PG&E's Late-Stage Demands Add $3.6M to Mission Street Affordable Housing Project

The San Francisco Board of Supervisors' Budget and Finance Committee unanimously advanced 15 items on Sept. 23, but the sharpest moment came when Chair Matt Dorsey laid out the cumulative toll of PG&E's infrastructure delays on city projects — an estimated $76 million since 2018. A completed 35-unit affordable housing building at 3300 Mission Street sat empty for months while the utility demanded 800 additional feet of trenching it never flagged during design review.

The committee also rescued an iconic waterfront restaurant from closure, greenlit $3.9 million in privately funded police technology, and locked in a $45 million airport ground-transportation contract as post-COVID travel surges.

• PG&E's late-stage scope changes force a $3.6M loan increase for a completed 35-unit affordable housing project at 3300 Mission, keeping families out of move-in-ready homes
• Port saves Pier 23 Cafe by slashing rent and forgiving $729,000 in back rent for the 40-year waterfront institution
• SFPD accepts $3M private gift for real-time investigation center drone and counter-drone technology — no general fund dollars spent
• SFO awards $45M curbside management contract to incumbent SP Plus LLC, adding 19 positions to handle growing passenger volumes
• District Attorney secures $5M+ in state grants for victim services, victim-witness advocates, and workers' compensation fraud prosecution
• Medical examiner deploys machine learning to detect emerging psychoactive substances in DUI cases with an $847,000 state grant

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Families Wait as PG&E Rewrites the Rules Mid-Construction

The most consequential item of the day exposed a pattern city officials say is costing San Francisco tens of millions of dollars: PG&E demanding major infrastructure changes deep into — or after — the construction process for affordable housing.

The basics: The committee approved a $3.6 million increase to the city's loan for 3300 Mission Street, a 35-unit affordable housing project developed by Bernal Heights Neighborhood Center and Tabernacle. The total city investment rises from $12.4 million to $16.1 million. The building is physically complete but cannot open because PG&E required 800 additional feet of underground trenching — quadrupling the originally approved 200-foot scope — and imposed design changes that did not materialize until well after construction was underway.

Why it matters: Over 2,000 households have applied for just 34 available units. A finished building sat empty while the developer absorbed months of delays and millions in unanticipated costs. The project uses public power on city-owned land, with SFPUC serving as intermediary to PG&E — meaning the city has limited leverage to prevent scope changes imposed by the utility.

Where things stand: Housing Finance Manager William Wilcox of the Mayor's Office of Housing and Community Development testified that the PG&E scope changes did not emerge until March 2026 and were not finalized until July 2026 — a full year after the project was expected to receive its temporary certificate of occupancy. "We didn't really have numbers until March of 2026. And didn't have that finalized until July of 2026," said Wilcox. He added that the developers forfeited $800,000 in developer fees to help offset the overrun, and that additional non-city debt covers $2.4 million in cost increases unrelated to PG&E.

Wilcox noted this is not an isolated case, citing similar PG&E-related cost overruns at 4840 Mission and 555 Larkin. SFPUC expects approximately $430,000 in potential refunds from PG&E for service upgrades that benefit other utility customers.

The other side: Chair Matt Dorsey did not mince words. "The estimate I got from the San Francisco Public Utilities Commission is that it has cost our city and its taxpayers about $76 million since 2018, these kinds of obstructions and delays," he said, referencing an appeal of PG&E the board had heard the prior day. BLA Analyst Nick Menard confirmed the city's $3.6 million covers only PG&E-related costs; non-PG&E overruns are borne entirely by the developer.

Decisions: Approved 3-0 (For: Dorsey, Chan, Sauter; Against: none; Absent: none) and forwarded to the full board.

What's next: The building is expected to begin lease-up quickly given the overwhelming demand. The project is also supported by the recently approved Affordable Housing Opportunity Fund. The broader fight with PG&E over late-stage infrastructure demands continues at the state and federal level.

