Workforce Hubs Grant Advances Without Endorsement After Oversight Failures Surface

The San Francisco Board of Supervisors' Budget & Finance Committee moved through a packed agenda June 3, but the sharpest exchange came over a $16.8 million grant for community workforce hubs — where the city's own analyst exposed inflated participant counts, undisclosed gift card spending, and a contracts team gutted to just 2.5 staffers. All 12 items advanced unanimously, but only one left without the committee's blessing.

• $16.8M workforce hubs grant sent to the full board without recommendation after the Budget & Legislative Analyst flagged lax monitoring, inflated data, and an unauthorized subcontractor at OEWD

• $75M rehabilitation of 72-unit affordable housing complex in the Western Addition approved with a $22.6M city loan, preserving a 100% affordable building untouched since 1999

• 72-bed homeless respite center extended to $21.5M after BLA found it matches shelter costs despite delivering more intensive clinical care — with 93% of clients leaving with a treatment referral

• City departments authorized to apply for $4 billion in state Proposition 4 climate bond grants before an end-of-June deadline

• $2.17M state cannabis equity grant accepted, extending a program that has distributed over $13M to more than 90 local businesses since 2020

OEWD's Grant Management Under Fire

The longest and most contentious item of the morning was a retroactive $1.5 million increase to a grant agreement with Bay Area Community Resources for three community economic recovery hubs in the Excelsior, Mission, and Visitation Valley neighborhoods. The hubs provide workforce referrals, housing assistance, food support, and benefits navigation to low-income and immigrant communities.

Why it matters: The BLA's review uncovered a pattern of oversight gaps at the Office of Economic and Workforce Development — not at the nonprofit itself — raising systemic questions about how the city monitors grant-funded programs serving its most vulnerable residents.

Where things stand: BLA Analyst Nick Menard told the committee he initially recommended against approval after finding five problems: participant data that exactly matched the contractual target of 7,150 because the nonprofit stopped counting after hitting the number; a $3,200 gift card allocation that OEWD initially denied existed; no in-depth monitoring of this specific grant; no line-item budget provided until after the BLA report; and an unauthorized subcontractor, MEDA, that needed to be added.

"When we reviewed the contract last week, I will say I had grave concerns about OEWD's management and control over the money in this agreement," said BLA Analyst Nick Menard. On the participant data, he added: "The number of people recorded as participating in the program in 24-25 was exactly the goal of the contract, 7,150 people. And I can tell you that almost never happens, especially with a number like that."

After OEWD addressed four of five concerns in the days before the hearing, Menard shifted his position from recommending denial to calling it a "policy matter" for the board.

OEWD Staff Krizy Otano attributed the breakdowns to severe staffing cuts. "This year has been a painful year for OEWD. When we were asked to put a lot of our staff hiring on hold, our contracts team became very decimated. We went from a team of eight people down to 2.5," Otano told the committee.

The other side: Supervisor Cheyenne Chen, who sponsored the item, advocated for approval given the critical services the hubs provide to Districts 9, 10, and 11. Ruth Badajas of the Latino Task Force and Mission Language and Vocational School, a subcontractor, described the pandemic-era origins of the contract and committed to improved data collection. "Our community, our immigrant population, our folks of color in San Francisco are still recovering from what they impacted, the ways that they were impacted during the pandemic. And that looks like being food insecure, that looks like being housing insecure, that looks like being underemployed," Badajas said.

Supervisor Danny Sauter was unconvinced that the concerns had been fully resolved. "If you're missing the fact that we're being told gift cards are not being used and they are, that is pretty troubling. If we're talking about another subcontractor being added that was not supposed to be there — that's pretty troubling," he said, before moving to send the item without recommendation.

Decisions: The committee voted 3-0 (Chan, Dorsey, Sauter) to refer the item to the full board without recommendation — a rare signal that the committee has reservations. Vice Chair Matt Dorsey framed the move as "a courtesy to our colleagues to discuss some issues that we may have some reservations" about.

What's next: The full board will decide whether to approve the grant increase without the committee's endorsement. The current services expire June 30, 2026, and OEWD plans to transition to a new RFP (RFP235) with eight job centers starting July 1.

$75M Rehab Greenlighted for Western Addition Affordable Housing

The basics: The committee approved a $22.6 million city loan, a 75-year ground lease, and an $18.7 million revenue note for the complete rehabilitation of Golden Gate Apartments at 1820 Post Street in the Western Addition — a 72-unit, 100% affordable development sponsored by Chinatown Community Development Center.

Why it matters: The building hasn't undergone major rehabilitation since Chinatown CDC acquired it in 1999. All 72 units — studios through four-bedrooms — are restricted to households earning 60–90% of area median income, with 55 units backed by project-based Section 8 vouchers.

Where things stand: MOHCD's Claire Costres presented the financing package. The total project cost is $75 million, with the city's $22.6 million primarily structured as a PASS hard-debt mortgage plus $530,000 in recast existing debt. Additional financing includes $21.9 million in tax credit equity, $18.7 million in tax-exempt and taxable bonds, and $1.9 million from operations. The BLA confirmed 20-year income projections are sufficient to service the PASS debt.

