City and County of San Francisco Thursday, September 08, 2011
supervisor campos: welcome to today' s meeting.
We are joined by supervisor
mark farre
ll and we will be
shut joined shortly by david chiu.
Madam Clerk , do you have any announcements? >> please turn your wringers
off of your cell phones.
you wish to speak, fill out a speaker card.
Items will appear on the board
-- the September 20th agenda, unless otherwise stated.
Supervisor campos: could you please announced item number one.
>> a performance --
supervisor campos: the question
of how much the city should advertise on city property is an issue that has been discussed
many times and at different
times, voters in san francisco
have opined on that issue.
The question before us is within
the confines of what city policy
is currently how are we doing in
terms of performing our duties
and maximizing revenue for the city?
That is the reason we call this
hearing and we begin by thanking
the budget and legislative analysts for their great work on this.
>> the morning -- good morning. I'
m from the budget legislative analyst' s office.
We would like to give a
presentation on the audit of city policies and advertising revenues.
The presentation will be given by those who have worked directly on the audit.
I would also like to say we started out by actually looking at the city'
s policies, the voter-approved policies.
They do define where advertising can and cannot occur
and what the goals of the city are. As far as naming rights on
candlestick park were recently
revised so that naming rights came back into agreement.
But yes, we did work within
those parameters.
just for starters, we -- the
presentation . The goal was to look at the city' s advertising agreement.
We looked at the city policies
and how they monitor in terms of the contract. This was approved in November of 2010 and we completed the audit and submitted it to the
board in April of 2010.
We had for findings and 15 recommendations.
the recommendations included
oversight of city policies, the
management of mta advertising
revenues, non-transit
advertising revenues.
Overall, we believe our
recommendations would be about 1.3 million, which we will talk about later in this presentation.
The city departments we covered
and received responses from, the recommendations to the city
administrator, rec and parks,
mta, all of those have agreed
partially with the decisions that impacted them, except for mta.
Supervisor campos: before you proceed, I think it would be helpful for those in the audience and those who are
watching, when you talk about
the two instances that voters have recently shared or
expressed an opinion, to simply note that.
My understanding is we have one
proposition, g, which was
approved by voters in the March
2002 which prohibits general advertising signs or billboards
on public and privately owned
buildings, but does not prohibit the number of general
advertisements on city-pound motor vehicles or in the public right of way, including sidewalks or streets.
The second proposition was
proposition e which was approved
in 2009, and that prohibits an increase in the number of
general advertising signs on
city-owned furniture, including
transit shelters, kiosks,
benches, and newspaper racks. >> that is correct.
when you talk about proposition
g, you will see when we go through the audit, there' s one billboard that predates that.
So there is one billboard with advertising.
But, yes, those are the two major propositions that govern advertising.
to put into context, the city
received -- this is based on the full year of revenue we had
during the audit, about $21
million in advertising revenue,
almost two-thirds of that is
mta, who has three different agreements from which they receive revenues.
One of which is from revenues on transit shelters, one of them is
for vehicles, and they receive some revenues through an
agreement between bart and advertising provider for the
combined muni-bart station.
There is an agreement with clear channel for advertising on airport property.
Public-works as two different agreements.
They provide public toilets in
exchange for being to advertise
on kiosks and another that is
not revenue-generating, but it is maintenance of news racks in exchange for advertising.
Recreation and park has an advertising agreement, they share an advertising revenues
with the forty-niners and candlestick park.
Real-estate has a billboard
talked-about on mission and the
convention facilities have some advertising in the center.
All three of these have --
themta, recreation and park, at
this time, there are no naming rights in the city.
with that, I would like to turn
this over to emily who will give the next part of the presentation.
>> of good morning, supervisors.
-- good morning, supervisors. i would like to give you an overview of the presentation.
First, we found city departments lack consistent advertising policies and their agreements with companies.
Not all departments were maximizing their advertising revenues.
while we recognize sfmta has increased revenues through
negotiations with new
advertising agreements, sfmta
does not consistently monitor advertising agreements to maximize revenue.
Finally, city departments have
not consistently monitored and advertising companies were compliant.
the first finding is in regards
to city policies and uniform advertising guidelines. There is a lack of advertising guidelines to ensure that
departments are complying with the city policy and requiring
advertisers to me consistent standards.
Only sfmta and the airport have advertising standards explicitly spelled out in their agreement.
For example, sfmta prohibits advertising is related to political activity, these of firearms and pornography and other prohibitions.
Because the department of public
works, recreation and parks department, convention facilities, and the real estate division lack formal advertising standards in their agreement,
they cannot and -- they cannot
assure companies understand or comply with city policies as
well as general department advertising policies.
We found only that airport
requires approval advertisements prior to installation.
Sfmta requires prior approval of pilot programs and experimental advertising only.
In contrast, the department of
public works and recreation and parks place their responsibility of approving advertisements with the advertising companies.
This is a picture of the only city-owned building with an advertisement.
The real estate division assumed
an advertising agreement when it
purchased this agreement in 2007
which predates the 2009 city
legislation prohibiting advertisements of alcohol on city-owned properties.
During the audit, we found the real estate division was not clear on what the city' s policies were and assumes that
when the outdoor advertisements
policy agreement would expire this year that they cannot replace it.
But with clarification from the commission, we found they could enter into a new agreement
because they are not increasing the number of advertisements on city-owned buildings within the
city, just replacing one agreement for another.
but, because of the restrictions
on alcohol, it is likely the real estate division will not see the same high monthly revenues from the new agreement.
