to be charged. it is not something that can be done across the board, but there is something we could look at in bond funds and others where we have a little more control on those administrative overhead charges. supervisor avalos: supervisor, mirkarimi? supervisor mirkarimi: i absolutely agree with what supervisor elsbernd was inquiring about. the police department or any department that has come before us, department of emergency management, although that may have been federal, grants that we have accepteded in that people have been within the system due to grant-funded positions, but then those grants segue into general fund positions, that has never been calculated with regard to what the future liability may be? >> i believe the question that

supervisor elsbernd was bringing up was if a grant continued say for a 10-year period. even if the employee leaves the city and county, the city would be continuing to pay a portion of the health insurance to the extent that the employee continues it. if an employee stays in the city, then absolutely that would be part of the calculation that is done in terms of our overall city work force. but i do believe that there are probably some instances -- supervisor mirkarimi: whether they are grant funded or not? >> right. but i do believe there are some instances where grants cover a period of time, and then once the grants expire, because we have been employing these individuals, we have been including them in the overall costs of ongoing fringe benefits beyond the five years.

supervisor mirkarimi: would it be possible to also figure out what the actual population is? >> we would have to look and see, and we would have to include a certain portion of people that have been funded outside the city's budget. some of the grants are also a part of the budget, in which case they would be included. many of our long-term grants are included in the budget because they are known, they are anticipated, and we know what those amounts are. for this $13 million grant, that had been budgeted as a project, so that is part of the overall budget of the city. there are different circumstances with each grant depending on the longevity and so on. supervisor elsbernd: if i could add something in this particular -- >> if i could add something in this situation. we have almost never had to

terminate somebody because we have been able to come up with addition grants. supervisor avalos: thank you. a good addition to the conversation on this item. we can go to public comment on the reserve. >> ♪ reserve fund time. i want you to fix the environment. make it shine. on and on. the grants still come and make a beauty define. we won't forget what you did for item five this time. and i think you should fix the environment. make it shine. one more time, make it define, and i won't forget what you did

for item five this time. and now what would you do now? make the environment shine. supervisor avalos: if there are no other members of the public who would like to comment on this item, we will close public comment. motion for the reserve. we will take that without objection. it is now released. thank you very much. mr. clerk, if we could hear item number 6? >> item number 6, the resolution under chapter 716 the san francisco administrative code approving a historical propt contract between nakamura, the owner of 1818 california street, and the city and county of san francisco authorizing the director of planning and the

assessor to execute the historical property contracts. supervisor avalos: thank you. presentation on this? thank you. >> thank you for having me here today, colleagues. this resolution would authorize the assessor and planning dip to enter into the contact to preserve the his teark landmark at 1818 california street. it is a state law that provides property tax relief for homeowners who agree to preserve they're historic homes. for many people, the cost of maintaining a landmark home is beyond their means. hester and sam nakamura first down themselves in this situation, and so they applied more than a year ago for this program. what makes this important is that this home requires structural work. the contract in front of us

requires more than $250,000 in foundational repairs to make it earthquake-safe. i wanted to ask the planning department to present on their recommendations, followed by the assessor's office to share their work with you. >> tara sullivan from the planning department. the item in front of you is a historical property contract. it is individual landmark 916-447-call 55. it was constructed in 19 -- 1876. the application was filed on december 1, 2008, and the historic preservation commission heard this item on june 3, 2009. the h.p.c. recommended approval with a vote of 5-0. they found specifically that 1818 california quasi face for the program because it is an individual landmark under article 10 of the code.

it is valued at over $3 million. however the h.p.c. determined the building is significant due to the style and the people that live there. they found that the maintenance and rehabilitation plan is more than adequate, and the found that the money to be gained from the contract will be put directly into the historic building. in the norton term there would be over $200,000 of structural work, and over the long-term they will be maintaining the interior features, the roof and everything else. the h.p.c. noted this is the type of property that the program is designed for. it is an historic building, no exterior alterations, and the money goes directly into the house. the historic preservation commission recommend approval. i am here to answer any questions you have. and i believe the owner of the

property is here is 0 speak as well. >> thank you. is there someone here from the assessor's office? how about our structural engineer to describe the work that is going to be done to the property? >> good afternoon. i'm sorry, i don't want to know your name. i don't to call you the structural engineer. >> my name is tom. we have been dealing with sam and hester for probably two years now just trying to get this place seismically safe. >> thank you. >> essentially what it is -- is there a way to project any of this stuff? >> you can just put it right there. >> what it is, this ground

floor here is full height unreinforced masonry wallace. you can see that it is subterranean, below grade. so they have had moisture coming through, and the mortar has deteriorateded quite a bit. so the upgrade would be essentially be structural steel frame to provide lateral and vertical load so that after the earthquake, the fire department is not digging them out. then we can do back and do a full retrofit. it is really a safety retrofit at this time. >> thank you. colleagues, i urge your support on this contract. supervisor avalos: thank you. can we hear from the budget analyst on this item? >> mr. chairperson and members of the committee, the proposed resolution before you would

