supervisor avalos: good morning. welcome to the budget and finance committee. we are joined by supervisor sean

elsbernd and ross mirkarimi. mr. young, could you share your announcements? >> please turn off all cell phones and pagers. if you wish to speak during public comment please turn in a speaker card to myself. items after today will appear on the board of supervisors meeting on december 7, 2010 unless otherwise stated. >supervisor avalos: thank you. we have the city that the attorney here. good to see you. please call item one. >> item 1. resolution authorizing the director of public works to execute an amendment to the professional services agreement for the design of a new public safety building under the earthquake safety and emergency response bond program to increase the not to exceed amount from $3,997,600 to $17,205,152.

supervisor avalos: very good. representative from dpw? >> good morning, chairperson of love, supervisors. project manager of dpw, responsible for this project. i want to take a few minutes to explain this better before you this morning. this is for the architect- engineer agreement, and modification to an interim agreement that was begun subsequent to their selection in 2009. it was a competitive process by which we selected the firm of

hok. they began their work subsequently through the interim agreement. that agreement was to take them through and arrive at a reliable description of the project and a cost estimate that we would have confidence to pass onto a bond measure for the voters. in that regard, it is city's practice to elaborate major couple -- capital work to the lull of specificity to inform a revival number that we have passed the vote. certainly, we do not want to find ourselves lacking in regards to the budget we have identified as we proceed to deliver the project. in that regard, our efforts were meant ahead of the bond measure to prepare sufficiently for that measure. the total fee inclusive of the

sum for the services already provided under the interim contract, as well as contingency for potential changes along the way is 70 million to a $5,152 -- $70,005,152. we introduced the professional builder early in the process so that along with the design professional, we could inform a thoughtful collaboration of the project and get that considerable construction injured -- inside before construction actually begins. this is the schedule as we currently have it. we are under way with the completion of our schematic design phase. we will subsequently, upon receipt of the first funds available through the bond sale, proceed with full force.

our interest is getting out on the street with construction work by the fall quarter of 2011. and completed two leaders in 2013, a substantial completion. we had negotiated this agreement with hok. the basic service fee is $16.9 million. nearly half of that accrues to be for dissipation of lbe firms. -- the participation of lbe firms. originally, the amount earmakred rked at 11%, so this is a considerable adjustor for lbe participation. we will be doing the first bond sale today, the subsequent sale

next year will effectively provide all the funding for this project. the first bond sale will provide the funding for this agreement. again, we are accruing to the integrated project delivery approach that the city has adopted, detailed in chapter 6. hopefully, you have a better version in front of you. the print is small. as you can see, it is a multi- disciplinary team. this is an especially challenging and complex project that requires the cooperation of several design and engineer professionals. we have a top-notch team that reflects the capacity and capability present here among such design professionals in san francisco. we are happy to have assembled this top-notch team. i think the end result will be

exceptional. of course, dpw is responsible for the direction of the work. i should mention, our bureau of architecture is participating in this network, not only in the feed discussion, agreement discussion, but they are working on how elaborate the interior structure of the facility. we will also be involved in the structure -- construction of the project. a number of accomplishments -- i will not go through each one of these. certainly, bring you some confidence on this proposed agreement, quite a bit of work has occurred. in the spirit of progress, we are well underway and we have bettered expectations that we can deliver on the promises that we made to the voters this june. we are confident, moving along nicely. we are confident about the fall

2011 construction start. for the sake of comparison, we offer you some benchmarking around some of the major capital work that has occurred or is currently under way. as you can see, we are well within the range of expected professional services for the four venture-capital work -- fee for venture-capital work. we are here to request your approval of this agreement with the executive architect team of hok to allow us to continue to deliver the project according to the particular time line that i have described to you here. thank you for your time. happy to answer any questions. supervisor avalos: thank you for the presentation. we will go ahead and hear from the budget analyst.