One of the war exemplary advertising agreements we found
during the audience -- one of
the more exemplary advertising agreements we found was the agreement with clear channel.
We found this advertising agreement had a high minimum annual guarantee, which is 70%
of gross revenues.
It also generated consistently higher revenues annually.
we also found that it had inappropriate advertising content review process, which I mentioned earlier.
It also had an updated, agency- specific advertising standard consistent with the city policies, such as the prohibition of alcohol and tobacco.
Finally, we found contrasting staff was well aware of these
requirements in the contract terms.
In contrast, one of the
agreements we found to have an unfavorable advertising terms
is the department public-works
agreement with jc
ducomb, which installs public toilets on the
streets in return for the
ability to place public kiosks on the streets.
These have some things like the city advertisments but they also
have two panels for commercial advertisements. Most city advertising agreements require companies to remit to
the city of higher of a minimum annual guaranteed or percentage
of gross revenues of least 40%.
However, the agreement between
dpw and the company only
requires 7% advertising revenues to be permitted to this city.
this next slide is a chart that illustrates the differences in revenue generated by different contracts.
In 2009, clear channel
generated a net annual revenue
of $7.6 million wear asjc d
ececuax -- the airport received $6.7 million whereas the department of public works only
received half a million dollars. Therefore, --
supervisor campos: that is 7%? >> there'
s a base pay -- there is a base payment plus 7%.
Therefore, we recommend the department of public works actually try to negotiate amendments to the existing
agreement and include some kind
of incentive because they' re obviously making money and May now want to remit some much
money to the city, but if we increase the number of commercial kiosks' they can
install, we could increase revenues to the city.
Supervisor farrell: you have
obviously been working with dpw on this. What are their thoughts? >> these contracts were negotiated a long time ago in the people who negotiated these contracts, they don' t know where they are.
They also did not realize what the other city departments were
doing, so to them, it would have
been helpful to that what was the structure for other
departments, so they are trying to negotiate amendments, but they also realize a challenge
given this agreement has been in
place for a long time. >> how long is --
supervisor farrell: how long is the term of the agreement?
>> the agreement is for
--
>> the agreement as until 2016.
They were actually opened to the idea to come back with some sort
of incentive for some sort of
reason for the company to come back and renegotiate terms of the contract. Although it' s not a given they will be able to do that, they are open to trying.
Supervisor
campos: what are the terms of the agreement? is there a unilateral term?
>> I do not think so.
Supervisor campos: it seems we
should be open to renegotiation. We have to renegotiate we have 7% and other agreements that
actually guarantee 70%, 40% or
30%, 7% appears out of whack.
>> we read the contract pretty thoroughly and I' m not an attorney so I cannot really
respond to that, but I don' t recall there was a provision that would allow a unilateral
termination to renegotiate a contract, but I could go back and look at that.
supervisor farrell: would it be
possible to send us the contract as well?
Supervisor campos: it amazes me
how we find $5 million pockets of money in our city government that we are not taking advantage of.
>> obviously, it would be nice
to renegotiate the higher revenue share consistent with
the others, but if the departure of public-works were to
renegotiate even just a 25%
revenue share, that include
additional kiosks, we estimate the city could generate or
receive $1.1 million in additional revenue annually.
Supervisor campos: from my
perspective, 25% is a very conservative number. I would hope the would be higher than that.
Supervisor farrell: I hope someone is running some financial models here.
25% now as opposed to
terminating in 2016, someone needs to run the numbers here because those are big deals.
>> we do follow up to our recommendation, so that is something we will continue to follow-up.
unfortunately, dpw lost their director, so it will be a new situation for us.
>> one of the more controversial agreements san francisco has been is the naming
rights agreement at candlestick park.
City and county of san francisco and the san francisco forty- niners entered into an agreement
for naming rights of the stadium in 1996.
From 1996 until 1992, the city
receives $4.9 million in revenue.
The existing naming rights
agreement began -- from 1996 until 2002. The current agreement will
expire in May of 2013.
This gives the 49ers' the
exclusive right to enter into negotiations for naming rights
of the stadium but there have to
remit 60% of the revenue to the city.
From 2004-2007, the park was
named monster park and the city received $3 million.
But despite renewed authority it to enter into naming rights agreements after a voter-
approved ballot initiative, the
san francisco 49ers have not exercised his authority.
Therefore, the city is forgoing
a potential 50% net naming rights revenue, which based on
past experience, average about $1 million a year.
Now like to turn it over to my colleague, sarah duffy.
Supervisor farrell: can I ask a quick question on the forty- niners? What is the solution here?
>> we spoke with recreation and
park department and they threw their hands up a little bit.
The only solution is to put
pressure on the forty-niners through the commission itself, perhaps.
But there is not any way they
can compel the 49ers into a naming rights agreement.
Supervisor farrell: so this was a bad deal entered into a while ago?
>> we had some concerns at that time, yes.
Supervisor farrell: do you know they have not made any efforts?
>> the recreation and parks department did not know the official reason why they did not make an effort, but there is
speculation that trying to find a naming rights agreement is not one of their priorities at this time.
Supervisor farrell: again, the question is do you know they have not made any efforts or they'
d have not succeeded?
>> we do not know if they have made any efforts or not.
One other thing -- when we talk
about the policies, we did make
a recommendation and the city administrator agreed to begin to
coordinate and centralize to
some sort of uniform standards to advertising which is currently lacking.
>> good morning, supervisors. my name is sarah duffy.
And going to go over the
findings related to the mta advertising contracts.
