May 15, 2020. The meeting will can the order. This the is the may 15, local meeting of the local agency formation. I am sandraly fewer joined by gordon marand cynthia pollock. I would like to thank sfgovtv for broadcasting this meeting. Madam clerk, do you have any announcements. Due to the Health Emergency and to protect commissioners, staff and public, city hall is closed. Members will participate in the meeting remotely. This precaution is taken pursuant to the stayathome order and local and state and federal orders, declarations and directives. You may participate in the meeting to the extent as if physically present. Public comment will be available on each item. On channel 26 and sfgovtv will stream the number on the screen. Each speaker will be allowed two minutes to speak. Communities or opportunities to speak are via by calling 408 4189388. Pound and pound again. When connected you will hear the discussions but you will be muted and in his senning mode only. Listening mode only. When your item is up dial star nine. Best practices call from quiet location, speak clearly and slowly, turndown your television or radio. You may submit Public Comment be in the following ways. Email to myself. If you submit Public Comment it will be forwarded and included as part of the official file. That concludes my announcements. Thank you very much. Can you please call item 2. Approval of the lafco minutes from the april 17, 2020 regular meeting. Thank you. Any comments from my colleagues . Seeing none. Lets open for Public Comment. Any members of the public to comment on item number 2 . Madam chair, no callers wish to speak. Thank you. I would like to make a motion to approve the minutes of the lafco meeting of april 17, 2020. Could i have a second please. Second. Supervisor mar. Roll call vote. The motion to approve the minutes. Commissioner fewer. Aye. Commissioner pollock. Aye. Commissioner haney. Aye. Commissioner mar. Aye. There are four ayes. Thank you very much. Madam clerk, can you please call item 3. Consideration and approval of the proposed lafco budget for fiscal year 20202021. We have mr. Bryan goebel, executive director presenting. Thank you, madam chair. Good morning, commissioners. Today i am bringing you a proposed budget which needs to be approved by the end of may. At the last meeting you asked me to bring two proposed budget options, one a significant increase in our budget for the general fund. Another would be a status quo of the lafco budget. The first option the general fund request would be under 7 84,000. Status quo would receive the amount that we are statutorily required to receive each year from the general fund which is 297, 342. This is because of uncertainty abuse of the budget situation. Commissioner mar asked to talk about the impact if the commission chooses to move forward with the status quo budget. This is the general fund balance over the years. Lafco has not had an increase in 10 years. We receive the same amount every year if from the general fund 298,000. We do expect carrying over to next budget as you can see in the column at the bottom that is our general fund balance. To the right in the right column you can see we are going to have about a 28,000 carryover to the next fiscal year. For those not familiar with lafco, i want to give a brief history and mission of lafco. Our lafco is unique. Most lafcos in california oversee special districts. Ours was formed in 2000 with a voter petition drive to create a municipal utility district. Over the years we worked primarily in energy issues. In 2007 we were assigned oversight of clean power sf. It would not exist without lafco. We led to the creation of clean power sf. Lafco is successful at exercising special studies powers. We have that authority under the act which governs all lafcos. We are allowed to initiate study os issues that impact Municipal Services. These are advantageous to help the city assess Municipal Service needs. In 201920 we did important projects. We commissioned the most representative study of on demand workers. Today as you will see we present a report offering a slate of recommendations on how to improve the working conditions on demand workers. We continue to derm avenues the city can take to curtail labor abuses. You heard a report last year about the troubling amount of disconnections, power disconnections in San Francisco, especially in neighborhoods that have suffered historical burdens. To do the special studies work, we have had to raise the money. In this fiscal year lafco raised 365,000 from five foundations, biggest from the ford foundation. We worked the bay and the casey foundation, San Francisco foundation, the family foundation. Through that fundraising we were ability to double the budget in this fiscal year. That money is the biggest source of funding. You can see where the general fund money falls in here as well as work order from the cca. That funding under 200,000 for clean power sf is to cure and will carry on in the next fiscal year. With increased resources for lafco, the significant increase that we are asking for, we will be able to carry on our work that we started in this fiscal year. We are hoping to do another round of Research Related to on demand workers and companies. We want to have an Engagement Process for recommendations we present today to vet those with a variety of stakeholders and city departments. We would like to Commission Additional surveys. The findings presented today, the broader survey of on demands workers was about halfway into the data gathering when it had to be suspended because of covid19. We hope to work to Cross Platform level data on worker trips and earning. We didnt get to do that during the initial phases of the survey. Of course, there is the work on public bank pending legislation, providing a consultant to support a Public Bank Task force. You will see in the presentation today from the lafco Research Associate recommendations that involve engaging with communities of color to traffic covid19 assistance from banks and organize listening sessions with limited English Proficiency communities how Crisis Response has affected bans responsibility. There is a Communications Plan to allow the work to increase Public Participation and engagement. Also to provide additional fundraising capacity. Significant amount of my time was spent fundraising this year. We have a slight increase in Legal Council budget because of increased workload and more item to review. Looking ahead in the next fiscal year clean power sf. This happens regardless of option one or two. We have that money from the p. U. C. We will manage and work with Renewable Energy consultant to provide improved oversight. We will have expertise working with staff to really strengthen our oversight role. We will develop and manage r. F. P. , hire another consultant to dive into the report on power disconnections in San Francisco. As we think longterm i would like a funding strategy to ensure it is supported after the m. O. U. And after the funding is gone. This requires no increased resources to do this work on clean power sf Going Forward. Speaking of clean power sf. This is the work order balance. We have under 200,000 left in that fund. Here is the first option. Increase resources for lafco. What does that mean . Two fulltime positions. Executive officer currently works as independent contractor. This would make the executive officer a fulltime city and county employee. We would hire a fulltime policy analyst and provide money for Labor Research and Communications Plan. The total increase we are requesting from the general fund would be under 487,000. Total request under 7 84,000. Budget option two. Again with the status quo budget. I propose most of our work focus on clean power sf. No additional funding required for this. If we go forward with this option we have money left from the amount we raise from private foundations for the survey team. There is funding there to do additional work. I am trying to derm what the scope of that would be. Moving forward with the status quo no funding for public bank. Limited staff capacity to fundraise for special studies, limited staff capacity to conduct further Labor Research. We could bring in Research Associates from graduate classes. We have been successful at this to work around it. Because of delays in the citys budget process, regardless which option you choose to move forward to, lafco will operate on the status quo budget july 1 through september 30. That is because the budget process is delayed. The earliest to get additional funding would be october 1st. These are the two options i bring before you today. Option one increase resources for lafco, allow us to follow up on the work we have been doing this year versus option two. Status quo budget no fulltime positions, move forward focusing mostly on clean power sf with no money to support the Public Bank Task force. These are the line items for each option. You can see budget option one, two, and then what the contingent appropriation would be if you approve budget option one. These are the numbers. For the first column most increases for the fulltime positions. They are for the public bank consultant, Communications Plan, budget option two status quo budget. Working within the amount we are required to get every year from the general fund. Column three shows the contingent amount if the citys budget process moves forward and lafco is favored in that process. We would receive that money after the citys budget process is complete. With that, commissioners, i am happy to answer questions and get your feedback. Thank you very much. Any comments or questions for mr. Goebel . I have a question. Mr. Goebel, thank you for presenting option one and two. That is helpful. I want to ask two questions. First is whether the sfpuc has talked about whether or not there would be a new m. O. U. For our clean power sf work Going Forward. The other is did you do the math quickly on what our spending was this past fiscal year when you count fundraising plus money from the general fund. It seems like we werent operating at status quo budget this year because we had fundraising. Is that the amount that would be with the fundraising and the general fund amount . How that differs . It looks like only about 100,000 difference in that option one budget. Thank you for that question. The first question about the m. O. U. I am in conversation with the Public Utilities commission. They michigan it may not be they think it may not be necessary to extend the m. O. U. And appropriate the money to lafco. We are investigating right now. I have been talking with mik mikeheims at clean power sf. They support lafco receiving the money. We are trying to figure out the best way to move forward if it is allow us to spend it moving forward. That is for the 200,000 . That is correct. Are there any discussions to earmark money to receive either i guess that would be like a change an addendum to the m. O. U. That would be for an additional amount . I was thinking after 200,000 is used it makes sense for our ongoing work with clean power sf that we receive additional funding from the sfuc. I have not had any discussions with the p. U. C. About future funding Going Forward. If the commission desires for me to initiate those discussions, i would be happy to move forward with them. So on the e on the expenditure. We spent the allocated amount 298,000. We have about 23,000 left of that. The total amount we raised for the survey and study 365,000. That has all been paid out to the survey team. Just the craziness of switching to covid19 survey and suspending the broader survey. We are trying to figure out what is in that pool of money. I hope to have an answer soon. I dont have an answer today. The 365,000 did you say. Thats correct. I am sorry. I dont have a calculator handy. Let me add that up. I will do the math on that. 639,000 total that is minus the 23,000 carryover, 639,000. The proposed option one budget was do you remember . 700 . Let meet put that back up on the screen for you, commissioner. These numbers are different than the staff memo because i had to revise these numbers. 150,000 difference if we were to continue with option 1. We are on track to spend at least i am just sort of thinking Going Forward if we were to do the type of work that we just did that without any additional fundraising we would need an option 1 budget. For the commission my colleagues to decide. I want to point out i know we were spending a lot more than the allocated amount from the general fund. Yes. You are absolutely right. I would like to mention that lafco has not had an increase in the 10 years it has been in existence. It has always been at 297,342. We have not had an increase even though the budget of the city and county of San Francisco has grown tremendously over the last years. We at lafco have not gotten an increase. I want to say on that line item budget about the executive director. You may recall that we had an employee before that was actually city and county employee, and that position was eliminated. Mr. Goebel has been working as a contract employee. It was part of the intent, i think, of our board here to actually secure a more stable salary for mr. Goebel that also extends to benefits and other retirement protection. That is an increase in that budget, which i think is, quite frankly, warranted. Any comments or questions from any of my other colleagues. I will put this up for Public Comment. Can you please see if there is anybody that would like to speak on item number 3. There are no callers wishing to speak at this time. Public comment is closed on item number 3. I think todays agenda reflects incredible things that lafco has achieved under the leadership of our executive director. The analyzing equity issues in the current program. It is my hope we can continue this program that is dependent on the city budget. I propose budget option one with the recommendation any increases in the latch could budget lafco budget are on the increase in funds in the city budget. Once the city budget is adopted lafco will need to revisit and make final objections. The board of Supervisors Budget Committee did hear a presentation on the updated request and the city is facing say significant deficits over the next two years. We are waiting for more information to come. This allows us to be prudent and have flexibility if we are able to secure funds. Any comments or questions about this . Madam chair. There is a caller who would like to speak. Would you like to reopen Public Comment . We can hold that thought about what i just recommended with option number one with the recommendation increases in the lafco budget are contingent on the increase in funds in the final city and county budget. We will open Public Comment again to hear from the Public Comment speaker. Any members of the public on the line to speak, please dial star nine now. Good morning. I came in late. Are you discussing the preliminary recommendations for food delivery drivers . Not at this time. We are discussing the budget for the lafco committee. Thank you. My apologies. I will defer. Thank you very much, caller. Any more Public Comment . I am curtis. I want to say our coalition approves the funding for a Public Task Force as well as executive director. I know there is a lot going on with the city and the budget, but i think we are one of the wealthiest cities in the country. I support the funding of the task force. Thank you. Thank you. That completes the queue. Thank you, public speakers. I would like to comment on what he said during Public Comment. I want to say we are facing a 1. 7 billion deficit. However, i would like to remind everybody that we will be going back to a 2018 member budget. Although we will have a deficit, we will still have a 10 billion budget. It is a larger budget than some countries. I want to pu put that in perspective. That is why i am proposing option one and we will deliberate that with the rest of the supervisors. I think we are not from a city that doesnt have a lot of income like fresno or modesto. We will still have a significant budget. Also, we have a reserve. I would like to leave options open. I make the motion to approve option 1 with the recommendation that any increases in the lafco budget contingent upon receiving an increase in funds in the final approved city and county budget. If there are no objections, i am asking for a second. Thank you, commissioner haney. Roll call vote, please. On the motion. Commissioner fewer seconded by commissioner haney. Commissioner fewer. Aye. Commissioner pollock. Aye. Commissioner haney. Aye. Commissioner mar. Aye. There are four ayes. That being. Could you, madam clerk please call item 4, 5, 6 together. Item 4 presentation and discussion on the findings of the Lafco Commission survey of on demand ride hail and delivery workers in San Francisco. 5. Presentation and discussion of the u. S. F graduate Class Research and recommendation on on demand Delivery Services in San Francisco. 6 presentation and discussion on lafcos recommendations to address problematic labor issues in the on demand economy. Dial star 9 to speak. A correction on the previous handout for the access code. The phone number for the call is 408 4189388 access code 625466705. Press pound and pound again. Then press star nine. Today presenting on items 4, 5, 6 we have our executive director bryan goebel. I think we also have the professor Chris Brenner and survey leader and researcher. Mr. Goebel and mr. Brenner, the floor is yours. Thank you. Good morning. Bryan goebel executive officer. As you know, last year, lafco contracted with a Research Team led by uc santa cruz to conduct a representative survey and study of ride hail and food delivery drivers. The survey team is a unique partnership between jobs with justice San Francisco and the Education Fund and the drivers cooperative. The goal was the give the city good data on this very vulnerable work force. Today we have that data. Now this. I am pleased to announce the survey is complete. Not without challenges. A lot of hard work went into this. We have produced troubling findings about the vulnerable work force in San Francisco. These are findings that will inform your policy to help improve the working conditions and lives of on demand workers in San Francisco. I would like to introduce chris beenner from uc santa cruz to present the findings. You can see the presentation now . Thank you for that introduction, mr. Goebel and commissioners. Thank you for the opportunity to present this work to you this is a collective effort. It represents the collaborations between the university and Community Partners. It is a pleasure to work in partnership with mr. Goebel in this project. He is a thought partner in helping us conceptionize the survey. You have the full results of the survey today. What i want to do in a short period is highlight for you the key findings. One of the things to stress in the method is that we were trying to get a representative sample of the work that is done in San Francisco by on demand workers. I want to stress that it is a representative sample of the work, not of all of the workers. There comes up with studies finding a higher proportion of people working parttime or a few hours. This is a small part of their work. That doesnt represent is bulk of the work being done. We wanted to get a representative sample of the actual work being done in the city. Rerecruited through six apps uber and lyft and two around Meal Delivery door dash and grubb hub. Two doing grocery deliverience take cart and shipt. We recruited in a way to reflect a representative sample of the work done in the city. For the ride hailing, we had tremendous data from the county Transportation Agency showing the geography of pickup and dropoff of customers as well as how that varies by time of day and day of the week. We were able to adjust the sample to match that geography and variation in time of day and day of the week. Then for the grocery delivery and food delivery, we had a data set of the geographic location of restaurants and Grocery Stores in the city. We were able to divide up the city to 11 different neighborhoods and sample from all of those different neighborhoods. Even though, as mr. Goebel said, we had to stop the survey 60 through what we hoped to get. We gathered date take from the beginning of february through the middle of march. We had a total of 64 3com pleated surveys from the six apps and representative across the city. We worked with the drivers seat cooperative in the pilot stage. I will mention that work. We were able to followup that the more representative survey with a supplemental Online Survey to get a sense of the impact the covid19 pandemic has had on the work force. I will present a little bit of that. The full findings are in the materials you have for this meeting. One thing is just how diverse this work force is. It is predominantly male. Tremendously diverse. 29 asian, 23 hispanic 22 white. Na over states the percentage of nonhispanic white. The number who identified as white indicated from brazil or other places. 56 are foreign born. People from incredible diversity of companies, brazil 14 , afghanistan 7, 6 china and 6 mexico. Then if you look at the age range of people doing this work. It differs significantly between those doing the ride hailing on uber and lyft and those doing delivery overall. The blue is 25 to 34 years old, the Largest Group within the food delivery. In ride hailing you have many people who are 45 years or older doing that kind of work. As we will see subsequently they have been working longer in on demand work as well. We asked general questions. People are living in difficult economic circumstances. 21 with no Health Insurance. 30 are using Public Health insurance there medical or Public Access such as covered california. We asked people and this is a survey question the Federal Reserve question does. How would they handle a 400 emergency payment. 45 didnt have resources on hand to handle that kind of emergency payment without borrowing. 15 receive some form of public since food stance. Food stamps, supplemental security income. We expect that to be higher if there were not such a large number of foreign born. We didnt ask about documentation status. We know a significant portion of those are probably undocumented and following through many cracks in our social safety nets. We asked people general questions about all of their work on different apps, platforms the key message for most of the people in San Francisco it is not a gig. It is fulltime work. When we asked people how many hours per week do you work on average for all of the apps . You can see that for 50 of the population they are working 41 hours or more. For over 70 of the work force they are working over 30 hours a week typically for all of the different apps. When you asked what percentage of last months total income was from platform work, half of them it is 100 . It is the only work they are doing. For 70 to 80 it represents over half of their income for the last month. One of the questions is how important is flexibility and the opportunity to choose your hours. This is framed as a choice whether people should be independent contractors and employees. We didnt want to ask people that specific question. We wanted to get a sense of what is a priority for them in their work. We asked them instead to rate the following job qualities. Indeed having a flexible schedule is a very high priority. It was extremely important or very important for nearly 90 of our respondents. Fair pay was as important. High levels above 60 or 70 it is very important or extremely important. Predictable pay, and access to Health Insurance and paid time off and workers comp, unemployment insurance, health and safety protections. They go on with the employee status. It is important to recognize that perhaps these arent tradeoffs. It is possible to get the important benefits of being an employee and the protections that provides with the ability to have flexible schedules. There were interesting differences between the ride hailing drivers and those doing meal and grocery delivery. The ride hailing drivers are more established. One way to see that is how many hours per week do you work on average for your current app. That is what we focused on in the survey. For the ride hailing about 60 are working for more than 30 hours per week for that single primary app they worked for. That is closer to 40 for the delivery workers. When you ask people how long have they worked for their current app . The differences come in. In the ride hailing category, over 50 of the survey respondents had been working for that company for over two years. In the Delivery Companies that was only 15 . Part of that is the industry of food and grocery delivery is newer, not well established. It represents the younger work force and more physical work with food delivery hopping in and out of the car and going up steps to deliver to apartments or things like that. Lets talk about earnings. The key message here is very low earnings for most of the people in the industry. I want to spend a little time on this charm which is one this charts the median weekly earni earnings. Before expenses that was 900 in ride hailing and 500 in delivery combining food and grocery delivery. We cant take the total earnings at face value because drivers and delivery people have expenses to be able to do this work. You have to figure out ways to subtract the expenses to get real earnings. We tried this in two ways. One, we asked a series of questions about expenses they had in the previous month. We asked them to give named dollar amounts. We would duct that from their earnings. We ask them to estimate the number of miles they drove for work. Using the irs figure 57. 