, this agrees to contribute seed money to the school project. this will accelerate pedestrian safety improvements on sunset boulevard. section 4.1.3. we've clarified the exception that is provided under the ellis act allowing rent control be applied to new and construction replacement units. as i think all of you know, there was a case where an appellate court verified that in fact this exception is valid. in this case, the city of los angeles passed an ordinance, which we have in our rent ordinances, as well, clarifying that replacement units have to be built. section 4.3.1. we have clarified because this

agreement is for a period of 30 years, we do not know if new technology will be serving the units. 20 years ago, i bet none of us would have considered internet would be a basic service. we've extended the scope for any new technology that may become standardized. this is a change to clarify the date of initial occupancy for a relocating tenet. this is a tenet who has been an existing 10 to has moved to a new replacement younit. we want to clarify that we restart the clock for past wrongs, not rent. this is to ensure there's no pass throughs. 4.4.5. this is an added fail-safe

measure to protect tenants who fail to replace notices. they are offered the opportunity to rank the units they would like an order preference. if a tenant failed to return the form, this clarification injures they still have the right to relocate to a replacement unit. they lose their right to grant their preferences if they do not respond. section 4.5.3. this is related to the rights of new tenants that come into a building that has been vacated. just for clarification, the new tenants realize that they do not have relocation benefits. section 9.1 is an amendment to the section requiring the annual

reporting requirements. it is a revision the city attorney suggested after the convenience of the planning department. the amendment essentially says there's been no activity at the construction site, that the planning director does not have to give a full report on the status of the development agreement. section 11.4 -- further clarifies the assignment under the development agreement and how it would apply to transfer of land. the point is to clarify there's a 30-day notice to the city before any transfer of land under the development agreement occurs. whether or not to transfer involves obligations to the city, the city still has to be a signatory and therefore has a contractual privity with any future owner of any piece of land on the project site. finally, two substantial revisions were made to exhibit q and exhibit s.

exhibit q, per the request of the sf puc power division, we met extensively almost every day last week and substantially amended that agreement to ease the administration clarity so that the sf power staff understood how they were to monitor and evaluate each some middle under the applications. puc will also have the right to validate energy usage projections. if necessary, changes will be made to account for the puc's feedback. supervisor mar: puc does have to approve this, but we can still move forward and they can do that at a later time? >> thank you, supervisor. i consulted with charles sullivan. there are some additional changes that staff at puc power

want to continue talking about. we intend to continue the dialogue with the city attorney, charles sullivan, to confirm that they could make them prior to the sf puc's approval and we plan to continue the dialogue. additional clarifications were made based on the feedback from finance staff. specifically, the biggest changes are monitoring and implementation of how the credits and the subsidies would be received. we want to make it workable with the new cards. secondly, any remaining funds from the program that are not used for transit subsidy passes -- a change was made to make sure that they enhance the proposed plans on the project site, things like the low emission struggleshuttles and cr sharing. i'm available for specific

questions, if you have them. supervisor mar: thank you. questions, colleagues? seeing none, let's open this up for public comment. thank you very much, mr. yarne. >> thank you, colleagues. i want to thank all the members of the public who have been spending time and thinking about the future about park merced. i had a chance to visit park merced. i want to thank the supporters and opponents of this project for educating me on this project. i think and i think many of us agree that park merced has the potential to be the kind of project that exemplifies 21st century san francisco. it's about smart growth, transit oriented development, building a huge number of new housing, creating a new school, shopping,

restaurants, and open space. that said, as someone who is a tenant, i've been extremely concerned about the issues raised by tenants, especially around rent control. i spent a lot of time with a number of you understanding these issues. i want to see them addressed in this annulment agreement. to that effect, today, colleagues, i'm offering 14 pages of amendments to park merced development agreement to address that. i would like to take a few moments to summarize what these with intel. they come under three categories in my mind. first of all, protections related to the transition. colleagues, i'm asking for development agreement to be amended to include a number of things. first, to include compensation for existing tenants that see a reduction of service due to the loss of a patio or balcony.

