that's going to mean something to the adjacent property owner. when you make a d.r. decision that find a way to form a compromise and to re-design a building that gives both neighbors a way to move forward, it improves the situation for both parties. that makes a lot of sense to everybody. but in a situation like this, where we're cutting into a balcony that he already has. and in going all the way back to the house, eliminate ago french door that he has accessing a deck, eliminating the possibility of a table being anywhere on this deck, it becomes just a walkway. so i would ask that you uphold the decision as it was previously made and let this project move forward. this is the sixth time we've been in a public hearing with this thing and it's a very

minor thing. thank you. president olague: thank you. any additional public comment on this item? everyone has three minutes, because it's all based on the clarification. commission secretary avery clarified that at the very beginning, that this item is not a d.r. it's basically to clarify -- >> oh, absolutely. president olague: yeah, everyone in the audience who's like to speak to it has three minutes. >> i was only going to respond to mr. paul's comments. all i would say is that -- president olague: if you would identify yourself. >> oh, i'm sorry. my name is chris boettcher. i'm one of the original d.r. quers and i'm one of the neighbors -- requesters and i'm one of the neighbors. i thought that notch was in fact going to be the full length of the deck. after all, the new project

basically -- the point of departure for the new project is not -- that deck won't be there anyway. so my understanding was that as it was shown on the overhead projection was that that notch was going to extend all the way back to the building, because that whole portion of the house is actually going to be rebuilt anyway, so it's not like they're really losing anything. they're gaining all that additional floor space that's going to be included in the remodel. and when we left the hearing, that was our impression of what was decided. i think michael smith, the planner, drew on the overhead to show exactly what the modification was going to be, and everybody agreed to it and it was voted on. so when we left the hearing, that's what our understanding was. thank you. president olague: thank you. is there any additional public comment?

>> pam, delores heights improvement club. and if in fact the decision that was seen on tv is what is being put forth here, i think that is quite acceptable. it was a bit unnerving to have one decision on tv and then another one on paper, where there had apparently been a meeting behind the scenes. that included the permit example pe diedor is what we were told and did not include any of the d.r. requesters. but if in fact the original decision is being honored, then i don't think i have any more to say about it. thank you. president olague: thank you. dd >> good afternoon. i'm the project architect. i would like to just respectfully disagree with the d.r. requesters.

it was our understanding that there was only -- we thought it had been expressed at the hearing that the notch was only going to be eight or nine feet. so looking at the drawings -- that eight or nine feet is taking space of both the living space and the deck above and what was part of the original deck that was on the house that jeremy just expressed. but also realize that at the ground level of the adjacent neighbor, their building is actually -- is partially supported on a column. so their setback is much wider at the bottom level of the property. so they are getting light in a substantial area already. i'm repeating what jeremy has expressed. the notch -- the neighbor has a shrubbery tree along this property line for privacy, and

that's the dilemma that we continually are example expressing is that the neighbors insist upon having privacy, but at the same time they want openness, so we're caught in this dilemma. i think the decision to cut back the notch eight or nine feet is appropriate and it gives us a deck that is at least functional. thank you. president olague: thank you. is there any additional public comment? >> i'm jim, one of the neighbors, it was my understanding that miss moore said that the building was too wide at the back. and so they were trying to narrow it somewhat, you know, to ameliorate some of the damage that it's done. we really thought it was the new part of the building, you know. that was our understanding, not just eight feet. so we were somewhat confused. seems like it was changed after we left. so i didn't understand how that

could happen. thank you. president olague: thank you. is there additional public comment? no? seeing none, public comment is closed. commissioner moore. commissioner moore: this is not re-opening the d.r. hearing or negotiating if it is or it isn't. i will have to basically state for the record that i did not meet mr. williams and discussed behind closed doors or independently the decision which was not on the verbal recount by people in the room, but it ultimately relied on the drawing which was handed to mr. smith. that is the drawing and that is what is accurately reflected in what he in yellow outline showed a few minutes ago. i went back through the entire case, looked at what the intent of the motion was, and that was indeed to cut back all the way to what i believe is really the

critical edge, that is the edge where the two building masses, the built-out masses meet. and in order to respectfully stay away from the gardens which meet in-between somewhere, that might require to cut the back of the deck back, because that is the intent of that yellow line. in addition to that, just for the record, the architect had not shown in his own drawing that is the roof plan on the first page of what the commissioners have in front of them, that there was indeed a deck protruding into that notch. and i believe that is the right decision when you plan an expansion as substantive as this will be, although one which has been approved. so i have always -- i've gotten numerous emails, responded simultaneously to secretary avery and mr. smith. i do not than gauge in

independent communication with -- do not engage with independent communication with any of the parties involved. and i always say go back to the drawing. that is where the interpretation and the meaning of the motion lies. ends of story.

