engineers and contractors to real tores and homeowners and others so that they better understand this information and can make good decisions. and meaningful incentives, steps are involved at this time. the second is after that process has a chance to run for a few years, you begin nudging the market by some requirements. the fist level of requirements we would suggest is requiring an evaluation upon fail. much of this is already done under normal circumstances. people will liar a contract tor look at their buildings is to the see whether they are buying problems like a leaky roof or shortcomings. so this will add to that to look at the site performance of the building and add that bit part of the buyer orel constructor we would expect more and more retro fits to occur and there would be more experience and other people

would want to retro fit their building as well. and the third step would be to require retro fitting upon sale. we know from experience, other programs statewide, but not everybody will retro fit if it's voluntary. so this begins now to make the retro fit mandatory. so doing it at a time where the cost can be rolled into the financing. but that would make owners -- or it would make the building more expense i have towards the buyer. that's expectation we would have to let carry out and allow fair decisions between what that cost would be. triggering upon sale would affect 1%-2% of buildings sold annually. it won't necessarily solve the problem until over decades. we would then go to the fourth

step and require that -- as the -- one allows us to know a lot more than we know now so we know when the more directive or city requirement -- over time. but we think fund nonal this, the city has to say this is fortunate us and establish that there is a decline and the decline will be a few decades away and the buildings will have to meet these standards so people know the city is serious. we believe the steps in terms of which buildings should be dealt with would be a priority system built upon use as well as building type. so an example of use might be housing. the building type might be 23407b deductible cement frames with 50 or more units. something along that line. this allows us the need to cover san francisco as well as

to deal with the safety. >> we'll make additional recommendations about falling hazards some are already covered by code for new buildings. fire code is huge for san francisco. can't talk about earthquakes without talking about fire. our modeling losses will be released soon but show housing losses that can be very, very high. fire is one of those estimate that is has a huge uncertainty in terms of the average, which we'll report. but on a dry, windy day, losses could be much, much worse on a rainy day, they might be much less. 3w we'll present average conditions and the average conditions are startling. the number of fires associateed with a magnitude 7.2 earthquake are the same as the number of fire houses we have in san francisco. the number of buildings lost or

housing lost on the order of shaking as well. the ground failure has been issued for san francisco and we know the marine district has poor soil and parts of the market has v poor soil. it's difficult for small business and building owners to deal with. this property line that you can't necessarily deal with yourself. we'll be making larger rectdations for those who thereof deal with it alike they do under undernew buildings. but new mexico terms of the smaller buildings, the more neighborhood conditions, we're perhaps taking a safer road and saying this really has to be studied. it has to be studied both from an administration point of view and how do you organize or finance multi-owned property or what kind of work do you do? from the geotechnical point of

view that are on the horizon that perhaps will help us tremendously in dealing with that issue in the future. the status of our product. the loss study i described to you is what i would say is at about a 90% level now. complete accept for two things. one is the fire losses have to be ruled in. and the review by the project panel which is underway now. the fire following estimates i would say is about 80% because author of that report is now incorporating the comments that the management staff gave him, and it will go before the project panel for their review as well. but those two steps are complete the status report -- this report drafted is not 95%. it's been reviewed by the

project engineering panel. the author is taking those comments into account doing the final revision i think will be done today. the author led in an effort to look at earthquake damage in new zealand and lost a couple weeks of his time. so it should be completed shortly. the risk report the task report when we rule all of this together becomes more meaningful. the draft becomes 507. and will be ruled by the advisory committee on two occasions. stand community action plan and stopets hear that out task and it -- it will come out of that report and be done another about the same time. so our next step, so you know where we are. the advisory comple meet next week on the 13th. at that time we will review the 50!