secondly, to extend the time for tenants to select a replacement units. thirdly, to improve moving benefits for tenants. in other words, the cost for tenants to move, i want to make sure we are modeling are benefits on state relocation benefits. fourth, there are amendments in offering to ensure that we strengthen tenants'rights to during the construction period. amend sections 4.4.5 a and replace sections 4.4.8 a. i also had a number of amendments to assist in ensuring that the community that currently exists at park merced is disturbed as little as possible during the phasing.

i have a number of amendments. first, the first replacement units built on vacant land in order to ensure that no one will have to move until we have replacement units. secondly, we want to ensure that existing neighbors that live close to each other -- that those communities are preserved. i'm offering an amendment to require that existing blocks of tenants be kept together. i met with a number of long-term tenants who have lived in garden court apartments for many years. i'm offering an amendment to specifically required that there be a number of blocks of garden apartments that not be demolished until the end of the project. this could potentially be 15 years or 20 years. it would allow certain long-term tenants who have been living on park merced for over 10 years to move into garden apartments that are vacated. all of these are amendments that

would affect section 3.4.1, as well as adding text to the end of section 4.4.1 a. again, to ensure that the tenants that are there -- that we phase move ins with the least disruption possible. the last set of amendments deal with the major concerns raised by tenants. the vast majority of these amendments in offering to date have been in discussion with various tenant leaders. i want to thank all the advocates that have assisted. it concerns the issue of what happens if the development agreement, for some reason, it is found to be not enforceable. a number of things i want to propose to address that situation. first, a lifetime leases.

in case the future bad actor tim's to invalidate the provisions of this agreement, i want to require that the current owner and any future owner has to enter into a lease attendance with all existing tenants at the time of relocation. these leases would provide to existing tenants the right to a lifetime lease, subject to the provisions of the rental agreements. that would amend 3.10.2 and 4.3.3. the second protection i would like to amend has to do with the possibility -- and i will ask the city attorney to opine on this. if it turns out, for any reason in the future there's a future owner who fails to honor the rent control provisions of the

development agreement, or if at any point in the future there's a judicial termination of enforceability, if a future judge finds the contract is not enforceable, i want to amend the agreement to state that the city can immediately terminate this development agreement and collect a liquidation damage that's the net present value of the difference between units with and without rent control + 20%. what that means in real dollar terms, this liquidation amount would today be estimated to be $160 million. in other words, if, for some reason, the development agreement is found to be not be valid or otherwise be terminated, that the amount that would be used to help support tenants in a worst-case scenario, which i do not believe will happen. i will ask our city attorney to opine on that. i know this was a significant concern for tenants. i want to make sure that

addressed. the last provision i would like to amend -- by the way, the concept of a liquidation amount is included in the new section 12.8 and 12.9. the last section i would like to amend would be to section 12.2 around the issue a private right of action. this would be -- the amendment would ensure that all persons who occupied in the existing units shall have immediately upon the effective date of this agreement private right of action or any successor owner. as well as to ensure that these individuals shall be expressly third-party beneficiaries of all requirements in this contract. what that means is the tenants will have rights under this contract, if there's any issue with this contract, to bring suit against the developer. i think that's an important protection. again, not something i think will be required. in the case it is, i want to make sure that we include that. at this time, i would like to

ask our deputy city attorney, charles sullivan. i want to thank thim for the countless hours of sleepless nights to work on these amendments. if you could discuss the amendments we provide id. i know there have been a lot of questions as to the enforceability of this development agreement. i would like you to address that and whether you think the development agreement is enforceable. i would also like you to discuss, if it turns out in a small is a sensinstance it is nn you explain the amendments in making and what impact they would have. >> thank you. this has been discussed for a long time and a lot of people are concerned about that. we've added a lot of bells and whistles. i'm going to walk through that quickly. then i will get to your