>> i don't understand the disagreement. there's a feeling that's not accurate. >> well, what people are referring to is there was a side meeting after the hearing to clarify what the motion was. and this drawing is from the project sponsor. but this is a different notch than what is reflected in the -- this is a smaller one than what is reflected in the yellow that i showed you. and so this was drawn after the hearing. we didn't have the benefit -- it was kind of brushed -- didn't have the benefit of maybe looking at the same scale of drawings when we did that.

but when we tried to clarify it after the hearing, it didn't match what i drew at the hearing. >> my feeling i have to go with what your showed that it was consistent with what we had seen and approved. i can't remember because it's off memory. >> commissioner miguel. >> i do remember. i looked at where commissioner moore was and listened to her as sfar as what she was doing. that is my memory. consistent with her previous comments on this and consistent with the yellow markings. i do not -- i was not party to any post hearing discussions.

i know there were some that were carried out on the floor. but i was only looking at them from a distance. so i can't say what happened there. but as far as what happened during the hearing itself, that is definitely my memory of it. president olague: commissioner sugaya. commissioner sugaya: oh, i thought the director was -- i make a motion -- do i make a motion? ok. i'm just going to say then if there's no motion necessary that my recollection along with commissioner miguel is what is shown in yellow on the plans. that staff has given us. which means the notch goes all the way back to where the other building comes to the property line. >> if that's the way to describe it. >> commissioners, if i may,

usually after a hearing, i go back to the office and i do a summary of the actions that you take. on that particular hearing or after that particular hearing, my summary of what took place at the hearing was that the commission took -- approved the project with a modification of a three-foot notch on the west side of ground floor deck and a more picket fence like look where possible around all the decks. and i didn't say that it was a three-foot notch for five feet. but it was on the west side. so my understanding of the motion, it was made by commissioner moore, was in a it was for the whole -- was that it was for the whole side. if that was wrong, i'll also say, commissioners, that in order to avoid this type of thing in the future, i -- with a there -- in a it be cleared

up before the -- that be cleared up before the meeting is over. this unfortunately, although think it was necessary for us to do because there is a question. but it should not go beyond the hearing. it should -- the clarity should take place at the hearing. before we adjourn. >> i think the city attorney could clarify on the record for us. >> could i add a comment here? >> sure. >> just reflecting on what secretary avery is saying, the difficulty with this particular drawing set and i would like to use that as a forward-moving comment, the drawing set is represented in two scales which makes it very difficult to read. the first is the one on which the setback or the cutout was documented as the first drawing was the roof plan. which clearly shows how the

massing of the building next to each other come together and how this notch indeed would reflect some form of a compromise for the building next to each other. and since we were all struggling to help the building applicant to get its approval, but also give some pushback relative to the -- in front of us, that is where we compromise. and it was that scale drawing which was used to indicate how far it would go back. so i think i appreciate claar fige her understanding because in the confusion of using two scales of drawings, you can very easily get lost. president olague: thank you. and city attorney. >> deputy city attorney marlina o'byrne. i recommend the commission does take a motion on this issue. you can call it a motion of clarification. something like that. but because it appears to have been very unclear what the

commission as a body decided with regard to this setback issue, i think that the commission does need to clarify that as a body and not just have this general discussion. president olague: commissioner miguel. vice president miguel: i would move that we certify the intent of the previous action on this matter be clarified according to the presentation made this evening by mr. smith and the department. >> second. >> call the question. >> may ski a question? -- may i ask a question? >> the presentation that she gave today is that in keeping with the summary that we produced last time, that the

notch goes back -- >> yes. the presentation i made today was for a three-foot setback for the length of the addition. >> thank you. exactly. >> incorporate that in the motion. >> so on the motion to clarify the action of the commission is that the three-foot notch goes the entire length of the side. on that motion, commissioner antonini. >> aye. >> commissioner borden. >> commissioner borden: aye. >> commissioner fong. aye. commissioner miguel. commissioner olague. thank you, commissioners. that motion passes unanimously. commissioners, you are now in general public comment. president olague: is there any jub public comment? seeing none general comment is closed and the meeting is adjourned.

supervisor chu: kim andi am joiy

supervisor kim and supervisor wiener. we will be joined by supervisor chiu later. >> if you wish to speak during public comment, please present a speaker card. supervisor chu: colleagues, before we call the items, can we have a motion to set excuse supervisor mirkarimi? without objection? thank you. and item number one? >> item number one, a hearing to review the joint report, three- year budget projection for general fund supported operations fiscal year 2011-2012 through fiscal year 2013-2014.

supervisor chu: thank you. >> good afternoon, ben rosenfe ld, controller. all three budget office's produces on an annual basis. we all get together at this time and repair a consensus projection going forward of the city's finances. we issued the report last week. i have copies of the report on the desk behind me, as well as copies of the power point presentation we will talk through briefly today. to start with, at the highest level, looking ahead in the general fund, we see an project estimates of $306 million shortfall in the coming fiscal year, followed by growing

deficits in the years beyond, $480 million in fiscal year 2015, but and higher thereafter. the number for the coming year, " $306 million, is down modestly from what the mayor had issued previously. there is some improvement, but in future years, this ongoing and balance between projected revenues and expenditures is cause for concern. like any report, this relies upon projections, assumptions, and our estimates in early years will be more precise than in future years. it in all cases, there are policy choices that the mayor and board will make to reconcile these budgets to change these numbers, which the charter requires us to prepare a balanced budget each year.