report and go over the 95 version of the fire fightings version and the 95 version of the task three report of the latter two reports are very technical but a summary will be of interest to the advisory committee what the yes cases are and that allows us by november 1 to finish the fire-following analysis and for the author of the task three report to complete that work. november 10 we have another advisory committee meetinging. that's the time when the 95 version would be rufede and the 95% version is the one they review in october. additional information and responding to their guidance, and at that time we will start laying out the action plan in terms of steps that need to be taken over time. november 15, we expect to finish the task two report. and then december. we have an advisory committee

december 28, that's when we expect the final review of the task four report and plan for the seismic safety and gives us the last week of the month take comments into account at that time and come up with a final resix. -- revision. not showing on here but important to the process is the review by the d.b.i. staff. and that goes on in real time and real version. i didn't want you to think it's being ignored. but it's not, because it's an insight as to how the city really works that's important to us. >> so president murphy, i thank you wand that i submit my report. >> thank you. mr. to be snn questions? commission center commissioner flinch? >> thank you. so when it says complete the report, is that the same thing as issuing? >> i'm sorry. >> when it says complete the report, does that mean issue? >> yes. there's sort of -- two -- yeah.

when it is complete that means conclusions have been agreed upon and we sfwained them and the report is done nap regard. the parent organization will actually be doing the publishing and laying it out their sort of copying editing process that goes on. terms of the recommendations and time to speak about it, it's done at that time. >> commissioner ehedge noke. >> on the next steps, i guess i'm just scures as to -- curious as to we, at the beginning of the year, had asked for target time lines. and some of these are not of a category that seems that it's being accelerated at the end. is there some fault that created the sort of

incompleteness or some category that from back -- i think in february, that we had looked at extending and then it went into spring and then went into summer, and then here to fall, and now we're receiving it at the end of winter time? >> the actual date has slipped my mind. but in about april, if i recall correctly, we had this study by the project interviewing panel. this was the study done about 10 years ago, if you will. when the caps project was active at that time, the loss study was done. but before it was ruflede technically, the project was terminated. and this was something that i don't think that we understood going into this. and when we looked at the results, we didn't like some of the results. it very clearly overestimated housing losses in western san

francisco. it didn't take the proximity of buildings, the interaction of buildings closely-spaced together in such a way. and we felt the loss assessment was overstated and went to a process of bringing back online this that i -- improved the way we could express the vulnerabilities and loss estimates. that took several nonts do. it took time to do, because the version being used under study, because of when it was done, 10 years ago, it's no longer supported, and it doesn't even run on modern computers, so we had to have a computer of that vintage brought back into service in order to run that study. so that's where we lost the time and it was completing the task two throort lost us the time. >> thank you. >> what worries me a rilt here

is the huge percentage of these buildings which are two units, single-family two units and even five units is dr. we have talked about it before like a year ago, 1 1/2 years ago, about, and i'm not sure you guys have addressed this. is are -- if the property owners out there have been justly represented in your meetings. i've been to the meetings. don't see too many people there that are owners, or for that matter, tenants. have we addressed you know, the illegal units in these projects? especially in the stop story building. i know my street alone, the

block that i live on, there's two or three units that are illegal. and these would come under that category. what do you guys plan to do with these units? do you plan to have to move these people out? are the units going to be legalized? because that's one question, and you know, the other one, you know, i like the recommendation. i like, you know, nudgal market by requiring evaluation upon sale by a decline. -- by a dead line. well, there's a percentage of buildings in san francisco that never go on the market. and probably never will. they stay in families for -- i don't want to say centuries because san francisco is a relatively new city. but for a long time. and they may outlive a couple of earthquakes.

so i don't see an awful lot of these earthquakes getting condemned because of that. and the other, you know, the other -- i remember there was one meeting i went to. there was a rep there from california insurance, and he gave a talk, but he really didn't say very much. you know, what initiatives do we get to retro fate building. a three-unit building we receipt fit it and go through the whole ba will you about tenants but angry neants that don't want you coming in, messing up their units. and you know, what -- will they get an insurance break from the insurance company, because now they are building this supposedly earthquake-proof?

