san francisco budget and finance committee meeting of april 17, 2024.

>> good morning. the meeting will come to order. welcome to april 17, 2024

budget finance committee commit meeting. our clerk is brent julipa. i like to thank kalina mendoza from sfgovtv for broadcasting the meeting. >> please silence cell phones and electroning devices. should you have any documents to be included as part of the file submit to myself the clerk. public comment will be taken on each item. when your item comes up and public comment is called please line up to speak on the west side of the chamber, and while not necessary to provide public comment we invite you to fill out a comment card and leave on the television on the left by the doors. if you wish to be recorded for the minutes and you may submit public comment in writing e-mail to myself, the budget finance committee clerk at

brent.julipa@sfgov.org. if you submit public comment via e-mail it will be forwarded to board of supervisors and included as part of the official file and may send via u.s. postal service 1 dr. carlton b goodlett place. items acted upon today are expected to appear on the board of supervisors agenda of april 23 unless otherwise stated. madam chair. >> thank you mr. clerk. before we call item 1 i like to remind we have budget legislative report for 3-5 and 7-12. for those item we will have the department presentation first and followed by the budget legislative analyst report and go to public comment.

>> item number 1-sorry, one second. item 1 is ordinance to amend the administrate was code to permit the assessor to not enroll on the assessment roll certain property exempt from property taxation due to low-value or enroll such property and apply the exemption. >> thank you, today we have the office of treasurer tax collector office here. >> today i'm prentded a proposed ordinance that permit assessor to enroll low-value property on assessment roll and apply the exemption. this is a technical change that codifys existing policy and conforms to administrative code to state law. to provide background, california law permits counties to exempt from property tax any property with a total value so low if not exempt amount to

less then the cost asesting and collecting them. also permits the assessor to not enroll the low-value property or enroll and then apply the exemption, however currently the administrative code exempts low-value property from property taxes, but directs assessor not to enroll the property on the assessment roll. this ordinance would simply provide the option to another not enroll or enroll and apply the exemption. the practice of enrolling and applying the exsemption is preferred because it allows the application of community benefit district and other fees. with that, i'll end and open up for any questions you might have. >> thank you. i don't see name on the roster. let's go to public comment on this item. >> thank you madam chair. if we have members of the public who wish to address the committee item 1, you may

approach the lectern and each speaker is given two minutes. madam chair, we have no speakers. >> thank you, public comment is now closed. mr. clerk, i like to make the motion to move this item to full board with recommendation and roll call, please. >> on that motion to forward to full board with positive recommendation, mandelman aye. melgar, aye. chan, aye. we have three ayes. >> thank you the motion passes. mr. clerk, please call item 2 and 3 together. >> items 2 and 3, 2 is resolution authorizing the department of public health to participate in the california state department of healthcare services state technical assistance marketplace program on terms and conditions that include the release of claims by the city and county and item 3 is resolution retroactive approving the agreement between the health advocates llc and department of public health to

provide uncomplicated care reimbursement reit covery service for amount not to exceed $11.4 million for 5 years and authorize the department of public health enter into amendments or modification to the construct prior to its final execution of all parties that do not materially increase the obigations. >> for item 2 we have cal aim director, from department of public health. >> good morning. my name is bernadette gates the san francisco health network cal aim director. i am here to request your approval to use the california department of healthcare services technical assistance marketplace to provide high level background, cal aim which stands for california advancing and innovating medi-cal is a 5

year waver that includes several initiatives as a part of the very broad medi-cal transformation that seeks to improve health outcomes and equity for clients with the most complex medical and social conditions. providing access and transforming health or path technical assistance marketplace is in partnership with the california department of healthcare services and include a nost cost agreement that allows us to more effectively plan for and implement various cal aim projects, and this resolution is requesting authority for the department of public health to accept non standard agreements in the term-in the agreement with dhcs. to provide a bit more detail, the providing access and

transforming health ta marketplace provides organizations with free technical assistance resources to implement and expand cal aim community supports and enhance care management programs. community supports are 14 services provided by medi-cal managed care plans that help members address their health related social needs, such as access to safe housing, or healthy meals aid in recovery from illness. avoid higher and cost aware levels of care and live healthier lives. enhanced care management or ecm, provides high turch person sendered care management to medi-cal members with the most complex medical and social needs. members receiving ecm have a single lead care manager who helps them coordinate healthcare and social services making it easier for our clients to get the right care

at the right time and in the right setting. i like to share with you two project examples of how we would leverage the marketplace to expand cal aim services. one example includes improving collaboration between the department of public health and our managed care plans to expand ecm service to more eligible medi-cal members with symptoms of serious mental illness. the impact would include advancing equity identifying target populations experiencing disparities and access to care and weaving these ecm services into the array of available behavioral health services. a second example would be to evaluate the cost and benefits to implementing short-term post-hospitalization housing as a community support.

this would offer is provide members who do not have a residents and who have high medical or behavioral health needs with the opportunity to continue their medical psychiatric or substance use disover recovery after exits inpatient hospital, residential substance use disorder treatment recovery facility, residential health, correctional, nursing facility or recuperative care. the non standard terms in the agreement include obigation for the city to release and hold dhcs harmless and third public administrator, pcg. with that we respectfully request approval of the dchs agreement with cal aim. thank you. >> thank you. vice chair mandelman. >> thank you. i find cal aim incredibly

confusing, but glad department of public health is trying to do the most we can to leverage all the resources for our most vulnerable people and like to be added as a sponsor, cosponsor. thank you. >> thank you. we'll go to item number 3 and this has a blaer report. that is for the general hospital. >> good morning. my name is jeanine smith, patient financial service manager zuckerbering san francisco general here to present on health advocate contract for uncomplicated care rebim ursment and recovery services. overview of the contract amendment, the contract summary is for the uncompensated care

reimbursement. the amount is not to exceed 11 million, 391 thousand, 540 dollars from january 2024 through december 2028. an overview of the contract, the services they provide include eligibility screening, program application assistance, application tracking and appealing denials for programs such as medi-cal and medicare for referral for patients without coverage or incomplete coverage. they also investigate and pursue the responsible party in cases of third party liability and workers compensation and resolve payment denials and under-payment of referral for patients with existing coverage. what exactly is uncomp sated care?

a overview, these services include those that do not have a reimbursement source. they include patients again, without insurance or government program coverage or with limited benefits insurance. they also include services where it is identified due to accident or injury and potential responsibility of a third party or worker compensation. and build services for which there is a payer, however the insurance denied or provided under payment of the claim that is then pursued by the health advocates. we do have history with health advocates and benefits that we have seen in receiving the services of this contractor is they poses capacity and access to the resources that exceed departments, including able to reach vulnerable patients, represent patients on denials and medi-cal fair hearings as well as pursue all potential

coverage and reimbursement sources. they also secure maximum government program eligibility so looking at all potential payer sources and coverage programs for that individual patient to cover the care they received. not only the care they receive but to access the care they will continue to receive and need. they secure maximum reimbursement for the city provided throughout the san francisco health network as well. this is a great benefit as we know for patients who will continue to receive our care and not only follow up to the services they receive and may become members of the san francisco health network so this is something that continues to pay forward down the line. just to share the reimbursement success through health adcovts in the previous contract which was a 10 year contract from

january of 2013 through december 2023 in amount of 20million 100 thousand. the performance for just a segment that period, nearly half from july 2019 through december 2023. they received uncompensated referral and have been able to recover on rebim ursment on 2425 so 60 percent success rate. with the rebim bursement recovery of approximately $79 million. just in that half of a year period of time, we have been able to experience just at least 8 times nearly 8 times the amount in the recovery that they have been able to return to the city. and just to add, of the referrals that health advocates

received they have little more then 700 still with them and still continue to pursue and we still wait for their final outcome and could further increase and lend itself to the reimbursement recovery with continuous additional approvals. it is a ongoing process and not even complete at this point for the numbers being provided here. for ret row activity, we are seeking retroactive authorization for this item. this contract is retroactive due to extended negotiations between health advocates llc and city attorney office because of health advocates disagreement with the city standard contract of agreement terms. following extensive negotiation between health advocates and city attorney office, came to agreement on the contract terms.

in conclusion, dph agrees with the bla recommendation and request your approval of the proposed resolution. thank you so much for your time. >> good morning supervisors. nick munered. item 3 is resolution that retroactively approves a contract between department of public health and health advocates for $11.4 million. term is 5 years which we detail on page 5 of our report to help the department increase its insurance revenues. we projected this contract will actually bring in about 97 $97 million over the 5 year period so more then pay for the cost of this contract. recommend approval of item 3. >> thank you. vice chair mandelman. >> thank you chair chan and this is another one i like and think is important and would like to be added as cosponsor

or sponsor if there isn't one? >> thank you. with that, let's go to public comment for these two items. >> thank you madam chair. we invite members of the public who joined who wish to address the committee regarding these items, 2 or 3 now is your opportunity. >> [indiscernible] if you were intelligent enough to [indiscernible] what is the meaning of this? impossible to understand. [indiscernible] so, if youdo because you are going to do it, i know it, because you are so confused. you said it rchlt it is confusing, right? who understand this? nobody. it is clear, we need to simplify, so you [indiscernible] you don't know what you are doing so at the

end of the day it is bad idea. if you are intelligent enough, which i recommend you to be, you have to not take this garbage. try to extricate the thing. >> thank you much for your commentary. madam chair, that completes the queue. >> thank you. public comment is now closed. i appreciate the health advocats contract agreement and appreciate just the surface itself. being able to help people who are uninsured. i don't have any other questions and would like to move item 2 and 3 to full board with recommendation and the roll call, please. >> on the motion to forward both resolutions to the full board with positive

recommendation, mandelman, aye. melgar, aye. chan, aye. we have three ayes. >> thank you, the motion passes. with that, mr. clerk, please call item number 4. >> item 4 is resolution to approving modification of 5 to airport contract for escalator and walk maintenance care and on-call service to kone inc. to increase by $8.3 million for new not to exceed contract amount of approximately 42.8 $42.8 million for no change to the contract term pursuant to charter. >> thank you. today we have sfo. >> good morning. i'm cathy wagoner with san francisco international airport. the airport is seeking your approval for the 5 modification with kone inc. for escalator repair and walk maintenance. this increases not to exceed by $8.3 million with no change to