questions directly. the first thing we did in the development agreement -- the law which everybody knows about does not allow the city to impose rent control on new units. it has a couple of exceptions. one of them is where the city provides a direct financial assistance or when we provide the forms of assistance listed under the state's bonus densities statute. for a long time, we've relied on the second exception, which is to say we rely on that exception. we have listed, specifically, all of the particular provisions the city is agreeing to for why we believe we fit within the exception under the density bonus section. we also requested and obtained a letter from the developer confirming all of those forms of

assistance and making clear that the project would not be achievable or financially viable without those forms of assistance the city is providing free we've also asked for and received a letter from the developer's law firm, which is a large and reputable firm in the state of california, confirming the validity of the letter. we have included, with your amendments and before your amendments, a requirement that all of these provisions that protect the tenants would go into the tenant leases and any assumption and a signed agreement. if the developer would to transfer the property at any point, it would repeat all these provisions. we would be listed and required to consent to that agreement. we have direct contractual privity with any subsequent owner to confirm, again, that all of these rights and provisions for the benefit of the tenants would be there.

and with the specific right of city and tenants to inform them. we also now site a case that came out of los angeles in 2009, the l.a. apartment association case, which recognized yet a third exception to the cost of hawkins' law. it is found within the ellis act. the state legislature amended the act to allow cost of hawkins to allow either, if a tenant decides it wants to continue to be in the rental business, if they do not demolish the unit, we rent it, and the city can post rent control. if they do demolish the unit on the property and we build new units within five years on the same property, under the ellis act, the city has the right to impose and require the imposition of rent control.

we have the ordinance in place in san francisco already. to that ordinance and that case, as to why we believe the rent control provisions should be enforced in this case. i know you have all seen the case. it is worth pointing out some of the express language of the case, which i will read to you quickly right now. this is in the los angeles county vs. some the of los angeles. they cite that you can control rent-controlled on new units. "residential property is subject to rent control is the following conditions are satisfied. one is the real property consisting of accommodations constructed on the same property where the previous accommodations were demolished.

the second condition, the previous accommodations were subject to rent control before withdrawn. the third is that the new accommodations are offered within five years." it is pretty strong language in that case, but we think is pretty helpful. we do recognize that this case is not directly on point. can be distinguished. we are not proceeding under the ellis act here. we have agreed that essentially what we are trying to do here is the functional equivalent. the city, as you know, repeatedly says we would not be willing to enter into this agreement without these rent control provisions in the importance of these rent control provisions to the city. bottom line to all of this is we essentially have three lines of defenses. the first is the exception in the cost of hawkins ordinance for the forms of assistance provided under the density bonus

statute. you heard my statement about how we've made clear what those are and however but has agreed to them. second is the case that basically acknowledges under the ellis act that creates an exception to costa pockets. the california legislature adopted this. it has been confirmed enforceable for replacement units built on the same property within five years. the difference is we are not proceeding under the ellis act. and then the very extensive provisions we have included in the development agreement that established the clear intent the parties, the clear considerations, the contractual privity with each and every owner. like i said, our unwillingness to proceed without the tenants' private right of action. there is no case directly on point, but we have a strong

argument that it is enforceable. it has been strengthened with some of the revisions you have suggested and we have made. not only the ones you introduced today, but the ones we've made throughout the last three or four months as a result of concerns tenants have and various issues that have been raised by tenants. we started out this agreement with trinity as the model. i think it is safe to say that we have greatly improved upon what we did in trinity to make sure there are sufficient protections for the tenants here. with regard to the remedies you specifically asked, think you summarized it correctly. we have included a right of first refusal for the city.

