Committee pauses appropriation of 706 Mission Street funds for Gene/Friend Recreation Center, seeks legal and financial clarifications

The Budget & Finance Committee voted to continue an ordinance that would appropriate roughly $1.7 million from the 706 Mission Street account to support the Gene/Friend Recreation Center and to allocate approximately $862,000 to the Mayor's Office of Housing and Community Development and roughly $862,000 to Recreation & Park for FY20222023.

Melinda Stockman Sullivan, project manager with the Recreation & Park Department's Capital and Planning Division, presented the Jean/Gene Friend Recreation Center replacement design, a proposed new building of roughly 24,000 square feet with two indoor gyms, multipurpose rooms and other amenities. She described a complicated budget built from the 2020 Health & Recovery bond, development impact fees and design-contract encumbrances. Sullivan explained the project team had already encumbered design contract funds and that losing the 706 Mission funding would require value engineering and could cost $22.5 million or more to redesign.

Supervisors raised two central questions: whether the one-time payment and the ongoing payment streams from the 2013 development agreement required a community-engagement process before expenditure, and whether Recreation & Park had begun spending money that—according to some commenters—should have waited for that process. RPD staff (Sarah Madeline) said the $1.8 million one-time payment had been appropriated earlier and encumbered to the project; she described a mix of bond borrowing, impact fees and encumbrances that produced the current cash‑flow position.

Public commenter Alan Lowe argued the 2013 development agreement envisaged a public process before any of the three payment streams were spent and urged the City to honor that process and demonstrate transparency in spending. Deputy City Attorney Anne Pearson said her reading was that the development agreement allows for a community process but does not require that process to be applied retroactively to funds already appropriated; the legislation setting up the 706 Mission fund imposes the process for future payments into the fund.

The Controller's office (Laura Smith) told the committee that, generally, placing an "expenditure reserve" is the normal mechanism to halt spending on appropriated funds and that feasibility depends on the source of the funds. Based on these questions, Chair Connie Chan moved to continue the ordinance to the call of the chair to allow the City Attorney and Controller to clarify whether a community process was legally required and what mechanisms, if any, could abate spending while the committee considers the legislation. The committee approved the continuance (Mandelmann, Safaie and Chan voting "aye").

Chair Chan asked staff to return with legal analysis of the 2013 development agreement and with options from the Controller's office about halting further spending pending clarification; the committee did not vote to reallocate funds and left the appropriation unresolved pending follow-up.