mr. rose? >> mr. chairman, members of the committee, just a little bit of background. this contract was originally awarded in the amount of $1.4 million. it is now up to $3 million, but did not come before the board because it did not exceed $10 million. the negotiated price was around $30 million. it was always contemplated that this firm would do the design work, and estimated cost was about $13 million. now that has been increased to $17 million. the difference is between the $13 million and $70 million is shown in our report -- $17

million is shown in our report on page 8. it shows you how they got from $13.6 million to $70 million. the question could be raised -- $70 million. the question could be raised, why not have a competitive bid? -- $17 million. the $13 million, we explain in the report, is due to various security changes in the building and other factors. our recommendation is on page 8 of our report. there is an incorrect amount. we recommend you amend the resolution to extend the

termination date through december 31, 2014. there was no termination date listed in this agreement. we recommend you approve the proposed resolution as amended. supervisor avalos: thank you. my main question is around escalation cost due to the changes in the design of the building, requiring greater security measures. what is the decision making process to add greater security measures? how did that come up? >> when we initially scope to the work, we believe it would be sufficient to design the security protocols for the building with a system of the average miss the building, notwithstanding the fact, that as a police building, would enjoy other attributes to make it more secure. we proceeded with that understanding. there was a change in the administration within the police department. the new administration became much more involved with the

evolution, development of the project. expressed to us deep concern about the appropriate array of security protections for the building occupants, primarily. we then retained a national expert on the matter of security, on the institution of municipal buildings. there is no excepted standard of protected municipal buildings. there are standards developed by the fed's for their own buildings, but none for municipal buildings. we were effectively creating a new standard for the protection of an especially representative- potential, libel building. in that discussion, we basically challenged some of the recommendations provided by the security consultant.

these resulted in a corresponding enhancement of building structure, building systems, mechanical ventilation, electrical, and other attributes of the building that would withstand any assault, whether brought by the definite -- detonation of a device, or ballistic way. -- ballistic plally. we eventually arrived at a criteria that was sound. supervisor avalos: are we expecting to see this new building as a new standard for future buildings we are going to construct, renovation of future buildings? we are talking about a major escalation in costs. >> supervisor, i think we are

breaking new ground, in regards to our awareness of this new era we live in, the potential for assaults on municipal buildings. while i would not necessarily say you can translate this criteria to any other municipal building, it does establish the high end of the facility, and it allows that to be applied to other -- supervisor avalos: there is a total contingency for this building, not for the earthquake safety, are emergency service response. do you see an escalation here on security measures, down the line? does that prevent you from doing other things that you were looking to do? how does that affect your ability to have flexibility in

the creation of this building? >> the program we currently have fuller response to all of the needs of the patients in this department, not just on the day of inauguration of occupancy, but for 15 years beyond that. the design of this facility reflects a modern era, reflecting how one designs modern buildings to adjust to changes and programmatic demands. in that regard, i think we have the right statement for the design of this building. as far as contingency, that is dedicated to the possibility of things occurring, especially in construction. the largest percentage of that contingency is for thing that may happen in construction that we could not have imagined, as well, spikes for the cost of materials, escalated costs of labor in certain respects. we believe proper budgeting requires that we allocate a

correct contingency for those potentialities. supervisor avalos: when do the construction bids go out? i see in your chart, you are looking at the second quarter. we have legislation today that will be heard in committee that will set a time line for local residents being hired. i would like to ensure that we are going to have a positive affect on employment in this project we are having today. >> through this process of integrated project delivery, we will be identifying a number of trade packages. the first of which will be in the third quarter of 2011. subsequent packages to follow. supervisor avalos: thank you. if there are no other question

from my colleagues, we will go on to public comment. any member of the public that would like to comment on item 1? we will close public comment. okay, without objection. approved, said ford with recommendations. thank you. -- forward with recommendations. please call item no. 2. >> item 2. resolution authorizing the mayor of the city and county of san francisco to accept and expend a grant from the california department of housing and community development in a total amount not to exceed $1,500,000 to assist low-income first time homebuyers and low-income homeowners. supervisor avalos: this is from

-- to rehab a presentation from the departments? -- do we have a presentation from the departments? ok, you are here to talk about the concourse, is that correct? that is the next item. we will get to that in a second. let us open this up for public comment. any member of the public that would like to comment on item 2? seeing no one come forward, we will close public comment. colleagues, how do we feel about moving this forward with recommendations? ok, very good. mr. young, please call item no. 3. >> item 3.