5 per mile duct the Service Costs on the vehicle. In the first method of deducting named experiences it drops to below 700 for ride hailing and 330 for food delivery. Based on mile lane it is 350 per week for ride hailing and 200 per week for food delivery. What is more disturbing we estimated the percent of people who actually earned zero dollars after fully deducting all of estimated expenses. In the first method as much as 7 are earning nothing by the more expansive mileage expenses 21 . How is it possfo possible for to work for nothing . These are hidden expenses you dont see when you are driving. It is wear and tear on the car and that shows up in Emergency Service a couple years down the road. Very concerning. There is unpaid time that people have as they are waiting for an order to come in or drive request we ask them to estimate what percentage of their time was unpaid time. The medium was 20 of the time for ride hailing and delivery. I will remind you even though we werent able to do a full effort with drivers cooperative we did have data from the pilot study that shows it is possible to get real data, not just estimates of the amount of paid apand unpaid time as well as geography of where people are driving. We hope to continue that work to get much stronger and more reliable estimates of the paid and unpaid time and how that might shape peoples real earnings. There are other work challenges that exist that people face, including nearly half of workers across both categories that work 12 or more straight hours, at least several times each month. A third sleep in their car before, doing or after the work. Sometimes or often. Threequarters say they have a problem when they have to use a bathroom but had no nearby access. In the subsequent interviews we heard the strategies people use for that in trying to build relationships with hotels or restaurants where they can pop in quickly to use the facility. That is an important thing to consider. 43 of ride hailing drivers felt harassed or felt unsafe by customers. One of the things that emerged from th the survey is understang the varieties of ways that the automatical go rhythms programmed in shapes the types of work they are doing. We asked if they were penalized for declining certain job offers or if the Rating System affected. They said they did. If they are independent contractors they should have the ability to select or not select jobs offered to them and the customers themselves could have the ability to accept or not accept their offer of a job or delivery. When it is the algorithms driven by the app s shaping those Job Opportunities it shows the ways the companies are controlling the work practices of delivery workers and drivers themselves. 18 of all delivery workers use a bicycle instead of automobile. 9 use an electric bike. These people also have expenses that are rarely reimbursed by their app. Only 33 had no purchases they had to make for work. 33 had to purchase protective gear, a rack for carrying larger orders, 30 had to purchase an insulated box and they were not reimbursed by the Platform Companies. Safety is a manning or concern major concern for bicycles. They said they felt unsafe or combination of cars in bike lanes, poor quality roads, delivering on roads not met for bicycles. 32 were threatened on the bike while delivering. We saw potential to expand bike delivery in the city. Some were using the bike for economic reasons, they couldnt afford a vehicle. 70 preferred delivery by bike or walking. 83 said it was quicker to use a bike in San Francisco. This was one of the questions that we were asked if they were provided with a financial incentive to purchase an ebike would they switch . 39 of delivery workers currently driving would switch from driving to ebike. 31 might. 25 of the ride hailing drivers said they would consider switching to ebike delivery if they had an incentive for an he bike. Quickly to sung rise impacts from the covid19 summarize the impacts from covid19. Unsurprisingly these workers on the edge prior to covid19 pandemic are really suffering in the current circumstances. We were curious whether people were able to move from ride hailing to food delivery. We found that about 20 of the people or half of the 41 doing delivery had made that switch. A higher number had stopped working because of concerns about health and people were clearly suffering economically as we have seen across the labor market in these unprecedented experiences of unemployment. One of the key questions we wanted to ask were there Platform Companies helping provide personal protective equipment or advice how to be safe . We found that 43 the january companies the App Companies were doing nothing to protect them and 12 not enough. 9 thought the apps were responsive to the virus. This was the second and third week of april. We have seen increases in services and support since that time. The slow andy layed response is a key part of the concern in this situation inputting the drivers and customers at unnecessary risk. We also asked what actions should Public Officials take in response to covid19. The highest priority was providing free sanitizer gloves and protective equipment and emergency financial assistance. In these times enforcing laws at workers miss classified of contractors have access to unemployment like paid leave and other benefits. This was critical many people even though they are eligible for unemployment under the federal cares act had a hard time documenting income. Companies might provide paid sick leave, it was only offered to those who documented that they had covid19. We know the difficulty in doing that with the limited testing that is available. To summarize the key points from the study, this work force is predominantly people for whom it is close to fulltime work and primary source of income to diverse work force 80 color, 56 immigrants. They struggle to make ends meet and it is made worse by the current covid19 crisis. We believe . Very substantial portion of the work force are estimated to make less than the equivalent of the San Francisco minimum wage. These are estimates but i think it is strong evidence that there is a basis for real concern here. This work force doesnt receive benefits that would be entitle to employees under the San Francisco laws and they are particularly vulnerable in this crisis. We cant underscore the importance of policymaking ensuring that existing laws are enforced for this work force as well as addressing the economic safety and Public Health concerns facing this critical work force. This was a pleasure to do this study. It was the first of its kind in the country with this method that can be replicated around the globe. I will turn it back to mr. Goebel. Thank you. Thank you so much, chris. I want to thank you and the survey team for your hard work on this survey. It is the first of its kind of representative survey of the work on demand workers are doing in San Francisco. No one else has done a survey like this. Madam chair, would you wish to ask questions or should we proceed with the next presentation . Lets ask if there are comments or questions from my colleagues. Any comments or questions . I also want to say thank you. This is fascinating. I think some of this. I assumed a lot of this. When you see the data, it reinforces what i assumed about this work force and what the majority of the board has seen about the work force. To get it from the participants themselves is fascinating. When we talk about a wealth gap, we talk about how the mechanisms of how we allow businesses to operate, quite frankly, perpetuates the wealth gap. We are also seeing this even more clearly with the covid19 also in the disparities. We can see how these companies allowed to operate in this way are contributing to the huge wealth gap that we have and the greater divide. Lets take comments or questions from colleagues now about on this item specifically and the presentation. Colleagues any comments or questions . Supervisor haney. This is extraordinary. It was interesting to me to see there were so many people who felt that free access to protective equipment was so important during this time,anticly because we have passed ordinances that should require that. Was there parts of the study that i guess this is sort of implied that they were not being provided with gloves and masks and things they needed . We passed the ordinance that required companies to provide that. One of the concerns was the companies were going to argue or define employees in a way that made it so they didnt provide this for the drivers. Was that something that seem to . Any part of the study that suggested they were denied that . Yes, and we did the survey and a number of followup interviews. Of course, we are not in the minds of the executives of the companies themselves. We know they are contesting ab5, which narrows the scope of being classified of an independent contractor. Many of the drivers thought the reason why they werent getting the support in that way is that the the companies were providing that personal protective equipment then that would give a clear indication they should be employer of record. We think it was part of the slowness in responding had to do with the legal challenges. It was putting their financial concerns in front of both Public Health and the health of the workers themselves. One of the things is that they are in an enclosed space with a tremendous diversity of people from different places and potential for spreading the coronavirus in that context. We heard drivers having all windows open and airflowing in as a way to prevent the spread. Many people were saying they were not getting the support. They were buying equipment themselves, masks hand sanitizer, trying to clean cars, not reimbursed for those expenses either. Any other comments . Commissioner mar. First of all, thank you, chris beenner, and the Research Team, my former colleagues at jobs to justice for your incredible work on this groundbreaking study that is going to provide so much Important Information here in San Francisco to policymakers as we look at how we can support the growing number of workers in the city that are working for appbased companies. This is groundbreaking. It will have a big impact nationally to push the conversation around workers rights. I have a few questions. First of all, did you look at lt where the workers or drivers lived . Whether they are San Francisco residents, bay area residents or further out . Iif you did look at that, are there any sort of is there a conclusion or analysis on differences for San Franciscobased drivers versus those coming here to work from other parts of region or state . We did ask the zip code of residents for the survey respondents. We have that data. I havent had a chance to analyze that yet. We do know that a substantial portion of the work force live outside of San Francisco. That is a higher proportion for the ride hailing work than the food and grocery delivery. That is a higher percentage who live and work in San Francisco. We got stopped half we through because of the pandemic. We havent had a chance to do a full analysis of the geography. We will Going Forward and i had have more to share in future meetings. A question around the earnings of the drivers. I know it looks like in your presentation you focused on weekly earnings. One of the main concluding points is that it appears many or most of the drivers are making less than San Franciscos minimum wage. Do you have any estimate of an hourly li wage for the drivers taking into account the mileage and unpaid time that they are just driving but not being paid . We asked for a estimate of number of hours. Figuring out the true expenses is difficult. That is why we were excited to work with the drivers to show the working time and the paid and unpaid time and mileage. We hope to raise additional funds to do that work Going Forward. One other thing is that the fact we dont have a registration requirement or a licensing in some way of drivers or delivery people in the city as a place like new york has or seattle making it that much harder to track and understand the hourly wages because if we had that system in place it might be an opportunity to get that data from the companies themselves. Certainly from research we would love to have that licensing and registration process to get access to the data. I think there are Public Policy reasons to consider that as well. Thank you. My final question is around the punitive or retaltory actions that the appbased Companies Might take if drivers decline offers for work. I know you had one slide around that. Most extreme would be de activation. Can you talk about how prevalent of a problem this is . I have been hearing from drivers about how unfair they are treated and they feel forced to stay on the job for fear of being deactivated. The de activation is most extreme penalty half of the delivery workers and a third of the ride hailing drivers said if they declined a certain offer it appears the app didnt offer them a job or offered them fewer jobs or some period of time after that. It is penalizing the income earning opportunities. There may be a number of reasons why they wouldnt accept the offer, maybe driving too far away or some other concerns about offering adequate compensation for what is asked for. The other way is that they were threatened with de activation because of some action they took. Others were actily deactivated, less than half thought the app handled it fairly. We do think that is a very significant problem. Particularly in the in depth interviews people were responding to say, especially those working two years or more, that th thal go the algorithms e changing. The companies are trying to optimize. It is in the interest of the companies themselves. Asking for some k9 of transparency in those algorhythm processes and information how they are structured is something many respondents would appreciate. Thank you, chris. Any comments or questions . Yes, this is cynthia pollock. I want to say thanks to mr. Benner and the survey team at jobs for justice. The findings are, as commissioner fewer said, something we thought for a while but this puts it out there in terms of facts. I wanted to ask if you had, for example you mentioned that new york has i know they are requiring companies to compensate drivers for the times they are circling to wait for a ride. They have a registration process you mentioned in new york and see a little and whether or not there are specific policy recommendations that you have that lafco could take to the San Francisco board of supervisors. One is the registration process, the other is i am thinking that we should require the data from the companies themselves the City Attorney should demand the workers are classified to be compensated at least to the San Francisco minimum wage, and the onus should not be on the drivers and the delivery workers themselves to provide the data but the companies to do business in San Francisco should be required to provide that information to the city. I just wondered if there was a list of policy recommendations that you in coordination with jobs of justice and also the workers themselves have that we could take to the board of supervisors and the City Attorney . I think, commissioner, you brought up the next two items. I dont be have the agenda in front of me. I dont have the packet. I appreciate that. I will say two things that might not be covered in the next two items. One is the way new york helps t enforce it is really limiting the number of people registered as drivers in the city. Using the data they get from the companies to track how much of their time is unpaid time versus time that they have a customer in the car. If that percentage of time goes over a particular threshold, then they can fine the companies for having too many people offering services. This is important. It came up in the covid19 survey where we thought more people would be doing food delivery work. There is a surge in demand for grocery afternoo and food deliv. What is happening. There is a flooding of people trying to do the work. People have the app on all day long waiting for a job offer and they might get one, two, three. When the overcomes in if you dont respond in a few seconds, someone else snatches it up. Having a mechanism to regulate the number of people doing this work so it matches the appropriate demand for it is a critical thing to make sure people can earn a sustainable livelihood in this kind of work. We want this information to be utilized and responded to locally, but i wonder if lafco and the survey team have plans to provide guidance to other cities and municipalities that have a large percentage of on demand work . We are making the results public. The issues that commissioner mar raised and the details on the method. We are in touch with researchers doing work in new york and San Francisco as well as in los angeles. We have not been approached directly by anyone yet to do direct work with other cities. We would certainly be open to it. Any other commissioners . Any comments or questions . Madam clerk, would you suggest i take Public Comment per item . Since we called 4, 5, 6 together . It is up to you if you want be to take them separately or together. I think people have been waiting. Public comment for item 4. Any members of the public to comment on item number 4 . Speakers. Go ahead. For those callers wishing to speak please dial 408 4189388 access code 625466705 to line up to speak press star nine now. Please proceed. Madam chair, two callers wish to speak. Good morning. I am happy to speak on behalf of the report. I am sherry murphy. I am a minister in the east bay. Today i speak as a lyft driver on behalf of item 6. In the past three years this is a primary source of income. I have driven 12,000 rides. I want to thank the commission for consideration in these unprecedented times. I urged the commission to accept the report and recommendation on how to address the problem. This includes delivery workers. Since the recession of 2008, as a black woman i know how important it is to have job benefits and Labor Protections in place. Most of the workers we are talking about in the report are people of color. They are on the front line in the crisis and hardest hit economically. In march i was making approximately 10 an hour, i was risking my life. I should not have to face the disease that has the potential to secure me to secure my home and pay my bills. It is urgent for the city of San Francisco to accept the report and recommendation for people like me an equitable opportunities so we dont have to compromise our health for livelihood. It will support drivers but those we come in contact with on a daily basis. There are stories of people still working and are struggling because they work even though they may be sick and exhibiting symptom. Or for those who have been exposed but cannot stop working because of income loss. The city can prioritize enforcement of 85 and these recommendations and investing in resources in San Francisco office of labor standards enforcement. Go ahead. I think the last speaker got caught off. Thank you for supporting our work and this study. I want you to know how much of a difference it is making for workers. In the lawsuit by the attorney general, the state attorney general c ited the study. It was in the chronicle today and sf examiner. It is making a difference because there is so much conversation about drivers. From the drivers speaking out today from the study, this is now you can see what these drivers want from drivers. What the drivers experience from drivers. This is part of the work and thank you, chris, on this. Thank you. Next qualler. I am on the board of the taxi workers alliance. My comments are not representative of them but i want to say a lot of taxi drivers are now doing food delivery as well in conjunction with their driving or instead because of the inability to use the airport as income source, lack of performing arts events, concerts and sporting events and the hotels are closed, tourist destinations are closed. They have to find ways to make money, considering a lot of drivers have to come up with a medallion loan which is something that is important to deal with. You have dealt with the issue in the past and there is going to be a problem when the credit union asks for these payments. Regards the study, i work with caviar. They have different rules than other food service deliveries. They do not penalize you for rejecting orders. They also did allow me to obtain the necessary cleaning supplies with a 5 shipping fee. What i got was a huge box of gloves, sanitizing solution, wipes, and 10 masks. The problem i have with these people that i support, you need to have proper registration or regulation of the food delivery people is that the city has very little oversights over these drivers. With can cabdrivers they are closer to the city and they also are familiar with the streets and with the taxi driver they have the ability. That completes the queue. Public comment on item 4 is closed. Thank you for all of your help and all of the Community Partners and jobs for justice. This is, i think, groundbreaking. Not only that. It calls for a call to action. Madam clerk, please call item 5. We have called it already. Thats right. We have bryan goebel the executive officer, kelly mcbride, graduate students. Here we are to the next item 5 with recommendations. Thank you. Madam chair before we move from item 4, for the record, there is no action taken on item for . Yes, no action is necessary. Thank you very much. Thank you, madam chair. You have heard the findings. Now we are on to the recommendations for how to address the problematic issues in the survey. For the second year in a row, lafco partnered with the university of San Francisco urban and Public Affairs graduate program to produce research to regulate the on demand delivery in San Francisco in the time of covid is the and beyond. The class of 16 students was led by doctor mic bride. These are the class that produced the recommendations last year, some of those students have become legislative aids. We had 16 students working on this project during this selling esther. Doctor mcbride is here with three of the students to present the findings of the research and recommendations. I will turn it over to doctor mcbride. I am politics professor at the university of San Francisco. It is my pleasure to work with our masters of public and urban affairs students. To give you a sense of process. I started meeting with director goebel late last fall and we started brainstorming what kind of research and specifically policy research would be most helpful at this time. We identified the deliver reindustry as something that was the unregulated wild west. We thought there had been a lot of progress made in thinking about the t and c companies and research on how to regulate t and c. We did think the delivery industry because it was so rapidly expanding had very significant impacts on community life. This is was an area that was right for more research. We began by thinking about labor regulations, environmental impacts and traffic impacts and difficult impacts on the restaurants industry that the delivery industry was having. Because of the development of covid we started to realize how Central Health and safety was for understanding the delivery industry. Basically in the space of six weeks sudden rewait a vaguely annoying thing to something absolutely essential to keepingg people fed and cared for. Before i pass this to students, i wanted to say that we wanted to take seriously the assumption that increased regulation might impact jobs. Increased regulation at the local level might end up decreasing Job Opportunities for people who very much need them. We did have a group of students who spent time investigating what happened when other localities did increase regulation of on demand workers. We looked nationally and internationally at examples. In london ange and in germany. Sometimes the Larger Companies left the city but that there were always Smaller Companies that moved in to that market opening. Therefore what we saw as it increased regulation could increase the biodiversity of the kinds of Companies Operating on demand workers. I will turn it over to kendra to present the findings about compliance systems. Good morning, commissioners and supervisors. I am kendra. We conducted a letterra tour review examining the compliance and certification looking at environmental, automobile and Consumer Product industries. The city has a number of items to consider when designs an effective compliance system. We would recommend two elements of this system. First a ratings system. Second a certification system. Then we want to address two points for consideration when applying the system. First the role of public agencies and second language that clearly defined the structural benefit of certification. It allows exchange of communication between participating firms, companies, partners and consumers. In Performance Measures and improvements are shared between businesses within industries. Externally they are to the public and consumer. Because of the information sharing it can create a venue for Competition Among businesses. The benefit of participating in this system really includes a positive brand name certification to publicize their participation and claim credit for producing positive behaviors. Next the certification process would lead to a rating which is then advertised to the public and consumers. It would incorporate a number of performance including health and safety, employee protection, traffic regulation and compliance and environmental impact. From these components would determine the level of certification rating and allow consumer joyce to reenforce the regulatory process instead of under mining it. The Rating System can act as Performance Management system to result in increased Company Accountability standards and public transparency. It would allow firms to have a positive effect on their impact wheel providing that higher level of certification. The two points of certification to up sport this Rating System. First the city