the contract term. this item is a corrective update to a previously submitted modification 5 with a series of billing errors identified by the budget analyst office when we started that process last year. once the errors were identified the airport undertook reviews by outside consultants to identify the billing discrepancies and potential airport credit that has been applied to this corrective updated modification number 5 which is before you today. maintaining and rehabilitating these systems is critical to increase equipment lifespan, minimizing disruptions to airport operation and providing passenger vertical egress. this contract is responsible for maintenance is and repair services for approximately 181 escalators and electric walkways throughout the airport facility as well as over-hauls

of older units to increase the equipment lifespan. modification 5 will allow the airport to continue to perform these regular repairs and over-hauls for additional escalator and electric walkways through the end of the contract term in june of 2024. the budget analyst office has reviewed and recommends approval and i just want to once again thank them for their additional work helping us work through some of the irregularities of the initial modification number 5. i would be happy to answer any questions you have. >> thank you. >> good morning. item 4 is resolution that approves the 5 modification to the airport contract with kone, which is a escalator and electric walkway maintenance vendor. the modification added 8.3 million to the existing contract with no change to the contract term which ends june

this year. the prior modification included a decrease in rates that was not implemented and so this modification corrects adds funding for services over the past year and remaining term and also corrects the over-billing to the airport. we detail the changes on page 6 of the report and recommend aal proval of item 4. >> thank you. i have just slightly questions and if i understand it correctly, could we explain a little bit about the billing process? >> sorry, one more time. about what process? >> billing process. >> so, as we started the process initially on modification 5, we relized there was orders approved that were duplicative work or equipment that we the airport

owned and kone used while they were charging for that equipment. it was basically-there were competing services that we had. we had some capital contracts for maintenance that included work that was also included in kone scope of work so there was duplicative invoices essentially and some charges for equipment that the airport actually provided, so that's a simplified version of what we went through to find where we get the credits and make sure what we were bringing to you was what we needed to complete the term of the contract and work. but again, the budget analyst office did a really great job of helping us identify where we needed to start to look. >> great. thank you. i think that is how the process is supposed to work and think it worked the way we--it is how we set it up. thank you so much for explaining that. i appreciate it. i don't see any name on the roster. let's go to public comment on

this item. >> public comment is now open for members of the public who wish to address this committee regarding item 4. i'll start your time. >> thank you. good morning chair and members of the committee. rudey gonzalez, san francisco building construction trades council registering support on behalf of the international elevator union local 8. appreciate it. >> thank you much rudey gonzalez. next speaker. >> [indiscernible] honesty, $42 million [indiscernible] taxpayer pay and it is getting a bit over the top here. so, make a accurate budget. even though i don't care about

money. >> if we have other members of the public who wish to provide public comment, now is your opportunity. madam chair, that completes the queue. >> thank you. public comment is now closed. with that, i like to move the item to full board with recommendation. the roll call, please. >> on the motion to forward to full board with positive recommendation, mandelman, aye. melgar, aye. chan, aye. we have three ayes. >> thank you, the motion passes. mr. clerk, please call item number 5. >> item 5, resolution authorizing the general manager of the san francisco public utilities commission to execute modification no. 5 to contract no. cs-109, specialized engineering services for recycled water projects, with kennedy jenks consultants, inc./brahman sheikh water reuse consulting/water resources engineering, inc., a joint venture, to continue providing additional engineering services in support of the westside enhanced water recycling project, increasing the

contract amount by $1,000,000 and increasing the contract duration by three years, for a new total not to exceed contract amount of $10,950,000 for a total contract duration of 16 years and six months, for a contract term from december 1, 2010, through may 31, 2027, effective upon approval of this resolution, pursuant to charter, section 9.118. madam chair. >> thank you. today we have public utility commission water enterprise here. >> good morning chair chan, supervisor mandelman and melgar. my name is barbara, a project manager for inwest side enhanced water recycling project with sfpuc. the item before you today approves amendment number 5 to agreement cf109, specialize engineering service for recycled water project with

kennedy jenks water sheikh pursuant to city charter section 9.118. this amendment will extend the contract term by three years for total contract term of 16 years and 6 months and increase the total not to exceed amount by $1 million for total contract value of $10.95 million. as part of the water system and local water capital improvement program, the puc committed expanded and diversifying the water supply portfolio increasing water conversation efforts, potable ground water supplies and recycled water for non potable use. the west side enhanced project contribute to this goal producing new recycled water supply of up to 2 million gallons per day for non potable use such as irrigation. the west side project includes the construction of three projects, approximately 8 miles of recycled pipeline, new

reservoir and pump station and new treatment facility located in ocean side wastewater treatment plant. contract was awarded by the sfpuc october 2010 to support the puc efforts developing and implementing recycled water projecktds inudclooing the west side project. the scope of services covered by cs109 are broad and address all facets involved of a new recycled water project. including support with planning, design, engineering support during construction, regulatory permits, preparing operation plans and procedure s, start up and commissioning and providing overall expertise in recycled water treatment and operation. the original contract agreement was for a not to exceed of $3.7 million and duration of 6 years. the contract has been amended four times, cumulatively

increasing the contract amount by $6.25 million for total contract amount of $9.95 million and the contract duration increased by 7 years and 6 months for total contract duration of 13 years and 6 months. january 9, 2018, by resolution 00518, the board of supervisors approved amendment 2 which increased the total not to exceed amount to 8 million and extended the contract duration from 9 to 12 years. the consultant team has been supporting the project during construction. therefore changes to the construction schedule also impact the contract timeline. the construction of the new treatment facility had several challenges. dlaiz in material procurement during the pandemic, design changes and unforeseen site conditions during construction, and conflict with major equipment items have lead to significant unanticipated construction delays.

bulk of these construction delays were addressed under the fourbt contract amendment which extended the timeline of contract cs109. the most recent project delay is related to the premuchur failure of equipment as the project was prepared to initiate the start up and initiating project the final step in the construction project. the failed equipment has been redesigned and procurement timeline is estimated to be approximately two years. this extends the overall completion of the construction project. the proposed three year extension of c surks 109 is based on the time to complete construction and commissioning of the treatment facility and the support services the consultant will provide during the commissioning process. the additional contract budget will address additional support services such as during start up and commissioning and other

tasks associated with the addition of new users to the recycled water system. thank you for your consideration of this item and i'm happy to answer your questions. >> thank you. >> item 5 is a resolution that approves an amendment to puc contract with a joint venture of various engineering firms. the modification extends the agreement by 3 years through may 2027 and adds $1 million to not to exceed amount. that $1 million is funded by water capital sources, primarily water revenue bonds and as we detail in the report, this is really to support an extension of ongoing project on the west side of san francisco to create a water recycled system to serve golden gate park and other users. there is premature failure at

one of the treatment components that system, which is extending the project timeline and therefore the contract needs to be extended. we recommend approval of item 5. >> thank you. supervisor melgar. >> thank you so much chair chan. i think this is great. i want to expand it. i'm wondering if you know if any other departments have made use of green revenue bonds or if the puc has in other projects besides this one? or maybe nick knows. >> i don't understand the question. can you restate the question? >> so, the bla analyst just said that this was green revenue bonds you used, is that not the case? >> pardon me, i said water revenue bonds. >> water revenue bonds. nevermind. thank you. >> thank you.

i have a quick question. i think based on the bla report here is i think sfpuc mentioned that this does not require a performance audit and evaluation. could you just walk us through a little why? >> performance audit-hf-just in case there is confusion, it is page 10 of the budget legislative analyst report and specifically talked about performance monitoring and according to puc performance reporting and evaluation are not required. sfpuc may not at full discretion construct evaluation of the contractor. >> thank you. jeremy spits with sfpu c.

the language says that the puc may conduct performance audits. in subsequent contracts and discussion with the bla we started to do that on a regular basis but since this contract started in 2010 and had a good working relationship since then, it just hasn't come up and we haven't started the audit process. but, it's something we are doing in all new contracts. >> i would appreciate that. i think is consistent and it is just one of those i think it is a good standard protocol to just insert and to implement, so i would appreciate that. thank you. i don't have any other questions. i don't have any other name on the roster. let's go to public comment on this item. >> we invite members of the public who wish to address the committee regarding this item 5. mr. pill.

>> as long as you remember it is not allowed to mess with water, you are good. now, i heard because i hear everything, i'm a musician, there was a [indiscernible] in your voice, which shows you are emotionally effected by what you are saying, because you know there could be a issue. that's easy to understand. remember we don't mess with water so you pay attention. clear, right? cant be more clear. >> thank you. madam chair, that completes the queue. >> public comment is now closed. colleagues, i like to move the item to full board with recommendation and roll call, please. >> on the motion to forward to full board with positive recommendation, mandelman aye. melgar, aye. chan, aye. we have three ayes. >> thank you, the motion passes. mr. clerk, please call item number 6.