Mta has three advertising agreements.
the first is the transit shelter agreement between clear channel and outdoor, the second is for
vehicles and parking garages and the third is a memorandum of
understanding betweenmta and
bart -- between mta and bart.
this shows the revenues associated with those three
agreements generated during a
10-year time frame through 2010.
You can see over the past four years, the revenues have
increased by $7.4 million. The increases are largely
related to mta' s success in negotiating a financial terms
for contracts, which in part
resulted from good economic
climate in place when the contracts were negotiated.
The transit advertising generates a majority of revenues for advertising on city property.
As a result of the audit, we
found mta has demonstrated a lack of success in monitoring some of these advertising terms.
For example, advertising for five of the city parking
garages under mta management, titan has not sold any
advertisements in these parking garages since the beginning of the agreement in 2009.
Titan has reported little interest in purchasing advertising space is in parking
garages given the poor economic climate.
but we noted the airport , their
agreement resulted in
advertisements located in
elevators and passageways in the airport.
These parking garages titan has the possibility of selling
advertisements and are all located in downtown san francisco. in mission and other very high traffic locations.
Supervisor campos: was there any analysis over what is happening with privately-and parking garages and the kind of advertising had that -- kind of advertising that happens in
those places and whether or not they are able to secure advertising?
>> we started looking at that
and we did not have much -- we
looked more at the publicly owned parking grudges in other cities.
>> we tried to benchmark with other cities. All lot of this is proprietary information and we had a hard time obtaining it. we did call different advertisers in different areas
in terms of their procedures, such as chicago, which has a
large number of publicly-owned parking garage is.
We did some spot checking, but I
would not call a meeting any sort of audit standards.
>> based
on making calls to
advertising agencies that
advertise in parking garages, we
advertise conservatively mta could receive revenues of
approximately $250,000 in
advertising in these parking garages.
also, mta receives monthly sales reports from tighten but does
not have information on actual compared to advertising.
Unsold advertising space not only result in lost revenue
potential, but also in graffiti
that tends to be up in spots
like transit vehicles where there is no advertising.
Supervisor
campos: I know the
finding is sfmta is not
maximizing revenue in terms of these dollars.
can you just summarize why that is the case? What is that finding based on?
>> our finding is based on the
fact that there are not any ads
that have been sold in parking
garages and another term of the
agreement is that titan has the possibility to sell digital
display and in the advertisement and we did not see any of that.
More oversight on the part of
mta in terms of overseeing the ads with the two different contracts. In response to those
recommendations, mta said it
tightened is working to maximize
sales and in the challenging economic times, it' s difficult to sell the maximum amount of advertising.
>>
we also looked at compliance.
Most of the city' s advertising
agreements that have the infrastructure in good repair.
Present terms of mta and
dpw,
advertising companies have not
complied with removing graffiti
and vandalism in a timely manner.
Neither mta d norpw monitored
the compliance with removing graffiti and vandalism. We found graffiti on transit
shelters and commercial kiosks
and found torn and missing advertisements and we found at least to public toilets on market streets that have been
out of order for over two weeks.
That would be part of the dpw
agreement on maintaining public toilets.
We also discovered news racks,
which are part of the dpw
contracts did not only hold the newspapers but were being used as storage for trash and other things.
Our office had five recommendations intended to improve compliance with inventory maintenance and other requirements under the existing agreements with the exception of mta.
all of the the parents agreed with our recommendations to
provide an example of mta' s
responses -- recommendation 4.3
in our report is that mta should
initiate quarterly site visits
to inspect advertisements and associated infrastructure.
Mta says staff reviews these items as part of the regular
duties, but the visits are not documented and the advertising space remains an issue.
Our office maintains all seven
recommendations made to mta as
part of the ottoman terms of compliance and revenue
generation remain feasible -- as
part of the terms of compliance and revenue generation remain feasible. We like to thank the department for their support.
Supervisor farrell: backing up one slide, the green newspaper
racks,
-- those are dpw' s?
Who is in charge of all the standalone racks?
>>
dpw has a contract with a clear channel to install those racks with the newspapers. They are in charge of maintaining them weekly.
Obviously they have not been doing that very well. We asked them for their records how they are sure they are maintaining them weekly and
clear channel does submit some
form of records involved, but
we found racks --
supervisor farrell: you are talking about the new, green ones. I' m less concerned about those. They are a vast improvement even if they are somewhat dilapidated according to report
compared to some of the stand-
alone.
The ones that are filled with
graffiti and our big eyesores, I wonder who' s in charge of monitoring and taking care of
it?
>> we look at the agreement they
had to maintain the news racks, but we don' t know about the others.
Supervisor
campos: any other comments before we hear from mta on this issue?
i get a couple follow-ups, just a couple of points on the budget analyst.
One of the things that jumps out is the question of who in this
city overseas, generally
speaking, issues involving advertising? Is there someone who is
monitoring overall compliance
with policies and procedures in the maximizing of revenue for the city?
>> no.
Planning department is
responsible for monitoring signs in the city. Our finding was nobody is responsible.
We recommended the city administrator become responsible, not so much for compliance, but setting the
standards and making sure all the departments know what the standards and policies are.
Then each department becomes
responsible for complying with city standards.
Supervisor campos: I think that would be very helpful.
It concerns me that there is no
uniformity of standards citywide. It concerns me, for instance,
that it seems for of the six
departments implicated here do
not, for instance, have standards that prohibit advertisements for political
purposes, guns, and as problematic. i don' t know the best way to make that happen.
If a letter from the committee
to the city administrator would
make sense, but I do think is important to have a point
person city-wide who is at least monitoring these issues. >> the city administrator did agree to be that point person,
so would be good to appoint them.