public agencies should provide Financial Support as needed. There are a number of costs that can be a barrier of smaller firms competing against uber and lyft. Incentives include reduced costs and tax incentives, grants and tax abatesments and fee waivers. The last point is that we recommend that the language within the certification system is clear and that the advantages and benefits of participating are well defined and advertised. To ensure the certification prevents inefficient low performing firms from achieving high ratings. The language must be clearly defined. Those in the certification systems highlight longterm financial benefits as keyen be r incentive ever incentive to joining the certification system. Now, i will turn it other to ryan powell to address the permitting system of this compliance system. Thank you, kenda. I am ryan. Good morning. I will present on key findings related to the permitting process. To start we will go over how we can utilize existing regulatory structures and bodies to implement a permitting process. We recommend that utilizing the San Francisco municipal Transportation Agency or Public Utilities commission as Viable Options to institute a regulatory process due to their already administrative capabilities. We researched the food trucks and delivery vehicles and that would be communication for delivery drivers. We want be to highlight that extracting fees to the permitting process will be able to fund the administrative process as well as bring compliance and Rating Systems enough funding. From our research is there recommendation the permitting fees should be born by the companies as opposed to the workers. When we invest investigated s born by the workers. We suggest the companies should take the brunt of the costs up front and moving forward we would dive into how t and t companies are regulated by the San Francisco airport. Understanding allow sfo regulated to mitigate traffic, i know traffic is an interesting thing to think about in the modern era. Following covid we will experience traffic and we believe bryans a permitting process we will mitigate the process with abundance of vehicles on the road. Furthermore, we sawho sfo regulated the drivers. They were able to gather data. That is a huge, huge source of information as to how to further regulate and mitigate drivers was a something that would be very important moving forward to the future how to mitigate gig economy workers. The strongest recommendation was permitting. There is a strong requirement for paul employees to be in compliance with ab5. They need to be in accordance with the california state law and using this example to ensure that workers that were previously not in the gig economy now classified as regular employees would be something that we can move forward to use permitting t to ensure compliance is met. To round it off we would like to communicate the importance of having a sliding scale in the permitting process to ensure that smaller businesses who employed delivery drivers are going to be in a level Playing Field with larger Delivery Companies. This could be mounted in a different way with a sliding scale based on the amount of employees companies have or the amount of Revenue Streams coming in. The sliding scale would ensure smaller businesses we able to compete with larger businesses to create a healthy ecosystem. Finally, when we talk about the fees and Revenue Streams from permitting, we feel that could go towards benefit things for drivers and delivery workers in the current era we are living in, one which would be a fund to go towards many different uses that would be applicable. To comment more i will pass it off to ricky trend. Thank you. I am ricky. I am here to discuss health and safety policy recommendations for delivery workers in San Francisco. I will outline three major components regarding health and safety. First is that we propose a surcharge for Health Insurance fund for delivery workers. The reason behind the surcharge is that it would be on all delivery workers in San Francisco. The money would go to the Health Insurance fund to supplement under the assumption that a lot of these workers will have Health Insurance plans covered by their respective employers. We advise the funds from the Health Insurance fund would be supplementary if they have any other costs. Second is that since they are working closely with the Restaurant Industry that we recommend delivery workers should be trained in food safety and hamming regulation handling regulations. Currently the city has serve safe. They should be trained in food safety and handling and this would not only ensure safety on consumers using the service but workers in the service as well. The last component will be system communication between the department of Public Health and delivery workers in San Francisco. We propose this system of communication between the department of Public Health and delivery workers because after once a delivery worker is certified they can register their number with the dph and once the dph obtains the certain amount of numbers the department of Public Health will be able to contact all delivery workers within San Francisco at a given notice. This will be crucial Going Forward should workers need to be informed of any developing updates, if there needs to be any changes in procedure and guidelines and this will also serve as both ways. Delivery workers that need to gain access to ppe, get tested or if they need to get supplies or food and health and safety they can rely on that rapid and efficient system of communication towards the ppe for necessary resources. I would like to conclude the students presentation. Thank you. Thank you very much. Colleagues. Any comments or questions . This is cynthia. I just have one quick question. I want to also thank you for the work that you have done on this. This is really important work. I wanted to ask again if you could repeat the two agencies you thought could be implemented for the certification process. The two agencies you identified. Thank you, commissioner. We decided that the s. F. M. T. A. And. [ inaudible ] were Viable Options for the permitting options. S. F. M. T. A. For permitting for the ride hailing and sfpuc for which workers . Our research was surrounding delivery drivers. We recommend that it would be up to your discretion to decide which agency would be the best fit, either or. They are administrative qualities and capabilities would be sufficient in providing that type of permitting process. Was it also considered to have a special department to do this . I am thinking the air bnb certification and how a department was set up specifically for that . Is that something you looked at i wonder if it would make it. [ inaudible ] the research we conducted we compared to food trucks permitting for large delivery vehicles for that matter. That is how we came up with uses sfpuc or s. F. M. T. A. I think it is important to look at both options. There will be the followup work to these studies and these reports based on the questions that we have today in our commission meeting. If there is, that is something that i would be interested in learning more about. Thank you. Questions or comments from colleagues. Thank you so much for this. I think the certification idea is not that hard to do. We are already doing it, like we do a Green Business certification so people are proud and there is an award ceremony. You can market your business saying if you shop here we are a Green Business we have met these measures and people feel pride in that. This could be the office of labor and standards. May i ask the presenter to take down their screen so we can see the commissioners. Thank you very much. I am thinking maybe it is the office of labor and standards. Ideally what i think is when we talk about food delivery or on demand Delivery Services, ideally it would be big companiesna have Delivery Service such as safe way or whole foods they would hire their own employees. They are represented by Union Representation and they could be rolled to the regular work force with the protection. For the other restaurants and on demand Delivery Services, i think this needs to be. We are extending this Delivery Service. I feel like it is going to be growing. When we talk about the cannabis businesses. Much is delivery. New york has been delivering food in restaurants. You can get anything in new york a long time ago by on demand delivery. We are just learning here. I think the certification thing is the idea. I think it is excellent. I think there has to be marketing attached to it so that people who would engage in these on demand Delivery Services want to know insured that their money is going to workers that are paid a fair wage, that there is safety concerns that are met, they have health cover age. I think colleagues who are on the board of supervisors, i am wondering if this is an idea you think we should bring forth to the board of supervisors. I would love to hear some input from you, also. Chair fewer. This is commissioner haney. In terms of the role of the s. F. M. T. A. They told us there are certain things they cant do because of regulations. When it comes to this sort of delivery and their ability to implement regulation, is it within their authority legally . Are they preempted . It all makes sense to me. We have always been under the impression our hands were tied as a city for regulation. For the researchers is that part of something you looked at in terms of what the length or the boundaries of regulation that the city can be providing over some of the recommendations that you have . No, we looked at existing regulatory bodies and processes that were in place and made assumptions based on that. We looked at models from other cities. There may be some special per mutations to the San Francisco regulatory environment. I am sure there are. You would know them better than we do. Commissioner main ne, that is a great commissioner haney, that is a great question. This industry is unregulated. The city has an opportunity here to step in and regulate this industry. To follow the labor laws. In terms of ride hailing, the c p. U. C. Has not yet determined if it is going to exert it authorities under the labor side of things. That is another opportunity here on what we are suggesting in this report is that the city asserts that it has control to enforce the labor laws and that is not under the purview of the p. U. C. For delivery they are unregulated. On the labor side for ride hailing, i think the city has the authority to sepin. I think that this is an unregulated industry that i get that this is the approach the students have taken is an approach of sort of a carat approach. I also think we need a stick approach. It is so unregulated and we talk about enforcement, there has to be a stick, you know. I think this would comment the stick very well. I dont know what that stick would be or that regulation would be for enforcement. I think a package together with this with maybe enforcement and some regulations around it but yet this opportunity to be a good player in the business. San francisco wants to reward good players. We would participate in boycotts and in the same way they would be very open to actually feeling as though they want to use this service but they want to feel good about using the service. None of us want to exploit people that is a general feeling among the culture in San Francisco. This is a fit for the culture of our city, too. This is why i think it is something we could really explore on. Supervisor commissioner haney. I think this would actually necessitate a conversation around this data. I am asking, mr. Goebel, you send all reports to every member of the board of supervisors so they have this information, too. As we Start Talking about reopening and recovery, people say how can we get back to where we were . Quite frankly, there were problems the way we were and this is one of them. This is very timely as we start to reopen. How can we then reopen in in y that is better than we were. This is such helpful information. Thank you so much to your students, also. At this time lets take comments. I have one comment. I wanted to thank professor mcbride and kendra, ryan and ricky for all of your work on this. The policy recommendations you put forward around regulating the delivery industry in San Francisco are really great. I am very interested in working with supervisor fewer and commissioner haney to bring these forward for consideration at the board. I did have a similar question supervisor haney had about our ability to enact any of this an at a local level given the challenges we faced in trying to enact any real substantive regulation on the Ride Hailing Companies due to preemption by the California Public utility commission. It is good to hear, mr. Goebel, that it is your understanding those preemptions, c pu issues we faced with the ride hailing Companies Might not apply to the food Delivery Companies. Thank you, commissioner mar. The p. U. C. Is having a rule making process on the labor side of things right now. They have not made a determination on that yet. That process is underway. In the meantime we feel the city could assert its authority until that process is concluded. On the delivery industry side, wide opportunity there. Thank you. I did want to state i have been working with supervisor mandelman in looking at local labor regulations on the Ride Hailing Companies. We have been working with the office of labor standards enforcement and the City Attorneys office as well as labor advocates and drivers organizations as well. That is work we have been working on for a number of months now. It is really exciting to have these new policy recommendations for the Delivery Companies put forward today. Thanks again for all of the work on this. I would like to also have a discussion on whether or not some of the students who worked really hard on this if they would like to see it go through the process and be involved in the process of actual legislation, if they would like to continue this and go deeper and learn a little bit about the processes of bringing the recommendation to actual legislation. I think there could be an opportunity for the students to continue to work on maybe on an intern capacity. It could be interested after all of their hard work to actually see those in San Francisco been fifth from it. We would be happy to explore the possibilities there. That would be valuable to all of us. If there is no more comment from colleagues. Lets open up item 5 for Public Comment, please. If you wish to comment please call the number on the screen. If you are already on the line please dial star nine now. If you have not already done so. Are there any callers for this item . There is one caller wishing to speak. Caller i appreciate the students tackling this situation. The only thing they didnt quite understand is the state tuc over site over tncs and the fact that the state restricts what the cities and counties can do to regulate tncs. I think based upon the proposals that the board of supervisors should request that they ask for legislation to allow San Francisco to do registration like new york does. That would be a great opportunity to do that. Regarding food delivery, i think that the Environmental Health division of the Health Department would be the best place to regulate food delivery workers. Like they do restaurants. They regulate restaurants and in restaurants. Considering food Safety Training through the Health Department would be the place to do that. The tnc with the m. T. A. They would need the same requirements taxi drivers go through, fingerprint, background checks and drug testing to be regulated by the m. T. A. Thank you. Thank you very much, caller. That completes the queue. Public item on 5 is closed. We are now on item 6. Our executive director has a presentation. Thank you, madam chair. Almost good afternoon, commissioners. I want to point out that some of the recommendations i am going to present now overlap with some of the recommendations from the graduate class at usf. My hope with all of these recommendations is to conduct further research and come back with a final report to you of recommendations that we think would work in San Francisco because they need investigation. What i hope to do here is put ideas out there. You have heard the findings of demand work. While the City Attorney working with the attorney general has filed a lawsuit against uber and lyft to bring in compliance with ab5, we dont know how long that is going to take. In the meantime peoples lives are on the line and Health Concerns remain. The question is what are other things the city of San Francisco can do to step in to help this very vulnerable work force . What i am bringing to you today is a table of ideas based on the survey findings, interviews with workers, stakeholders and legal research. We wanted to get the process started from addressing the labor abuses from a policy perspective. Every recommendation that i present today requires further investigation, engagement and refinement. There are four categories. Improve Economic Security for ride hail and delivery workers, promote accountability and lawful operations among the companies, improve sift and Health Safety and health and promote Public Health and safety. This is hand and hand with the bigger Public Health picture. How can the city improve Economic Security for ride hail and delivery workers . We know the answer to that already. Enforce city and state Labor Protections for ride hail and delivery workers. Ensure they are making minimum wage and the companies are providing health core contributions and paid sick leave. This is the law in San Francisco. Of course, under ab5, on demand workers are required to be treated as employees and receive the benefits that come with being an employee. The city should prioritize enforcement of ab5 and invest in the San Francisco office of standards enforcement and the City Attorneys office to promote compliance. The city should also be empowered to collect any and all data needed to establish compliance. Delivery companies are unregulated. There is no reason why the city cant receive labor data on a continuous basis. Workers need to be compensated for every hour they are on the clock, not just when somebody is in the car, or when they have a package. You wouldnt package. Enforce ab5, the local laws, give resources to the City Attorney and the San Francisco office of labor standards enforcement to do this. The idea discussed. Require a license for meal and food delivery workers. When you regulate it can improve earnings. With a cap to help reduce traffic and congestion. We dont Want Companies to underpay workers. We want to ensure they are making a living wage. Another benefit talked about ine previous comment. They would have Contact Information to communicate on issues. Contact information of all uber and lyft drivers are required in seattle. The city of seattle did a similar survey and got a huge response, thousands of workers. The city has their Contact Information. I want to be careful with this recommendation. Any kind of licensing facility should not place Financial Burdens on workers or create red tape. It should be developed in couldn consultation with workers. The other idea we have been exploring is we think the city should explore creating a ride hail and delivery Worker Resource Center to educate workers on rights and provide resources to resolve complaints with on demand companies. We have two models similar to seattle. There is a fee and uber and lyft rides. Many ride hail and delivery workers are fired or deactivated with little recourse toward resolving complaints. A center could offer resources. Communitybased organizations could provide information and educational materials on their rides. We think the city should create a task force to explore a cityrun worker owned ride hail cooperative. We know these services are valued by san franciscans and many rely on them. Workers are suffering under the models. They are not sustainable and they argue they cant comply with ab5. What if we woke up and there was no uber or lyft . We think the city needs the task force to explore a city run ride hail cooperative. What if it offered flexibility to give them the protections and benefits every worker should be entitled to. This is an idea worth, moring. Next is accountability and lawful operations. The top of this should be improving city access to company data. We think the city should have a strategy for valid ongoing data needed for setting, implementing and enforcing policy. The city needs to understand the hours, earnings, working conditions of on demand workers which make and many work on multiple platforms. That has to be Cross Platformed. For delivery workers there is no reason why the city cant go after the data now. Some of the things the city would look at. It needs continuous data for implementation and enforcement and wages and hours and eligibility for protections, contact and demographic information. On demand mobility of platform contributions to vehicle miles traveled and agree house gas emissions and the impact the delivery platforms have on Small Businesses. It is very important to note that any data policy should be developed to ensure that drivers and delivery workers maintain their right to independently collect and share personal work data regardless if they are employees or independent contractors. Third Party Intermediary can help with the analysis of data to ensure it is valid and accurate. We have a lot more in the full report which you can read at sf. Gov lafco that we will post on the site. We think they should collect and share information about injuries. Mom payment to healthcare age Workers Compensation insurance. The sick pay insurance is the law in San Francisco. It should look at the Tax Liability arising from this classification in San Francisco. The total amount of unpaid benefits that workers are entitled to under the retroactive enforcement of a b5. Also the social impacts of this long standing practice of nonpayments of mandated worker benefits. Next is improving safety for at based drivers and bike riders. Number one, provide free and accessible restrooms to workers. We are suggesting the dent of Public Department of public works explore a public facility for at based delivery and ride hailed workers with free restrooms that is parking accessible. 77 of the ride hailing drivers and 86 of the delivery workers had no access to a facility. Restroom could be located at the Worker Resource Center i mentioned earlier, but generally make restrooms more widely available to everyone. We asked drivers a few questions. I know from doing this work that they face some of the most hostile street conditions. Cars in bike lanes, weaving in and out of that mess, avoid doors floors flying at you. In the survey 70 on the bikes felt unsafe while doing work in San Francisco. How do we address that . We think the m. T. A. Should do a rapid build out of protected bikeways especially on high injury corridors and busy streets. Especially now that restaurants and Small Businesses are reopening for curb side delivery and pickup, s. F. M. T. A. Should dramatically expand loading zones to help keep drivers out of bike lanes and prevent bikers from getting parking tickets. We also think that it is imperative to expand the citys network of those streets. Make it permanent. It helps eve us and keeps the streets safer for everyone. We wanted to shift people who do the car work in cars and he bikes. We asked ebike questions. If you were given the incentive to purchase the bike would you shift from the car to the ebike . 25 of uber and lyft drivers would shift doing delivery. 39 of the delivery drivers said they would switch to an ebike with an incentive. 