property tax settled on this item? >> i am not sure. supervisor mirkarimi: is their disputed or unresolved property tax on these? >> no. supervisor mirkarimi: they are absorber by the minimum bid? >> yes. supervisor mirkarimi: it just seems extremely low for a time share in san francisco. >> anything that any of these properties, time shares or others would yield above the minimum bid, the minimum bid just represents related property taxes and a minimum fees. anyone bidding in excess of that, that money goes to the property owner. so that the property owners would still realize anything in excess of that bid. supervisor mirkarimi: i

understand. supervisor chu: to clarify, from my understanding that minimum bid is prescribed by california law? >> yes. supervisor chu: so, by california law we have to set the minimum bid at what the delinquent property tax values are. and then if we get a bit higher than the minimum bid amount, we would basically pay for all of the costs associated with putting that on the marquette. and what ever is in excess, by law, has to go back to the property owner? >> that is correct. supervisor mirkarimi: please go to the process of how the public gets to participate in these auctions. >> yes.

we advertise the public auction in the newspaper for three consecutive weeks. we also have the information available on our website. we also send a notice to any potential bidders who have contacted the tax collector's office for any future events. this will be online. public option, through a lot of people it exposes those that may not believe in san francisco. they can also participate on- line. supervisor mirkarimi: are they done physically at all? they used to have them on the steps of city hall. >> the ones done on the steps

are conducted by private property -- private institutions. supervisor mirkarimi: this is not that, though? it is this that? >> no, this will be online. just like what they do on e-bay. the highest bidder gets the property. supervisor mirkarimi: is there any kind of discount affiliated with an on-line transaction like that? >> no. supervisor mirkarimi: regarding the dwelling report, the personal property -- regarding the dwellings, personal property, real property, how many units are those? >> out of 117 possible, there are 96 timeshare and the rest are single-family homes.

we have five condominiums, eight single-family residential units, one commercial retail store, three apartments, and one hotel. supervisor mirkarimi: i am curious. these are casualties, for whatever reason, of the wave of foreclosures? do we know that if there had been good faith effort in trying to save these buildings, modifications of loans, etc.? >> the tax collector always make sure that the owner is afforded with consistent ways to retain property. we have notified the owner before the sell date.

before the sell date we will also fought -- notify them and if a personal contact cannot be made, we will post a notice at the front entrance. we will likely talk to the neighbors. we also hired a research consultant agency to locate the owners. in past auctions, almost all of the real property sales were redeemed by the sale late. the notification? how many days? >> we have many back in 2010.

we will follow up with ward supervisor approval. sending certified mail to all parties of interest. after we see the reports from our research agency, as i said, going to the property to notify the occupant or owner in person. supervisor mirkarimi: 4 public edification, please distinguish why the city is moving on an auction of property and not the banks. what is the difference? >> the difference is that the tax collector can only sell property when they have defaulted on property taxes. private companies foreclose on mortgage defaults. supervisor mirkarimi: chances

are that the tax the fault is significantly less and more reconcilable than the mortgage default, correct? >> yes. which is why all of them, most likely will be redeemed by the time they are sold. supervisor mirkarimi: thank you. supervisor chu: i think that that line of questioning its at the fact that it should be a high threshold before the city goes and sells a property owner's private property. in this situation and sounds like the property owner has defaulted on tax payments owed to the city. my understanding of the background material provided is that generally the property owner has been given five years to pay back the property tax default. not only have they not done so,

but in addition they have not contacted us to say that they are trying to set up an installment payment. and in terms of notification you have sent a certified mail to the property owner plus, you are also going through the efforts of hiring a private firm? >> correct. supervisor chu: in most cases we have seen that once the final sale is pending, property owners say wait. >> in the past they came forward to pay off the taxes before the sell date. supervisor chu: supervisor kim:

thank youkim -- thank you. supervisor kim: just a couple of follow-up questions. roughly 6% were bought back by owners last year. is there a general percentage for the number that buyback property each year? is that buyback generally what we see every year? >> yes. supervisor kim: around 60%? >> yes. supervisor kim: the units that are not sold go back out this year? >> we did not put those back this year because we have to ask for the board of supervisors approval to authorize a tax collector to sell at less than a minimum bid amount. supervisor kim: that is not in

this request, though. selling below minimum four units from previous years. >> last year there was no public auction. supervisor kim: what do we plan to do with units we have never sold? how many are there besides the ones from 2009? >> all of them were either redeem or sold. supervisor kim: what are we going to do with those 12 from 2009? >> we will be putting them back next year. supervisor kim: has the interest accrued even more? >> which is why we are looking for the authorization to retreat -- reduce the interest amount to sell them?