>> item 6, resolution approving and authorizing the director of property to enter into a license to enter and use with honeybee foods corp., a delaware corporation, dba jollibee usa for approximately 414 square feet (underground) of hallidie plaza, effective upon approval of this resolution, through december 8, 2034, at an initial rent of $1,200 per month with 3% annual increases thereafter; and authorizing the director of property to enter into any additions, amendments, or other modifications to the license that do not materially increase the obligations or liabilities of the city to effectuate the purposes of this resolution. madam chair. >> thank you. i feel this item has been [indiscernible] >> yes. >> i are would say that my office and i, i am excited about what's to come in this space, so thank you. >> thank you. claudia, real estate division.

before you is resolution involving a unique circumstance and opportunity. it regards underground space as hallidie plaza. replace a temporary underground utility line necessary for restaurant at 934 market street, a privately owned building at corner of market and 5th street. running from the building to market street to operate a restaurant at the site proposed needs additional power. hallidie plaza is under jurisdiction of the san francisco rec and park department with the real estate division authorized in the admin code to issue non-reriational permits on the park behalf. the license area is not in a street so dpw has no jurisdiction. dbi reviewed the plans and approved. construction is performed with pg&e involvement. the permit area is approximately 11 by 40 feet or

414 square feet. the term of the license is approximately 10 years or the remainder of honeybee lease for the private premises or until december 8, 2034 should the licensee continue under one of its options at the restaurant, we would then bring this license back to be approved for additional term. the license fee is actually yearly not monthly at $1200 per year and 3 percent annual adjustment. i thought we sent revisions for that in the resolution, but apparently those were not received and or taken, so i do have to ask for revisions to the resolution at page 1, line 1. page 1, line 7. and page 2, line 8 that the monthly be changed to yearly.

and we ask for your positive recommendation. >> so, we are looking at--i think that is a significant value discrepancy or difference from $1200 monthly base fee to-same amount, $1200 of a annual fee. >> license fee,s yes. >> license fee. can you walk us through a little more, just- >> how we got there? >> thank you. >> i apologize for the mistake. it is a underground use basically, so the street level part of the plaza is still able to be used in full. it takes 19 weeks for them to do it and they do in stages and

allow for sidewalk access and ada access. the yearly fee was based on comps of the area, which are difficult to do that then were taken a percentage of and so even the comps in the area were under fair market value of $45 per square foot so didn't need appraisal. we looked at kind of parking lot uses, vacant land uses and took a percentage that and it is only 414 square feet so very low. we decided that is somewhat why we decided to do a license with a yearly fee and they are putting down a $25 thousand security deposit. >> so, when exactly is the above ground restaurant going

to open? >> they have been waiting on this to open and to do i think the majority of their construction inside, because they did n't-if they couldn't get this they are not moving forward with the lease, so i think once they get this going, they will also start on the construction inside so i don't know how long that will take inside. i know this will take 19 weeks. >> 19 weeks for underground, 414 square feet additional is for specifically for electricity, because that's what is requires for above ground restaurant to operate and so with the 19 weeks it is from the time of approval- >> correct. >> and then from then on out we can get a better estimate when they will open? >> correct. i think there have been chomping at the bit. >> yeah, since 2019. been a while. >> i did not know about it in 2019, but i think everyone was

trying to figure who and where and how to get it done because it is a unique and confusing situation. >> i look forward seeing this spot. i think it is a critical space to be activated to be-to be occupied and will be a good just kind of given where it is, and it will give connection connecting to union square, to that space and rest of the market street too, so-and bart and all that making good connection. >> very good opportunity. >> yeah. great. okay. thank you. i don't see any other name on the roster. let's go to public comment on this item. >> members of the public who wish to address the committee regarding item 6, now is your opportunity to approach the lectern and i'll start your time. >> my name is anthony, the superintendent doing the job.

we are targeting end of the year the latest for opening. any other questions? >> thank you. sorry, you are saying you are targeting to open end of the year so complete construction work? >> open the restaurant. >> wonderful! great news. thank you so much for being here. there we go, we have the answer to our question. >> madam chair, that completes our queue. >> thank you. seeing no public comment, public comment is now closed. i guess there goes our answer to end of the year opening the restaurant in this space and i look forward seeing that. with that, let's like to make the amendment to move the specifically starting from page 1 from the title to actually switch from initial monthly based fee to initial annual?

c >> correct. >> it is throughout the legislation to swap out monthly to annual. with that amendment and roll call-a motion to amend. i also want to double check with deputy city attorney that we are amending this resolution for the right now we are looking at 1200-the current is $1200 initial monthly base fee, we are changing it to $1200 initial annual base fee. my assumption it is not substantive? >> deputy city attorney, pierson. i am sorry i have been in conversation about another item so i appreciate the summary. if i can confirm the details of the amendment before you act on it, i would appreciate that. i want to make sure i get it right. >> of course. lelts polk come back to the item. we close our public comment on

this item, we just wanted to make sure we get the language correct and before we go forward with the motion, so we have a motion hanging there to amend, so we'll let you-and come back. let's go to item and call together items 7, 8, 9 together. thank you. >> items 7, 8 and 9 are resolutions approving and authorize the director of property for the following and authorize director of property to enter into amendments or modification to the following that do not increase obigation or liability or [indiscernible] item 7, execute a transfer and agreement for purchase and sale of steam distribution infrastructure facilities which

run along mcallister street, larkin street, grove street and dr. carlton b. goodlett street to energy center san francisco, llc, as buyer, for the transfer of ownership and operational responsibility for the steam loop; for two easements to allow buyer to operate and maintain the steam loop on property owned by city; for city to reimburse buyer for certain emergency repairs in an amount not to exceed $3,100,000; for the city to continue to buy steam from buyer for five years following the transfer date; affirming the planning department's determination under the california environmental quality act, and adopting the planning department's findings of consistency with the general plan, and the eight priority policies of the planning code, section 101.1; and authorizing the director of property to execute any amendments, make certain modifications and take certain actions that do not materially increase the obligations or liabilities to the city, do not materially decrease the benefits to the city and are necessary or advisable to effectuate the purposes of the transfer agreement, the easements or this resolution. item 8 on behalf of department of public health office of civic engagement and immigrant affairs and drug market agency coordination center to lease a portion of the real property at 1145 market street with trinity center llc for term of 10 years with two 5 year extension options to renew at initial annual base rent of approximately $1.4 million with 3 percent annual increase.

item 9, execute a lease agreement with hudson, 1455 market ll crurks as landlord for lease of the property at 1455 market street for office space and storage and parking for 20 years from may 1, 2024 through april thrurt, 20245 with two 5 year options to extend and 12 month rent with base rent of $6.5 million for year 2 for 157 thousand square feet with 3 percent annual increase and include the option to atsds lease space for three years and three year option to purchase. the property subject to subsequent board of supervisor approval. authorizing director of real estate to extent of operating budget and to the extent not covered by the tenant improve allowance to expend amount not to exceed $100 thousand for digital technology cost, tenant

improvement and furniture fixture and equipment. adopting the planning department finding of consistency with the general plan and property priorities of the planning codes. >> thank you, before we go to real estate division, i want to acknowledge our president in the chamber and that would like to provide opening remarks for all the three item as a sponsor. >> thank you chair chan and colleagues. i want to commend and salute real estate division mr. penic for the work on all three items. two related 1145 and 1455 market street. one of which is item 7, a stand alone issue having to deal with the steam loop that provides heat to this building and buildings around civic center, and this has been long in the making and has been the subject

of extensive negotiations. we are in the city and county would transfer the hundred year old steam loop to a private entity who would be charged with maintaining it going forward. there are approximately $5 million of differed capital maintenance on the steam loop now. this would commit the city to pay for about $3 million that and would commit the city to buying steam for the next 5 years if my recollection is correct. there is a recommendation from the budget analyst to add a clause the public interest or necessity demands or will not inconvenienced by transfer of the steam loop and i recommend that amendment to you colleagues. as to items 8 and 9, i want to once again thank the entire board of supervisors and no disrespect to division of real

estate, but in our september 2023 rejection of the $64.60 per square foot lease at 1155 market and we did that really acknowledging that the city should benefit from the increased vacancy rates and lowering per square foot rates in the office market in this case, without abandonening the city commitment to midmarket and once the board rejected that september 26 last year mr. penic and his team went to work and negotiated what i think are two fabulous long-term leases, one with a option to purchase in a class a building that formally housed uber and currently housing the transportation authority and the other next door to 1155 at

1145 market street not $64.60 square foot, but $29.95 saving the city millions of dollars. it actually relative to items you have later on on the agenda having to do with treasure island and certificate of participation, will actually lead to more cop capacity because we will no longer have to deal with 170 otis as our department of homelessness and supportive housing is able to move into 1145 market street. these come with great provisions around tenant improvements and around move-in allowances, so i really cannot commend the division of real estate for taking advantage of the market conditions that we are in and this will $1145 market street. these come with great provisions around tenant improvements and around move-in allowances, so i really cannot commend the division of real estate for taking advantage of the market conditions that we are in and this will have a multi-million dollar savings in the case of 1455, 21 years.

in the case of 1145, it is a 10 year with two 5 year options to extend, but it will save the city millions and millions of dollars. mr. penic, job well done. i commends all three of these items to you budget and finance committee. there is-this bears a little discussion and will hear more about this. there was a recommendation from the budget analyst on item number 9, the lease agreement for-sorry, on item 8, the lease agreement for 1145 market street, wherein, the budget analyst is suggesting that provisions be included that give the board the ability to oversee lease extensions, options to extend. i like to after conversation with the city attorney to amend slightly reading the department

of real estate in a decade from now would be required to give the board of supervisors notice, but would in their own autonomous ability be able to exercise any lease extensions and i think that makes sense for a number of reasons. finally colleagues, there are actually the 1145 deal is actually three separate leases and you will be hopefully next week considering the remaining two. one for the law library and the other for i think public works but may have gotten that wrong because there is a lot of moving piecing in the leasing multiple floors of 1145, which by the way is also a fabulous building. with that, madam chair, i'll turn it back over to you. thank you for your indellgence. >> thank you board president. we will go to real estate. real estate also present on the

steam loop? >> yes, ma'am. >> great. thank you. >> good morning. thank you president peskin for that excellent summary of the items. there is nothing more for me to say, but i'll endeavor to give a presentation none the less. if i could have the--eme polk before you this morning on the first item, item 7 seeking positive recommendation for resolution approving a transfer agreement. this transfer agreement transfer ownership of the steam loop from the city to ecsf which is the steam utility provider in san francisco. the steam loop is owned by the city and built in 1915 and more then a hundred years old. it is under the jurisdiction of red. it runs as you see on the map

along mcallister, larkin, grove and goodlett. it provides heating and hot water to bill graham auditorium. grove. city hall and superior court on mcallister. the steam loop has long suffered from differed maintenance and early october of 2022, the steam loop had a significant pipe cracking that caused hot steam to escape through two man holes. one just opposite city hall, which is near man hole 13 on the map. the other on the northeast corner of polk and grove, which is the man hole number 11, seen on the screen. in fiscal year 2022, the city budgeted $300 thousand for annual maintenance of the loop. we also budgeted in fy23, one time amount of $3 million to make the necessary repairs.