31 said maybe. We think this is significant. We are suggesting that the city establish an e bike rebate company in collaboration with bike manufactures and companies. Getting folks out of cars to do delivery on bicycles has many benefits. More efficient delivery, fewer cars on the streets to meet the emissions reduction goals and drivers dont have to worry about getting parking tickets. Our final category is promoting Public Health and safety. It is what the class mentioned earlier. Something we can look at as well. We can mold it into one proposal. I am in the thirdparty delivery. Public health permits. To ensure all food is free of contamination, why not require it for thirdparty food Delivery Companies. I have a great many people to thank for input on this report. Mostly i want to thank dan rail, the Research Associate who did research and writing. The Research Director at the justice Education Fund, survey team and everyone else over the course of the last few years. All of you for input. What i am asking you today, commissioners is for feedback and direction on this. I am happy to take all of the issues and vet these and talk to other city departments and what i suggest is that i come back to you with a final report. With that i am happy to take any questions and get your feedback. Thank you for your great work and for taking what was in the survey and putting that into actionable steps to take. Often we see the reports and there is not a clear path forward. I think what you provided here is really strong and clear path forward for us. I am interested in most of these ideas. I think it is more for us figuring how to do this and where to start. I think most of these things are needed and would address some of the issues we have seen in the survey. We could have a working group on this to support this. We could have you go back and sort of begin to work with the department in terms of what some of these policies or, you know, even some of them are things that could happen right now in terms of support would look like and come back to us. I would just say on ward i do think we can lead the way on this. The urgency to support these workers and also to protect customers and residents. It is about the workers first but also about the health and safety and overall quality of life. Thank you, chair fewer for your leadership and supervisor mar. I am in. Mr. Goebel you mentioned a lot of suggests. I am thinking we would have to categorize them on the things sequentially to do. There was a recommendation to request the bla report also. That is something we can start on because there was a que for those reports. Maybe it would be helpful to supervisor mandelman and i had been work on the most contentious issues on enforcement of ab5 and atbased workers in our city they are going to bring this to the board. So mr. Goebel, maybe you can speak to supervisor mandelman and mar about what they discussed and maybe there are parts of it that the supervisors may want to use and if we need more data, they can use for their research, also. But it seems as though, what you are proposing and what supervisors mandelman and mar are doing compliment each other and they work hand and hand together and i think that would be wise to see what theyve alreadinvestigated and compare. On that, i would like to open up Public Comment. Im sorry. Im so sorry. I have one quick item to add. Thank you so much for this work and these recommendations. As the commissioner who is sitting in the public seat, i would ask, also, that we think about ways to engage the public, whether that is a working group or a task force, just when you look at these options of ways to engage either the collectives who are providing input and the workers themselves and these workers have a seat at the table. And i know that thats something that the supervisors offices and the supervisors themselves really value, public and Community Input into their processes, but i just want to make sure that we echo that in lascoe, as well. Thank you very much. And i believe it was made public, a caller that mentioned an organization that she is working with and so, i think that it would be a great start, also. , to hear about that. We cant legislate that without hearing from people. Lets open this up from Public Comment. Would anyone like to comment on item number 6 . For members of the public who wish to provide Public Comment call 408 4319388 and once you connect, please dial star 9 to speak. Please let us know when the callers are ready. I have one caller on line two. Thank you. Brian, thank you for all of your recommendations and the problem is because the city doesnt have the ability to regulate the tncs based upon state law and cpuc oversight, its a problem. And the fact that theres an uneven Playing Field still going on, that until the city gets the legal right, the legislative authority to do it, it creates major issue. However, i do agree that licensing like the limited number of medallions and the policies of the sfmta have a limited number of vehicles, of taxi cabs on the road. It would be a great idea to create a licensing system to limit the number of delivery people out there for two reasons. One, to allow for enough income for living wage and also for to avoid the congestion on the streets. Once the shelterinplace order is lifted, there will be a lot more traffic on the streets and it will create a lot more stress and problems toward the food delivery workers. Regarding the food delivery in terms of income, the problem with the companies is that they actually try to rely on the customers generous tips and that could be a problem at times. There have been several occasions where the customer did not provide a tip and the delivery fee was so low that it didnt even cover the cost of actually providing the delivery. And so, this is something that should be looked at as the fact that the companies are expecting customers to be generous with the tipping and not make it a briefing. Thank you for your time. Thank you very much and any other callers on the line . Ha dathat completes the cue. Thank you, mr. Goebel. Madam clerk, no action is needed on this item. We did not take action on item number 5. Thank you, can you please call item number 7. Presentation and discussion on the lafco report assessing the Bank Accounts ability in San Francisco during the pandemic. We have kerry yi, a lafco Research Associate. Tell low, commissioners. Its great to be with you again. This past month, ive had an Incredible Opportunity to be engaged in conversations. Beginning this work, ive learned so much and feel like im more curious and excited to explore this in my career. Before beginning this presentation, i want to give a special thank you to executive boss for leadership and support at this work and acknowledge the Community Leaders who gave their time to inform these finds. This research coincided with Government Programs and mandates with covid19 developments and i want to acknowledge the active engagement and service of our Community Leaders and with that, well begin the presentation. This presentation will cover a snapshot assessment of how banks in San Francisco have responded to covid19 and will propose recommendations for next steps. And there are several driving questions for this research and the first are how banks are able to respond to the crisis and the second, how are banks held accountable for the Crisis Response and lastly, where are the gaps and how can San Francisco respond to theme . In adjusting the first question, its important to understand banks operate in a system with banks and other actors. The pyramid visual here demonstrates a hierarchy enables regulators who oversee banks with customers and the general public. In this hierarchy is true where legislators at the top of the pyramid refer to congress. While regulators have the authority to mandate and enforce oversight on banks, legislators can step in and clarify through legislative action the intended roles in society. So to begin what banks are accountable for, we start with the coronavirus aid and Economic Securitys act or the cares act that Congress Passed on march 27th. The cares ability is a 2 trillion relief package pumped to provide fast is direct economic assistance for families, workers and Small Businesses among other actors. The exists infrastructure to deliver Economic Relief quickly, specifically banks were enabled under the cares act to be distributed for workers as shown on this slide and for the general public, via the banks Customer Bank will be explained in the next slide. So they ensured banks in San Francisco were assessed on their participation as distributive for Small Businesses and employees and also under action for Bank Customers. For Small Businesses and Small Business employees, the cares act created the Construction Program or ppp which essentially gave Small Businesses the opportunity to maintain their workforce and cover business costs with a federally covered forgivable loan. The ppp was serviced on a firstcome, first served basis with advantaged them under participating banks. Out of the 45 banks in San Francisco, 38 banks or ppe are eligible as fba qualified lenders as shown in the top line of table and of the 38, 35 banks participated as described in the second line. And in small fonts, youll see the numbers for the Community Banks subslide. Community banks are recognised as being local actors and those more likely to serve low to middleincome communities. Whats significant here is that the difference between the first and the second lines of the table come entirely from the Community Banks subside. So three Community Banks chose for one reason or another not to participate as pppp lenders even though they were eligible and in total, three fewer banks were counted from the 38 total eligible. And the last line of the table identifies banks in San Francisco who deviated from the normal course of action to accept ppp applications from Small Business owners, not in their existing customer base. As the count shows, six banks in San Francisco did not require a free existing banking relationship with the applicants in two of the six offering the service for noncustomers were Community Banks. To provide Economic Relief for individuals, the cares act increased bank lending ability and flexibilities to encourage banks to ease cash flow on affected borrowers and provide other forms of relief through waivers, moratoriums and created protections pentagon th upon ths discretion. They were to defer to Bank Decisions on Loan Modifications related to covid19. Under the cares act, banks were enabled in various ways to extend relief measures to their customers and so for the method here, banks in San Francisco were assessed according to how they publically communicated and offered available customer relief. The transparency rating in the first line of the table refers to the banks public commitments to accommodate customers and the second line unpacks this with the accessibility of the relief measures. The customer relief offering is broken down into the four main processes through which banks make customer relief available. Where relief is offered universally, the bank applies reef learelief to all customers. Where relief is offered upon request, or an optin process, the bank is upfront with what is offered and the customer is responsible for requesting or applying for the relief. Some banks hint at the possibility of relief but dont disclose to what extent and tell customers to directly consult with the bank. In the last category, it doesnt make any relief available for covid19 customer. The end of the table specify ones type of relief extended to Bank Customers and how its being offered. In terms of accountability for the way banks have been enabled by legislators and regulators to be distributive intermediaries, weve seen a Public Mobilization and conessential shift in thcon. This access federal assessments and figure two reflects a difference with those who reflect ppp loans in the distribution. Unfortunately, a solar narrative cant be told regarding bank interactions with the customers. And because information on who receives Loan Modifications and other relief measures are not publically available. The gap is Holding Things available is understanding what goes on in the bank to customer interaction. Studies by the International Coalition found a correlation between helping customers being treatedan. Additionally, since legislators and regulators defer to banks discretionary power, theres no real requirement or consequence for banks who arguably provide fewer flexibilities and allowances. Considering what San Francisco can do to held banks accountable for the customers and for the community, in this first recommendation, i would urge the city to issue a statement of intent or resolution to hold banks account for community accessibility, fair practises and good faith efforts. Its to signal to banks and Community Actors to make concerted efforts as responsible intermediaries and secondly, encourage public conversation that identify common Bank Customer experiences. Given studies that identify racial despairties and Banking Service and access, i would consider a lafco special study to document customer requests and bank extinctions of covid19 relief flexibilities. The purpose for such a study would be to document how customers of color are served by. Bybanks at this time, and approved on a case by case basis. Recogniseing this is not explained by differences, the study could assess the banktocustomer interaction. Another group identified as atrisk of being underserved are disadvantaged and bank interactions is the lep community or those with limited English Proficiency. In this environment where communication with lep groups require additional trans ligs and connecting cultural channels, i would urge policy makers with the lep community to understand how the time sensitive nature of the Crisis Response has affected accessibilities. One way for the stay to increase Public Accessibility is through educating the Bank Customer and i recommend that the city spotlight direct service providers, those providing legal counsel, Work Training on the resources page. In doing so, the city could raise Public Awareness and demonstrate a commitment to hold banks accountable for fair and good faith practises. And in this moment, the services are in higher demand and its important that Community Providers have the comfor capaco meet the need. To highlight an area, i would urge the commission to have a longterm viewin as preserving as aformeddabl affordable housi. So consistent with that, the city should assess the preparedness and capacity of its Nonprofit Network to quickly scale and compete against firms and speculators in order to exercise the right of first offer and right of first refusal. They need to rapidly scale up to meet the need. Considering productions of a covid19 in the housing market, i would urge the city to conduct a preparedness assessment. To close, bank should be accountable because of responding to covid19 and Community Needs tor economic assistance. Though there are gaps in Holding Banks accountable, they can bring transparency and the bank to customer interaction and to protect the community from longterm effects from the pandemic. I urge the commission to consider these five recommendations and to take appropriate action and with that, im happy to receive any comments and field questions. This is valuable information and i think we can do every one of those recommendations and i love to hear from my colleagues, too, and i think that it gets to our equity issues and it gets to act accountability of banks. We are seeing this Banking Industry deny o of course wen leading on the bank initiative, also, but this calls on the need for public banks, too, and how the services that theyre offering and i think what they dont offer and the information they give and theyre the holders of so much information but also the holders of so much financial literacy, but also Financial Resources and i think this is very interesting. Colleagues, do you have any comments or questions for me . Could we have a call for Public Comment on item number 7, please. For members of the public who wish to speak, please dial 408 4189388 and access code 625466 and 705 and for those who have not already done so, please press star 9 to line up to speak. Let us know when the calls are ready. I want to say thank you for this report and reaching out for us. North dakota was the top state in the country that allocated more ppe loans in the country and thats a direct result of the public bank of north dakota. Put so our Coalition Supports the study of lafco studies of a public bank and we urge the body to make sure that the goal of the task force is to provide a clear blueprint of how we get the public bank and, unfortunately, that did not happen with the treasurers task force report. The treasurer had a task force that basic looked into the feasibility of a public bank and, unfortunately, the end product was a report that said a it wont take billions of dollars and this was included with multiple Task Force Members advocating the opposite. So i think its really important that the new task board has clear decisionmaking processes and making sure its fair and transparent. Iti think they did a great jobd personally, when youre an elected official not having to engage with the public like this, you may be resistant starting from scratch. As far as recovery, the existing bank is good and weve talked about creating a resolving loan fund and theres a lot of good ideas and we look forward to working with you all and i think at the end of the day covid19 has shown how inadequate our systems are and had we had a public bank now, nothing would be perfect but we would be quick to getting capital to the people that need it. Thank you to all. Get some rest and maybe you can recharge your battery and come back. Thank you so much. Thank you. I wanted to say thank you for the report and these are a lot of the things we should be doing and certainly ive heard from a ton of people in my district and having to go through the banks who havent already been responsive for something so essential during a pandemic is more evidence, i think, as others have said and we do need greater regulation and we also need to have more opportunities for our own government to step forward and provide support and i think it really underscores the need for a public bank and so chair fewer, i would love to work with you on the recommendations to make sure that they move forward and i just want to thank everybody for their work. Yes, thank you, commissioner. I think that as most people know, my term on the board is to be ended at the end of the year and so we are looking for somebody, another supervisor to take on the public bank issue as we think its super important. I wanted to ask about the gathering of information, so on the slides where you showed how the banks compared oh, i wanted to ask for clarification. When you say Community Banks, are you referring to Credit Unions . They do fit under actors in in space. Actors in this space. I use a definition that the occ and fdic provide guidance for and its not just an assessment of slides. If you see in the full report, expect banks include federally chartered banks so these are also regional banks. And so the criteria thats met for Community Banks and usually some sort of mix of how or where the deposits are coming from and where the loans are extended and in which communities are they being extended to, as well as consideration for bank size. How were you able to gather the information about the services to clients . It was primarily done by an assessment of what kind of assessment theyre making public, so press relief, on their websites and coldcall customer, just a member of the public in gathering the information. There are studies that would further the goal of establishing the municipal public banks with the distribution of ppp loans, wall street, banks really cant be trusted with a recovery. As well, this is a prime opportunity to take charge of our own economic features and come up with the beginning plans for investing in things that we actually need, like housing and Renewable Energy and Small Businesses and public infrastructure. Thank you so much. Thank you, miss fielder. Hello . Caller, go ahead. Good afternoon. This is peter cohen, with the council of Community Housing organizations and just wanted to thank your team for good work on the support. They did reach out to us and ask us about input and i wanted to emphasize the recommendations, number 5 and in the context of where we are now, with this economic crisis and looking back on the Great Recession and what happened in the housing system. please stand by . We have to be able to jump on these properties and we need a plan to do so if this market, as we know the Real Estate Market is like 20082009 is a opportunity for the city to acquire some of these properties before other big players buy them up. Thank you very much. I think my fellow colleagues would like to join me in saying thank you. We intend to share this work with the entire board of supervisors. Would you please make sure this report is sent to every single supervisors office. Yes, i will. Thank you for your assistance. Can you please call item 8. For the record there was no action taken on item 7. Item 8 is authorization to pay lacould intern lea troeh for research assistance. This would authorize us to pay our Research Associate for additional work. She came on in the beginning of our emerging mobility labor study and provided valuable research and help. I ask the commission to authorize me to pay her a not to exceed amount of 9,000. That is what i am asking today. Thank you very much. Any comments or questions from colleagues at all . Seeing none. Open for Public Comment. Any members of the public to comment on item 8 . Please let us know if there are callers on the line. Madam chair, there are no callers wishing to speak. Public comment is closed on item 8. I would like to make a motion to approve the authorization to pay the intern for research as an as assistant. Can i please have a second. I would like to second that motion. Thank you, commissioner. Roll call vote, please. Commissioner fewer. Aye. Commissioner pollock. Aye. Commissioner haney. Aye. Commissioner mar. Aye. There are four ayes. Thank you very much. Please call item 9. Executive officers report. A update on r. F. Q. For Renewable Energy expert. B update on the sfpuc. I want to say briefly this is a comment on something that is not on the agenda but related to the previous item. Will do the best to work within the resources to mend the recommendations in the studies you have heard presentations on today. Again, we will be operating on the status quo budget until october 1st regardless of the city budget situation. I will work within the resources that we have and do our best to blend all of that together. The item that i did want to talk about today was our rfk for Renewable Energy expert. We held interviews the friday before the shelterinplace was issued. That delayed the process a little. The scores is complete. We hope to issue is intent to award contract soon and bring recommendation for consultant be to you at the june meeting. This is for the service area to provide expertise to strengthen the oversight role of clean power sf. I want to update you on the m. O. U. That expires at the end of june. The p. U. C. Supports 200,000 left in the fund. As i said during the budget presentation, that is going to fund all of the work we had planned in the year ahead on clean power sf. M. O. U. May not be required to receive the funds. We are investigating not having an m. O. U. But continuing to receive the funds without it. It would be in writing. Anything we agreed to with your feedback we would ensure the funds continue to come to lafco so we can continue our work on clean power sf. That concludes my executive officers report. Than thank you, mr. Goebel. Comments or questions . Open item 9 for Public Comment, please, madam clerk. Please call the number on the screen. Are there any callers . There are no callers wishing to speak. Thank you. Public comment is closed on item 9. Can you please call item 10. For the record there was no action taken on item 9. Item 10 is general Public Comment. Are there any members of the public that would like to make comment . Is there anyone on the line . There are no callers wishing to speak. Thank you. Public comment is now closed. Madam clerk please call item 11. Item 11 future agenda items. Colleagues, any future agenda items . Seeing none. Open for Public Comment. I just wanted to note for the items we have asked mr. Goebel to follow up on in terms of reports and those matters if we could open those up to be future agenda items for the commission. Yes, thank you very much. Any other future agenda items, colleagues . Seeing none. Lets open item 11 up for Public Comment. Is there anyone on the line . Madam chair, there are no callers wishing to speak. Public comment is closed on item 11. Is there anything more business before us today . That concludes our business for today. Thank you, mr. Goebel for organizing the presentations today. We all learned a lot. I know it was a long meeting. Thank you. We all learned a lot and i think all of it was so interesting. I want to thank everyone who participated. All of the background and the research on the presentation. Thank you very much. This meeting is adjourned. You may begin the meeting. Good afternoon. We will call the meeting to order. I will start with a public announcement. Brief remainder to mute your microphones. Unmute when you are ready to speak. I suggest you keep your cell phones away from the computer if that is what you are using. Due to the covid19 Health Emergency and the Health Recommendations and that governor and mayor have listed the restrictions this is held with all members and staff participating Via Teleconference to ensure the safety of the board, staff and members of the public. In our published notice for the meeting and on the web page we ask the public to participate remotely by writing to the board or leaving voicemail in advance of the meeting. We have received and appreciate those comments. While this Technology Allows these meetings it may not be as seamless as we would like. There will be gaps and dead airtime as staff is transitioning the technology between the speakers. Please know we are doing the best we can and we ask your understanding and patience as we all learn this new way of working together. If i havent done so, i am going to ask all members of the board to mute themselves to minimize background noise. Unmute to comment. There is staff in the background managing the technological functions during the meeting to switch from slide presentation to whoever is speaking at the moment. Be patient as we make these adjustments. Thank you to all people working to make this meeting possible starting with the technology manager, darlene who is coproducer. This is a lot of work putting together. Many rehearsals on using this technology. Madam secretary, please call the roll. President driscoll. Present. Commissioner bridges. Present. Commissioner casciato. Present. Commissioner chu. Present. Commissioner heldfond not present. Commissioner safai. Present. Commissioner stansbury. Commissioner stansbury not present. We have a wore rum. First item, please. 