we would add to the cost of the minimum bid. it would not be cost-effective. we know that we would not be able to sell those. supervisor kim: i see that there are roughly 15 units -- . is anyone currently occupying those units? >> yes. if he looked -- if we look, there is a homeowner exemption showing that they might be a resident of that property. meaning we should pay more attention. supervisor kim: if the owner is

not able to buy it back, we would have to go through the victim process? >> yes. supervisor kim: how often does that happen? >> we have never seen it so far. they often get loans from relatives to play. -- relative to pay. supervisor chu: are there any members of the public that wish to speak on item number two? seeing no one, public comment is closed. in terms of the clarification of the document, i know that you had indicated a desire for the department to sell timeshare items below the minimum to the point where in the might be a

question for the city attorney. >> madam chair, my understanding is that the department was going to make that change. is that something that you want to do? what i was under the impression that the budget analysts office had a pair rapper indicating that the tax collector is requesting to sell at less than a minimum bid is sounds like the budget analyst with recommending it all happened. we should accept the recommendation to make beds. supervisor chu: i think that the

budget analysts recommendation shows that we should amend the legislation to allow the timeshare units to sell below the minimum. not to take away from our ability to collect to do taxes, but make sure that we are able to sell those timeshare properties is there a motion? supervisor mirkarimi: motion to accept a budget analyst recommendations. supervisor chu: on the item as amended? supervisor mirkarimi: i would like to ask a question. to the budget analysts, have we ever done a city survey of where they are? in terms of solvency, how healthy the industry is? what i have read in "the wall street journal" and elsewhere is

that this is a sick industry with significant problems internationally. cut and am wondering what the burden looks like in cities like ours. >> there are at least 9800 units in san francisco. five or six buildings. club. tella on post and mason, those are -- club nutselo, on post and mason. we have the streets at fishman whorf on hyde. also very attractive.

the opera at civic center. we do not have problems with those. the san francisco streets on how -- powell and post, we have no problem with that. the only building that we anticipate having problems with is the one on pine street. 1000 pine street. >> it sounds like, based on market trends nationally and abroad, that we are doing much better. >> in general. supervisor mirkarimi: as with residential home ownership, there are different class is in tears. i understand that there will be some that will be more protected and stable as opposed

to other tiers of ownership. in the middle, on the low side, that sounds an unstable. what does that look like in san francisco? >> 9800 timeshare units, we only have 96 time share, that is a low percentage. we believe that the owners that are delinquent in taxes simply abandoned them. either they cannot afford to take vacation anymore, or they cannot afford to pay the high cost of maintenance. close to $1,000 per year for the maintenance and the insurance. so, they do not feel like it is worth keeping them. after years of delinquency, the property tax penalties of interest increase and increase.

so, they sell them. they say they do not want them. supervisor mirkarimi: thank you. supervisor chu: to be clear, we accepted the budget analysts recommendation, but to be specific we are specifically allowing the department to sell at or below the minimum specifically for timeshare units. if we could make sure that that amended languages added to the -- language is added, we can do that without objection. thank you. item number three, please. >> item #3, resolution approving and authorizing the execution of lease no. 10-0347 with china airlines, ltd., for cargo warehouse and support office space to be occupied by china airlines, ltd., in building 648 at san francisco international airport. supervisor chu: the think you

very much. we have kathy from the asset open -- sfo. >> the airport is seeking the approval for a five-year lease renewal with china airlines for office space cargo space and ramp space at the airport. the terms of a lease renewal have changed slightly. the amount of square footage does represent a reduction in office space that china airlines no longer needs. as well as a reduced square footage rental rate. the current rental rate per square foot is $23.77. the new five-year agreement would have a $21.40 per square foot proposed rent.