real estate did analysis to the cost to properly maintain the steam loop. we determined it would cost actually $4.9 million for the city to do the emergency repairs and we would need additional $12 million in order to replace old piping and valves. we estimate that 60 to 70 percent of the loop is in need of repair. we also estimated that we need $300 thousand ongoing annual cost and we would have unknown exposure of liability for property damage and personal injury due to escaping steam. it was quickly determined that it was cheaper and more cost effective to buy seem from ecsf like any other steam provider and get out of the business maintaining our own steam loop. the transfer of the cost and liability in this case far exceed the far market value of the loop.

the term of the agreement before you today require the following city obigations:the city transfer ownership of the steam loop to energy center san francisco, again ecsf for $1. the city pay ecsf3.1 million to do the emergency repairs. you note that ecsf can do the emergency repairs for only $3.1 million, while it would cost the city 4.9. the city indemify for damages that occurred before the transfer and the claims made within 3 years of the transfer. i'll talk more about this later, but basically it is possible the steam loop caused damage for which the claim has not yet been presented. the city will grant ecsf two easements one for the civic center garage and the other for the power house so ecsf can

access and maintain the steam loop that cross those city properties. as stated by president peskin, the city will continue to buy steam from ecsf for the next 5 years. ecsf obigation, will make the emergency repairs based upon scope amount and time pp line. the agreement allows for them to make these repairs over a 9 month period, they are anxious to get stated right away and we believe these repairs will be made in a much shorter time period. the emergency repairs are scheduled to start the first weekend after approval of this agreement subject to weather conditions and also events at city hall and bill graham civic auditorium. ecsf is owner of the steam loop is responsible for future repacement repair and maintenance at their own

expense and also assume all liability for damage and personal injury that occurred after the transfer. reason frz the easement, has a franchise agreement that governs use of the steam loop in the public right of way, however those portions located in the civic center garage and power house are outside of the right of way and require an easement. the easement is a contractual mechanism that allow the city to be indemifyed should there be damage or destruction of the property and in the case of the garage, should ecsf f block or use parking spaces, rec park is reimbursed for the loss of the revenue. the indem fiication. there is a liability before the transfer and after the transfer.

under the agreement, there is a three year window with which the city will indemify ecsf for claim s and damages that occurred before the transfer and not yet presented until after the transfer. given the statute of limitation we thought three years is a good window to identify claims. typically claims are presented within muns of the incident so we dont anticipate there is any claims that fall under this provision in the future. i like to thank the mayor and city administrator carmen chui and special thanks to president peskin for his sponsorship and leadership and [indiscernible] from real estate for technical expertise and help with the negotiations and lastly, most importantly thank nancy taylor from the city attorney office for her legal expertise and working on the drafting of the

document. we have no objection to the recommendation from the bla and that concludes my presentation for this item. >> thank you. >> item 7 is a resolution that approves three different agreements, one transfer agreement to transfer ownership of the city steam loop to energy san francisco and two easementss to allow that firm to access the loop and in two locations around the loop. we detailed the terms of the agreement on page 14 of our report. the key fiscal impact is a $3.1 million one time payment from san francisco to energy center san francisco to make emergency repairs to the steam loop. that payment is funded by certificate of participation and been approved by the board of supervisors. the agreement requires certain language be included in the

resolution that approves the agreement, so we recommend adding that language which says public interest or necessity is not inconvenienced by the transfer of the steam loop and recommend approval of item 7 as amended. >> thank you. who would have thought steam is that important? please go ahead and-i would say can we combine the presentation for item 8 and 9 and then go to bla report? >> thank you. item 8, if i can have the screen, please. i'm seeking positive recommendation of a lease at 1145 market street which is owned by trinity. because of the similarity in some of the addresses i'm about to use i'll refer by the property owner name. when i say trinity i refer to

the building at 1145 market street. as you see in the picture, the trinity building is the white building in the center of the screen. 1155 market street owned by lighthouse is the building you see to the right. the city leased 1145 market street for over 10 years. we have three existing tenants in the department, law library, health service system and retirement. all three of these leases are about to expire or hold-over. last fall when retirement proposed moving out of the building in fall of 2023, the landlord offered a competitive rate. they offered $30 per square foot fully service net electricity if requirement would stay. then the following day, they beat their own offer and

offered $29.95 per square foot. they also offered to hold this price for any available space in the building. given that very competitive rate, the city looked at what options we had to possibly fill the building to take full advantage of this extremely competitive rate. but, for today, we are only considering floors 1 and floors 8-11. we will be back to you as president peskin said earlier to talk about similar leases for hss and law library on the second floor but also at the $29.95 rate. here is a stack of the building as we here at real estate subject to board approval. as i said earlier, today we are

talking about floors 1, 8, 9, 10 and 11, but you can also see other possible stacks. on the first floor reading the graph from left to right, you see that hss is currently in half the space with the cafe in the other half. if you move over to the after-condition, you see that hss is replaced by [indiscernible] they will be taking up 6400 square feet. and coming from 11 55 market street right next door. on the 8th floor that is owner occupied or vacant space that dmac, police will be moving in to the 8th floor. they are taking up 11 thousand square feet and also coming from 1155 market. however, in june of 2025, dmac

will leave the space and back-filled by department of public health from 1360 mission. the 9th floor going from vacant to dph and 10 and 11 the same and you see the square footage. dph is coming from 101 grove and 101 montgomery. the deal points, pretty straight forwards. 10 year term. starting may 1, 1-8. it will start july 1, 2024 for dph floors 9, 10 and 11. the lease will expire july of 2034. we have two-5 year options to extends. total premises under this lease is 45 thousand square feet starting at $29.95 per square foot yearly with 3 percent

escalation. again, fully service net electricity with base year of 2025. we have a small ti allowance to allow both dmac and ocea to move into the space, $266 thousand that cover construction wiring moving from next door. there is a provision that gives the city the right but not the obigation to basically borrow from the landlord up to $500 thousand for ti construction. the city percentage of occupancy under this lease is 34.97 percent but can be over 85 percent if we were to take advantage and occupy all the available space. estimates that it will cost $205 thousand to wire the building should we take the entire building. we don't yet have estimates of

dph ti cost. we estimate that we'll be saving $11.5 million based on the rental rate of $29.95 versus $52 per square foot we were initially considered last year before the landlord dropped the rent rate. again, i want to thank the mayor and city administratored carmen chui for her support and [indiscernible] the lead negotiator on the deal and nancy taylor, for her work and are helping us get through this. that concludes my presentation on this item. >> that is just the trinity center. let's go into also for the hudson. and then go to bla for both.

>> seeking recommendation for resolution authorizing lease at 1455 market street. when i say hudson i'm referring to the building at 1455 market street. the picture, what i like about this building is that, it serves a variety of purposes. it was built as a data center by bank of america. they still have a presence in this building. their data center is still

located there and they will be leaving i believe in 2025. also, some of the latest tenants were uber and square, high tech companies that did some high end tenant improvements so this is a state of the art building both physically and from a data standpoint. this lease and there is also lease option and purchase option which i'll get into in a minute, basically decamps from 1155 market, which is lighthouse to the hudson building. right now we are showing the stack only for the floors that are involved in the lease before you today. as you can see on the 7th floor starting at the bottom, it is owner occupied, plus mta has a

presence in this building as well as b of a. in the- >> sorry, just want to correct sh slide. that is listed at 1145 market but we are looking at 1455 market? >> that is correct. my apology. >> good eye. >> oen the 7th floor, the stack wont change, but mta will be taking additional 50 thousand square feet. you can see there it is 51 and some change. the reason being, mta needs new space for consulting team for their transit center upgrade project. on the 12th floor, we are going from owner occupancy or vacant to gsh, hr and dhr. they will be taking 5700 and 11 thousand square feet respectively. gsa hr is coming out of market

and dhr is moving the training center from 1740 cesar chavez. on the 13th floor, vacant moving the mayor office of disability and the department of the environment again from 1155. 16th floor, cmd and tax collector from 1155, and then on the 17th floor we have the assessor and dcyf moving from 1155 in the case of the assessor and 1390 market street of fox plaza in the case of dcyf. this is just another visual presentation of those moves. you can see on the left the department, the floor they occupy at 1155 and the square footage and again, where they will be located in the hudson building and again their square

footages. the reasons for these moves are to take advantage of the competitive rate. it allows for additional consolidation over time of other city departments and it also presents a buying opportunity for the city. again, just a different visual representation, this is dhr. we also have shared conference rooms that will be part of the stack at the hudson building. we will have a shared conference room on the 12 and 16 floors. lastly, again dcyf and mta and their stacks. deal terms, for the lease, the lease is with hudson property. the building is $1.1 million square feet. in phase 1, we will be taking 157 thousand square feet on floors 7, 12, 13, 16 and 17.

the lease term is again another typo, my apology, the lease term is 21 years with two 5 year options to extend. however, the first year is rent free so that's why i believe i made that mistake and said 20 years. starts may 1, 2024. expire april 30, 2045. the rent rate is $40 per square foot service net electric at 3 percent annual escalation. the base year starts out at 2025, but what extend to 2027 if the city were to add an additional hundred thousand square feet. the ti allowance is hundred dollars per square foot or approximately $15.7 million. this allowance is refreshable

and stackable. what that means is if we were to exercise the lease option and move additional people into the building, they would also be entitled to their hundred dollars per square foot allowance and by stackable, that means if we don't use all the hundred dollars per square foot in one move, we can save that and move it to the subsequent move as long as we do so within 24 months. for example, if we only used $80 per square in one move, that additional $20per square foot is available in the next move making $120 per square foot assuming the two moves were [indiscernible] the moving allowance is $15 per square foot or approximately $2.3 million. it also refreshes it each move but not stackable. the rent credit is 12 months or $6.2 million. this is phase 1 only. the total credits are $24.3

million. additional phases as i said before, we get the ti allowance, we get the move allowance, but the rent credit goes down. we get a rent credit during the ti build-out only. we anticipate that is approximately 4 months for each phase. swing space, what we did for this lease is we tried to eliminate the barriers to moving. the barriers to moving are often times those one time upfront cost that the city hasn't budgeted for or can't affords. in addition to ti and move allowance we also asked for swing space provide on the 8th floor. this is 7600 square feet. this allows staff to work in person during the ti build-out. for those who have the ability

to telecommute or remote work, they will be doing so during the build-out period. furniture storage if needed, we can take our ff & e and city personal property and store it. they will move and store as part of the ti and moving allowance. furniture purchase, as i mentioned before, the building was occupied by uber and square. there is nice furniture and fixtures in the space. city has the right but not the obigation obligation buy furniture left over. there are 22 floors so maximum of $22. the lease option, so in addition to a lease, we also have a lease option. the lease option is available to through december 31, 2027

and exercised at the city option and subject to board and mayoral approval in light of the city attorney and president peskin comments before about exercising options. the language might have to be adjusted. the base rent will match and escalate the same as the original lease. what that means is that, if we were to exercise the lease option and take additional space in july next year, the rent started at $40 per square foot and escalated at 3 percent, so next year it is $41 and some change. we would be moving the additional space would be at the $41. it would have the same base year as the original lease, accept that if we exercise the option and add a hundred

thousand square feet, that base year would move to 2027. for the entire lease. the original phase and any additional phases. that means we would not start paying operating expenses on the building until january 1, 2028. the option is for whole floor increments only. the tower floor plates 27 thousand square feet and podium floor is 99 thousand square feet. under the option again we get the ti allowance, the move allowance, the rent credit during the build-out. there is no limit on the number of times we can exercise the option up till december 31, 2027 and what is really also i think important is that cta, a current tenant in the building can take advantage of joining this lease at their lease expiration next year. >> cta is county transportation authority? >> it is. >> thank you.