2. Communications. Due to the covid1 covid19 heah emergency the boardroom is closed. However members will be participating remotely at the same extent as if physically present. This is being delleviced by sfgovtv. There is a 20 to 30 second time lag. If members of the public have called in and are watching the meeting, please know there will be discrepancy between what you see on sfgovtv and what you are hearing. Members of the public who wish to make Public Comment on items on the agenda, the phone number i 888 3634734. Please make sure you are in a quiet location. That you turnoff any tv or radio. If you are Live Streaming the meeting via sfgovtv mute the sound. This will reduce any reverberation and electronic feedback so the board can hear you. At the appropriate time president driscoll will ask the phone lines to be open. If you wish to comment on a particular item press one and zero. The auto prompt will say callers are entering question and answer. This is Public Comment. You will be in the queue in the order you press one and zero. An automated voice will tell you when to speak. You will hear us to ask your name and your comments. You will start two minutes. I will say 30 seconds when they are remaining. When your time is up, i will say thank you and next caller. The moderator will put you back on mute. I will repeat these instructions about dialing one and zero after the phone lines are open as i am aware some members may join late and may not have heard these. Alternatively you may submit email goes to Public Comment at sfgovtv. If you submit via email it will be in the minutes of the next meeting. President driscoll. The board will be going into closed session. The board will return to open session to begin the public portion with general Public Comment but not earlier than 2 30. We will take Public Comment going into closed session at this time. Madam secretary, please open the phone lines for Public Comment. At this time the public may address the board up to two minutes on items within the subject. Dial the tollfree number on the screen. Enter the access code and press pound. When you hear you are connected to the meeting, stop and listen. Wait for the Public Comment to be announced by item number or for general Public Comment. When the clerk calls Public Comment dial one then zero to be added to the speaker line. When the system message says you are notified when the speaker is ready, press one and zero and wait for your turn to speak. When the system message says your line is unmuted state your name and make your comment after the tone. This is your opportunity to provide Public Comment after the beep. This is not a question and answer period. This is your time to provide a statement. You have the standard two minutes to provide comments. Once your two minutes ended you will be out of the speaker line to the listening as a participant in the meeting unless you disconnect. Participants who wish to speak on other items on the agenda or comment periods may stay on the meeting line and listen for the clerks next prompt. Do we have any callers on the line . Madam secretary, there are no callers on the line. Thank you. President driscoll. You may proceed with the meeting. Thank you. Before closed session i will let those planning to come back to the open Public Session it will not be before 2 30. The first action item we will discuss will be number 17. Item number 11 is postponed one month. We are prepared now to go into closed session. Board members reminded to please go to your calendar in the Microsoft Teams and join the closed s back in open session. Please call the roll. President driscoll. Commissioner bridges. Here. Commissioner chu. Here. Commissioner safai. Present. Commissioner stansbury. We have a quorum. We have a motion to disclose or not disclose what was covered in closed session. I would move that we not disclose what the proceedings were in closed session. Is there a second. Second. Okay. I now will call for Public Comment on that motion. At this time the public may address the board up to two minutes on items in the subject. Dial the number listed on the screen. Enter th access code. Stop and listen. Wait for Public Comment to be announced by item number or for general Public Comment. When the clerk calls Public Comment dial 1 and 0 to be added to the speaker line. When it says you will be notified when the speaker is ready for your question and to withdraw your question, press one then zero. Wait for your turn to speak. When the system message says your line is unmuted, please state your name and make your comment after the tone. This is your opportunity to provide Public Comment after the beep. This is not a question and answer period. This is your time to provide a statement. You will have two standard minutes to provide comments. Once your two minutes end you will be moved out of the speaker line and back to listening as a parties pant in the meeting unless you disconnect. If yo you wish to speak on other matters stay and wait for the prompt. Do we have any callers on the line . Do we have any callers on the line . We are waiting for callers. Moderators, are there any callers on our line . Members of the public we have a technical problem we are trying to clear up. You have not missed anything. Moderator, do we have any callers on the line . I called in on the number. It sounded like she was saying she couldnt log into the meeting. We are trying to figure out why the call is not going through to the meeting. This conversation is going out live. I dont know what is wrong. If you could hear me then on the phone, but you were talking to someone on your phone. We would pick you up on the computer. It is the connection to the moderator to the meeting that is not occurring. It sounded like grace was there for a second when i first called because i got my computer. We are going out live. Thank you. Moderator, do we have any callers on the line . Can we move Public Comment to later in the meeting if this doesnt work . The public needs to hear the discussion. Robert, is that you . That is a legal issue we have to have Public Comment on the motion before we go the other items where there can be comments. Until we connect the phones, we do not have a public meeting. Moderator, do we have any callers on the line . I am assuming somebody is calling in to make sure that it is working or not working. It was tested yesterday. Is anybody from the staff calling in to make sure that it is working or not working . President driscoll we should recess for five minutes. We have a caller on the line. The issue is the moderator is muted so we cannot hear her. She is reported out but we cannot record the fact there is a caller for Public Comment. We cannot record the Public Comment. I am declaring a five minute there is one caller on the line. Give us your name. Your two minutes start when you Start Talking. Will the member who called in, please Start Talking. Members of the public who are currently in the queue who wish to provide Public Comment please dial 1 and 0 when it is your turn to speak, the system will prompt you automatically. Those not in the queue please follow the instructions on the screen. Moderator, are there any more callers on the line . Madam secretary, one callers on the line. City attorney bryant, how long do we have to wait because this caller is not connecting. Why dont we move to the next item and if the caller is not connecting, i think that we can move on. If i mean, if everything is okay on our side and the caller is just not coming through, i think we can move on. And we need to make sure. Madam secretary, ask the moderator. Moderator, are there callers on the line . Madam secretary, theres still one caller on the line. Okay. My apologies. Were not able to get the caller connected. Therefore, that will conclude the Public Comment and i will call the question on the motion to not disclose what was covered in the closed session. Madam secretary, roll call. Clerk commissioner driscoll . Aye. Commissioner bridges. Aye. Commissioner tu, aye. Commissioner holfein, aye. Commissioner safai. Aye. Commissioner sansbury. Aye. Madam secretary, the next item, number 4, general Public Comment. Clerk item four is general Public Comment. And the members can direct on interest of the public. And the members have an opportunity to speak to each item on the agenda when Public Comment is called for and that item. And they can address the Public Comment. First speaker led by indiscernible and before i do that i will recognize the executive director. President driscoll and members of the board, we have received two Public Comments and ill read the first one into the record and the second one is 150 words, however, it will be included in the minutes. The first Public Comment is from john stenson. His Public Comment is Hedge Fund Managers are notoriously antiunion and they have no problem investing in firearm investments. So i hope that all of you Board Members that belong to labor unit whereons when you invest in hedge funds youre biting the hand that feeds you. With best regards from john ste in everyone za, a 45year member of the s. F. Retirement fund. And accepted is a letter from june leong and well include it with the minutes when we bring them back to the board for approval. And those are the only Public Comments that we have received via email. Thank you. Madam secretary, please open up the phone lines for general Public Comment. Clerk members of the public who are currently in the queue who wish to provide general Public Comment, please dial 1, 0. When it is your turn to speak the system will prompt you automatically. Those of you who are not in the queue, please follow the instructions shown on the screen. Moderator, do we have any callers . Hello . Please give us your name. Hello . Your time will start do you hear me . Yes. Go ahead with your comment. Thank you for allowing this comment in these covid19 times. My name is Damian Goodman and im actually calling from los angeles, california, specifically for the community. I lived in the park area where the crenshaw mall that is situated. And in a community that had concentration of black people in los angeles. Home to the panafrican Film Festival which attracts 50,000 people from across the world with the largest black Film Festival in america. And the redevelopment of the crenshaw mall was a dream of the late great mayor tom bradley. You may ask why im speaking to the San Francisco retirement system, its because it is clear that you have funds of your public and your retirees in c. I. N. Booth. 14 days ago the Los Angeles Times and the t. A. M. Group would seek to acquire this cultural iconic and economic engine in los angeles, in South Los Angeles specifically. And intend to do it differently than the plans that have been previously been approved. They actually speak to intentionally retenant. They push out existing tenants and those in the surrounds communities to bring in the more affluent and better paying businesses in culver city. To understand how significant this issue is, by the end of the day crenshaw mall was trending on twitter nationally. Thats how important this center is. So we sincerely doubt you have 30 seconds remaining. The people of San Francisco are aware and that wed like you to do three things. First, to confirm for the public that the dollars from this fund have gone into projects that intend to identify crenshaw. Second, confirm that the dollars have gone into the acquisition of the crenshaw mall from your fund. And, third, to send correspondents to terminate the acquisition of the mall so that the community that has risen up and made its voice clear they dont want your time is up, thank you. Next caller, please. Thank you so much. Moderator, do we have any further calls . Madam secretary, there are no more callers on the line. Clerk thank you. President driscoll . Thank you. We are now going to start with item 17 from the investment calendar. Mr. Koppel, you have the floor. This is for the Downside Protection and theyre listed on page one and theres a 10 out of the money which ill explain in a moment and for 30 million plus for 4. 13 of an 8 million portfolio which is the size of our portfolio and 1. 7 of our total current assets of 26 billion. Out of the money put, it seems that we infer the full loss of a Public Market downturn equal to the amount that is out of the money but we are protesting against the loss greater than that or the duration of the contract period. At the bottom of page 2, [broken audio] and you can see indiscernible [broken audio] [broken audio] and we would be negative 4. 3 . 14. 1 equal to the loss of the public equity, the losses across the book. But we are against a loss of greater than 10 , so our negative downsize. indiscernible on page 3 then, and its higher. For example, applying the same 20 public return is for our risk Management System and we estimate that our full return would be about 15 . And then net cost is 1. 27 of 26 billion total cost. And these are a return indiscernible . And then you can see the public equity confirmed negative 10 is that we estimate the return would be about negative six. And then the cost would be negative 2. 7. And you can see thereafter that the full 26 billion is not protected in the public equity of greater than 10 with these losses. But we are protected against more than a 10 loss in public equity. And then on page 3 and 4, we would do the same with purchasing a 20 out of the money. And you can see here the costs if we refer back to table on page 2, the cost is 187 million or 2. 34 of the 8 billion portfolio and 72 basis points. And the total trust assets and we can find that table in the upper part of page 4 is the public equity return of 20 . Public equity would return 17. 7 . [broken audio] and the public equity return of 20 during this at the end of this 20year period is a return against a loss of greater than 20 or the period of the contract. Identifying that same to the trust as a whole, option 2 is seen that, for example, that its public equity, that we estimate the trust as a whole would earn 15, and up to 72 basis points for the cost, which is 187 million or 72 basis points of the trust assets of 26 billion which our return is 14. 28 . And those are highlights of the public examples of what we call purposing of the money clause. Theres several other options to consider. Beginning on [broken audio] and these are the updates of 20 years. And the first option, option three is a 3 position or about 800 million. Option four then is 5 , in the same amount in my analogy with the chart on page 5, [broken audio] what that does is it levers defines. Why would somebody want to do Something Like that . This highlights the returns of the public equity and the total trust we lost 20. 11 . And i think that its down 22. 4 . But you can see the 20year treasury return was plus 22. 16 , and that 20year treasury portfolio returned over [broken audio] and our total trust returns negative 7. 56 for the quarter. If instead we had purchased 3 20year treasury and sold public equity of 3 on january 1 is our return would have been 6. 70 . And then on option 4 if we had done a 5 position of 20year treasuries, sole public equity at 5 on january 1, is our return would have been 5. 8 , better than 2 of our actual experience. And then you can see on long dated treasuries 20 years, levered three times, on the 3 position, is our loss would have been 5. 46 or 250 basis points of our actual experience. And then the next couple pages just walk through the map of that. Now importantly, on page 7, is buying longdated treasuries does not work. Indeed, it works very poorly in a strong up market. For example, in calendar year 2013, public equity, our public equity portfolio is up 26. 7 . And our total return for the total trust was up 16. 8 . But take note of the 20year treasury return was 13. 7 in the 20year levered treasury portfolio return 39 . So in the same examples that follow if we had done the same actions as back on page 5, rather than earn 16. 8 our return would have been about a little more than 1 , to about 2 lower. So those highlight the three additional options. The first two options were to buy 10 and 20 out of the money pot, and the next three are buying long levered treasuries at different percentages, 3 and 5 . And also buying a 3 position in 3x levered 20year treasuries. And our sixth option is to outsource the decision for a tactical allocation to an external manager. Now this is something that ana and i had was in our toolkit to bring to the board. Ana has had a ton on her plate in the first year and a half. And began this initiative back early in the year, perhaps late last year and we sent out requests for our buys and we received 24 in return. We received those in march. And we have since asked for Additional Information to showcase one 2020 returns and the analysis of those 24 r. F. 5s will soon begin. Its our anticipation that we may bring one or two strategies to the board late in the summer or in the fall. Now ultimately, were not recommending anything. Even though we are very concerned that covid19 represents a risk unlike any other. And we dont think that the public equity returns, the market has recaptured more than half of almost twothirds of its lost that it occurred of 34 from february 20th to march 23rd. Its captured nearly twothirds of that back. We dont think that the markets are expressing the full magnitude of the economic apocalypse that has just taken place. To give some numbers to that is unemployment is currently now roughly over 20 . And it may trend towards 30 over the next number of months. Single quarter g. D. P. Is expected to be 30 to 40 , the worst ever on record for a single quarter which occurred 50 62 years ago. It was 10 . And while all we have in our toolkit to manage the to limit the spread of covid19, if all we have is limiting social restrictions and limiting social gatherings, then that also puts a significant lid on Economic Activity, which then limits a rebound. The but ultimately were not recommending anything for a couple of reasons. One, we have already done a ton. Weve done a ton. We have reduced our public equity weight from 50 , five or six years ago, to 31 . That is at like a four or fivedecade low. And its not only very, very low relative to our own history but its very low relative to our peers. Our peers average in the midtohigh 40s. Second is that we currently do have an 8 allocation combined to cash plus treasuries. And, third, is that its really, really important to do this to get the timing exactly right. And you have to get the timing at the point of the purchase right and at the sell or at the end of the contract period. There are several examples here of how problematic timing can be. And ill give you just one example that were actually experiencing right now. If the market decline began on february 20th and peak to trough it was down almost it was down about 34 . And if we had been wise enough to buy 20 out of the money on february 13th, one week before the decline began and we held them through yesterday, february 12th and then they expired, is that those would have expired worthless. Even though the peaktotrough decline was negative 34 because the markets have rebounded so strongly. If we had bought after the march 11th Board Meeting on march 12th, the market right now is up more than 15 since march 12th. So we would be more than 35 out of the money. Even though so we think that ultimately the best way to manage the risk of a large loss is through diversification, Strategic Asset allocation, and manager selection, and outsourcing a gtaa solution to an external manager, rather than making the decision inhouse. That said, the board may have other sensitivities or sensibilities and ana and alan and i are happy to answer your questions and to be helpful however we may. You may start with questions. Ive got a question for alan. What other systems are making tactical decisions like this and doing it well . Brian, most large public funds have government practices that either as bill suggests outsource this to a manager that is hired to do it, or in some rare cases to an individual c. I. O. Im not aware of any where the board would direct the action at a moment in time to say do this. Bills options that he listed he himself has some authority as the c. I. O. To sell equities and buy bonds up to the limits that the board is approved. And he has the authority to do it. Theres no governments required. To take on leveraged treasuries under your current policy, thats something that the board would have to specifically to allow and the same thing with put options. I agree with bill entirely that in the midst of a crisis it seems like we ought to do something that as you know that option pricing is based on the volatility of the underlying instrument. And this carries to the s p 500. The markets are extremely volatile now. So these options are very, very expensive. And as bill said i want to emphasize in bills point is that had you bought one at the right time and the market had gone down the 30 or so that bill highlighted, and yet youre before expiration, here you are and the market is just dropped 30 and you have this option and you can exercise it today and it did work. But youre thinking, oh, my god, the market is down 30 . Its going to go down more. Im going to hold on to this thing. And then the market does just what bill describes it bounces back to the point where youre no longer in the money. So you have to make that decision to buy it and to sell it. At exactly the right time. And to sell it youre going to do in the face of a market that is declining and its very hard to not be tempted to hold on because its going to go down more. So im sorry i am straying away from your question. The question is how many other public funds exercise tactical repositioning . And the answer is very few. Other than through thirdparty managers who have the authority to do it within controlled limits. And a handful with the c. I. O. Has the delegated authority to do that. And, brian, i can give you one example from my whole experience. Not one of my plans, but the new mexico Public Employee Association Prior to the great financial crisis, had a board member who was a state treasurer and they positioned their 10 billion fund at the time, 25 in fixed income, right in the 20072008 period. And for two years they were the best performing public fund in the country. But they never reinvested that money and so as the markets recovered, if you look at the whole cycle, they ended up just about like everybody else. So its very rare that a board would do that. And i have no examples where its been done successfully. So what has the return been on the 30year, say, in the last couple months or yeartodate . The 30 year treasury . Yes. The 30year unleveraged treasury has returned over 20 yeartodate. And the levered over 60 . No, i understand that. Its a safe haven. But what about where we are in the market now. I mean, i dont want to time the market, i think that is always a bad call, but we are in a unique position now and i do think that there is equity in the credit market that are not going the same direction. Youre going opposite directions. And so my question is, at this point in time, what do we do . Do we increase our allocation to treasuries . I dont want to be on the wrong side of this though and get hit, you know, three times the volatility on the wrong side of treasuries. So what do we do . So to, first of all, purchasing longlevered treasuries is purchasing insurance against an economic apocalypse. Thats what that is. And the and then the depending how much insurance you want and how large your position is. I can i agree about the market risk is especially high right now. The market to me looks like its pricing in a pretty strong recovery that to me a vshaped recovery really requires a vaccine, it requires a treatment, and neither one of those is anywhere near on the horizon in the near term. The so i expect that over the next number of months that theres going to be a recognition by the market that this recovery is going to take longer and its going to be slower than consensus right now thinks. I could be wrong. And the market may even if that does happen, the market may look beyond that and look to 2021. That 2021 will have a strong recovery. Another another issue about not just the market but about timing is that once we open up the once we open up the economy and we relax social restrictions we are going to have new cases. You know, we will have them in some degree of volume. We will be better prepared, the health care industry, to manage them in volume than we were the first time, but we will have to act on these to shut down Economic Activity selectively, where regions pop up. Were going to have to act on that very quickly to limit the spread. Now another positive factor related to a second wave and a third wave is that the first wave relied on the vide velocitf People Movement. And this virus was released to the world in december. And in that time there were half a Million People in the United States that traveled from china to the United States and more than a million that traveled from china to europe. And that velocity of People Movement has stopped. Its going to be slow to return. So Industries Like hotels and airlines and, you know, the like, those are going to be slow to return. And as long as social gatherings are dangerous is that its going to put a lid on an economic recovery. Brian, we have to find a new way here. We have to restart Economic Activity. But we have to be thoughtful about how we manage the risk of large social gatherings and when we have smaller social gatherings like we have right now. We have, what, five of us in this room but were all spread apart by more than 10 feet. You know, were going to have to be smarter about how we practice business together. That new way needs to we need to begin to create that now. We cant rely on a vacts seen or treatmen vaccine or treatment coming anytime soon. With the data that i read, theres nothing compelling right now. There may be in a few months but there is not right now. So as long as this virus exists and we dont have a vaccine and we dont have a treatment, were going to have to find a way to live with that. And that could be several years. And its the rally and pretty optimistic. What are we going to do, and are we going to do more treasuries and stay where were at, what is the plan . So what we have done is that we have trimmed equities on recent strengths. So our cash plus treasuries right now is currently 8 . It may have hit a trough of about 4. 