>> with respect to the dpw 7%
issue, I think it makes sense
for us to comeback and hear
directly from dpw in the near future about what efforts have been taken to address that issue.
You are talking about millions of dollars, a significant amount of money.
One of the things that was
interesting to me was that departments do not always require approval of the ads that
go up.
From my understanding, the airport is the only one that does that? >> that is correct.
Supervisor campos: in terms of
the best practice, do you have any idea if that makes sense?
I would think before and that goes up that there should be
someone who at least looks at it and decides whether or not it is consistent with the policies of
this city. >> I don' t believe we have best
practice information on that particular piece.
Again, that would probably be part of the standards the city administrator would set, whether
doing, setting standards doing post checks and giving approval
before would be best.
>> I know it --
supervisor campos: I know that' s
sfmta require some approval of ads, but not necessarily everyone.
trying to understand what the best practice should be is important. Why don' t we hear from the
sfmta?
We have the cfo with us. Thank you for being here.
We know we heard from the budget
and legislative analyst of the
six departments mentioned in the report.
The mta is the only one disagrees with some of the findings.
>> thank you for letting us comment on this review.
First, let me say there are a lot of areas where you could
find fault with the mta, but we don' t think this is one of the
areas -- our revenues have gone up 5000%.
We have over 10,000 to 15,000 had spaces.
some of the -- dead is site visits are not feasible given
our resource constraints, so we
have not agreed with some of the
commons because we do not
believe the best practice for an
advertising type like we do,
with some ads and faces, we have embedded all the requirements in
to the contract so that by
making sure the contract is complying with our advertising
policy, which we believe is very
strong, and all the other restrictions, we have
significant liquidated damages
should and our contract has been
requested by multiple systems as
the best practices, so we feel
very confident our contracts -- I would say internationally as
well, in terms of the areas of
maximizing revenues, you know
advertising is one of the areas we are absolutely focused on
because if we don' t maximize advertising revenues, that
means community services and we
actively monitor the advertising.
unfortunately, the advertising market is not as strong as you
would like to be, what we had in 2011 exceeded revenues by
over 15 million and both of our
contractors are succeeding and
every dollar above, we get 65%,
so we have a strong revenue contract.
I would say as an overarching comment, unless you want me to go through point by point, we
feel strongly about our advertising effort.
Supervisor campos: I appreciate the perspective and I think a lot of effort has been made, but
I think the effort raised in the
report, it makes one wonder
whether you are in fact maximizing revenues. Let me give you an example.
One of the things the report says is that the mta does not
have information on available
advertising locations compared
to actual advertising locations. They' re saying you do not have the information of what you could potentially use as advertising in terms of locations.
You only have information on the actual. Can you respond to that?
>> we know exactly the number of ads bases and sites available
on our buses and transit shelters. We know the entire universe of
sites that are available and we' ve asked contractors to provide us with what they actually advertise on so we know the difference of what they' re not advertising on.
Second, our mag is so high that
even the advertisements on those
bases -- we would not hit mag, so those are the two points I would make. >> --
supervisor campos: wouldn' t you want to know what the contractor believes are actual
advertisments sites so you would have a way of comparing of what
they think is a potential advertising site relative to what you think --
>> de
give us every month
information by type of ad, the location of the ad, the location, so let' s say clear
channel -- we have 1100 shelters
with free ad sites on each shelter.
We know there are 3300 possible ads basis. We know clear channel will be
selling 10,000 spaces to yahoo! At these locations.
we have these that are free and
so we know for the next three
months in advance who is
selling, the buyer, the site,
what is empty and what ever is anti automatically becomes public-service ads.
We monitor that because --
automatic wet -- what ever is
empty, automatically becomes public service ads. I' m not sure we communicated
that effectively to the budget analyst, but we feel comfortable we know how many ads are sold and where they are and who is buying them.
Supervisor campos: it seems like there is a disconnect in terms of the information was provided because that' s different than what the report says. Something else the report says is you have not audited the contracts.
Have you audited the contracts?
>> when they did this review,
they did this for fiscal year 2009 and 2010.
Both contracts had just officially been initiated. We are in the process of auditing the second year now. Having said that, every year
during our fiscal year-end audit, the outside auditors that
control the audits go to our contractors and ask them to
verify the revenues and audit the revenues to make sure what we are reporting in our books
is what the contractor has
indicated, so we have an ongoing
process and we are initiating are already full process and the contracts are now over one year old. >> I think it is good you are conducting the audit.
One of the things the report
says is that the agreement
specifies every year a certified public accounting firm May
conduct a verification of advertising sales reported by
tighten, but the mta indicated that was not cost-effective and wonder if you can comment on that?
>> one contract says every two years we' re going to do that.
This year, we have an audit firm actually doing the process.
We thought a two-year review would be good on that particular
area because the length of the contract is a 20-year contract
and the cost of doing an annual
contract which could be $100,000
to $200,000 was not very cost-
effective, so we have a biannual review process.
Supervisor campos: something
else it says is that clear channel has are required it to
maintain the number of transit shelters and no one is performing routine side checks to make sure the shelters and kiosks are in good condition.
>> supervisors, there are 1100 transit shelters that were actually part of the contract.
We have had to take five down at
the request of the committee and board of supervisors.
that is what the budget analyst
is recommending is that we are a
little bit below that 1100 because of the removal of some
of the shelters, particularly in the tenderloin area.