>> the purchase option. in addition to a lease and lease option we also have a purchase option. the purchase option opens and available to us once we have 400 thousand square feet of occupancy in the building. in the initial move-in, will be just over 200 thousand. i anticipate in a phase 2 move we would meet or exceed that 400 thousand threshold. once open, the purchase option is available to us until december 31, 2027. the exercise is at our option subject to board and mayoral approval. the purchase price is the fair market value based upon appraisal and the city must close esgrow within 255 days of our notice or december 31, 2027, whichever occurs first. why this move?

when i was before this board in september of last year, and supervisor chan i think you will remember, i was tasked with finding a purchase opportunity for the city. i had been given similar guidance by the mayor and the city administrator as we had developed a strategic plan for civic center that required us to think about consolidation and taking advantage of telecommuting and remote work in light of covid and we developed a strategic plan we thought we could bring to fruition in 2028. based upon the urgency of the mayor and direction of the board, we looked to try to accelerate that plan and pleased to stand before you to say i believe we found the opportunity to do just that.

the hudson building has 1.1 million square feet over 22 floors and 350 parks spaces. the city has 8 leases in civic center expires between now and 2028. the city also has 5 city owned builds shz in civic center, 4 of which i believe are candidates for consolidation. two of which are seismic hazard rating of 4, the worst rating and the city made the policy decision to vacate the buildings as soon as possible. they are 101 grove and 170 otis. the total lease and owned space in civic center is 1.2 million square feet. this doesn't include 1145 market, 1650 mission, city hall or 49 south van ness. these are locations i do not believe are consolidation candidates. the hudson building allows us to solve all for our departments in civic center,

not just the ones at 1155 marth street. also, with regards to sustainability, all the air handling yuntsds in hudson are filtration. the city uses merv so moving to a building in robustness and climate. speaking to robustness of the building, it was retrofited for improved seismic performance, it offers continueality of government in a emergency as it has redundant power for the building. it has on-site supply of diesel which lasts 9 to 10 days. on-site supply of potable water which last 7 to 10 days. it is unrivaled scale being the largest building in civic center and i already mentioned the air handling. i like to thank the mayor and

city administrator carmen chui, president peskin, betsy from the city attorney office for her work and drafting these documents and that concludes my presentation for this item. >> thank you. >> alright. nick monard from bla. item 8 and 9 are two leases, one with 1145 market street for 10 year lease with two 5 year options to extend starting at $29 a square foot. that primarily will allow dph to move out of 101 grove, which is a city owned building is seismically un-sound and also allow dph to consolidate reduce lease space at 1360 mission and another site, but forgetting. when i did the calculation, this will save the city $1 million a year starting in fiscal year 2025.

that is general fund cost. we had a recommendation that the extension be subject to board approval. that is the case with 1455 market and is certainly the practice of this body for decades, but as supervisor peskin pointed out, he would prefer to have notice of those options being exercised. item 9 is a resolution approving a lease with 1455 market street. it is allowing most of the tenants from city lease space at 1155 market street to move to that site. moving to this new lease space will save the city about 2 and $2 and a half million a year, we recommend approval of item 9. >> thank you. president peskin. >> as to my earlier suggestion on item number 8, i would

suggest a further resolve that reads further resolve that the director of property shall provide notice to the board of supervisors in advance of exercising any authority under the agreement to extend its term, and then the language that budget and legislative analyst suggest for item 7 also needs to be incorporated into that item. >> thank you. with that, let's go to public comment on these three items. >> we invite members of the public who joined to speak on our items 7, 8 or 9. now is your opportunity to approach the lectern and i'll start your time when you begin speaking. >> brandon cox, the chief operatoring for lighthouse for the blind owner of 1155 market. the lease approval of 1455, 1145 market in a long-term

partnership at 1155 market, the lighthouse building between the city and longest continually oprating non profit in san francisco. the lessen learned from what is laid out by president peskin prior to this activity has been learned by non profit in the city. we weathered and fought against the doom loop narrative in the press and open air drug market is at our door step that brings destruction of property and significant safety and accessibility concerns for the blind community including employees and those of ccsf. we endered the cost having to pay for goods service of community ambarders to insure ure safety and access. we have seen store frent after store front close and buildings empty out with ply wood covering the entrance and-the

success of the skate park. we moved into the building in 2014, we had the support of the city to continue their lease on floors 1-8. after the committee sent the lease option for 1155 back to the negotiating table we were expecting the real estate department to negotiate in good faith with us. we came back with competitive opportunity. it is our understanding now this is moving forward. my question to you is, what message will this send to other non profits or socially minded businesses who can take the risk and invest in the market and not large commercial entities? had thank you. >> thank you brandon cox for addressing the committee. next speaker, please. >> there is a figure of 8 between 7 and 9. this is logical, but not for

what you are addressing here. there is no connection between 7 and 9. i said, we dont mess with water. steam is water. it is like ice, so the city has owned the system of the steam here for over a century so it will stay in the city's hands. we dont was private here. accept if there is [indiscernible] i don't know what you are talking about market. a building is interesting. 1128 market. the rest i submit. you don't mess with water. steam is water. >> thank you for addressing the committee. next speaker. >> rudey gonzalez, building and construction trades council. not much to say about the easement for the steam loop,

but as i understand it is pretty straight forward. supporting item 9, hudson as not only as a developer, but a good business partner in the city. they employ skilled trained workforce, we are working with them as partners for really exciting improvements to the ferry belding and shown to be good steward. i have to say this is not only a fiscal prudent and smart move for the board to support, but also improve the working conditions for front line workers and are provide redundancy for the emergency capacity of the city and county of san francisco so i want to extend thanks for the leadership of president and all you moving this item forward with positive recommendation. thank you. >> thank you much. if we have other speakers now is your opportunity to line up by those curtains and next speaker, please.

>> hello president budget finance committee. i am the [indiscernible] the owner rep for 1145 market street. we are hoping you will approve this lease. we own the building on the corner of 8th and market, which is the second next door building to 1145 where we leased to whole foods. we have been trying to encourage whole foods to reopen and they are hoping we can do this lease. whole foods is in favor of this at 1145 market. it would go a long way to help the neighborhood and bring whole foods back. my hope would be to bring whole foods back to the neighborhood. we both think this happening bringing people in the area and working would be a lot closer to have this occur and thank you all. >> thank you much. next speaker, please.

>> hello, chairman, paul wallace with trinity. also i hope you will consider this application number 8 favorably. i like to reiterate what [indiscernible] encouraging whole foods reopening. the additional traffic and employees in the area will generate the foot traffic to assist whole foods in the decision to reopen the store. also, it will help the general retailers in the area, the small retailers and additional foot traffic so thaunkz thank you for your consideration. >> thank you much. next speaker. >> yes, my name is van, i like to extend my two minutes that you have done somehow down 7, 8

and 9, which is consolidated everything. i like to bring some objection s up and read a statement i wrote to the members yesterday. my objections are about the timing, about the short notice. i'm speaks and objecting mainly about 1145 and exactly the sunshine i like to bring sunshine to the committee meeting about these leases and speak in favor of using the light-house building as opposed to the trinity. i'm very aware of the hudson building. i was a member of the pacific exchange for 25-30 years. we looked moving the trading floor into that building in the early 2000 so very aware of the building. again, like i say, what i'm coming to do is object and also speak for the lighthouse

building which is a long time partner of the city. i think they were railroaded on this deal and there is a lot of things put out in front of this committee that are somewhat inaccurate. the first piece that story is, yes and i accept and read that in my statement that original lease at $64 was rejected and applaud the city for doing that. try toog get a market rent rate coming in as markets were reevaluated. what is not said and the city went dark in the negotiation with lighthouse, lighthouse and the similar to 1145 and i see no value to moving from 1155 to 1145, when lighthouse put in front of the city a $39 square foot subsequent 10 year lease

with 2 years-- >> nob [indiscernible] >> i like to put-now put 3-if not i like you- >> unfortunately with the speaker before you, they are afforded two minutes and i have to--i can take a written statement and include that to the file. very well. public comment is now expired. >> thank you. we appreciate it. you have a lot of the time. >> [speaking in the background] >> you have allotted 2 and a half minutes. >> [unable to hear speaker] >> thank you very much. >> you have allotted the time.

you spoke. >> [indiscernible] [gavel] >> [indiscernible] >> if we have another speaker now is your opportunity to approach the podium. >> [indiscernible] >> you are now disrupting this meeting and preventing our-- >> [indiscernible] >> we are going to recess.