>> i know to get earthquake insurance right now is -- it's just impossible. and if you do get earthquake insurance, you're responsible for the first $50,000. which, you know, in most earthquakes, that could be the max of your damage. you're not going to get anything. so i am curious if you guys have talked about that. >> well, we, mr. president, we have discussed each of these issues. let me just say in terms of the people on the committee, we have had consistent representatives from booma. we have a couple building owners who have been there and stay abreast of what we're doing, and we've had a representative from the apartment association. we have three or four who are rental tenants in buildings as well. like this sort of careful on how i say thfments in some ways

i would say some participants within the committee are observers. they want to know what's going on and advice -- and advise back. it's how does your might be look at this kind of problem? how will you as an organization represent this problem to your snebs >> and i think that the jury is out on how well that works. my personal view, which i admit is a bit naive, perhaps. is that the real risk in these buildings is one that's being held by the owners right now. they tend to lose their assets. they tend to be the people in try to, because they've got to understand how their assets are really at risk. and i would like. i hope we can threapt to them. regardless of how they like or dislike the approach we take, having a fundamental

understanding of risk when it's not addressed ask terribly important and we're relying on those organizations to make that point back to their members. how well they do, we're not sure. we hope to help them do that by properly ar tick latings it so there's there's a mutual understanding of where we're coming from. it affects an entire city. tenants as well as owners. we rely on the committee to give us those insights. illegal units the one that -- i don't know if the answer is we're addressing it or not addressing it. >> i think what we've seen has the legislation for the five and more units buildings going through, the units being identified, so if they have a four-unit building with an illegal unit that's a five-unit building and gets pulled into the whole process and addressed. >> city policy on whether to

legalize or require upgrades to have somebody taking it out. no, we're not following recommendation for -- how owners can be incentivized in order tord carry tout seismic strengthening. but that's not one this caps project is taking a position on. >> buildings don't change ownership over hand. in fact, many are under one-family ownership and would not be affected. and that's really why we have sourt of a two-pronged approach. pronged in approach to how we would lay out. because of the housing losses and the safety threats from the five-unit residential buildings wrth with the soft stair story. the buildings is having to deal with it. it's not one that relies on the building to sell over time. it doesn't, and that's an

important issue for the city of san francisco. and i would think dealing with those buildings, we're not going to wait until they might sell some time in the future. the city would have a celebrated program for those type of buildings. i think perhaps this is yet to be maybe that's the kind of ability you have a long deadline and agree on those houses selling over time, that might be a fwar better strategy for that type of building than some of the others. that's the kind of process that we would lay out. insurance is a business. for the most part. i think the rates they are chargeing in san francisco and other places are hugely high. the deductibles are very high. and it doesn't make good sense. when i look at insurance, i think that it's probably reflect it is risks fairly well. that's why it's expensive.

>> that's why if we could just have a process in this city where people would look at what their premium would be to have build that is resist earthquakes and not need earthquake insurance. earthquake insurance in the residential market is not a very effective tool. insurance industry hasn't been very active. so we have that kind of entrey. and some representives are countries that -- >> have a great exposure for fire, for example, and haven't seen any real interest in them dealing with fire fop and this turns out to be far more active when it comes to fire.

>> commissioner? >> have you guys run any doomsday scenarios where residents lose their building and set fire to it? >> and what? >> well, they torch their own building because they'll get rei mean bursed if it's a fire. that could lead to other fires. i 4 i think the insurance companies should be aware of that type of scenario. >> as commissioner, you know that is an unfortunate tchaurns does occur. and it's one of those causes often fire. when you look at earthquake fire statistics, they don't follow cause within the first few minutes. they spread out over a few days and certainly arson becomes an issue. it is a heightened time for fires over a period of some time. it is an issue, and it's one cause of fire. >> one other question, mister

-- do you think we've done enough as far as educating the average joe homeowner out there to what's really going on here with caps? and what's in it for them? what it's going to cost them? >> no. i mean, we we have not. we have not as a caps project, we really don't have an outreach budget, if you will. i think that individuals within d.b.i. do a great job counseling people on a person person-by-person basis. when you look at the literature in terms of risk communication, what you find is that the people need a consistent message given over time from a number of different sources and sources they tend to rely on for good information. so that message then needs to come from, you know, not only the city and d.b.i. and the caps project, but it has to come from the red cross and the