that results in an annual rent payment to the airport of $814,955. both the rental rate and the five-year term of the lease renewal are the results of negotiations between the airport staff, aviation staff, china airlines, with reductions representing changing cargo environments in the shrinking environment. especially san francisco. staff is extremely happy to have another five-year commitment from china airlines. i would be happy to answer any specifics. supervisor chu: let's go to the budget analysts report. >> when you consider the reduction in square footage rate, as well as the reduced

crops 450 square feet, there would be a significant reduction in rent. has been pointed out, there is a 12.5% vacancy rate at the airport for cargo. it would seem prudent to have negotiated this lease and kept this tenant. in any event, there is no fiscal impact. under the airport's break-even policy, and the deficit would have to be made up by all of the airlines. we recommend that you approve this resolution. supervisor chu: are there any members of the public that wish to speak on item number three? seeing no one, public comment is closed. is there a motion to send this forward with recommendation? okay, without objection. item number four, please.

>> item #4. hearing to consider release of reserved funds, mayor's office fy2010-2011 budget, in the amount of $44,000,000 to fund the salaries and fringe benefits for various city departments. supervisor chu: thank you very much. this is a request to release $44 million that was placed on reserve in last year's budget committee deliberations. mayor's office, would you like to make any comments on this item? >> madam chairman, chair members of the committee, i am the mayor's budget director. we have submitted a letter requesting the release of these reserves. they were placed during the budget process for a couple of reasons. the main one being that at the time we were still awaiting significant information about the contents of the final state

budget. at that point the committee and the board decided that they wanted to place some funding on reserve until we saw the outcome of the state budget decisions. so that the board would retain the options given the uncertain revenue. it did not come in and we had to make major adjustments. you have had the three month updates and six months updates from the comptroller's office that indicate uncertain revenues that have either been resolved or in some cases are not coming in. the budget is in balance for the current year. given that increased certainty,

we are requesting another release of reserves so that the apartments can continue on their operations. supervisor mirkarimsupervisor c. mr. rose? >> the board was concerned as to whether the mayor would fully fund the restorations. so, this reserve was placed on here. we have contacted departments, although they were not able to give us specifics of expenditures. the funding of restorations has been fully funded. if you did not approve of the release at $44 million, of various cuts, if they were all on personnel there would have to be a lay off to lose the estimate of about 4075

employees. we recommend the release approval of these reserve funds. supervisor chu: thank you for that report. let me open this up for public comment at this time. are there any members of the public that wish to speak? >> good morning, supervisors. thomas [unintelligible] , tenderloin resident. supervisor mirkarimi: -- now that supervisor mirkarimi has announced that he is running for sheriff, he should probably not be involved in discussions that put money back into the sheriff's department. perhaps you have an opinion from office. supervisor chu: please address the committee as a whole as opposed to individual supervisors. >> ok. five minute discussion on

adding back $4 million -- $44 million for salaries and fringe benefits to city employees. i would have liked to see hearings by the government oversight committee before you perfunctorily added that $44 million in the general revenue fund. where we really do not know the amount that will be there at the end of this fiscal year. supervisor chu: are there any other members of the public? seeing that one, public comment is closed. the item before us is not adding back or adding additional funds for salaries at this time. this is money that was anticipated and is included in the department's budget and

operating. all that we are doing is they're asking to hold the item for it to be released at a later time. these are existing budgetary items that occur within the department's budget. supervisor mirkarimi: if i may come up when we decided to hold this back, it had been a part of a committee before, why is there a loss of staff with only that staff member in the report? it was said that we would lose a certain amount of staff. why is that? >> madam chair, a supervisor, our report indicates that if you did not release these funds, the

city would have to make an equivalent cut of around $44 million. the department always contemplated that you would release these funds. certainly, you have a right not to. if you were not to release the funds, there would have to be cuts in equipment, capital, materials and supplies, and the majority would be personnel cuts resulting in layoffs. this was strictly a reserve, as indicated, where it was contemplated where the conditions will be met and the controller was certifying the available federal, state, and local revenues that were certifiable. the second condition was that the board of supervisors gets that. restorations were funded.

whether or not they will be fully expended this year, we have not been devised by the department. if you are satisfied by those conditions, you should release the funds. supervisor mirkarimi: a few of our colleagues did say the whole those dollars back. because of the and kleinman of the date in negotiation with and the newsroom, i think that this was held back, for lack of a better phrase, leverage. it is not clear to me that if there had been full parity, i know that faith have asserted that it would have been.