Having said that, there is a website that was part of the
contract where we know exactly
the maintenance of every shelter every day. For us to have to visit every
shelter every day, four and t a staff, we don' t have that as a
normal -- for a mta staff, we don' t have that as a normal process. Our staff are out there on a regular basis and we also have the website that tells us on every shelter when it was maintained.
You can go to the web site, look
at the shelter on the corner and
from of city hall, we know the
maintenance shelter, when they picked everything at and what
time the person was there, what they found, so we believe our
review is pretty strong.
We also have a staff member who
does do random reviews, but not on a regular basis.
Supervisor campos: I would say
having that information is great and helpful, but I don' t think
that can replace an actual, physical inspection.
i think this is a point that I
hope the mta takes into consideration.
While it is difficult and
challenging for sfmta staff to check these sites on a daily basis, I don' t think anyone is saying that' s what needs to happen.
the public does have to go to these sites on a daily basis and
it seems to me there has to be a
way in which you can physically verify that the information you have in your database is actually correct because the
fact is data is reliable to a
certain extent because sometimes
the wrong data is input into the
system, but I think a routine
physical inspection would be an appropriate consideration.
>> we will look at that in terms
of our prioritization and budget process, we will put that into the mix of request.
supervisor campos: in terms of
information about annual revenue
data from the contractor, can you comment on that?
Do you have that information? >> absolutely.
Not only do we have that, but we meet with the quarterly
revenues, the auditors reviewing it, and we also have the
revenues reviewed by the city' s auditors.
On the revenue side, we feel very comfortable we are getting
-- our mags are so high that
some of our contractors are making a loss because they have to pay us some much.
Supervisor campos: with respect
to bart, it says you' re not currently requiring bart provide
ionization of advertising sales
at -- ionization of revenues.
What is actually paid is inconsistent with the revenue
sharing agreement.
>> what we do have from bart is a monthly spreadsheet, a
calculation of how they came up with their number.
We have asked for bart to find
out if a audit the contract and what they are reporting to us is accurate. They do not actually audit their
contracts, so they do they gear and review that we do.
based on the information we
get, our auditor verifies that and other than that, I' m not
sure what more we could do with bart in terms of requesting
additional information, given
their contract with the vendor does not require that level of information.
supervisor campos: I would think maybe we could work with our to make sure there is a requirement for that information from the vendor because to the extent we
are relying on a percentage of those proceeds and there is no
guarantee that those revenues
are being maximized, I think we
have an interesting and we could have that conversation was part to make sure there is a way of
ensuring the highest revenue possible, not only for us but for bart itself.
I would encourage you to have that discussion. >> certainly.
Supervisor campos: with respect to graffiti, there is a point
about coordinating efforts that are better and more effective. Do you have any comments?
>> I wish we could address graffiti better as a city.
When our director of operations came on board initially, he did not like any advertisements. Now he'
s a fan of ads because it pushes the burden of graffiti cleanup to our contractors and
so, we have a constant challenge
of graffiti on our buses and the contractor does a much better
job of graffiti cleanup and our forces are able to do.
To the extent we can get an asset in a space, that helps
with our internal graffiti cleanup. We have a dedicated group of people who do nothing but graffiti cleanup. We spend almost $50 million a year on graffiti cleanup.
Supervisor campos: the final question I have is that there seems to be an implication here that there is not of coordination between the folks
at mta who manage the contracts and the folks working on graffiti prevention.
That seems to be the suggestion. I' m wondering if you can respond
to that. >> I' m not sure I can be very conversant about, but what
happens every night when the buses come into the arts, the
advertising contractor is there
a long with the cleanup crews.
They are putting up -- they' re
cleaning up the graffiti in the
non-add spaces and they' re
working together on the buses at the same time on the shift. I' m not clear as to whether
there is an argument as to who should be cleaning up that individual piece of the graffiti, but they are working to clean up the bus at the same time.
It is unclear what else we can do there. >>
supervisor
campos: colleagues, and the other questions?
>> we are not going to go through all of the differences. Most of those are covered in our
transmittal letter, said the have any specific questions, we will respond.
None of the information is new that was just presented right now.
I do want to say on a couple of the points, one is on the
monitoring of the contracts in terms of available advertising space and what actually gets
sold, our report we believe is quite accurate.
With clear channel, which
advertises on the transit shelters, there was a high variability in the amount sold every month we thought was really important.
To work with clear channel and make sure the maximum number of spaces are sold.
With tight and, they do provide
-- with tighten, they do provide the information monthly.
but they do not compare sales to available advertising space.
We maintained mta needs to make sure they' re making all possible efforts in the space. The other one is on the issue of
the minimum number of shelters and kiosks that are required.
this is problematic because the
contract sets a minimum that is not achieved.
Mta gave multiple reasons why this was not, but the bottom
line is part of the
compensation and value of the contract is maintaining these shelters and kiosks and they are not maintained at that number.
There May be all sorts of community reasons or planning
department reasons, but we did look in and permits had not been pulled.
We did not feel there was an active case there.
On the audit -- some of these we don' t actually have a major disagreement.
On the issue of the audit, the
response, I don' t believe they told us they' re planning to do the audits every two years.
That May very well fill the spirit of the recommendation.
Supervisor
campos: a final question -- with respect to the
number of shelters, there is a minimum requirement in the
contract and we are not meeting that requirement, I think we should either modify the
contract or, it seems to me, we have to make sure the letter and spirit of the agreement is being applied.
>> certainly, a supervisor. To comment on that.
We definitely want shelters up
for the writers where we believe it is inadequate.
-- shelters up for the riders.
those shelters have been removed and the communities have asked to remove shelters.