5 a number of weeks ago. So that is one. The we have not increased our risk as a result of this weakness. The third is that our public equity weight right now at 31 , that is really, really low. Thats the equivalent of being underweight compared to our peers by comfortably 15 . That if the markets fell by 20 or 30 , well outperform by 3. 5 to 4 . So our underweighttopublic equity is the equivalent of having a pretty significant position in treasuries even though formally it doesnt look that way. Im glad that we are underweight equities and my concern is that were going to see asset class correlation increase as we go into a bit of a credit crunch here. Yeah, yeah. Are we going to try to increase that . What is our plan beyond and i appreciate the fact that were not going to do as bad as everybody else, but when everybody else is 20 , 30 down, i dont like being 20 down. So what else can we do . What is our plan over the next couple months . Are we just going to hold tight . We have debated back and forth. I have had the subject with ana and th why we should buy 20year treasuries or leverage the treasuries and the latter wed have to bring a recommendation in i believe to the board. Thus far we have not elected to do that. Its that kind of investment is only going to serve us well in an economic apocalypse. Other than that its not going to serve our interests well. The yield is 0. 7 . And in addition to we think that were well protected on the downside because of our Asset Allocation. And also because of our manager selection. As we have indicated, we have a pretty considerable overweight to technology, to software, to the digital economy, to biotech and the innovation. All of these themes are working very much in our favor. And we think that this crisis has pulled all of those themes in the future. We think that they have accelerated and brought them forward. And so we thank were going to hold up think that were going to hold up well with Asset Allocation and manager selection. The last thing that i would note is that we have our eye, in addition to brian, i think that we have a really, really good approach to Asset Allocation and manager selection to achieve two goals. One is to protect ourselves against a large market decline. Were still going to get hurt. But we will not be hurt as much as others. And every few percent does help because of the compound nature that when you lose money that if you lose 20 , you have to make 25 to get back to even. And that number is even larger when you have cash out post for pension benefits. So we have good Downside Protection. And were also cognizant that timing markets is highly, highly problematic. And were also cognizant that we have to earn over 7 in the long term. Were also ko cognizant that the 15year return in the s p 500 today is 8. 6 annualized. Thats through this recent experience and its through the g. F. C. So two blood baths and its still earned 8. 6 . And the its been my experience that moments of deep pain in the markets when you look out 15 years from now, in every instance in my career they have been blips on the screen. Every single one 1987. The bursting of the internet bubble and the g. F. C. And even this current experience, its bounced back more than half in less than two months. You know, i would like to say a couple things and i will step away and let other Board Members chime in. I think that if we were to ask the members of the Pension System who went through pension reform, you know, how they feel about the s p 500 recovery with the financial crisis, and having everybody to say that it would be great. But people would be willing to give up some of that return to avoid pension reform. And theres a lot of people on the sidelines rooting for the Pension Systems to fail. And so we do have a benefit of investing over the long term. But we are subject to shortterm political gyrations. Even as illogical as they may be. And so we want to make good longterm decisions for our investments, but we do need to be mindful of the volatility. And so i appreciate all of the work that and the staff have done to set this up, but i guess that in closing i have one last question just very simple are you going to hold us and take us up to that maximum 6 of treasuries . Or are you going to keep us where were at . What is your plan . Yeah, so we currently have 8 so our target weighttotreasuries is 6 and our target weighttocash is zero. And combined right now those two numbers are 8 . So were at the maximum of 6 right now . No. We have 4. 6 in treasuries of our target weight to cash is zero. And with an allowable range up to 5 . And we currently have 3. 4 in cash. We normally are fully invested, but were not right now. So if you look at treasuries plus cash together as one line item, the target weight is 6 and our actual weight right now is 8 . Do you need more authority, or do you need authority to increase that . Do you want to increase that . Or are you content with the range that the board has given you . Did i hear somebody was about to make a comment . This is ana. I think that the ranges are very reasonable, theyre set strategically. And the range for treasury is i believe is up to 9 as well as the range for cash is up to 5 . So combined cash and treasuries its 14 . So we have the authority to go from 8 where we are now to 14 if we deem that there is a need for that. And were monitoring it very, very closely. And everything that we have done and that bill just outlined, first and foremost, we wanted to make sure that we have the liquidity. That the liquidity, not just immediate for one or two months as we discussed, whether its a year or two that we can withstand it. And thats why we we feel that it is very important to have cash as well as treasuries. The second point that i would bring is that in june we plan to propose changes as discussed changes, and not proposed, but discussed to our Asset Allocation and were working is very closely with this. And bill and i work with an a. P. C. To think what it means for us. Because these are longer term decisions. And the longer term we would have the plan to be more liquid and to have a defensive allocation. And so the recommendations that we would like to discuss Going Forward will include the recommendation with the view that bill just discussed, the g. T. A. Global tactical Asset Allocation manager, that with the view of protecting from the equity downside. And an allocation to cash. So these are the things that we would we would come in and view. Now the shorter term, brian and i hear you between now and june and july when we start that discussion, we are holding on and we might increase that allocation. So i just want to hear this correct. I thought that treasuries we had a limit of 6 . Its 9 . The target weight is 6 . The target is 6 . And the upper limit is 9 . Okay, all right. And in terms of between now and june, i suspect that were probably going to see a lot happen, especially in the middle of june as Companies Start to wrap up the quarter and we see close to a full quarter effect on everybody. Do you need any changes in policy in the interim to protect the plan between now and when you come back with the recommendation . We dont plan to weve discussed this, i dont know, six, seven or eight times in the last month and a half. I have come close several times to suggest to our team that we buy that we go to the board with a recommendation to buy 3x levered treasuries. But we have not gotten super close to doing that. Again, in recognition that in a market rally that we will get killed by that and it represents the very poor longterm return. And with all of the stimulus thats been approved and which i believe that there will be much more stimulus to come because i do think that the coronavirus will be with us for a period of time and that unemployment will be double digits, six, 12 months from now, and i think that theres going to be many trillions of dollars more, 5 trillion, 10 trillion of stimulus. This becomes potentially inflationary at some point. While a 3x long levered treasury is the absolute worst investment to have in such an environment. So this really becomes problematic if we put it on about when to take it off. So right now were comfortable with where we are at. We have recognized that the markets have done have giddyup and go. And i would point out about the equity market. Theres no bear market and there was never a bear market in the amazon and theres not a bear market in netflix. Its really Company Specific. Its industry specific. And we have a tilt towards the parts of the new economy that are benefitting from these changes that are underway in how people enjoy their lives and how we do business. Again, brian, i just want to r reemphasize that having a 30 weight relative to our peers that are north of 45 . That difference of 15 , if the public equity goes down by 20 , it is it is we outperform by 3 . And that 20 decline is on is on 30 of our portfolio. Its a 6 hit. Its not across the entire 26 billion trust. So the headline number of the public equity is doing is obviously can be very upsetting when the market is going down. But we hold up relatively well. And in addition to that, its not just public equity but our private equity portfolio is 75 in technology and biotech life sciences. Thats a really good position to be in in this kind of market. In real estate, we have a 5 of our book of our real estate book is in is in hotels. Thats a really low weight. That equals 50 basis points of plan assets. Thats a really low weight. And except for the Mortgage Investments that well talk about which we think that are an absolute return and the Energy Investments in our Natural Resources portfolio, which are going to take a very long time to come back, you really need much higher demand and much less supply to begin to get a good return out of that. Thats a really longdated story to come back. Im not sure how much its going to come back. But except for that one part of our por portfolio, i dont view anything as structurally broken. Well, the other thing that to consider in the numbers that bill presented is that these are indices. And if you look at the composition of s an s p 500, 50s health care and health care and the amazons and the ne netflix d google. And they are benefitting from this type of environment. So we have to be very cautious if we do go defensive that we might not participate on the other side of the economy that is benefitting. I was going to say go ahead. Brian, im not sure if you had the opportunity to review it but yesterday afternoon i sent what the cost is to buy 5 and 10 and 20 between may 15june 30th. So assuming that the key sensitivity point is what will our fiscal year return look like on june 30th. So to avoid a large loss between now and fiscal yearend. The cost of buying 5 out of the money puts on an 8 billion public equity portfolio is 172 million. So thats 2. 16 of public equity and it is about 66 basis points of plan assets. So if the markets didnt fall more than 5 between now and the end of the year is our return would be reduced by 66 over the next month and a half. Over a 10 out of the money put costs 100 million. So thats 39 basis points, the plan assets. And 20 out is 32 million. So thats only 12 basis points. Those are options for the board to consider. The we would still you know, say in the 20 option, the cost is really at 32 million. But that does mean that were protected against the loss between now and the end of just six and a half weeks from now. The market would have to decline more than 20. 4 for that to be a profitable trade. I will just say this, you know, and then im truly done. I would rather give up some on the s p side to protect us from the downside. And i dont know that that means buying puts, but maybe it means a higher percentage to cash than treasuries. So i strongly encourage you all when this meeting is over as priority number one to think about what you need to do to protect the pensions from this ever changing economy. And especially between now and the fiscal yearend. Because a longterm return is important to get through each fiscal year. And i wish that we could invest in a vacuum without the politics of everybody who just likes Pension Systems but were in an interesting point in time and so my message is very strongly to please consider a defensive position and ill turn it back to the chair. Could i just make two more quick comments, brian. I totally the shortterm sensitivities and thats why we have the Asset Allocation that we do. Its to protect us from a large loss because the impact of politics and the potential for the glaring eye of the media and the funded status and the sustainability of a public pension plan. Thats why we have the Asset Allocation and the approach to manager selection and the emphasis on manager selection that we do. Its to protect us from the downside. The modeling that ana and i did a year or so ago shows that in punishing markets that we should be comfortably ato a top perfor. Our we all know that our returns in the last five years have been really good. Theyre in the top 5 , 6 . The lesser known story of that is that our risk adjusted returns i believe that are in the top 1 . And our and our Downside Protection so our ratio, i dont recall exactly what it is but i believe that is in the top 5 relative to our peers. And its an approach through Asset Allocation and through manager selection. But i hear you about considering to do more. Any Board Members with questions before i start. Yes, thank you. Bill, thank you very much for your commentary and i do agree with you its a very difficult process and i thank you and your team for being very committed to looking at the various models throughout the process. And my question is that i look at the various sectors and our Asset Allocation that we have thus far and i would like to know on absolute return, how you think that well do during this crisis as well as our exposure to china. If you could comment on both of those for me, it would be great. Sure, ill comment on china real quick. China has held up quite well here during this pandemic. And the beta returns are fine. And in public equity the weighted averages and the access returns are 8 or 9 . And our returns in china are stellar, and theyre outperforming as a whole i think by 4 or 5 . Our private equity return portfolios are very good. And tanya and ana and kurt are welcome to chime in if they have more exact numbers. So regarding china, i recognize that its a political hot button, its a political bulls eye. And its also a great place for entrepreneurialism. Its a great place for innovation. And a rising standard of living for middle class. Theres just so many ways to make money in china. We talk about in health care, well, health care in china, you can make money in clinics and in medical equipment and in dentistry and in biotech. And in many segments of their economy that theres really good ways to make money. Now thats different shade between the politics and how to make money. So our China Investments have done really, really well. Our private Credit Investments in asia and in asia have outperformed our private credit returns as a whole. And in absolute return, our China Investments have totally kicked it. Its i think that it might be one of our two best performing managers is our long short china equity manager. Turning to absolute return, this portfolio was doing great through the end of february. It was outperforming bonds. It had less volatility than bonds and it had a ton less volatility than stocks. And it had captured only 11 of the equity return in months during the equity market decline. It was showing a great deal of independence from both the stock market and the bond market. And you look at its monthly returns and its just these small little movements, mostly up i think 33 months and five down months. And that was better than the stock market and a lot better than the bond market. Which was about half and half up and down. And so it was totally doing exactly what it was designed to do and in march that all fell apart. Well talk about it during davids during davids update. Its principally around our credit exposure. And in particular theyre in the Mortgage Market and our Mortgage Investments fundamentally look so strong. But theyre not in market prices and were not reflected in the march crisis. They were in the february crisis when the equity market was down 7 , our absolute return port foal you was down 31 basis points. It did great. But in march investors began to fear a depression and priced in a depression. And its reflected in the pricing of our Mortgage Investments which fell by between 50 and 90 . We ultimately think that is money good. We think that we get all of that money back. Okay. Well talk more about this, but i think that the key is liquidity management and im looking forward to the presentation further in the Board Meeting where we talk about the management of the portfolio. That will be the key during the pandemic crisis. Yes. Absolutely, leona. And as bill mentioned, and our allocation and why we are confident that we will we will certainly short term, by the end of q2 will be in good hands in in solid returns. But also why longer term it makes sense is because we have a large allocation to liquid asset classes. As a result its imperative to monitor liquidity and we are doing and monitoring we have almost 4 in cash right now which is the highest that weve ever seen. And we monitor it very closely. And its not now, but in june we plan to present an even more liquidity stress that we are gearing towards. We hope that it wont be experiencing it, but we want to plan for that. In fact, its our responsibility to plan for that and were doing it. Thank you, president driscoll. Next board member. Tanya and ana. Thank you. Other Board Members with questions . Hearing no other Board Members i will make some questions and observations. An attempt to clarify certain parts. But, bill, you mentioned the 7. 4 and you said have to earn. And i would say its not a have to earn issue, except by the board adopting it as allocation, we told our stakeholders and sponsors that we can earn 7. 4 . Thats why its an objective. Thats one. And two, this item was put on the calendar as tactical. Not strategic. And the Asset Allocation mix gives you the range to go down to 20 public equity. You have the discretion to do that now. As a tactical decision. So i believe i thought that the minimum was 25 . Absolutelactually 25 . Yeah, yeah. There are no active considerations right now to reduce the indiscernible 31 , excuse me. The point is that if you thought that equity returns were not so good tactically, you could sell the futures now and buy the long treasuries without going through the option business. You could rebalance the portfolio right now. You have the discretion to do that. Just like you had the discretion to go to 6 treasuries that you didnt do for whatever reason. Well, we look at it that we are defensively positioned right now. Okay. And you dont thank we need to become more defensive tactically in the near term . No, we dont. Okay. Because in your memo you have mentioned how in the markets went down a great deal in 2007, that everybody thought it was going to bottom out and it went down greatly again. So it can happen again. I think that you mentioned how in your career and probably amongst all of us here you have the longest investment career but theres other people who said no one investing today has ever lived with the possible recession that may come. One of our managers said that at least 20 trillion has to put in the economy of the world to maybe just stop things from sliding. Umhmm. Will that occur . Will it be necessary . I believe that much, much more stimulus is going to be needed than we have spent on it so far and 20 trillion would not surprise me at all. If we look, there are right now we began this crisis with about 170 million jobs in the u. S. And comfortably 50 million to 60 million of those jobs are going away. And there was a study yesterday that indicated that 40 of the jobs that will be lost will not come back, okay . So theres going to have to be a whole lot of stimulus for quite a period for quite a period of time. At least for as long as we dont have a vaccine or a treatment is that the economy will be ailing for a while. Were not going to get back to previous base for at least several years. So tactically were going to have to find new ways of creating how we do business and how we enjoy our lives. So tactically you dont think that we need to do anything more . I mean, were always trying to do things but to reduce our exposure more, the fact that we went to 31 is the big reason why our returns by reducing the equity and bringing on the absolute return among other things, that was one of your objectives was to cut the draw down in half thats right. The question is tactically, we do not need to do more . And president driscoll, youre exactly right, we did that strategically through our Asset Allocation. You said it exactly right. We had planned for an event like this while still thinking that we could achieve 7 plus over the long term and protect us on the downside. As far as doing it tactically, something beyond what we have done strategically, which is really significant to have a 31 weight to public equity. Thats a pretty significant, strategic shift relative to our peers to protect on the downside, and to do something tactically introduces uncertainties about timing. We have thought six or seven or eight times about doing something tactically to take up treasuries more, even recommending levered treasuries and we have discussed that at least half a dozen times over the last month. Im really, really, glad that we havent done that. The stock market is up 20 in that time. Thanks for all of that. I just wanted to say consciously that were not doing anything more significantly tactically, and continuing with what were doing well now and trying to meet all of the cash calls from our private security. Let me just point out that this is not such a big issue with me, but when you and alan you do the same thing when you talk about how were doing compared to our peers, believe it or not, i think that is in one sense very irrelevant. Because when we have the problems meeting our bills were not able to ask our peers to pay. Right. This is the wrong footing. Its what i call a base bias. So i wish we would stay away from that, okay . And tactically we can do things. So whoever our really good investors, theyre different we are. And maybe we should try to find out what theyre doing and copy that. Very good, commissioner, thats a great point. And i totally agree with you that benchmarking yourself against peers is really a limited value. We have our own cash flows and our own characteristics and we have our own philosophy towards investment. And even putting aside that, to have only 49 in public plus private equity meaning, growth assets, only 49 for a pension plan, thats low. To achieve a longterm return, thats a modest number. If we had no cash flows, and we had no political sensitivities about what our shortterm returns would be, rather than that 49 to public and private equity, i recommend that it would be 100 . Yes. That is one reason why ive asked our consultant, mr. Martin, to see if he could get any kind of a breakdown of the managers and their Asset Allocations to see how theyre doing. Again, just a way of we are closer to them than we data relative to our own, but even relative to our own, 49 is light. Yeah, but again the question is relative to what can we do how much risk do we want to take. Thats why this big drop and tactically its very uncomfortable. We dont like losing i say we dont particularly like volatility and preserving capital. If we can accept it, hey, its okay. Its when it triggers a change in contributions, thats when people start asking us very pointed questions. It is with our success in being realistic about uncertainty particularly and risk that were able to then tell our sponsor this is why to please support our budget to bring on more and better talent and to compensate them accordingly. And president driscoll, youre right, we all dislike volatility. But videvolatility only matterse day of a year, june 30th. The volatility on to march 23rd is irrelevant, what is our return on june 30th is what is relevant. Thank you. One, this is a possible action item and theres no motion on the floor. If someone wants to make one. I will note. Staff has not made a recommendation. But commissioner stansbury, you asked for this to be put on the calendar and to think tactically and strategically at all times. And i will contact you if you want to continue on with this subject before we call for Public Comment. Thank you, commissioner driscoll. From my perspective, you know, i think that having purchased puts back in february before everything began to unravel and then we had sold at some point as the market kind of unraveled, it would have been very beneficial to the Pension System. Trying to see those things sometimes can be very difficult. And if youre on the wrong side of it, its hard to justify 160 million loss. Of course we dont have to do the full 8 and we could do a smaller portion thereof, but im not going to make a motion for that. And it sounds like from everything that i have heard from staff today that you feel like you have the flexibility and the tools that you need to protect this portfolio. But i would say this and i want to drive this home, echoing what commissioner discoo driscoll sad what we touched on earlier is that if were only down 20 and everyone else is down 30 , thats great. But no one is going to care. Theyre only going to care that were down 20 . And 18 , 20 , 24 , it doesnt matter, the taxpayer, our sponsor, those people and, the employees and the members contributing, they are the ones that will care that were up or down 20 . Its impossible to run an Investment Fund and have down years. Its just impossible. This is a unique situation. And i again, i want to just encourage you to think defensi defensively for the portfolio. Other than that im not going to make a motion. And thank you for putting all of this together. This is probably still one of the most important conversations that we had in this fiscal year. This is helpful. I would like to note that if we bought puts 20 out of the puts on february 20th, right now markets are only down 14. 