[recess]

[meeting reconvened] >> we are returning back to budget and finance committee for the item of 7, 8 and 9 and that we were wrapping up public

comment so i want to make sure we continue to wrap up public comment. mr. clerk, would you make the announcement? >> yes. we are currently holding public comment for item 7, 8 or 9. if we have any other members of the public who wish to address the committee regarding the items now is your opportunity to approach the lectern. that completes the queue. >> public comment is now closed for these three items. i think we made that clear actually since 2023 last year we have been in discussion. in fact we have been long-standing discussion with the real estate division and thank you director penic. this was before our colleague who was actually on this committee, supervisor ahsha safai made some of those

comments, including when we were making the lease for fox pausey and we have in discussion including with city administrator chui to see what we can do for a sustainable asset managealment for the city for our workers, both in lease management as well as office space or land acquisitions, so that we have a diverse portfolio to be able to be-that the city actually has for real estate and to allow our workers to function and work and so, with that, i think that last year we have these conversation specifically about 115 5 market street and at that moment everyone should recall the budget legislative analyst report was not recommending the

lease agreement because that was deemed above market value at that moment, knowing because the pandemic real estate value has decreased in the area. with that, we voted that lease out to full board. it was unanimously vote down to disapprove the lease agreement and therefore you went back to the drawing bord. we basically unanimously from the board of supervisors sent the real estate division back to the drawing board to figure out what we can do for the long-term lease for all the city departments located at 1155. and to really highlight the fact that what you have come back with today with these two leases, 1455 market as well as 1145 market, are very impressive. imprevs in the sense where clearly per square footage rate

significantly lower then 1155. 1145 market is 29.095 square foot rate and 1455 is $40 square footage rate and it compared to i believe formally $79 and then $60 square footage at 1155 that still remains significantly higher and according to our budget legislative analyst for sher for the 1145 market street that we are saving about more then a million dollars or roughly a million dollars per year for the duration of the lease and with the 1455 market that we really allow to have to do options to exercise our right to purchase the site for a more sustainable asset manageagement straty. colleagues today first of all, i also want to thank our city

administrator for asset management. the steam loop as a contract for our city, i think it is a critical piece of assets that the city really have to manage, but not too be able to have it within the city jurisdiction, just doesn't seem to be able to maintain and better deal to contract this out for maintenance plan for a long-term at least for the next 5 years. with that colleagues, i like to make the motion to make the motion to amend item steam loop contract and that is the item number 7. that is to accept the recommendation by our budget legislative analyst and to include the term of-give me one second. the public interest or necessity demands or will not

be inconvenienced by the transfer of the steam loop and that is amendment to the proposed resolution recommended by our budget legislative analyst. with that, on that motion to amend, item 7, roll call, please. >> on the motion to amend item 7 to accept the bla recommendation and add the resolve clause state d by the chair, mandelman aye. melgar, aye. chan, aye. threei rirs. >> thank you, the motion passes. with that for item 8, as i understand it, what the board president who is the sponsor of the legislation for item 8, which is the lease agreement for 11 four 45 market street would like to advance notice to the board of supervisors from the real estate division in the event you determine to exercise

to extend your 5 years lease when right before the 10 year term expired. please go ahead. >> lease extension option in the 1455 market street lease as well. would that amendment be appropriate for that legislation? >> it is not recommended in the budget legislative analyst, but i'm-i see head shaking. >> i'm okay either way, just wanted to make sure there was a decision and not just overlooked. >> deputy city attorney ann pierson, i don't think it is necessary for the other agreement. i appreciate they have different terms now and we are discussing those with the sponsor and intermly within our office but i think this recommendation is specifically for this one item. item 8. >> thank you.

i think nothing would stop for real estate to approach the board in the event you need to exercise your options of extened ing your lease, or purchase agreement, which i think that would require for you to come before the board for approval in the event we decide to purchase and so, we will just going to be amending only item 8 today for that advance notice. >> very well. >> thank you. with that, colleagues i like to amend item number 8 to accept the recommendation. well, to modify that recommendation is to receive notification that require the real estate division to send notification to the board of supervisors in the advance when they determine to exercise extension options. with that motion, roll call,

please. >> chair chan before that motion, bla recommendation is also to amend the resolution, right? very well. on that motion to accept the bla recommendation requesting-- >> it is actually a modify recommendation because the bla is asking for the board approval, but what we are saying instead of board approval we are only requiring a notification to the board. >> understood. okay. >> i believe supervisor peskin read an additional resolve claus into the record and what he read was, furkter resolve the director property shall provide notice to the board of supervisors advance of exercising any authority under the agreement to extend the term. >> motion to amend is read outloud by the deputy sit a attorney. >> on that motion, mandelman,

aye. melgar, aye. chan, aye. we have three ayes. >> thank you, the motion passes. and then now with that, we are going to move all three item, including item 7 and 8 as amended to full board with recommendation. >> on that motion to forward all three resolutions, 7, 8 and 9, mandelman, aye. melgar, aye. chan, aye. we have three ayes. >> thank you, the motion passes. mr. clerk, please call item 10. >> item 10, resolution approving the second amendment to the grant agreement between abode services and the department of homelessness and supportive

housing (“hsh”) for administration of a flexible housing subsidy pool program; extending the grant term by 12 months from june 30, 2025, for a total term of february 1, 2021, through june 30, 2026; increasing the agreement amount by $8,018,683 for a total amount not to exceed $17,918,683; and authorizing hsh to enter into any amendments or other modifications to the agreement that do not materially increase the obligations or liabilities, or materially decrease the benefits to the city and are necessary or advisable to effectuate the purposes of the agreement. madam chair. >> we have department of homelessness and supportive housing. jrkss >> good morning. emily cohen, deputy director homelessness and supportive housing and here with you today for to seek authorization for resolution to enter into the second amendment to our grant agreement with abode service for operation of the flexible housing subsidy pool for formally homeless adults in the community. this proposed amendment was

heard and approved by the homeless oversight commission march 21. the current term proposing to extend the term by one year and increase not to exceed amount by approximately $8 million to total of approximately $18 million. the flexible housing subsidy pool is a form of scattered site permanent supportive housing that is funded with local dollars, so for the tenant it operationalizing similar to a section 8 but it

>> through house location assistance, including housing quality standard inspections, housing coordination, landlord services, subsidy administration and case management services. as noted in fiscal year 22-23,

we served 85 clients from 72 households with over 95 percent of people still housed after 12 months. this program allowed many to stabilize, especially since this population is primarily over 60. over 84 percent of participants have maintained or increased income. providing subsdizeed permanent scattered housing in the community making faster and more cost effective tackling homelessness. i want to share a story of a participant out of prison as covid hit and went to a sip hotel. a board was able to get housed through a privately owned rental unit and he has been stablely housed for 2 and a half years now. this participant attends

therapy, mens recovery group and big player in the local music scene where he invited a few staff to a local concert where he was performing. he had transformed his life with supportive program like the flexible housing pool. these are the stories that drive and motivate our organization to get access to supportive and safe housing. thank you. >> thank you much. next speaker, please. >> you are better then at math so do the math. you have to make sure you understand that you don't exploit homelessness here. you sold it. so, it should be something that goes without $17 million, $18 million. how many people do you have for

how long? again, you are good at budgets, so make sure you-- >> thank you much for your comments. madam chair, completes our queue. >> public comment is now closed. with that, would like to move this item to full board with recommendation and roll call, please. >> on that motion to forward this resolution to full board with positive recommendation, mandelman, aye. melgar, aye. chan, aye. we have three ayes. >> thank you, the motion passes. mr. clerk, please call item number 11 and 12 together. >> items 11 and 12 amend approve the following between the city and the treasure island development authority treasure island community development llc and consistency with plan of the 8 priority policies of the planning code and the california environmental quality act.

item 11,ordinance amending a development agreement between the city and county of san francisco and treasure island community development, llc, a california limited liability company, for the treasure island project and to amend the financing plan; making findings under the california environmental quality act; making findings of consistency with the general plan, and with the eight priority policies of planning code, section 101.1(b); and making findings of public necessity, convenience, and welfare under planning code, section 302. >> maldm chair. thank you i want to thank supervisor dorsey being in the chamber today is this is really his item and like him to have opening remarks. >> thank you so much chair chan for having me today and scheduling these items and are thanks in advance also to supervisor melgar who heard some of these remarks i will be making earlier this week at land use. the items before you toods are sponsored by mayor breed and myself and our hope is these will keep the treasure island project on track and moving forwards with a number project

agreement amendments. this highlights a emerjing san francisco neighborhood showcasing a long planned and promise housing boom. treasure island is first and foremost a san francisco neighborhood and it has finally begun to see real progress over the past few years on the first stage of construction, nearly a thousand homes are approaching completion, served by parks and utilities, public art, new streets and ferry service. when complete treasure island will be 27 percent affordable with high quality public realm with parks and open spaces, waterfront access and amenities and unmatched views that will be worthy of our world clas city. as you will see in the presentation today, the neighborhood is truly remarkable. it represents nearly 10 percent of our rhna targets and committed to doing everything to insure progress continues. that progress isn't solely limited to fulfilling our housing element obigations. it is also about keeping

promises to residents of treasure island. this is a community that is home to resilient community of around 2,000 residents, majority are low income or bipoc community members. many treasure island residents are from the recovery and reentry communities living inspirations making the most of second chances and who are in many cases doing god's work to help others. largely because that treasure island will always hold a special place in my heart. when i joined the board nearly two years ago it was my journey in recovery. there isn't a play book how to run for office as a recovering addict and some days i want sure how it was going over but i tell you treasure island residents embraced me. they welcomed me as their supervisor in ways that meant the world to me and i will

never forget. they reminded my recovery and redemption matter and some faces inspire me every day on the treasure island prints on display in my office. residents have been waiting patiently some 20 years new units and infrastructure slower to come on line then expected. it was 2002 when i started in the city attorney office when i was much younger. my treasure island constituents have endered delays and problems further perception for too long they have been treated as second class san franciscans. with a bridge separating from opportunities of san francisco, lack of many services, power outages one this week, i'm aware as the district supervisor their experience of being a san franciscans is very different from most other san franciscans. that is a longstaunding wrong we have a opportunity to right

with the legislative package before you today. i hope you see this package is a opportunity to make good on our commitments to more structure our financing investment and reimmadgeen the development agreement in ways to deliver long-stand ing promises that the san franciscans on treasure island deserve. the city and treasure island community development are committed insuring the project does not lose momentum and now is the time for ticd and the city to double down. with the prudent deal adjustment true to the spirit of the original deal affirming our commitment to treasure island next chapter. monday land use committee recommended approval to update and zoning map and endorsed resolution recognizing treasure island and yerba buena island statement.