Having said that, our mag is so high that where we put our shoulders up are dependent on
the service needs of our rd
iders or the system.
Our revenues are so high that we don' t think we should put up a shelter just to put up a shelter
unless the community wants it.
There are some new shelter locations and we are actively
working with dpw on the new shelters which is taking much more time than we thought.
We should be seeing some new
shelters going up across the
city soon once we resolve the power and permitting issues.
Supervisor campos: I appreciate that, but if that is the case,
if your position in terms of what is needed is different from
what is outlined in the contract, the contract should reflect that.
>> I don' t think the contract
says -- maybe I am wrong -- I can' t go back and look at that whether there is a dollar requirement or shelter requirement.
Supervisor campos: finally, what
I would say to m theta, I' m glad there is specific responses but I feel there is room for improvement.
there has been a lot of talk about the need to improve service and the need for additional resources to make that happen.
If we can make improvements and
changes around this issue, you are talking about a significant amount of money that could be added to the system which could
in turn helped with the service
provided, so I hope they recommendations and findings are
take into consideration and, to
the extent improvements can be made, that those improvements are made.
Why don' t we open it up to public comment? any member of the public would
like to speak, you each have three minutes.
>> good morning, supervisors.
I' ve lived in san francisco for 59 years.
I would like to thank the budget and legislative analyst for this report. As usual, they give us the real picture.
My interpretation is that it is mainly bad news.
Is it a fact that the ex head of public works is now the current
head of mta?
you can make a decision whether
that is a good move for bad, but
based on this report, one has to
ask the question of whether this is good or not.
At least the question is being asked.
Second, I found it interesting, the reference to the city administrator' s office, why the contract was being closely watched their.
i would like to pose the
question as a private citizen,
was a recent city administrator during such a good job as being claimed publicly?
Because it seems to me like today'
s report indicates that
was an area where there was not
any monitoring, obviously, to the detriment of the city' s income.
Thirdly, I would like to ask question, if the city is not doing a very good job here,
maybe we should fund more
audits on a regular basis so we
can get more reports like this
and find out why the city has so
much alleged waste and incompetence and try to get that fixed.
Like a supervisor
farrell says, $5 million is $5 million.
If we can find it here or there are chances of finding it somewhere else like public health and general hospital is very good.
As a matter of record, I would
like to point out that even the
President Of the united states
approved enthusiastically that
government assistance to cylin
dra, it is a matter of fact that the government paid a visit to them this morning.
It does not mean those projects
are adequate or even good for the economy. What I would recommend is that
this committee called the audit and oversight committee, increase its activity to make
sure that we do not have more
instances of cylindra coming up,
because realistically in san francisco, every dollar lost hurts the poor that need it.
Supervisor campos: thank you very much.
Anybody else would like to speak?
Seeing none, public comment is closed.
Colleagues, would it be ok to continue this?
We have a motion by supervisor farrell. We can take that without question. Clerk, you can call the next item.
>> item number two, ordinance amended the san francisco administrative code.
Supervisor campos: thank you very much. This is an item that has been
introduced by both myself and supervisor farrell.
i want to thank supervisor farrell for his work on this item. What it does is that it addresses an issue that has come
before this committee a number
of times, as well as the entire board, and that is the issue of overtime. We know that in the last fiscal
year, the amount of overtime
that departments went above that
which was budgeted, which was
about $40 million, which means
that city departments spend more
than $40 million in overtime
that was actually budgeted by the board of supervisors and the mayor. Right now, there is no process
in place that requires that any amount of expenditures that goes
above the budget be approved by the board of supervisors.
This legislation would require
that approval and would create that process.
I want to thank the controller' s
office for their good work in helping us put this item together. from our perspective, this is a
good government, best practices, a piece of legislation and makes a lot of sense. We have a budget process in
place that requires presentation by the mayor to the board and
approval by the board of supervisors. We want to make sure that that process is applied to the issue of overtime.
supervisor farrell, I do not know if you want to add anything to that. I will turn it over to the controller' s office.
>> good morning.
Monique from the controller' s office. On a monthly basis and semi-
annually as well, the comptroller' s office provides reports to the board of supervisors as well as the department of the actual use of
overtime compared to the budget.
The board of supervisors did pass legislation this week also
related to the maximum amount of
overtime hours any employee can work.
this companion measure would
limit the overtime to how much
is a budget and would require a real appropriation to change the
amount or to increase it.
Because this legislation was pending before the committee during the budget process, we took a hard look at the actual
overtime in each of these departments and recommended an amount that is consistent with the prior year' s spending. We' re hoping that the apartments will very carefully monitor
their overtime and not exceed those amounts.
And if they are on a pattern to
over-spend, we will certainly be
monitoring it and advise those departments to come to this committee. One of the things that we have
proposed that the overtime appropriation legislation pertain to annual operating funds, which is clearly the vast
majority of all the funds in the city and county.
We do have capital funds or special funds that are sometimes used for overtime.
Currently, our reporting
capabilities do not allow us to
separate out that over time, budget vs actual, and I think
that if we limited at this to the annual operating funds, we
would achieve 96% to 97% of all of the dollars in most of the cases.
>> just a couple of points.
this legislation applies to the departments that spend the most
in overtime, and that would
include the airport, the office
of emergency management, the fire department, police department, department of public health, public utilities commission, department of public works, recreation and park department, and the sheriff' s department.
It does not include the sfmta,
because, legally, we, as a board, do not have the authority
to approve specific budget items. We'
re limited to approving yes
or no, their overall budget of an agency. >> that is correct, Mr.
Chairman, however, we do it -- include the mta in all of the reports.