9 . And that we wouldnt have made money on that trade. But you wouldnt go 30 down and continue to sit on it. You would have closed out those positions and taken that money off the table. On june 30th we would not have touched it. I very much disagree with that. In fact, i would personally need a motion to take some of that money off the table to help to protect us. I think that indiscernible had an expiration, i think that right its not a good decision. So, anyway, thank you for putting this together. And it sounds like you have the flexibility to do other things in puts. So, again, thank you, and just please be mindful of that. I understand. Thank you. Any Board Members with a motion before we go to Public Comment which is required. Hearing no motion, madam secretary, call for Public Comment. Clerk members of the public who are currently in the queue who wish to provide Public Comment please dial 1, and 0. When it is your turn to speak, you will be prompted automatically. Those who are not in the queue, please follow the instructions shown on the screen. Moderator, do we have any callers on the line . Madam secretary, there are no callers on the line. Clerk thank you. President driscoll . Okay, there is no motion and therefore we go to item i have a question. I have a question. Its al. Yeah, to bill do you think that you need a motion . No, we would have calendared it as a recommendation if thats what we were requesting. Okay. And i am just asking based on the entire conversation that just took place. Okay, thank you. Thats it. That takes us to item 8. Board members, items 8 and 9 and 10 are almost identical, they are three terminations but they must be considered and voted on separately. Very good, Board Members, item 8 is a recommendation to terminate a. Q. R. , an International Equity strategy that weve had for about 13 or 14 years. And it has performance that has been in line with the benchmark. Almost exactly. And youre familiar with our efforts to increase the excess returns of the public equity portfolio which we have been able to do with our recent hires. Kurt . Thank you, bill. Just to reiterate, the staff is recommending and to be supportive of the termination of our Investment Management agreement with a. Q. R. Bill noted they have been managing capital for us since 2006 woo. Have written a brief memo with our rationale and if anyone would like to make comments ill simply turn back to the board for questions. Kurt, let me just this does tie together somewhat with the last discussion that we had on Asset Allocation and with the hiring of the manager that we previously hired and that is to bills point that the tools that we have to achieve the 7. 4 , joe, i couldnt agree more thats what were trying to do. It involves not only the Asset Allocation and the diversification, but the selection of managers that add value. And managers that hug the index arent going to add enough value over time. And you previously hired a number of managers that are more differentiated, higher active share in industries that have Better Future growth potentials. And so when you do that, you need to get the money from somewhere or youre going to change the overall allocations. So all three of the managers that are being recommended for termination are not bad managers and theyre not on being terminated because they havent delivered but they really dont fit the strategic portfolio which is to add more active shares. And id say the same about all three of them that were fully supportive of this because it is consistent with the longterm strategic intent for the portfolio. Board members i would add that this is in line with our reduce allocation to public equity in the last two months. So, again, its not something that is reflective of the managers, its reflective of the needs to reach an end of the staff desire to have public equity disclosure. Thank you. You both said it very well. Unfortunately, or perhaps someday the reporters who like to write up what we do only indiscernible and with that in the newspapers as opposed to the full explanation why were trying to pursue greater active share with other managers. Anyway, well said, alan. Thank you, ana. Anymore Board Members, if not, a motion is in order. I move to terminate. A second . Ill second it. Madam secretary, call for Public Comment. Clerk president driscoll, im sorry. Members of the public who are currently in the queue who wish to provide Public Comment, please dial 1, 0, when it is your turn to speak and the system will prompt you automatically. Those of you who are not in the queue, please follow the instructions shown on the screen. Moderator, do we have any callers on the line . Madam secretary, there are no callers on the line. Madam second, roll call. Clerk president driscoll . Aye. Commissioner bridges. Aye. Commissioner casciato. Aye. Commissioner chu. She had to go to another meeting. Clerk absent. Commissioner heldfond. Aye. Commissioner safai. Aye. And im sorry, i have to leave the meeting now. Clerk thank you. Commissioner stansbury. Commissioner stansbury. Hes not available. We have 52. Motion passes. I dont know that you can call it 52. You have abstention or absence. Clerk the motion passes. Next item. Clerk next is causeway and this is a recommendation to terminate a manager in the portfolio for 17 years. They have slightly outperformance and were seeking higher active share in this higher access returns. Kurt . Thank you, bill. For reasons and circumstances that weve just discussed, were recommending the termination of our Investment Management agreement with causeway. Again, we have written a brief memo that describes our rationale that we just discussed. And id like at this point to have any further input from anyone, ill turn it back to the board for questions. Ill make a motion to adopt staff recommendation. Is there a second . I move a second. Commissioner heldfond did you second . Ill second, thank you. Board members any questions . Hearing no questions, madam secretary, call for Public Comment. Clerk members of the public who you are currently in the queue who wish to provide Public Comment, please dial 1, 0, when it is your turn to speak and the system will prompt you automatically. Those of you not in the queue follow the instructions shown on the screen. Moderator, do we have any callers . Madam secretary, there are no callers on the line. Clerk thank you. President driscoll. Madam secretary, roll call vote. Clerk president driscoll. Aye. Commissioner bridges. Aye. Commissioner casciato. Aye. Commissioner chu. Not attending. Commissioner heldfond. Aye. Commissioner safai. Not attending. Commissioner stansbury. Aye. Motion passes. Be advised that its getting late and commissioner chu had to leave at 3 00. So, thank you. Next item. Very good, Board Members. Next is q. And a. And this is a core strategy that has underperformed in the 12 plus years for which we have been invested and they have increased amount of competition for Data Analytics for engineering talent like google and facebook. There are some firms that we still think highly of but its become a much more competitive space for engineering talent. So we recommend termination and were looking for more Company Specific risks than this company can provide us and higher shares as well. Kurt . Thank you, bill. Again, staff is recommending that we terminate our Investment Management agreement with 2ma. And before i turn over to the board i want to acknowledge and to thank each of the three firms for their partnership and contribution over many, many years. We have valued them. So with that, again, we have written a brief memo further describing our rationale and ill turn back to the board for recommendations. Ill make a motion to adopt staff recommendation. Leona, and i second. Calling for Public Comment. Clerk members of the public who are currently in the queue and who wish to provide Public Comment, please dial 1, 0, when it is your turn to speak. And the system will prompt you automatically. Those of you who are not in the queue, please follow the instructions shown on the screen. Moderator, do we have any callers on the line . Madam secretary, there are no callers on the line. Thank you. President driscoll . Aye. Commissioner bridges. Aye. Commissioner casciato. Aye. Commissioner chu, absent. Commissioner heldfond. Aye. Commissioner safai. Absent. Commissioner stansbury. Aye. Thank you, five ayes. Motion passes. Next item number 12. Very good. Board members this is an annual update to the indiscernible portfolios and ill just leave it for comment before turning it over to david. Oh. Can everybody hear me . Yes. Very good. Board members in a moment ill turn it over to david, with the portfolio update. Through the end of february this portfolio was doing exactly as it was intended, it was outperforming bonds at very, very low volatility in the range of about 2 annualized. And had only captured 11 of the market return, market equity return in months that the markets declined. It also had more up months than the equity market and many more up months and fewer down months than the bond market. That all changed in the month of march for reasons related that we think that are related to markettomarket pricing that do not resemble the underlying Credit Investments that we experienced large losses. We think that by Holding Tight well be money good meaning that well earn money and return of principle on these investments. And ill ask david to take it from here. Thank you, bill, thank you, commissioners. And can everyone hear me okay . Okay. Very good. We went into march of this year with about a third of our portfolio invested in credit oriented strategies and within that the meaningful allocation of about 12 to Residential Mortgage credit. This was based on solid fundamentals in an area of the credit market that has gone through a notable strengthening since the Global Financial crisis. In the weeks that followed after april 29th, after february 29th, the world changed significantly. The majority of the developed world found itself under the government stayathome orders in the vibrant liberal economy and experienced an abrupt shu shutdown without clear dates of reopening. Our portfolio suffered as a result and was down just over 10 during the month of march. In the interest of time today im going to skip through the slide deck and skip around various slides but highlight several key messages and then open up for the boards questions. I will provide detail on what happened inside of our portfolio during the month of march with some information showing how we were allocated coming into the month and the data supports why we were allocated that way, details showing the Market Dynamics that drove our losses and the information on why our thesis for these investments remains intact. There were two presentations that were sent out for this meeting today and ill be sharing the relevant slides virtually. Ill be starting with the first absolute return Program Update slide 6 that is titled spurs absolutely return, return attribution by substrategy as of 3312020. Hopefully everyone can see this slide which is page 6 and shows the performance over time during the month of march up to six different absolute return substrategies that were allocated to. The most important takeaway on this page is the credit line item and its performance during the month of march. We started the month with slightly more than 28 of our programs capital to peer Credit Strategies. Our multistrategy and special situations managers also have some exposure to credit, so the total credit exposure was around 35 . Pure Credit Strategies accounted for 54 of the loss during the month of march and when we include the credit portion of the loss for multistrategy and special situations, the total losses attributable to credit exposure exceed 60 of our loss for the month. Perhaps most important, is that our overweighttoresidential Market Strategies which had been additive for the last couple years quickly turned during the month and was responsible for approximately a quarter of our program losses during the month. A logical question would be why did we have such a large allocation to Residential Mortgage credit . I would now like to direct your attention to slide 16. And in this its the spurs Residential Mortgage credit for those not following virtually. And here you can see two columns comparing the Residential Mortgage credit from 2008 to the metrics that one of our managers invest in today. And anyone who has applied for a mortgage in the last 10 years knows that underwriting for individual loans today is done to very strict standards. Compare this to the pregmpletd g. S. T. When there was little supporting documentation and the no income and no assets or ninja loan term came into prominence. A few other points to note most of the loans that compromise our mortgage exposure are comprised of loans with 10 plus years of payment history and have l. T. V. S around 75 . Whereas in 2008, the loans were far less seasoned and many l. T. V. S were over 100 . Lastly, household Balance Sheets came into the current covid19 crisis in very strong shape. The aggregate of lending criteria attractive l. V. T. S and strong payment history and borrower financial help provided an attractive set of tailwinds for Residential Mortgage credit investment. On the next page, slide 17, and theres further support of the thesis as it highlights that the undersupply of housing is greater today than it has been in almost 50 years. Additionally, the next wave of household formation from the age 20 to age 39 demographic cohort is just beginning and its actually larger than that of the baby boomers. Ill now skip a slide and skip ahead to page 19. Where you can see a pie chart that has the u. S. Fixed income market and that the mortgage related assets compromise more than onefourth of it. As part of ourunde underwritinge had exposure to mortgage credit and concluded that our exposure was very small and disproportional given the size of this market. Additionally, having the exposure be a hedge funds structure is advantageous in that these managers are given the flexibility to be long and short and can hedge out Interest Rate risk. In summary, theres a strong set of fundamentals and Interest Rate approaches that substantiated having 12 of the absolute return Program Capital invested in Residential Mortgage credit. What happened during the month of march . And slide 21 21, march 2020 cret dislocation provided an idea of how bad the credit markets got by showing spreads at different points of time across various instruments. In all cases spreads at the end of march exceeded the 90 percentile of the range they experienced since 2012 for these instruments. Third from the bottom is legacy nonagency, a residential back securities and it spread as of the end of march, and blew out to four times the level of where it was at the end of 2019. Slide 22, shows the series of events that resulted in a perfect storm for credit. Concerns about residential and commercial mortgage borrowers ability to pay resulting from covid19driven economic weakness and concerns about a perceived refinance wave related to the Interest Rate movements in early march, led to a rapid price decline among residential and commercial mortgagebacked securities. Mortgages, which operate with leverage from four to 10 times, came under selling pressure when spreads widened and the prices declined. Adding to the pressure on liquidity and pricing were high levels of redemptions experienced by mortgage and structured credit mutual funds with daily liquidity. Further, typical buyers like Insurance Companies took a more defensive stance and were temporarily out of the market. Lastly, there was a limited willingness of counter parties to provide financing and the market for Residential Market assets went into a severely dislocated state. Bondbonds and loans that tradedt or near par at the end of february traded at levels as low as 50 during the month of march. A logical question here is how are our funds different from Mortgage Rates or mutual funds . Or funds will hold many of the same securities as Mortgage Rates, but they hold them in structures that utilize much lower levels of leverage, typically a quarter to one turn of leverage, and maintain much higher levels of cash. This helped our funds to avoid forced selling to meet margin calls, but there was nowhere to hide from the pricing pressure and our funds were forced to market their portfolios to market at month end. Theres also a presentation that was sent out for this meeting from blackstone and there are several slides in here, for those following along and ill refer to pages 4 through 6 of the blackstone presentation. But you should see on screen for those on the call a slide titled forced selling and structured credit. With this slide, it talks through that Residential Mortgagebacked and commercialbacked assets declined in value by 30 to 50 , which is comparable to the price declines in 2008 and 2009. On the next page, we see the time period over this that this occurred in march relative to what happened during the Global Financial crisis. What we just experienced took almost six months to occur during the Global Financial crisis and comparatively only took 15 days in march 2020. So the speed of this decline was absolutely unprecedented. And so what happens now . Fortunately, the low leverage utilization and the strong cash positions of our mortgage and structured credit managers helped to mitigate and leverage the Liquidity Risk and presented the crist salizatio crystalliza. We estimate that of the 6 loss in march that it is attribute to our credit managers, that less than 10 of that related to asset sales and a permanent loss of capital. As the stimulus packages have become better understood we have seen some recovery and credit spreads and the price of mortgagerelated securities. We have seen positive performance from our credit managers in the range of 2 to 6 for the month of april. Also mitigating the effect of our march loss is about 200 million of unfunded commitments that we have with Residential Mortgage credit managers who will be deploying capital into dislocated markets and the opportunity to earn stressed level returns on our behalf. The thesis is definitely impactedded bed by covid19. First, the underlying loans were originated and or modified to very high credit standards. As a result of these standards and home price appreciation, l. V. T. Ratios provide Downside Protection from borrower weakness and home price declines. The housing shortage is an additional dynamic that is expected to help the asset class. Lastly, the trillions of dollars of the government stimulus is targeted primarily at median incomelevel households that compromise the majority of borrowing that make up the loans in our portfolio. Underlying loans in our portfolio average 150,000 to 200,000 and relate to Household Income levels below 120,000 annually, for which the cares act will provide income replacement near purpos 100 fo. And its likely that the government stimulus will accelerate around the novemberlication if the economic weakness looks like it persists into 2021. No doubt from here that there is an element to the Residential Mortgage credit thesis that is aligning ones self with the governments stimulus actions. But given that were under a mandatory matter to stay in our homes as a matter of Public Health and our homes are not only where we sleep and also our restaurants and gyms and movie theatres and our places of work, we expect that the government will exhaust all possible resources to prevent another housing crisis. So weve gone through a lot of material here supporting our thesis and supporting why we still believe in these investments. We have a lot more materials for you today than we have time. But im going to stop here and both myself and the representatives of blackstone will be happy to take your questions on what weve discussed as well as any other topic that is related to the absolute return program. Unmute. Thank you. Lets turn the floor over to the rep from brakeston blackstone ft before we start the q. And a. Do you have a specific question . No, just going to give them a chance, though you touched on their powerpoint, i thought they might want to add. Okay, alberto, would you like to make a few comments . Yes, good afternoon, david, bill and commissioners. Can everyone hear me . Yes. Yes. Great. Yeah, i just want to confirm what david just said and in terms of some of the reasonings of why the portfolio had a meaningful exposure to the Residential Mortgages and, you know, going into this we thought that the fundamentals were very good and better than the previous crisis. David highlighted and walked through some of the slides. And especially the point that is most important is that this is really mark to market and we expect this to recover. I will pause here. Do we have any questions . Board members, time to ask questions. Okay, ill ask one sort of a loaded observation. But this is a Performance Review of this. And march had a tremendous effect on returns. Dave, you basically decide with blackstones help, you do twothirds of the Asset Allocation with the categories and the manager selections to execute inside any category. I assume we dont make any major changes in the next 30, 60 days . We dont plan on making any major changes, but consistent with what youve heard from other members of the investment team, we are focused on slightly modifying the profile of the absolute return program to become more liquid. And this is just part of our Risk Management efforts in order to make sure that we are in a position where we can absolutely fulfill the commitments that weve made to fund any of our unfunded commitments. And for absolute return, that extends even beyond some of those commitments that we have within our portfolio, but potentially to be a source of liquidity for other parts of the plan. So, you know, with the exception of some of those changes, we really dont anticipate making any other material changes. Since inception, the strategy has been positive, though again march was a very bad month. And i tend to not focus on singular month returns but its the first time that we had a chance to look at the total portfolio with this level this level of returns and how it breaks down. I know that theres another level underneath it but this is perhaps very good for the Board Meetings. That concludes my questions and observations. Other board member questions . This say nonaction item. Hello, its scott. If i could make one comment. To thank david and bill and everybody involved in how they presented this today. But more importantly how they sort of walked me i dont know whether they walked other commissioners, but i appreciate all of the time that you gave to explaining. I want to echo scotts comments and to really express my appreciation to the staff for your great work. And, david, its leona. Thank you for walking through the entire comprehensive review, because i did have some questions but you answered them all through the analysis and the research that you presented today. So thank you to you and your staff. Thank you. This is a nonaction item but i still have to call for Public Comment. Madam secretary. Clerk members of the public who are currently in the queue who wish to provide Public Comment, please dial 1, 0. When it is your turn to speak, the system will prompt you automatically. Those of you who are not in the queue, please follow the instructions shown on the screen. Moderator, do we have any callers on the line . Madam secretary, there are no callers on the line. Clerk thank you. President driscoll. That takes us to the last investment calendar item on the 13th. Clerk item 13, discussion item, chief Investment Officer report. Board members, we had a great month in april. We were up 4. 29 . The just a great month. Public equity was up, you know, double digits. And now on a fiscal yeartodate basis, im pleased to convey that were up 1. 37 on 10 months recorded in the books. And thats even as the s p 500 is about flat and the broader equity market is still down decidedly. We do have one closing to report that i believe that im obligated to mention verbally and that canin closed. We asked the board for 40 million in march. We were allocated 30 million. This is a strategy. And i wanted to mention about just the Human Health Crisis to put some metrics to it which i have highlighted is that is 33 million, 36 million jobs lost in a period of six weeks and upemployment spiked from 3. 