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 insurance mandatory i think it was a better deal. if it was a better deal, there probably would be better support for it. but because it's such a bad deal at the present time, it's not. retrofitting is clearly the way to go. i recognize it's an out-of-pocket expense, the disruption that has all of these down sides to it. but it's so much better than these other alternatives like heightened insurance premiums. commissioner lee: if retrofitting is the way to go, has the insurance companies given any indication that they would insure these buildings that have been retrofitted at a lower cost, perhaps? >> the earthquake insurance market is dominated by the california earthquake authority. it applies for buildings only to one and two-unit buildings. and by state law it provides a

5% premium break for retrofitting. that was just an arbitrary number that was reached, i guess, when the legislation was being passed. it doesn't reflect the actuarial changes that occur once being retrofitted that require state law to change that. personally, i think it should be changed. when it comes to other buildings, building owners can get earthquake insurance through private insurers. there are a couple of company that do only earthquake insurance. their policies are directly competitive. you can get different terms like lower premiums -- excuse me. not lower premiums. lower deductible limits. when it comes to larger commercial buildings -- and i don't know where the breakoff is -- there is earthquake insurance. and it usually depends on having a thorough building evaluation and a requirement such as probable maximum loss of 20% or less before they'll write earthquake insurance. but we believe that that mechanism has worked for a

large number of commercial buildings in san francisco because of owner -- excuse me, lender requirements and insurer requirements have caused work to be done on a large number of buildings in order to get the probable maximum loss to 20% or less, and have that coverage. so it's kind of a mixed bag. chairman murphy: commissioner hechanova? commissioner hechanova: under the finance and care has there been some discussion under the possibility where there are higher at-risk zones, that there could be a pooling or an aggregate of insurance, insureability, of those property owners? and i don't have an answer nor is there one probably, but in

the coverage issue there are those that are in the higher at-risk zones that it isn't sure that they will get damaged. so there should be some incentive for those property owners at those locations by which maybe there could be an aggregate insurance premium that the property owners can -- if for lack of a better description, almost intensely in common buy into a program. >> commissioner, it's a difficult question. i have not heard of a pooling insurance for particular areas. i know one of the problems with any insurer is there tends to be adverse selection. those of us who live in dangerous places or have weak buildings go to insurance to cover, you know, our rifpblg in some cases. -- risk in some cases. and those with better buildings or better locations are long away from the fault will not

necessarily buy it. so the exposure is highly concentrated. insurance is regulated by the state. the insurance commissioner really has two jobs. job number one is to make sure the insurance companies that are licensed within the state have adequate reserves to pay off their losses. and the second is to ensure that the premiums being charged have an actuarial basis for it. that latter requirement that there be an actuarial basis has strictly been a hang-up for insurance companies offering, you know, mitigation as incentive and dealing with some of these issues. because it's so difficult to quantify the actuarial basis of these kinds of policies. whether or not insurance even works as a mechanism, there are other problems with federal law and taxation. i know the insurance industry if they were here, would be telling bus it.

-- -- us about it. but after the earthquake there was a state program, sold statewide, for loans to help owners repair. and those were loans. and they were used. and they were paid back. just a few years later when the north ridge earthquake struck, california was in a worse economic condition then and the idea for bond measure failed and the state did not help with that recovery. but in that case the city of los angeles stepped in and had created a program to help owners of multi-owner buildings finance, make repairs and move ahead. i suspect the answers to a lot of this will be after the fact and will require government intervention for funding. that's, again, not so much of our report. it is a good argument why retrofitting makes sense and is in the best interest of the owners as well as tenants. owners as well as tenants. commissioner hechanova: th