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Port Rescues Pier 23 Cafe With Rent Cut and $729K Debt Forgiveness

Why it matters: Pier 23 Cafe, a family-owned waterfront restaurant operating since 1985, nearly closed after COVID-era office vacancies and work-from-home trends gutted its customer base. The Port of San Francisco spent two years negotiating a restructured lease to keep the 40-year legacy business alive rather than risk a vacancy on a specialized waterfront property.

Where things stand: The new lease cuts base rent from $64.44 per square foot to $26.65 per square foot and reduces percentage rent from 7% to 6% of gross revenues. The Port agreed to forgive approximately $729,000 in unpaid rent and interest. In exchange, the cafe will invest $500,000 in capital improvements to the port-owned facility, staggered over extension periods. The deal carries a four-year initial term with options for 15 additional years and includes a true-up clause capping total rent at 6% of sales for the first four years.

Deputy Director of Real Estate Scott Lansdale of the Port explained that the cafe had been paying more than any other direct port tenant along the waterfront. "Pier 23 was actually paying a base rent that was higher than any other retailer along the waterfront that was a direct port tenant, and paying it not only on their interior space but on patio space that was very seasonal," he said. Lansdale noted the restructured deal avoids retenant risk and anticipates synergy with upcoming tenancy at neighboring Pier 29.

Supervisor Danny Sauter, whose District 3 includes Pier 23, called it "a longtime business in my district, a legacy business, in fact, and has been a stop for many through the years along the Embarcadero."

General Manager McGurran Leibert testified that the cafe has recovered from COVID and is committed to investing in the property as it approaches its 40th anniversary.

The Budget and Legislative Analyst identified a technical error in the resolution's revenue figure, which the committee corrected from $5,877,000 to $3,236,685 before voting.

Decisions: Approved as amended 3-0 (For: Dorsey, Chan, Sauter) and forwarded to the full board. Supervisor Sauter moved the amendment per the BLA recommendation.

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$3.9M in Private Gifts Power SFPD's Surveillance Tech and Recruiting Push

Why it matters: SFPD is building out its technology and recruiting infrastructure almost entirely through private philanthropy and state grants — expanding drone capabilities, officer wellness programs, and hiring pipelines without tapping the general fund.

Where things stand: The committee heard four SFPD items together. The largest was a $3 million cash gift from the SF Police Community Foundation for the Real-Time Investigation Center at 315 Montgomery, including $540,000 for two drone docking stations and $375,000 for counter-drone technology, with the remainder earmarked for future hardware, software, and facility costs.

"So far we're north of 700 arrests since the inception for the Real-Time Investigation Center," said Captain Stephen Jonas of SFPD Strategic Investigations.

Chair Dorsey praised the center's track record: "I really am grateful for the work being done by the Real-Time Investigation Center. I have been a strong supporter of making sure that SFPD has the tools that a modern police department needs."

Separately, a $45,500 in-kind gift from China Basin Ballpark Company provides Oracle Park as a venue for a police recruitment testing event. Acting Sergeant Mike Patuia reported the department is on pace for a major recruiting milestone: "We are well on track to exceed over 10,000 applications this calendar year for entry-level staffing for the department." He cited the O2X officer wellness program — funded by another $103,750 foundation gift — as a competitive recruiting advantage.

A fourth item authorized a $772,507 Cannabis Tax Fund grant from CHP for drug-impaired driving enforcement training and a replacement DUI patrol vehicle.

Decisions: All four items approved 3-0 (For: Dorsey, Chan, Sauter) and forwarded to the full board.

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SFO Locks In $45M Ground Transportation Contract as Travel Grows

Why it matters: San Francisco International Airport's commercial ground transportation system — covering taxi dispatch, limousine operations, autonomous vehicle operations, and ride-hail staging — serves millions of passengers annually. Post-COVID air travel recovery and prevailing wage increases are driving staffing and cost growth.