resolution concurring in the recommendation of the controller and the director of the office of public finance that the issuance of $30,000,000 tax- exempt bank qualified bonds with first republic bank for and on behalf of the music concourse community partnership, a california nonprofit public benefit corporation, is reasonably prudent; and directing the controller and the director of the office of public finance to do everything necessary and desirable to provide for the issuance of such bonds. supervisor avalos: thank you, victor. hello, not yet. >> good morning. thank you for hearing this item. i would -- we had asked for an amendment as a whole from the committee. we had sent it to victory young. i wonder if you receive copies of them? it is made to ensure the bonds are tax exempt under federal law and will be required to hold a public hearing, which we held

this morning. there were no members of the public to submit any comments. with that, i would like to give an overview on this transaction. today, we are asking the board confer with the recommendation of the controller and director of the office of public finance in allowing the music concourse community partnership to pursue a revenue bond transaction in an amount not to exceed $30 million, to refund a revenue anticipation note that was issued in 2005 to finance golden gate park music concourse underground parking. by way of background, the board had approved the issuance of revenue bonds in 2003. at the time, they had anticipated issuing $63.4 million in revenue bonds. due to litigation surely after the approval, the music

concourse community partnership was not able to access the public market. as a result, they used some of the private dollars on hand and issued a bond notice in 2005, issued by the california statewide community of development, in an amount not to exceed $26.5 million. in addition, it took out a loan of $1.5 million andrew on credit of about $1.4 million. the bond anticipation notes issued in 2005 had a final maturity of december 2011. typically, because it is a short-term note, there is the expectation to take up financing, even though the final maturity is not until next year, due to the provisions. there is a provision that allows the mccp to take advantage and

issue their debt in advance of the termination -- maturity of their existing debt. that would result in a more competitive rate. as a result, they have engaged first republic bank for the purpose of this bond, fixed interest rate of 5.5%. in order for them to take access under the provision, they have to issue the bonds by the end of the calendar year. we have worked with mccp and we have reviewed their financials. we believe it is in their best interest to take advantage of this opportunity. i have representatives from the mccp here as well. they will be able to respond to questions that you might have. one thing i would note, these bonds would be paid from revenues collected from garage

revenues. looking at the financials, when you take account the rent paid to the rec and parks department, taxes are coming back to the city. i will be happy to answer any question that you might have. supervisor avalos: thank you. supervisor mirkarimi? supervisor mirkarimi: thank you. we have come a long way since the voter-approved backing of the installation of the parking garage. it appears to be a decent deal, the sooner we pay it off, the more money comes to the city. what is your estimate on how much money will come to us, once it is paid off? >> when it is paid off, there is an annual cash flow that comes to the city. based on the figures that we

have, $55 million over the life of the transaction would resort back to the city when the ground least terminates. supervisor mirkarimi: several years ago, there had been an unusual circumstance where money had been absconded from the parking garage itself. what was that loss, how was it recovered? >> i think i would like to have the folks from mccp respond to that. >> managing director of mccp. the actual loss was about $3.6 million. we were able to recover about $90,000 from the sale of the culprits home. the bottom line is, he is in the big house, and while we have a judgment against him, the

likelihood that over time we will recover the remaining funds is not very high. supervisor mirkarimi: improbable, as these cases go. as part of that loss, were those realized in the calculations? >> basically, the transaction that will come as a result of this financial action really deals with retiring in the band itself and expenses related to that transaction. the ongoing catch up with the fraud itself has been taking place through our operations. supervisor mirkarimi: understood. initially, with the public- private partnership for the

development of the garage, subsequent caretaking, there had been a pledge of private funds. had that pledge been realized, completely? >> yes. there were about $36 million in philanthropic dollar that went to do the initial improvements to the music concourse itself. supervisor mirkarimi: and that had been completely satisfied. >> yes. supervisor mirkarimi: thank you. supervisor avalos: mr. rose? if you could share your report. >> mr. chairman, members of the committee, our report points out on page 3-5, the existing bonds, revenue bond anticipation has a revenue rate of 6%. it is estimated the new financing will have a rate of 5.5%. so that is certainly

advantageous. also, to make it very clear, there will be -- the issuance of this debt does not create any liability to the city. we recommend threcommend -- i bs already been submitted -- but we have a suggestion of a public hearing on this matter. we recommend that you approve the resolution as recommended. supervisor mirkarimi: that is on the amendment as a whole. supervisor avalos: let's open up for public comment. any member of the public that would like to comment on item 3? >> ♪ you found health just in time you found health just-in-time before this item came our city was running low

our city bridges were all junk know where to go now the items here i know just where the money is going no more doubt and fear we have found a way help just came in time. you found monday in time and changed my lonely grave life and made it a better, help the day ♪ supervisor avalos: any other member of the public that would like to comment on this item? it is not correct on the screen. it is related to the concourse parking lot. ok, we will close public comment. supervisor mirkarimi: glad to hear that a parking garage could hear that a parking garage could cause someone to sing.