approve the contract and the current owner of the property at 1818 california straight. as shown in our report on table two, page 6-4, approval of this contract would result in a reduction of the first year annual property taxes, which would be $42,309, reduced by $31,617 or approximately a 75% reduction so that the property owner would be libel for $ 10,000 -- $10,692. that is the first year. the contract that is before you is for 10 years with automatic annual renewal there after based on the $31,617 reduction in the first year tips 10 years, it is $316,170 over that 10-year period. as noted, it would continue in

perpetuity until either party goes forward to terminate. we would also note that the planning department does have guidelines for re-- review of historical properties, one of which is that the limit be $3 million of assessed value. we also know -- note that the property before you is currently assessed at over $3.6 million. so it is not within the strict guidelines that planning has established for itself. ills also note -- supervisor avalos: does planning -- planning is going to offer a wafer for that, is that correct? >> that is correct. they are waiving their own guidelines in this case. supervisor avalos: is that a formal decision that the planning commission makes to do that? >> through the chair, the

historic preservation commission reviews this only if the planning commission doesn't reviews these anymore. the guidelines that the department has established, which are on our website and have been using for a year after, do have the maxwell mums of $3 million for residential. there are built-in exceptions that a property owner may apply for if they are over that max. in this case they did apply for the h.p.c. to approve this. the h.p.c. found that since it is landmark number 55, being designated for 20 years or more, and they found that the history of the building warranted this using the contract. so yes, they did apply for the exception, and the h.p.c. found it was worthy. supervisor avalos: thank you. mrs. newman?

>> on that note, i would indicate that the board of supervisors, even though we have brought it up in the past, has neither approved the guidelines or adopted criteria of your own on how to move forward on the mill zach historically contracts. the board has full discretion to determine whether it is in the public interest to interinto these contracts. he may approve it, disapprove it and make whatever changes you wish. i would also note that this committee and board has previously -- there are four existing mill zach contracts that has been apreviously approved.

. this board has rejected some, approved some, amended some. because of the discretion, we indicate this is clearly a policy decision for this board to make. supervisor avalos: thank you. supervisor mirkarimi? supervisor mirkarimi: thank you, chair avalos. first i want to thank supervisor supervisor alioto-pier:. i think this is warranted and merited. i have sponsored one of the four properties that are identified here that have been contracted over the last several years. when other properties have come before us, i have asked questions about the merit regarding the designation and regarding the tax ducks. can you walk me through a bit at how we arrived at a 75% reduction? >> that is not our determination. this is done by the assessor's

office. i will indicate that this property did go through a couple of iterations. it has been in the pipeline for a while. the planning department or the assessor may be a little more qualified to walk you through that aspect of it. however, i do know that it was purchased as a single family home. however, my understanding -- and that was the way the assessor did the previous determination. it has now been corrected because planning has indicated actually on their roles as a three-unit building. although it is being used as a single family home, it has now been corrected. supervisor avalos: i thought i read in the report that it was purchased as a three-unit structure, a bed and breakfast, was a single family home, and converted back to a three-unit

building? >> i will defer to the planning department because of the way it is on their roles and the way it was presented by the previous owner and the current owner, there were some discrepancies there. >> thank you. tara sullivan. as the budget analyst office did indicate, there was some cushion as to what the legal use of this property was. i believe it is correct that when the current owners did purchase this property, at some point either on the assessor's role or real estate, i don't know where it was, but they were under the impression it was a single family house. however, in the planning department and the building keep's database -- we are the departments that authorize uses for uses -- it is a three-unit apartment building. it was broken up probably in the 1920's or 1930's if not later into three units. after the h.p.c. recommended

approval to this board, it did come to our attention that this occurred, that there were some illegal activities occurring in the building, that they were running a bed and breakfast. there were provisions in the code that would allow them to do that. the property owners chotion to close that business. one of the reasons we delayed in bringing it home is we wanted verification that they were not running that anymore without the permits. the property owners did submit supervised plans -- revised plans to the department. i personally reviewed them with the new zoning administrator, and it is a three-unit house. it's a three-unit apartment building. there may or may not be three individual tenants living in there, but we do not get involved in that. it is legally that three-unit building. supervisor mirkarimi: and to

that earned, can it be changed from a three-unit building, and what if the property has been sold? does the designation in this particular case continue to affiliate with the new property owner? >> they can. we recommended or said one of their options if they wanted it to become a single family building again, they can apply for a dwelling merger. like i mentioned, the property owners decided to retain it as a three-unit building. as for the contract being transferred owner by owner, it does run with the land. so the contract and all of its restrictions as well as benefits will go for each successive owner of the property. over, if a subsequent owner did decide to do a dwelling unit

merger, i can't say for sure, but i think we would re-evaluate and redo the numbers based on the property use at the time. supervisor mirkarimi: this question may be more pertinent from the assessor's office. are they here? >> the gentleman is on vacation. i just got a text from him. unfortunately, he is not here. the reason that the evaluation did change from the initial data until now is it was valued as a multi-unit building whereas initially it was valued as a single family property. the way the state tax code is set up, and i am not an expert on this, they require rental comparisons, and they do rental comparisons for single family and commercial property, and there is a formula that allows them to re-evaluate.