before you today is a package of critical items to insure the project momentum continues into the next major development stage and deliver more affordable housing behavioral health building and prepare for additional 1300 units of housing. colleagues considering the item today i know you will be mindful this is about much more then change. it is about fulfilling the promise of thriving inclusive neighborhood and well embody the city value s for generations of san franciscanss to come. there are multitude of external partners to thank including many with us today. one treasure island sherry williams and [indiscernible] honored in the board chambers not long ago. development partner the treasure island development corporation and grateful for house of labor from building trades and carpenters, i believe rudey gonzalez is with us today from norcal carpenter

union and others. before i hand this off i would like to ask if chair chan can move forward a technical non substantive amendment i will read. section 4b, page 5, striking the text, da exhibit a project site to reflect revisions to marina exhibit boundaries. b, legal description to reflect revisions to marina exhibit boundaries. the references were added in error and will not changes to the exhibits. the clerk distributed hard copies of the amendments with colleagues and my office sent electronic versions. before we hear from the dedicated staff who work so hard on this i like to thank some of them from the development team and oewd. staff from the controller office and city administrator office and all the tida staff, especially bob beck, jamie

[indiscernible] ann marie rogers. i like to invite bob beck from tida who will lead us today along with jamie-- >> thank you chair person chan, supervisor dorsey, members of the committee. i am bob beck, director with the treasure island development authority and privileged to be joined by incredible team, many whom supervisor dorsey just mentioned as well as our development partner represented by chris and charles chen and mayor office of housing community development, sheila nick lopilous and cindy. it is 27 years since the former naval station treasure island closed and 13 years knrf the board approved the development agreement and disposition development agreement to create this new neighborhood. the da vision for sustainable new community is truly

unprecedented. based upon preliminary scoring the development will be the largest i highest scoring project under leed for neighborhood design standards. over the last few years significant progress has been made realizing that vision and we come today with propose amendment to the da and dda intended to main tin the momentum of the program, insure the vision is fully realized and deliver new tax revenues and housing opportunities including more then 2 thousand affordable units to the city. before we get to the details of the propose amendments, i want to provide you with a snapshot of the status of the development on treasure island and yerba buena island. anyone who has driven across the bridge or looked across the waterfront on embarcadero can see development made over the last few years. we are nearing the completion of the first stage of

construction, all most 1 thousand new homes are now or soon be ready for occupancy. new parks, utilities, public arts, streets and new ferry landing have been accepted by the city and put into use. the initial stages of new neighborhood are outlined in yellow on this slide and we have 974 completed or under construction units, including affordable and market rate units, apartments and condominiums. treasure island is the project when there is a moment for tremendous need of new housing in san francisco. the progress made is remarkable given the regional national and global economic challenges treasure island program is delivering remarkable results and proposed amendments are critical to continue delivering these results and realizing the vision for the island. the next stage of development on the island includes the core

where the island commercial and retail service will be concentrated as well as three additional affordable sites. providing infrastructure to enable development of the next stage is critical to continuing the momentum established demonstrating a commitment to delivering the vision for treasure island and attracting the services residents rely upon. the treasure island program unique in the amounts of infrastructure investment required to enable development. the legacy frublt left behind by the navy is at or beyond the service life. the condition of the existing infrastructure and need for geotechnical and sea level rise adapation require the construction of new backbone infrastructure, [indiscernible] treatment plants as well as, new roadways and utilities.

the soil is accommodated through a process called [indiscernible] to mitigate for seismic events. the bay is compressed through surcharging a process soil is stock piled prior to construction on the improvements to alloyd differential settlement over time and the perimeter of the island is improved mitigate potential lateral spread in future earthquakes. at the end of the surcharging process the soil is partially removed leaving behind a elevated building footprint of 3 to 6 feet in anticipation of future sea level rise. the bulk of the infrastructure and initial subphases accepted through the board last month and city agencies are assuming

owner ship and operation that infrastructure integrating island residents into the budget and work plans. the puc also began construction of the new wastewater treatment plant for the island which produce recycled water for use on the island. in the slide before you is storm water treatment garden to filter storm water flow before discharged to the bay. the county transportation authority is also the leading delivery of a series of roadway projects on yerba buena island improving access to and from the bay bridge at value of more then $265 million. the completion of infrastructure and geotechnical improvement can require 3 or 4 years to complete but essential. maintaining momentum on the construction of new infrastructure in the stage 2

area even through challenging economic times is essential to insure vertical construction can occur as market conditions improve. [indiscernible] condominium project first hundred percent affordable site. we now have 229 completed units on treasure island and yerba buena island and another 745 completed early next year. additional 360 units are in the planning phases. next building to be completed will be the hundred percent affordable star view court which is developed with mercy housing and catholic charities. completed this summer more then 1 in 6 island households will move into new permanent homes in the building. treasure island and yerba buena island also include all most 300 acres of new parks and open

space. the greatest single addition to the city open space network since construction of golden gate park, including wild land, signature parks, beaches, neighborhood. shown here is [indiscernible] unparalleled view of the sky line, golden gate and bay bridge, alcatraz and entire bay area. this park and signal point are complete with formal openings scheduled for mid-may. also in the panorama park you see the sculpture. the first instillation under the treasure island art program. there is a great deal of important progress on treasure island and yerba buena island and want to maintain and believe behoove the developer

and city to keep the city on track for the next phase. as cost risen due to delays and escalation and public reimbursement lagged it is clear additional fiscal changes were needed. the amendments before you are the result of extensive work with the developer and within the city family to assess how to support and sustain the progress made on the island and bringing forward these changes we didn't want to lose any of the public benefits that have committed to the program, including the many public benefits [indiscernible] affordable housing commitment, but to differ cost where possible, modify sections of the da that were not comparable to later developments and have lost pace with changes in planning code and other agreements. but most importantly to accelerate public financing

reimbursement by director treasure island generated revenue back to project infrastructure. where possible to implement process improvement and reaffirm city commitment to permanent review timelines. within these guiding principals staff at the office of economic workforce development and treasure islands development authority developed proposals before you here today. the fiscal package tested by the city staff with the city administrator office, the controller office, mayor budget office and outside consultants. tida board reviewed the proposals under their jurisdiction at there meeting last month and unanimously recommended approval. last week the planning commission reviewed the land use portion of the plan and the land use and transportation to full board with recommendation. with that, i turn it over to

jimmy, tida finance manager to walk you through the details of it fiscal proposal. >> thank you. jamie, finance manager with treasure island development authority. treasure island is once in generation project. for san francisco it delivers more housing, more resilliant infrastructure and public spaces the entire city can enjoy. the most important piece is proposed fiscal changes that accelerate public financing to the project and enable the next stage of development to proceed. construction cost are higher then expected and infrastructure has taken longer to deliver due to permitting delays. tax increment and special tax revenues coming in slower then

expected due to delays and turbiant economy of the last few years. we are at a cretical inflection point. stage 2 will slow or pause under these conditions, but the city as partners in this undertaking do not want to pause. we propose to builds on the current momentum, move forward with the next stage of development and deliver the promise of the project. the magnitude size and complexity of the treasure island projoct means there is no comparison with other projects in the city. the basic infrastructure cost alone total $1.4 billion. this comprise work that builds new island from the ground up, insuring the land is geo technically sound and the brand new utilities and streets to support a neighborhood and

development that is unconnected from the city infrastructure framework. to accomplish this undertaking the mast r developer sourced and invested 800 million kl to getd where we are today. the da obigates to reimburse the eligibility infrastructure expenses. yet the existing public financing tools generated $125 million in reimbursement for infrastructure we will own. we now propose to accelerate $115 million in general fund certificate of participation to full nil reimbursement obigation for the next stage. stage 2 is a next and second largest phase that complete the backbone infrastructure on the island. it creates parcels for 1300 units of housing. of those, the city is well underway in predevelopment and financing for two affordable

housing buildings totaling 100 units for seniors and 150 for family housing. additionally, the department of public health is also in predevelopment for 240 bed behavioral health facility. this will support the city urgent need to expand residential treatment. it is critical that we begin stage 2 infrastructure to deliver on the three city supported projects. this fiscal package insure the correspondsing infrastructure is built on time. without it the projects will pause. here are details about the fiscal package. $115 million in cop would be across three separate issuanceing used in support of the next stage of infrastructure. the fund reimburse the developer for construction of

streets and utilities necessary to serve the next large area of the island. we analyzed many fiscal options and cop provide the most appropriate source to enable the phase to advance over the next 3 years. the three cop issuances are appropriated and approved by the board of supervisors through future board action. at the time of the approval of the firks cop and approval after, we evaluate the debt limit. the bla report makes assumption as to the city cop issuance capacity however we expect to [indiscernible] early 2025 to insure we advance this project in concert with the rest of the cop program needs. in partnership with the controller office and city administrator we conducted a detailed fiscal study that demonstrates after accounting

for the cop debt service, the island future tax growth will provide a net positive tax benefit to the city over time. as a neighborhood that has been fully reliant on tida non general fund leasing revenues and not relied on any general fund support, this fiscal package is a opportunity to prioritize the future public infrastructure on treasure island that serve existing and future residents. embedded in this proposal we negotiate guardrailed for the general fund. protections include first, redirecting any treasure island tax increment back to the general fund as long as the cop are outstanding. second, during this period, the developer is required to reinvest proceeds from land sales and tax increment back to the project until stage 2 is

complete. lastly, the agreement also states the cop are one time only and will not be available for any other use or phase. as part of the dda amendment process, tida staff reviewed provisions in the dda and financing plan to update language for clarity, accuracy and to incorporate feedback received from city attorney and outside bond counsel to better reflect project milestones, revise development schedule, and maximize the use of tax exempt proceeds. with this fiscal package and these guardrails, we can advance the project at a critical juncture in a responsible and forward thinking way. before we conclude our staff presentation, i like to invite sheila from mayor office of housing and community development to speak to the two affordable housing project under predevelopment in stage 2

and tida, oewd and city staff will be available to answer any questions. thank you. >> good afternoon. sheila with the mayor office housing community development. mohcd works with our sponsors and tida to advance both projeths jamie talked about for seniors and the family housing. provided predevelopment financing support to both projects and made preliminary gap financing commitments for the senior project for financial application. additionally, committed to providing preliminary gap financing for the family development for financial applications at some point in the future. the completion of infrastructure phase 2 is crucial for these two affordable housing projects. without the completion of crucial infrastructure construction cannot commence for either affordable housing project. bogets projects are steadily advancing through

predevelopment. reanticipate sponsors will submit [indiscernible] hope the infrastructure will be sufficiently developed for both project to commense production once they secure state financing. thank you. >> items 11 and 12 are ordinance and resolution that wds approve chaechcks to disposition and development agreement and development agreement with related to the treasure island development. that development has been on bp going since 2011. at that time, the project was expected to cost about $1 billion less then the expectation now and the project was now is 8 years behind schedule relative to the original assumptions and those planning documents. with the major fiscal impact of these changes is to add additional public financing of