Supervisor campos: which is the
third item on the agenda, urging the mta to take appropriate steps, and we will get to that shortly.
Colleagues, any comments or questions?
With respect to the issue of
capital projects, my
understanding is that the amount
of money in overtime that is expended on capital projects is
about 7% or
4%, 6%, depending on the fiscal year. >> correct.
Supervisor campos: I do not have a problem with that approach in
terms of going forward and excluding capital projects, to the extent that we are talking about a smaller percentage of the amount of overtime.
but I do think it is important for us to deal with the issue of overtime when it comes to capital projects. Maybe there is a different
process that we should put in
place, or at least a separate discussion. >> we can begin to report on the
actual overtime within those continuing funds.
often it is more efficient and
cost-effective for departments to use overtime, rather than
hire additional staff to complete a capital project that
May take just a few months.
In many instances, the overtime is preferred, rather than to
hire additional staff.
but we can report the dollar
amount to you and work with you
over the course of the next number of months if you like to
make some changes to the appropriation methodology for those funds.
Supervisor campos: ok, thank you very much. Why don' t we open it up to public comment? If any member of the public would like to speak, please come forward.
>> good morning, supervisors. My name is douglas.
I would like to thank the chief
sponsors for this item.
I think it is long overdue.
In fact, when I think about it
sitting here, I am asking
myself why two so-called experienced fiscal watchdogs on the board have not come up with
this idea sooner?
This current item, so I am wondering about that. Secondly, I think this is something that is long overdue.
basically, if you ask a private
business how they are going to control over time, they have a simple answer. The call on the employee.
They tell them this is a need to be done. Is it the constraints.
These are the time requirements. We would like you to do good job. And if you do not do a good job,
then we will find someone else
who can do a good job. I think the very real excuse to
keep hearing around city hall that it is cheaper to pay
overtime then bring in new employees is a false idea.
Did it ever occur to anyone that May be those new employees
will be better employees than
the employees you currently have? Because if you take that point of view and follow successful
companies, like apple and google, companies like that do
not tolerate or even keep employees that cannot meet budgets and goals.
I think is pretty simple.
if you ask a doughnut shop
operator how he controls over time, he is basically going to say either the job gets done within the goals and
requirements or else we' re going to find much to do a better job than the people we have now.
So maybe, maybe, you should ask
steve jobs to volunteer for the
city, have him sit down and look
at all these operations and say,
maybe you can come up with a few suggestions for the benefit
of the city of san francisco. Realistically, I do not think it
takes a lot to figure out if you
cannot do the job within the restraints, maybe you should not have that job.
What is the problem with
bringing in outsiders from the city government?
Is it a fear that maybe those outsiders are better workers
than most of the city workers we have now?
[Bell chimes ]
is a politically correct to ask the question that maybe we
should be hiring based on merit other than so-called agenda
connections, which always gets
us stuck in city hall but nothing gets done about it. What is done with hiring people that can get the job done on time? Thank you.
supervisor campos: thank you very much. Is there any other member of the public that would like to speak?
Seeing none, public comment is closed. Colleagues, we had the legislation before us. The question has been raised on
making sure that the legislation reflects that we are
talking about operating an operating budget.
is there a motion to make that change? >> motion to amend. >>
supervisor campos: motion by supervisor farrell. For purposes of the public and
the folks watching this hearing,
it would be adding the words
with an annual operating fundswi
operatingthin annual operating funds."
it would read, the annual a pretentiousness shall contain a separate appropriation within an annual operating funds for overtime.
I am concerning with the city attorney and the controllers that that is the language that would be added. >> correct.
Supervisor campos: we take the motion without objection. And now on the underlying
legislation, as amended.
We have a motion by supervisor farrell. We can take that without objection. Thank you very much. Again, thank you to the controller' s office, to lead to the city attorney. Thank you to supervisor farrell and his staff. Thank you to sheila and my staff for working on this.
And thank you to President Chiu for your support.
Madam Clerk, call item 3.
>> item number 3, resolution
encouraging the san francisco municipal transportation agency to develop a plan to manage
overtime expenditures in 2011- 2012 and subsequent fiscal years.
Supervisor campos: first, a
quick question on item two, and that would be a motion to move
forward with the recommendation.
That is not going as a committee report.
Item three, please.
let me say that, with respect to
item 3, this is an item related
to item two, as was just noted.
We on the board of supervisors
do not have direct oversight of
line-item budgets within the san francisco municipal transportation agency, which is
why we are accompanying the
legislation with this resolution
that is urging the sfmta to take all necessary steps to address the issue of overtime.
As has been noted before, the sfmta, at this point, accounts
for 41.52 % of the city' s total
overtime for fiscal year 2010- 2011. That is a pretty significant amount.
And with respect to the amount
of money, that $40 million that exceeded the overtime
expenditure that was budgeted,
mta for fiscal year 2009-2010 spent $11.9 million more in overtime.
That was actually budgeted.
And so when we talk about overtime being an issue and being a problem for the city and
county of san francisco, the one
agency that really stand out is
the sfmta, which is why this resolution is here, which is why we' re having this hearing today.
Let me note that I have met
with the new sec -- the new executive director for the
sfmta, and he has indicated to me that he understands the
gravity of this issue and that
he is going to take all the steps that are necessary to address it.
I know that he wanted to be here.
There is a tjpa meeting right
now that is happening, and
depending on when that ends, he may be able to be here.
But I see that Ms. Bose is here.
So I would like to ask you to
please come forward and to talk
to us about this issue of overtime. Because it is a pretty
significant issue.