supervisor mirkarimi: but you said earlier that they are not utilizing three units? >> but the building is legally a three-unit building. it is on the books. it is a legal three-unit building. whether or not it is used and they are only using one of the units, we can't force the property owner. they own the entire property. it is not a t.i.c. or condo. otherwise, all of the owners would be involved. this is a single owner who happens to own a multi-unit building, and they are using one of the units. we have checked. there are doors to separate apartments that are on file in the building. so we were able to relegalize this or re-authorize this as a three-unit building. supervisor mirkarimi: i might return back with another question. thank you. supervisor avalos: supervisors elsbernd? supervisor elsbernd: thank you. a few questions on this.

i don't know where this one goes first. the impetus for this is the initial work we heard about from structural and such that need to be done, but this is frankly a contract in perpetuity. so after that work gets paid off, the tax break continues, and i assume the idea is a house of this nature takes a lot of maintenance. in the contract, is the city able to impose maintenance standards? >> that is integral. it is part of the whole package. as a part of the approval you are actually approving an ongoing maintenance plan. it is in your packets, and it is ongoing, and they have priced it out in addition to

the structural. yalsyals ask d.b.i. go out and inspect every now and then? what is being done? >> the supervising department is the lead department. if they are not adhering to the contract, we can terminate the contract. supervisor elsbernd: and you are allowed into the home? >> absolutely. it is not just a drive-by. we will meet with the property owner, we will have the rehabilitation contract, and we will be looking to see that the building is being upkept. it is a contract between the city and the property owner. there are two ends. >> supervisor elsbernd, ills also note that the ongoing maintenance is estimated to be $22,667 annually. as we previously noted, the tax reduction would be $31,617

annually. supervisor elsbernd: so in other words, there is a little extra that is going there. $9,000 a year, but over the course -- one more. i am not the best when it comes to appreciation of architecture. that said, it is an absolutely beautiful building. i have driven by it many times growing up in san francisco. i knew exactly where it was. that said, san francisco has a lot of beautiful homes very similar to this, and what i need to hear a little bit more is what is going to differentiate this one from the -- even if it is just 50 other homes. if you do the masters, 50 times

$35,000 a year, and we are in trouble. what is the uniqueness of this place? >> the contract is designed as a preservation incentive program. the only way that a property can qualify to even enter into this is if they are a designated landmark either locally, at the state level or the national level. there may be other buildings in the city that are architect really similar to this. however, they are not landmarks. they have not applied to partake in the program. this particular house at 1818 is landmark number 55. it is a very low landmark number, indicating it was probably designated in the 1970's. it is a very significant building to the city and county of san francisco. the board of supervisors at the time felt that way. that really is my short answer

as to why this building over any other building. it has long qualified, and the city has long held this building to be of significance to the city. that is why this building is eligible under the add minute code, and that is where they have applied and the money can go ideally into the building. supervisor avalos: supervisor mirkarimi? supervisor mirkarimi: thank you. to the three of questions that have been asked, i don't think anybody at all is question a, the validity of the landmark and should this not be under the contract. it is just a question of the formula with regard to the property tax reduction and how that is justified so it doesn't seem so arbitrary. i don't think it is based on the cost of repairs and maintenance. but when we look at the other four properties, the highest property comes up to a 61%

property tax reduction, and the lowest a 25% property tax reduction. so this problem would far exceed in the rankings so far that has been on roster of who would earn a significant reduction. we just want to make sure that there is something even-handedly applied in this early stage of us contracting important residences and buildings like this. >> supervisor, without the assessor's office here, all i can offer is that the evaluations and tax duckses are very strictly mandated in the state codes. so there is no arbitraryness necessarily in how this is calculated. if you are looking at the other contracts and what is the difference of percentages of taxes back, so to speak, is that most of the properties were valued as residential

properties with the exception of the one that is in your district, 1080 h.a.y.t.e. street, this was valued as a bed and breakfast. there one was that was more commercial than residential, and it had mixed value in calculation, which is why it has a higher level of evaluation and tax back. supervisor mirkarimi: wouldn't a better baseline be just to say, at least for the cost of the maintenance and the care taking that had been assigned -- i don't think it is a significant difference between that and what is being asked for, that at least being more apples to apples. >> that is a policy call this board has to make. we are here just to present the information. supervisor mirkarimi: thank you.

supervisor avalos: why don't we go into public comment? any member of the public who would like to comment on this item? >> walter paulson. california history street. california history here you come. time to go and fix it some. and now you're gonna fix up the oroville pratt house, and it's going to look great now. as you know, i can hardly wait. fix it, open up that house gate. and you're gonna make it great. fix up the california pratt orville house now.

>> thank you. supervisor avalos: thank you very much. please come forward. >> we are the owners of 1818 california. i wanted to thanks you for considering this. thank you to supervisorality's office -- alioto-pier's office for bringing this far. the monthly maintenance is not the situation. it is the $250,000-plus that we would have to get a loan for. we thought we couldoff set that with the property tax, and it would make sense for us financally. i don't know the our applicants, if they did retrofitting or had to come up with so much money