some of the key assumptions, first, generally speaking, the report projects a modest recovery in our local economic picture over this three-year horizon. we have hit bottom and our local economy and have begun to see some modest growth. to the extent that the recovery is more robust and faster than what we are assuming, these numbers will improve. to the extent we see additional said the downturn in the later years, the projections will material affect the numbers down. the report also assumes constant service levels. this is based upon the current year budget. it assumes no major changes to service levels, number of employees, nonprofits, and the like. obviously, as the budget is balanced, that will affect future numbers. the report assumes no change and

the labor contracts, and the open labor contracts, medicines cpi. there negotiated -- it assumes the cpi. they are negotiated on a regular basis, and the ultimate outcome of the negotiations are known. lastly, the one that has the potential to change the most is the assumption regarding the state budget. the state of california funds just over 15% of the general fund budget and we are heavily reliant on state funding, in particular for health and human services and county jail functions. the ultimate impact of the state's budget is not known to us, given the fact the state has yet to not adopt a budget for the coming year. we're estimating a loss for the state, which is a preliminary estimate.

this puts revenues and use is in big buckets and tries to tease out some of the trends that we see. on the revenue side, we see an project growth every year of the 3 a-year horizon. and more robust growth of $102 million the year after that. we're seeing revenue growth in the picture. however, this slide illustrates we also project expenditure pressures to outstrip available revenues during this time. $344 million in estimated cost increases, an additional $208 million the year after, $264 million the year after that. every year, we see expenditures growing in order of magnitude greater than revenue growth. within the expenditure side, it is a mixture of things driving that. it is a mixture of employee-

related costs, wages and benefits. city-wide expenditure pressures on capital, debt, and other city-wide adjustments, at a whole host of other department alisa specific details which are outlined it -- departmentally specific details which are outlined letter. supervisor chu: if we see no change in the assumptions. to be true and are no changes on the expense side, we expect deficits the next three years, basically. >> yes, yes. if you take that picture and display it graphically, which is what we project as revenue growth reverses' expenditure increase and how that drives the numbers, this is a depiction of that. geographically, modest revenue growth in each year of the projection, but expenditure

growth of a much greater magnitude. we always have questions about what effect a more robust recovery would be on the numbers. i think it is fair to say that at least our office cannot imagine a recovery where revenue growth in any year of this projection would be at the level of projected expenditure increases. it will not be a shortfall that we grow our way out of, absent policy changes. the projections here differ somewhat from our expectations following the dot com bust, where we saw today v-shaped downturn, we lost a revenue -- a lot of revenue quickly and we gained revenue quickly as well. at the moment, we're looking at a more gradual, long-term recovery. digging through component

pieces, in terms of fund balance and reserves the coming fiscal year, where roughly even, compared with the current year budget. that is the result of our projected year-end fund balance for this current fiscal year improving slightly compared with what was assumed. there is a positive $10 million gain, offset by $12.3 million in losses because the rainy day reserve will the longer be available in the coming year, given the revenue growth. we're not protecting we would be in the charter range that allows a withdrawal of any reserve, as we had assumed in the current fiscal year budget. these numbers will be updated. at our office will provide an update for the mayor and the board at the end of may for the current imbalance of the current fiscal year and that will change these numbers. in terms of the annual the recurring revenues, it is about

$37 million of growth in the coming fiscal year, driven heavily by property-tax improvement and property transfer tax improvement, although there is much more detail in the report. on transfer tax, it was approved an increase in the transfer tax rate on large commercial transactions. over 10 years, we estimated that would bring in approximately $30 million per year, although it is highly cyclical. that was not to send in the current year budget and we see improvement and transfer tax because of the rate increase and also because we have begun to see a bit of a pickup in commercial real estate market and san francisco. we're seeing large properties turnover and change hands for the first time in a couple years. the other bright spot on the revenue side is the property tax base.

the property taxes are the largest source of revenue in the general fund, just over $1 billion. unlike any other county in the state, san francisco has not experienced a decline and our property tax revenue stream, which is one of the things that has been holding us up. with continued to see and assumed a modest growth in property tax going forward. that is offset by the likelihood we will begin to pay out and need to set aside money to pay out appeals that have come in and we have talked about before from property owners for changes in assessed value. those are the two good pieces of revenue news looking forward. on the negative side, we have the losses of two major time- limited revenues that were used to balance the career budget. as we are all aware, the stimulus bill approved by

congress and president several years ago has expired. at that provide it is significant money to the general fund to balance the budget, $47 million. those funds will not be available to us next year. they expire and we have to absorb that loss. at the bottom of this page, there is the hospital fee. we talked about this a lot during last year's budget process. $88 million of this one time, time-limited revenue was assumed that the current year budget, and that program is scheduled to expire. we had it to major losses of revenue, one from the state, one from the federal, offsetting the majority of the good news we're seeing here and our local revenue picture. in the middle of the page, there is the conversations about the state again, these projections assume $30 billion of losses and the ultimate impact from the state may well be unknown s.