department of emergency management. it has to to come from the insurance industries and the hardware stores. and contractors who might go door-to-door and try to sell their services. i think there needs to be a campaign so people are fully informed, both in terms of what they face but also on what they can do and the cost of doing it. it's badly needed. it's one of our recommendations. proim commissioner hechanova? commissioner hechanova: on the estimated loss on the percentages where they are showing on the wood frame residences along with the, you know, three, four and five, on the risk communication, are the non-profit housing sector really being engaged as part of their ability to respond to something like this? i know on the calt debris -- category of those private owners they do have the means,

especially on the non-profit housing. they're on the marginal edge of being able to really respond in something like this. >> some representatives of housing within the tenderloin have come to a few of our meetings but not on a regular basis. i think they perhaps know of them. but i don't think people really fully understand how earthquake losses will affect low and assisted living situations. many of the buildings -- let me back up. many of the repairs took a few years to accomplish. we find when it's multi-unit buildings, it's very difficult. it's not like you can just go out and start working on your house. there's a process that goes through. funding is really key.

it depends on the economy at the time. when it comes to larger buildings, owners who have no equity, they can't borrow, they have no income stream. it's very difficult. it's going to rely greatly on the city to help that housing sector come back. i think that there's a lot of housing units in buildings that are extremely vulnerable, that will be damaged. may not collapse. some of them might. but the damage will be severe. and it will take 10 years of these buildings to come back. so dealing with replacement housing for low-income housing is a huge issue that the city has to face. i think our studies show that clearly. it's a huge issue. commissioner hechanova: thank you. president murphy: commissioner lee? commissioner lee: i want to get back to the insurance topic. i was just wondering, was there any discussion on any alternative to insurance? by that i mean the whole idea

of insurance is to find enough funding to allow the homeowners offer property -- or property owners to rebuild. were there any discussions of possibly out-of-the-box ideas of how to do that? is it mandatory that every property owner chips in to a pool of money or something like that? or even -- i don't know. i'm blank here. but any ideas that would allow homeowners to get back on their feet quicker. >> advisory -- commissioner lee, thank you. the advisory committee has talked about that issue from time to time. part of it is it becomes sort of a jurisdictional issue for our project in that we're not really doing recovery -- there's a recovery effort within the city. the city administrator's office carries it out where many of these issues need to be addressed. but we have spoken about some

of these different options, if you will. one was recommending to the city to make earthquake insurance mandatory. for certain classes of buildings. it sparked heated discussion. somebody said you can't do that. someone said, what's the difference if a state can require cars to have insurance why can't it require earthquake insurance as well? possibly so, but i think that's legislation. another issue in that multi-unit buildings -- multi-owner unit buildings have a difficult time dealing with damage whether it's fire or from an earthquake. the ownership has different interests, different timelines, different abilities to borrow, to pay. and so forth. and they're traditionally just very, very difficult to deal with. so another state matter there would be to require that the facilities plans that are required for homeowners associations include in them an earthquake analysis and set

aside some sort of insurance in order to deal with the need for replacement funds, you know, following an earthquake. many years ago ending in i think about 1992, the state of california had a program that was funded off of a small fee on property insurance policies that went into a fund. the idea was that would pay off . it could pay off to, say, $10,000 at that time per dammed building. it wasn't -- -- per building. it wasn't insurance as much as it was for repairs it worked very well. but when the state looked at what the potential for that kind of a program in terms of the hit on the state budget it would either have huge, huge losses that weren't budgeted, weren't covered. or the state would renege on that promise and pay a dime on the dollar in terms of the $10,000 expected.

so that was then repealed in terms -- and replaced with the earthquake insurance that we have now from what i understand about 10% of san franciscans now have earthquake insurance. very small penetrations. so we have discussed some of these issues. you know, i guess, commissioner lee, the bottom line is the ideas haven't been too exciting. commissioner lee: will these options be listed -- this type of discussion be put in the final report or something like that? >> there will be a discussion. excuse me for stepping on the end of your question. there will be discussion in terms of the dixie in repairing and financing repairs. i think we will certainly mention the options that include state legislation for facilities plans with homeowners associations. i don't get the sense of advice the committee would support making earthquake insu