Where things stand: The committee approved a three-year, $45 million professional services agreement (with a two-year option) with SP Plus LLC, the incumbent operator selected through a competitive process that drew three proposals. A panel that included airport officials from Oakland and San Jose airports evaluated the bids. Staffing will rise from 93 to 112 positions. The BLA noted a 25% increase over actual spending built into the budget to accommodate expanded service levels and recommended approval.

Mark Gleason, a representative of Teamsters 665, spoke in support, noting the union has represented the SFO curbside workforce for over half a century.

Decisions: Approved 3-0 (For: Dorsey, Chan, Sauter) and forwarded to the full board.

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DA Secures $5M+ in State Grants for Victims and Fraud Prosecution

Why it matters: The District Attorney's Office's Victim Services Division served 8,263 victims of violent crime last year. Without state grants, the city's victim advocacy staffing and its ability to pursue workers' compensation fraud — in a city that is self-insured — would face cuts.

Where things stand: Three items were heard together. A $75,000 revolving fund with the California Victim Compensation Board covers emergency expenses including funeral, burial, relocation, and crime scene cleanup. A $1 million grant from the California Department of Insurance funds one investigator and two assistant district attorney positions to prosecute workers' compensation fraud. And approximately $4 million over three years from CalOES sustains the Victim Witness Assistance Program, funding nine advocates. Chief Karima Baptiste of the DA's Victim Services Division noted the scale of the division's work.

Assistant District Attorney Jeff Daly underscored the stakes for a self-insured city: "San Francisco is a self-insured entity for workers' compensation, so any fraud is harmful to this city. This takes money away from other important services that could be available to the residents of the city."

Decisions: All three items approved 3-0 (For: Dorsey, Chan, Sauter) and forwarded to the full board.

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HSH Lease Extended at Lower Rent; Civic Center Consolidation Eyed

Why it matters: A $6-per-square-foot rent reduction saves $52,000 in year one for HSH's administrative offices, and the lease's 2029 expiration creates a strategic window to relocate city offices into the Civic Center — boosting daytime foot traffic in a struggling corridor.

Where things stand: Director of Real Estate Sally Orth negotiated rent at 601 Van Ness Avenue down from $46 to $40 per square foot, with a $1-per-square-foot annual escalation through July 2029. Total rent over the extension is estimated at $1.1 million. Deputy Director Emily Cohen noted that about one-third of HSH staff work at 601 Van Ness, with two-thirds at headquarters at 440 Turk. Orth said she will meet with new HSH Director Levine to discuss future consolidation.

Chair Dorsey articulated a broader vision, citing the general plan: "What that was envisioned in, as in our general plan, is that we should have a vibrant, thriving government center in the Civic Center and Midmarket area by day, and then at night it's enriched by cultural institutions like theaters and the symphony and opera."

BLA Analyst Nick Menard confirmed no further extension options exist after 2029, making strategic planning urgent.

Decisions: Approved 3-0 (For: Dorsey, Chan, Sauter) and forwarded to the full board. Orth indicated she will meet proactively with new HSH leadership on future office needs.

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Minor Items

• LGBTQI+ community grant expanded: Human Rights Commission grant amendment with TransCanWork Inc. increased by $150,000 to $450,000 total; approved 3-0.
• Food as Medicine at DPH clinics: DPH accepted a $300,000 in-kind gift from Community Initiatives providing groceries, cooking demos, and vouchers for patients with chronic conditions at six clinics; approved 3-0.
• Medical examiner gets $847K for drug detection: Cannabis Tax Fund grant funds two forensic toxicologists and machine learning software to identify novel psychoactive substances in DUI cases; approved 3-0.
• Industrial supply contract nearly doubles: MSC Industrial Supply citywide contract increased by $7.6 million to $17.1 million for HVAC components, safety equipment, and plumbing supplies; approved 3-0.
• Wholesale Produce Market lease delayed: Item continued to the Oct. 21 meeting at the department's request; approved 3-0.