5 to north of 20 in just six weeks. And 2q2020g. D. P. Is expected to be down 30 to almost 40 . The worst on record is negative 10. And its becoming clearer and clearer indiscernible . Its becoming clearer and clearer that the recovery will be a slower one than consensus expects. In terms of asset class update, public equity has solidly outperformed with the weight of technology and to health care, private equity. And absolute return, we just gave an update there, private equity has performed spectacularly well. Its up 11 on a fiscal yeartodate basis, again, overweight to tech and health care have helped considerably. And real assets is that real estate portfolio is holding up holding up reasonably well. And in the energy market, theres been a complete collapse of the demand following from 100 million to 70 million and the production initially rising. So a plunge in demand and the production has eased off some but theres still a significant imbalance. Its going to take quite further time and production and a rise in demand. I think that the last in particular is going to be slow going. Our private credit performance performed well, indiscernible and i did indiscernible and speak about one thing prior to Going Forward. [broken audio] the recovery would be vshaped, and ushaped. I think that is very likely barring indiscernible and lshaped indiscernible it takes a very long time to begin a recovery. And a ushaped is a recovery and then indiscernible or how long lasting the indiscernible and it takes quite a long time. indiscernible and the industries are going to be slow to recover really for as long as social gatherings are dangerous, thats going to put a lid on an economic recovery. So were going to be living with this risk for a while until we have a vaccine or a treatment and were going to have to really discover new ways of enjoying our lives and new ways of doing business. Meanwhile ill point out on page 6 as i have before is that we have a material overweight throughout our portfolio to technology to software to biotech, to the digital economy, and to innovation. And all of those things have worked really well for us. And we believe that Going Forward that those things that have been pulled us closer indiscernible with that i will stop and ask the board if they have any questions. Board members, questions . Ill just make one observation then. I note that alan martin indiscernible with forecasting and the prediction one of the instructors who i had the benefit of listening to has also offered to educate us. Those who dont know forecast and those who forecast dont know. Again, we will try to do our best Going Forward with all of the anticipated possibilities and allocate. I will call for Public Comment please. Clerk indiscernible members of the public who are currently in the queue who wish to provide Public Comment, please dial 1, 0. When it is your turn to speak, the system will prompt you automatically. Those of you who are not in the queue, please follow the instructions shown on the scre screen. Moderator, do we have any callers on the line . Madam secretary, there are no callers on the line. Clerk thank you. President driscoll. Okay, that moves us to the administrative calendar, items 14 and 15 can be taken together. It is the same subject matter. Clerk item number 14 and 15. Review and approval of the action adjustments for thomas a. Abrahamsem and daniel dunnigan. I move to adopt those. Is there a recommendation that we individually have to vote on this because of this change . Commissioners, these are folks who have qualified for additional disability and that the Workers Compensation and appeals board has come back with a final determination of the perseasopercentage of disabilit. So for mr. Abrahamsen, to approve to adjusting his retirement allowment to 63 . And for mr. Dunfigan to 58 . And so we do need a roll call vote to approve both of these adjustments. We used to have to sign a paper. Okay. Missioner, what is the motion ill make a motion to adopt the staff recommendations on both of these individuals. And i second. Any Public Comment . Hearing no Public Comment sorry, go ahead. Clerk members of the public who are currently in the queue who wish to provide Public Comment please dial 1, 0. When it is your turn to speak the system will prompt you automatically. Those who are not in the queue, follow the instructions shown on the screen. Moderator, do we have any callers on the line . Madam secretary, there are no callers on the line. Clerk thank you, president driscoll. Okay, before we go to the executive directors report, we need to go back and catch up oh, we need the roll call vote. Roll call vote. President driscoll, aye. Commissioner bridges, aye. Misser casciato. Commission. Commissioner chu. Absent. Commissioner heldfond, aye. Commissioner safai. Absent. Commissioner stansbury. Five ayes, motion passes. Before we go to the executive directors report, we have items 5, 6 and 7 to catch up. 5 and 6 are basically identical. Call them separate. Clerk item number 5 is action item approval of the minutes of the march 11, 2020 meeting. indiscernible . Does anybody have any corrections or deletions on the minutes of march 11 . Any questions . Chair, i move that we adopt the minutes from march 11th. Leona. I will second. Any Public Comment . Clerk members of the public who are currently in the queue who wish to provide Public Comment please dial 1, 0. When it is your turn to speak the system will prompt you automatically. Those who are not in the queue, please follow the instructions on the screen. Moderator, do we have any callers . Madam secretary, there are no callers on the line. Roll call vote. Clerk thank you. President driscoll. Aye. Commissioner bridges. Aye. Commissioner casciato. Aye. Commissioner chu. Absent. Commissioner heldfond. Aye. Commissioner safai. Absent. Accommodationer stansbury. Aye. Five ayes. Motion passes. Item number 6, action item approval of the minutes of the april 22,2020, special meeting. Ill make a motion to appro approve. Ill second. Any board questions . Public comment . Clerk members of the public who are currently in the queue who wish to provide Public Comment, please dial 1, 0. When it is your turn to speak the system will prompt you automatically. Those who are not in the queue, please follow the instructions shown on the screen. Moderator, are there any callers on the line . Madam secretary, there are no callers on the line. Clerk thank you. President driscoll. Aye. Commissioner bridges. Aye. Commissioner casciato. Aye. Commissioner chu. Absent. Commissioner heldfond. Aye. Commissioner safai. Absent. Commissioner stansbury. Aye. Five ayes. Motion passes. Item number 7, consent calendar. Any members want any items set aside for a separate consideration . If not, a motion to adopt is in order. So moved. Casciato. Leona. Second. Thank you. Board members with any questions . Any Public Comment . Clerk members of the public who are currently in the queue who wish to provide Public Comment, please dial 1, 0. When it is your turn to speak, the system will prompt you automatically. Those of you who are not in the queue, follow the instructions on the screen. Moderator, do we have any callers on the line . Madam secretary, there are no callers on the line. Roll call vote. Clerk thank you. President driscoll. Aye. Commissioner bridges. Aye. Commissioner casciato. Aye. Commissioner chu. Absent. Commissioner heldfond. Aye. Commissioner safai. Absent. Commissioner stansbury. Aye. Five ayes. Motion passes. Next item. Clerk item 16, the executive directors report. You missed one. The im sorry. The one for training. The agenda item for training. That was in the consent calendar. Oh, okay, i forgot to amend. Okay, forget it. We can reconsider and open it back up if you want to amend it. Yeah, i just wanted to i was trying to see if i could attend that and if i could be amended to attend, i would like to see if i can put those modules in. We can certainly handle that with the vote to approve and well just add any other Board Members who want to attend, we can go ahead and set them up. indiscernible . It probably doesnt even require an amendment. Because its just indiscernible . The board approved it as an appropriate conference for one board member but certainly more Board Members could also want to attend. indiscernible . Clerk im sorry . Ill start, the executive directors report. I had sent out an email on the 5th of last week that the cares act provisions have been implemented, effective may 5th for the sfdcp program. I can report that during the first week that weve had some activities. Weve had 13 participants who have applied for and received the coronarelated distribution, the new distribution that allows them to take out up to 100 of their sfdcp account balance or 100,000. And we had 13 folks who have accessed that provision. Theres also opportunity for them to repay that at a later date. Weve also had three folks who have requested loan suspension. They currently have loans and they want to suspend the repayments and so weve had three folks in the first week who have done that. And weve had one participant who has actually requested and received a covid loan, again, with a higher level limit up to 100,000 or 100 of the account balance. So the participants certainly, certain of them were very happy that the board approved this and there is i will call restraint access to it at this point, but, certainly, we have folks who are interested. And the other thing that i would stress is that the deadlines for filing form 700 were extended, but theyre coming up. The deadline, the final deadline now is june 1, 2020. And then there was also the mandatory harassment prevention training and that deadline was extended to may 15th, but we believe that it will be extended beyond may 15th. But darlene will remind you oh, im sorry darlene will remind those of you who have not completed the form 700 filing. And then were waiting we believe that there will be an announcement today extending the harassment prevention training and once we have that deadline well send that out to you. With that, i will answer any questions of note on the 5th, the California Supreme Court have heard arguments in the alavita Deputy Sheriff Association Case related to restriction of components of pay and pension and its one of the three that will be being heard hopefully over the next few months by the Supreme Court. Certainly, i believe that its 90 days from the date of the oral arguments that we would anticipate a decision by the Supreme Court. But this is one of the california rule cases, and so i just wanted to let you know. Im sure that you have probably seen summaries of folks interpretations of the arguments, but we anticipate that there will be at least an initial ruling on this case in particular before august. And with that ill answer any questions. Board members, questions . I have a question then about the cares act. I have seen a lot of different agencies try to explain it. Its loaded. But focusing on the defined contribution area where people can borrow or seek hardship withdrawals, i know that its underway and you have sent stuff to it. Have you tested to see whether our members understand the act . Its great that its going on and im sure when theyre coming down here theyre getting good service, but did you actually test to see if participants understood what was mailed out to them or on the website not even mailed to them . Right. I will clarify theyre not coming here and our offices are still closed to the public. So the folks who have accessed it have either done it through member counselors or through the website. And certainly the fact sheet that i added on to my email when i notified you that it had been implemented, that has been distributed through the departments, the team and Resource Department and posted so that the folks will know that its available. But right now its either done via telephone or online. But i believe that most of the applications that you are required to go to the sfdcp website. And i believe that the turnaround on the loans and the distributions is 24 hours. So thats always been extraordinarily fast. And if you complete the application today, it might be too late today, but you would expect it turned around within 24 hours. That is very quick. Hopefully theyll understand the repayment issues. Secondly, to let you know that the harassment training deadline is extended in my department to july 3rd. So maybe theyll indiscernible and the Supreme Court case which is a triple case that may or may not affect us directly. On the service side, since it comes out of your reports, to let you know that a member walked up to me yesterday morning who i had seen a million times and said, i want to retire. And within 30 minutes and the administrative side were starting to deliver fixed services to this gentleman. And it was Super Service very quick. Well done. Thank you. Thank you. Thank you, members. Thank you. Any other Board Members have questions or comments . This indiscernible . I want to say that i want to thank and the staff and everybody for all of the help, you know, all of the calls that weve gotten and all of the people that are similar to joe, with what joe experienced yesterday. I want to say thank you, thank you all across the board. Thank you for your recognition. Okay. In how things went today, about 45 minutes were spent simply by the madam secretary going back and forth. Its necessary to meet the meeting rules so i know that Everyone Wants to spend more time on the important part of listening to the presentations by staff and our subject experts but with that a motion to adjourn is in i order. Public comment on my Supreme Court. Thank you, robert. Public comment on the executive directors report . Clerk members of the public who are wishing to provide Public Comment dial 1, 0. Members of the public who are currently in the queue who wish to provide Public Comment, please dial 1, 0. When it is your turn to speak the system will prompt you automatically. Those of you who are not in the queue, please follow the instructions shown on the screen. Moderator, do we have any callers on the line . Madam secretary, there are no callers on the line. Clerk thank you. President driscoll. Motion to adjourn is in order. Does that require a roll call vote . So moved. Thank you. So moved. Meeting is adjourned. Time to hang up. Shop and dine on the 49 promotes local businesses and challenges residents to do shopping and dining within the 49 square miles of San Francisco by supporting local Services Within neighborhood. We help San Francisco remain unique, successful and vibrant. Where will you shop and dine in the 49 . San francisco owes the charm to the unique character of the neighborhood comer hall district. Each corridor has its own personality. Our neighborhoods are the engine of the city. You are putting money and support back to the community you live in and you are helping Small Businesses grow. It is more environmentally friendly. Shopping local is very important. I have had relationships with my local growers for 30 years. By shopping here and supporting us locally, you are also supporting the growers of the flowers, they are fresh and they have a price point that is not imported. It is really good for everybody. Shopping locally is crucial. Without that support, Small Business cant survive, and if we lose Small Business, that diversity goes away, and, you know, it would be a shame to see that become a thing of the past. It is important to dine and shop locally. It allows us to maintain traditions. It makes the neighborhood. I think San Francisco should shop local as much as they can. The retail marketplace is changes. We are trying to have people on the floor who can talk to you and help you with products you are interested in buying, and help you with exploration to try things you have never had before. The fish business, you think it is a piece of fish and fisherman. There are a lot of people working in the fish business, between wholesalers and fishermen and bait and tackle. At the retail end, we about a lot of people and it is good for everybody. Shopping and dining locally is so important to the community because it brings a tighter fabric to the community and allows the Business Owners to thrive in the community. We see more Small Businesses going away. We need to shop locally to keep the Small Business alive in San Francisco. Shop and dine in the 49 is a cool initiative. You can see the banners in the streets around town. It is great. Anything that can showcase and legitimize Small Businesses is a wonderful thing. After my fire in my apartment and losing everything, the red cross gave us a list of agencies in the city to reach out to and i signed up for the belowmarket rate program. I got my certificate and started applying and won the housing lottery. [ ] the current Lottery Program began in 2016. But there have been lot rows that have happened for Affordable Housing in the city for much longer than that. It was there was no standard practice. For nonprofit organizations that were providing Affordable Housing with low in the city, they all did their lotteries on their own. Private developers that include in their buildings affordable units, those are the city weve been monitoring for some time since 1992. We did it with Something Like this. Where people were given circus tickets. We game into 291st century in 2016 and started doing electronic lotteries. At the same time, we started electronic applications systems. Called dalia. The lottery is completely free. You can apply two ways. You can submit a paper application, which you can download from the listing itself. If you a plo apply online, it wl take five minutes. You can make it easier creating an account. To get to dalia, you log on to housing. Sfgov. Org. I have lived in San Francisco for almost 42 years. I was born here in the hayes valley. I applied for the San Francisco Affordable Housing lottery three times. Since 2016, weve had about 265 electronic lotteries and almost 2,000 people have got their home through the lottery system. If you go into the listing, you can actually just press lottery results and you put in your lottery number and it will tell you exactly how you ranked. For some people, signing up for it was going to be a challenge. There is a Digital Divide here and especially when you are trying to help low and very low income people. So we began providing digital assistance for folks to go in and get help. Along with the income and the residency requirements, we also required someone who is trying to buy the home to be a first time home buyer and theres also an educational component that consists of an orientation that they need to attend, a firsttime home buyer workshop and a oneonone counseling session with the housing councilor. Sometimes we have to go through 10 applicants before they shouldnt be discouraged if they have a low lottery number. They still might get a value for an available, Affordable Housing unit. We have a variety of Lottery Programs. The four that you will most often see are what we call c. O. P. , the certificate of Preference Program, the dthp which is the displaced penance Housing Preference program. The neighborhood resident Housing Program and the live worth preference. I moved in my new home february 25th and 2019. The neighborhood Preference Program really helped me achieve that goal and that dream was with eventually wind up staying in San Francisco. The next steps, after finding out how well you did in the lottery and especially if you ranked really well you will be contacted by the leasing agent. You have to submit those document and income and asset qualify and you have to pass the credit and rental screening and the background and when you qualify for the unit, you can chose the unit and hopefully sign that lease. All city sponsored Affordable Housing comes through the system and has an electronic lottery. Every week theres a listing on dalia. Something that people can apply for. Its a bit hard to predict how long it will take for someone to be able to move into a unit. Lets say the lottery has happened. Several factors go into that and mainly how many units are in the project, right. And how well you ranked and what preference bucket you were in. This particular building was brand new and really this is the one that i wanted out of everything i applied for. In my mind, i was like how am i going to win this . I did and when you get that notice that you won, its like at first, its surreal and you dont believe it and it sinks in, yeah, it happened. Some of our buildings are pretty spectacular. They have key less entry now. They have a court yard where they play movies during the weekends, they have another master kitchen and space where people can throw parties. Mayor breed has a plan for over 10,000 new units between now and 2025. We will Start Construction on about 2,000 new units just in 2020. We also have a very big portfolio like over 25,000 units across the city. And life happens to people. People move. So we have a very large number of rerentals and resales of units every year. Best thing about working for the Affordable Housing program is that we know that were making a difference and we actually see that difference on a daytoday basis. Being back in the neighborhood i grew up in, its a wonderful experience. Its a long process to get through. Well worth it when you get to the other side. I could not be happier. [ ] this is one place you can always count on to give you what you had before and remind you of what your San Francisco history used to be. We hear that all the time, people bring their kids here and their grandparents brought them here and down the line. Even though people move away, whenever they come back to the city, they make it here. And they tell us that. Youre going to get something made fresh, made by hand and made with quality products and something thats very, very good. The legacy bars and restaurants was something that was begun by San Francisco simply to recognize and draw attention to the establishments. It really provides for San Franciscos unique character. And that morphed into a request that we work with the city to develop a legacy business registration. Im Michael Cirocco and the owner of an area bakery. The bakery started in 191. My grandfather came over from italy and opened it up then. It is a small operation. Its not big. So everything is kind of quality that way. So i see every piece and cut every piece that comes in and out of that oven. Im leslie ciroccomitchell, a fourth generation baker here with my family. So we get up pretty early in the morning. I usually start baking around 5 00. And then you just start doing rounds of dough. Loaves. My mom and sister basically handle the front and then i have my nephew james helps and then my two daughters and my wife come in and we actually do the baking. After that, my mom and my sister stay and sell the product, retail it. You know, i dont really think about it. But then when i sometimes when i go places and i look and see places put up, oh this is our 50th anniversary and everything and weve been over 100 and that is when it kind of hits me. You know, that geez, weve been here a long time. [applause] a lot of people might ask why our legacy business is important. We all have our own stories to tell about our ancestry. Our lineage and ill use one example of tommys joint. Tommys joint is a place that my husband went to as a child and hes a fourth generation san franciscan. Its a place we can still go to today with our children or grandchildren and share the stories of what was San Francisco like back in the 1950s. Im the general manager at tommys joint. People mostly recognize tommys joint for its murals on the outside of the building. Very bright blue. You drive down and see what it is. They know the building. Tommys is a San Francisco hoffa, which is a germanstyle presenting food. We have five different carved meats and we carve it by hand at the station. You prefer it to be carved whether you like your brisket fatty or want it lean. You want your pastrami to be very lean. You can say i want that piece of corn beef and want it cut, you know, very thick and i want it with some sauerkraut. Tell the guys how you want to prepare it and they will do it right in front of you. San franciscos a place thats changing restaurants, except for tommys joint. Tommys joint has been the same since it opened and that is important. San francisco in general that we dont lose a grip of what San Franciscos came from. Tommys is a place that youll always recognize whenever you lock in the door. Youll see the same staff, the same bartender and have the same meal and that is great. Thats important. The service that San Francisco heritage offers to the legacy businesses is to help them with that application process, to make sure that they really recognize about them what it is that makes them so special here in San Francisco. So well help them with that application process if, in fact, the board of supervisors does recognize them as a legacy business, then that does entitle them to certain financial benefits from the city of San Francisco. But i say really, more importantly, it really brings them public recognition that this is a business in San Francisco that has history and that is unique to San Francisco. It started in june of 1953. And we make everything from scratch. Everything. We started a you we started a off with 12 flavors and mango fruits from the philippines and then started trying them one by one and the family had a whole new clientele. The business really boomed after that. I think that the flavors we make reflect the diversity of San Francisco. We were really surprised about the legacy project but we were thrilled to be a part of it. Businesses come and go in the city. Pretty tough for businesss to stay here because it is so expensive and theres so much competition. So for us who have been here all these years and still be popular and to be recognized by the city has been really a huge honor. We got a phone call from a woman who was 91 and she wanted to know if the mitchells still owned it and she was so happy that we were still involved, still the owners. She was our customer in 1953. And she still comes in. But she was just making sure that we were still around and it just makes us feel, you know, very proud that were carrying on our fathers legacy. And that we mean so much to so many people. It provides a perspective. And i think if you only looked at it in the here and now, youre missing the context. For me, legacy businesses, legacy bars and restaurants are really about setting the context for how we come to be where we are today. I just think its part of San Francisco. People like to see familiar stuff. At least i know i do. In the 1950s, you could see a picture of tommys joint and looks exactly the same. We havent change add thing. I remember one lady saying, you know, ive been eating this ice cream since before i was born. And i thought, wow we have, too. This is a meeting of the bothered of appeals. Ann lazarus will be the chair, joined by rick swig, darryl honda. At the control of the boards Legal Process clerk, we will also be joined by representatives of the city departments who have cases before the board this evening