The rehabilitation scope covers exterior cladding, waterproofing, window and roof replacement, unit interior renovation, accessibility improvements, and sewer line repairs. Tenants will be relocated in three phases — each lasting less than one year — with all relocation costs funded by the project. Construction is expected from July 2026 through March 2028, with all residents returned by April 2028.

Decisions: Passed 3-0 (Chan, Dorsey, Sauter) with recommendation to the full board.

Homeless Respite Center Shows Promise at Shelter-Level Cost

Two Department of Public Health items advanced together: a new three-year state performance contract for behavioral health programs and a two-year extension of the Westside Community Mental Health Center's contract for the Eleanora Fagan Center at 1018 Mission Street, bringing the total to $21.5 million.

Why it matters: The 72-bed Eleanora Fagan Center provides short-term respite and health stabilization for homeless individuals with substance use issues — a clinical model designed as a first step to exiting homelessness. Since opening in August 2025, it has delivered roughly 5,000 encounters to 183 unique individuals.

"They have provided around 5,000 encounters serving 183 unique individuals, with 93% of those folks leaving with a referral to the next step in their treatment and recovery," said DPH Director of Substance Use Services Kelly Hamm.

BLA Analyst Nick Menard recommended approval, noting the center costs about $70,000 per bed per year — essentially the same as a standard HSH shelter bed despite being more medically intensive. "It is basically the same cost as a HSH shelter bed, which is less medically intensive. And this contract is funded by homeless gross receipts tax. And ultimately it will be Medi-Cal eligible, at least for a portion of the services," Menard said.

Vice Chair Matt Dorsey expressed enthusiasm about the clinical model. "I often feel that the issue that we sometimes have with permanent supportive housing isn't with the permanent supportive housing providers. It's with we, the city, asking permanent supportive housing to solve problems that it was never designed to solve," he said.

The companion item — a new performance contract with the California Department of Health Care Services — covers six behavioral health programs including the Behavioral Health Services Act (formerly MHSA) for July 2026 through June 2029. The contract sets compliance and reporting standards but does not directly include funding.

Decisions: Both items passed 3-0 (Chan, Dorsey, Sauter) with recommendation to the full board.

Cannabis Dispensaries as Neighborhood Assets

The committee accepted a $2.17 million grant from the Governor's Office of Business and Economic Development through the Cannabis Equity Grants Program. Since 2020, San Francisco has distributed over $13 million to more than 90 local cannabis equity businesses, with a 95% utilization rate and over 90% recipient satisfaction. Funds can be used for rent, capital improvements, regulatory fees, testing equipment, and compliance with good neighbor policies.

Vice Chair Matt Dorsey asked whether grant funds could help dispensaries pay for security guards required under the city's good neighbor policy — staff confirmed they could. Dorsey noted that regulated dispensaries face steep competition from illicit markets and have become valued community assets. "I heard from neighbors of cannabis dispensaries how much they appreciated having a cannabis dispensary in their neighborhood because there was a security guard on site," he said.

Decisions: Passed 3-0 with recommendation. The companion appropriation item was also referred.

Minor Items

• Proposition 4 climate bond resolution: All city departments authorized to apply for competitive grants from California's $4 billion Proposition 4 climate bond. A major application cycle closes at the end of June. Passed 3-0 with recommendation.

• SFO passenger processing contract: SITA contract extended through June 2029 with a $9.7 million increase to a $16.8 million total. SITA achieves near-98% performance on boarding pass and bag tag terminals. Funded at $3.2 million per year from airport revenues. Passed 3-0 with recommendation.

• SFPD retail theft grant: No-cost, one-year extension of the $15.3 million organized retail theft grant from the Board of State and Community Corrections, pushing the term to June 2028. SFPD reported 9,227 organized retail crime incidents and 4,178 arrests since October 2023. Passed 3-0 with recommendation.

• SFPD naloxone acceptance: 1,800 units of naloxone valued at $43,200 accepted through the state's naloxone distribution project. Retroactive because the state ships naloxone automatically after application approval. Passed 3-0 with recommendation.

• Jail Health Services lease: New five-year office lease at 796 Brannan Street for DPH's 10-person HIV and hepatitis C care coordination team serving incarcerated individuals. Rent is $40 per square foot with 3% annual escalations. The space has served as the program's headquarters since the early 1990s. Passed 3-0 with recommendation.

• Transgender District banners: Retroactive $24,516 grant for placemaking banners in the southeastern Tenderloin and along 6th Street south of Market. Continued from the prior week pending a City Attorney determination that the competitive bidding waiver eliminated the need for a grant agreement. Passed 3-0 with recommendation.

• Tad's lease at 44 Ellis Street: Continued to June 17 so MTA can finalize a rent escalation provision for the first extension period. Chair Connie Chan cautioned that June 17 is the last budget committee meeting before July, and substantive changes could push the item further. Passed 3-0.