$115 million using certificate of participation to fund a portion of the phase 1 infrastructure improvements required in the development agreement. we know in our report a couple different policy considerations. one is that the legislation you are asked to approve describes a fiscal impact analysis about what of the impact of these changes to the agreement is on the general fund. that analysis has not been shared with our office and not available for your review. in addition to that, this will fully consume the cop capacity for the next several years unless the capital plan is restructured. we know that one project is going to be taken out 170 otis street, which is right now part of the plan at $70 million. the original plan for that money was to purchase a

building for hsa. they are now moving into leased space and pending board approval at 1145 market street but that wont fully offset the new cop being contemplated and so the board doesn't know which projects are delayed or extended to accommodate these new cop's. we consider approval to be a policy matter for the board. >> thank you. before i call back on colleagues because i now have everyone on the roster and i just want to first really thank the treasure island team for your work and also i want to specifically call out [indiscernible] i think she is in the odd audience from office workforce and economic development for working us and i think your presentation today reflectsed some of the conversation that we have been having and i appreciate that. that is very fast to adjust your presentation and being

able to also articulate both the needs of the island at this moment, but also understand the challenges that the city face-as they both on the cop capacity, our bond capacity, our debt capacity. those are very real conversation, not just with the treasure island team, but really as a city that we must have for the upcoming budget season. at one point, the fact this budget and legislative analyst report has left as a policy matter for the board and i do think it is. it is a policy that the board and the city has to make. how do we prioritize our capital dollars and resources? we know that with it has been

difficult for the budget proposed by the mayor last year we recognize the majority of the capital outlay was reduced or in fact no longer part of the city departments budget and so we know that capital dollars and capital improvement as a resource it has been more and more difficult as a resource to the city. also the departments. with that said, i do concur with supervisor dorsey in his opening remarks about the existing residents right now on treasure island in need of infrastructure--those completed

and those we hope to complete in early 2025. but with that said t is a balance approach we mest have to both make sure we continue to work on treasure island and also take care of some of the capital needs in san francisco that throughout rest of the neighborhoods, not just treasure island neighborhood. often time i feel like it seems treasure island beit come a after thought and time to time and feel the same about bayview and it is a worthy investment because the sit has not been making that investment in the past. i want to respond to some of those conversation we have been asking before i call on you. i just know these concerns and supportive of this project and the development overall. i do have reservation taking on

this level of debt given the incredible need we have for infrastructure project across city facilities and the unresolve, but i know supervisor dorsey is working on the transportation and change in market condition and a year ago the certificate of participation was much lower rate then today. it was worthwhile to exercise certificate of participation in the event when we need a capital improvement in our city, but roget right now market condition and interest rates make the tool like not as effective as it used to be. and more costly and less favorable now. after many conversation i just again really want to thank office of workforce economic development and tida team. we have been having some of the

conversation and last couple weeks and also want to thank our city administrator carmen chui who also guided this conversation as she is the chair of the city 10 year city capital planning committee, so i am also grateful board president peskin has conversation and suggestions and how we can come together to move forward but with some fiscal responsible fiscal premise for this to move forward as a certificate of participation. also help us to all have greater confidence in the impact of the item on the debt limit. i have ideas what this is and after all it is really how we make sure that we the city has a revised and are finalized 10

year city capital plan before moving forward with the sales of certificate of participation and evaluate the city capacity before we move forwards. we want to consider there is cost saving like the dbt service fees we can differ that will be great, and to really be mindful about the issuance in terms of timing of the issuance of the sales of these certificate of participation that is working best advantage for the city financial condition. i am going to go back to colleagues, but you should know i'll call on tida or oewd to walk through the amendments we agreed and they will be proposing on the ordinance which is item 11 on the section

4 and section 4d which is you will see is really on the page 4 starting but really on page. starting on page 4 is section 4 and page 5 is where section d will be, so with that said, supervisor dorsey. >> thank you chair chan. i want to wrap up my portion by just expressing gatitude whether the city staff and all the people from treasure island who just shone support for this and will be remiss not to thank my own staff who very much share my love and appreciation for this really special neighborhood and especially brian dol and madison tam. chair chan, thank you for your thoughtful comments and allowing this opportunity. >> thank you, vice chair mandelman. >> thank you chair chan and thanks to everyone for their presentations and their work. this week the noe valley

bathroom opened in noe valley and we will be having a celebration that event on i believe this weekend. i do not withstanding how exciting treasure ilen islands in is in a lot of ways and the extraordinary work of a lot of folks with developer team and the city folks and the folks at tida are all doing, i do have a little bit of a feeling that in some ways treasure island is the noe valley bathroom at large and some things that caused us so much pain and suffering with that very little and needed project on 24th street at the town square are not unlike some of the things that are driving costs and delay at treasure island and the challenges with our permitting, with diffuse city

departments and now not just city departments, but city departments and tida all having to coordinate and developer team and folks from the mayor office running around chasing after all of these different actors is a ongoing problem in san francisco and is going to be-make it harder for us to get projects done, whether if is a little bathroom in noe valley or thousands and thousands of housing units in the middle of the bay. that being said, we got to get it done, and it is interesting to me also to think about the different ways that i think cities are thinking about public infrastructure. i think certainly in the decades after prop 13, cities were trying to figure out how to push as much responsibility

for as many parts of projects to the private developer as they could for good reason, and i have been part of some of those efforts in my pre-supervisor life, and i think as we increasingly recognize the desperate needs for housing and begin to think about housing as something that is not just a nice thing to have, but a necessary thing to have, i think san francisco in particular is having to think a little bit about what more we need to do and whether we actually can push all these infrastructure costs over to the developers. increasingly it is clear that the city is going to have a role in funding infrastructure going forward and we have to figure out a way to make it work even in a

post-redevelopment era. looking through all the mattresses and pillow cases to figure where the money might be and how to draw down some that anticipated growth in the future that will benefit developers and the public. how can we leverage that? dont love using cop for a project like this. on the other hand, seems completely necessary and i also don't love a billion dollars of additional cost that more streamlined and efficient processes maybe could have saved some of. all that being said, this is a case of the systems isn't great but i think the people in it are amazing. now is a appropriate time to rethink how the project will

work and this is a good update and like to be added as a cosponsor and thank everyone for their work. >> supervisor melgar. >> thank you chair chan. like my colleague my reserve ivations are about certificate of participation. i haven't heard from mr. wagoner. i like to know what this does to the capital planning and the timing. i concur with colleagues that i wholeheartedly believe in the project, i want it to go forward i'm worried about the costs over the next 10 years and whether or not there is any other color money we can use or this is our best solution. my second set of concerns is more about the process. yesterday we learned that park merced is defaulting on the

mortgage. that is in my district that already has a existing population as well of folks who in the last two years we see vast increase in people with section 8 vouchers living in park merced that is a big chunk of the rhna obigation because we approved the entitlements in 2011 as well. what i think about is, if we do this for a project, do we do this for other projects? do we do this or is there anything else we can do? aside from-this is temporary situation that we are in i think right now. just like juxtaposition of high building cost and high interest rates and i do think that's temporary, but in the meantime, we have to produce housing, we have to keep the jobs going and do all that stuff and what are we giving up in return and what is the process the

sneaking into the capital plan for a project that are in trouble? everything is important, right? so, i like us to be thoughtful about our policy when we are talking about that, and that i also this committee we saw what it is go-a glimpse what it will cost for climate adaptation. we saw it for the port but we'll see it with every other agency, mta and everything. is that a part of the capital plan too when we have a better idea and then how do we fit that in as well? anyway, i love to hear from you about both those issues. >> thank you through the chair to supervisor melgar. greg wagoner had, controller. i think these are all good questions that you are raising and some things that the city

collectively has been and all you have been juggling as part of the conversation. in terms of the process, the city capital plan is updated every other year and we are in off-year cycle. when a new anticipated use and there are multiple parts of the plan, the cash plan, the general obigation debt plan and the cop plan. when change is contemplated mid-year there are a few things in the off cycle year, a few thing that happens. number one is, under the admin code provision related to debt policy. there is a cap on 3.2 percent of the aggrt discretionary revenue so office has been talking with the city administrator office about the

total debt projected in the capital plan and the city administrator office identified a number of off-setting downward changes in other parts of the plan, however this would use some of the additional capacity and as you point out there trade-offs using debt for this purpose or other purposes. when we actually issue the debt, the controller's office would according to the admin provision come to this committee and as we are required to do, certify myself and the director of public finance that the dbt will not cause us to exceed the 3.25 percent threshold and i believe some of the amendments that chair chan referenced clarify the process and timing of the issuance of these cop's, so

that analysis would be before you when you act to issue the cop's. so, that was a long answer and on your other questions regarding the precedent and where else we may have pressure to use debt, i know that oewd and others have tida have thought about this. there are restrictions on the use of debt of this type of debt for public assets and other legal restrictions, but i think the question of policy and precedent is reasonable to raise in this committee. >> thank you. i want to just summarize the changes that we are proposing into addition to what supervisor dorsey read on