Again, in the last few years, we have seen pretty significant cuts to service in this system.
In my view, to be able to restore a lot of those service
cuts, we have to get our hands around this issue and tackle the issue of overtime. I think we owe that to the
ridership. >> thank you.
the director of transportation would have liked to been here, you' re right. Because he' s committed to do what you suggested, looking at the overtime issue. It has been a significant issue for the mta. I know the new directors committed to not only looking at managing over time but assessing
our budget impacts and holding our manager accountable.
He has had several meetings already about the overtime within the agency. He has received a significant number of reports already. The mta has given him reports.
He has requested monthly reports, toning down on the details.
He has already expressed
interest in what to look at this issue of overtime.
supervisor campos: the resolution calls upon the mta to actually develop a plan for
dealing with overtime.
As I understand it, there' s not a plant per se that actually does that.
Can you comment on how long it
would take for the sfmta to do something like that?
>> I think what we will do next is we have a policy adviser
group meeting tomorrow with the board. Over time is on the agenda. We will bring this resolution before them and suggest that we put something together for their approval before bringing it to you. I do not anticipate, given the
level of interest in the agency and the new director, that it would take a long time.
We request that the mta board weigh in on it before we actually bring you the plan.
I would feel comfortable with this and a 60-day timeframe to bring something back for your review.
Supervisor campos: ok, and part
of the request is that in creating that plan been
, you provide
some level of detail about how
overtime is actually managed. >> absolutely.
Supervisor campos: I just want to make sure that is included.
Is there a specific target in terms of the kind of reduction
that you would be aiming for, or is this something you are still working on? >> supervisor, this fiscal year,
we spent about $15 million in revenue. If we could even get back to the
budget number of $30 million or somewhere in that range, I would say that is a significant achievement.
In addition to over time, one of
the major reasons for overtime as the individuals who do not show up to work every day.
Mostly in the front-line areas.
So we have to manage the absence of individuals. That would be part of the program.
It will require assistance from our human resources folks in
terms of how much of these are manageable and how much are legally required.
We have not officially declared a target, but we can certainly
bring that before the board and the director of transportation for discussion and come back to
you and hopefully give you a more solid target.
from the cfo perspective, I am eager to see that dollar never increase.
-- I am eager to see that dollar
amount decrease.
Supervisor campos: colleagues, any questions? From my perspective, I think coming back to this item sooner rather than later is really important. If we' re talking about 60 days, you' re talking about coming back
sometime in early November.
>> yes, if that is 60 days. I am trying to count. Yes. Mid-November is probably a good time.
i would like to pick the first tuesday in November for the board meeting.
Supervisor campos: a final question.
One of the things that we found
when we conducted the budget -- the budget analyst conducted a performance audit of the mta,
looking two years prior to the
completion of that audit, the sfmta board had actually not
even entered talks about the
issue of overtime in its meeting speeded you have any idea on whether or not that item has
been on the agenda for the mta board? At they discussed that issue?
>> for the last five or six months at least, the policy
advisory group with three board
members has done that every month. They' re asking staff to report every month on overtime.
It has not gone to the full
board for discussion, but the three active board members regularly reviewed this every month. >> I would encourage the full board of the mta to tackle this issue.
I think when you constitutes 40% + of the cities over time that you haven' t obligation to make sure you continue to monitor this closely.
President Chiu ? Why don' t we open it up to public comment?
Thank you, Ms. Bose.
>> good morning. My name is douglas. I would like to make one suggestion on how you can handle this problem immediately.
I would like to suggest that the
mayor take charge.
Calling the relevant department
heads, said in a room, and work something out before anybody
gets the lead. I think that is the kind of leadership needed to solve a problem like this that has been
going on and on and on.
It is pretty obvious that some of our past leaders, which I
suspect are doing it for political reasons, have not
touched this item efficiently enough.
So what is wrong with calling all the people that are the decision makers, putting them in
a room, and say you' re not leaving until we make some progress on this?
i think the people would
appreciate something like that, and it is a first step to solving this problem.
I think it is reasonable to ask that.
People have an excuse for not
showing up for whatever reason,
then I think that reflects and tells the people in san francisco that we have leaders session not be our leaders.
Secondly, this problem has been ongoing for so long.
It is obvious that it has not been solved.
I would like to suggest that
there are solutions, but for
political reasons, those solutions are not being discussed.
i think it comes down to, are we
going to waste more money where we could be using that same
money for the poor and needy?
I think everybody in charge of
san francisco needs to sit down
and say, are we going to spend
money on the poor and needy that spend -- that deserve the money or are we going to continually tolerate what has been going on at the mta?
I would like to further suggest
that maybe we should call in
somebody that has run a smaller
mta-type organization, May be in
the midwest where common sense
prevails and ask them how they would solve the problem that we have in san francisco.
I can guarantee you that they have some pretty common-sense
solutions that May be san
francisco would consider politically incorrect.
[Bell chimes]
Are we going to commit to waste more money? or are we going to use the same money to the poor and needy?
A think everybody would agree that the poor and needy need that money rather than the politically connected.
Our past leaders have not solved the problem. I have a suspicion that they' re very interesting reasons why the problem has not been solved. Today' s hearing is a very good first step. thank you.
Supervisor campos: thank you very much. Any other member of the public that would like to speak?
Seeing none, public comment is closed. Colleagues?
We have a motion to continue. Motion by supervisor farrell. We can take that without objection. Thank you. We will come back to this item. madam clerk, is there any other business? >> there is no other business.
Supervisor campos: thank you very much. Meeting is adjourned.