we would essentially use the liquidation payment amount of that you have described, which is valued currently at $150 million plus 20%. supervisor mar: $160 million plus 20%. >> yes. the money would be used by the voucher program for tenants to provide the difference between the brand controlled rent and what ever rent was charged. frankly, we have the right to make sure with the right of first refusal, which is pretty cumbersome and difficult -- we have made it as unattractive as possible for a developer or subsequent owner to try to seek to renege. if they do, we made the

provision that would give us the right of first refusal to lease the units so we can make sure the tenants get the rent to go into those units. we also have the language -- one other piece you did not mention. if there is a reneging act or any sort of judicial determination -- the developer and subsequent owners agree they would not take any action against existing tenants, unless until the matter is finally adjudicated or they pay the liquidation amount. we would have the money in hand to make sure those tenants get the vouchers so they will then not be forced out of these units. supervisor mar: mr. sullivan, could you please start to summarize more succinctly so we can get to public comment? >> ok. the remedies introduced today

include termination rights for against reneging owners and developers. if it happens at all, there would be a termination of the development agreement. if it happens after substantial construction, so we're in the middle of construction, developers have an option of either continuing to abide by rent control or pay the liquidation amount. like i said, we also have the right of first resultrefusal. i'm happy to answer further questions on that. supervisor mar: we have the 14 page document and a summary. we also have mr. yarne's summary of the different amendments. thank you for that. my understanding is there's a puc recommendation, as well, which i think is on our desks, too. my aide has distributed copies.

if anybody wants them, please raise your hand. there are two documents you should be able to receive. one is a summary document that summarizes all the amendments i am proposing. the others are the 14 pages of the actual language of the amendments. folks can see that and review it. supervisor mar: thank you. our city attorney is cheryl adams. i've been advised we will get through public comment quickly and then we will come back to discussion of those amendments. let's open it up for public comment. >> if i could just make two final comments. first of all, thank you for the work. i know that not everyone in this room is going to agree that this agreement is where it needs to be. frankly, i do not think there's anyone on either side that wish is that all the provisions that are in here were in here. i know that the developer would

probably have not referred to have considered putting these amendments into the development agreement. i know there are advocates for tenants who may not think this is enough. that said, again, i am a tenant in san francisco. this is a set of issues i've really struggled with, how to ensure that all of the folks that are currently living at park merced get to continue to live at park merced and continue to live the kind of life that we all want to live in san francisco. it's my absolute intent with these amendments to ensure the protection of all of you who have made park merced your home, who have been part of our san francisco community tree as our deputy city attorney just said, i do think that the agreement itself before the agreements that i put in are extremely

dispensable. i believe that with the amendments that i placed in, we now have protections that would insure that in the small, small circumstance something would happen to this development agreement, our tenants would be protected. i think that's incredibly important. again, i look forward to discussion. i do want to mention that at 10:00 a.m., supervisor elsbernd and i need to go for a few minutes to be part of an announcement around pension reform. supervisor mar: we're all going to recess at 10:00 a.m. thank you. let's open this up for public comment. i'm only going to qualified people. we are going to recess at 10:00 a.m. and come back in 15 minutes at 10:15 a.m. i have about 100 cards here.

we're going to come back and have quite a bit more testimony. please keep it short. thank you. >> thank you. i'm speaking on behalf of san francisco. tomorrow, first of all, the proceeding is out of due process. you cannot make a determination before finalization. prejudice is the outcome. therefore, the process is out of whack. i have made that point before. secondly, i have proposed an alternative pro forma for the development to indicate that there are examples, there are alternatives that lower cost for the developer and insure rent control stabilization for the tenants. if i can do this, then your

experts need to do this, as well. therefore, if there are alternatives, everything needs to be postponed until those alternatives are exposed. shall we say, indicated by alternative professional experts that you can trust who are not in conflict of interest? thank you. supervisor mar: thank you. >> i have one more point. i'm going to indicate regard for the suggestions by president chu. if it cannot be insured, it cannot be mitigated. therefore, if you can find an insurer, then you have a project. supervisor mar: thank you. please come forward. thank you. >> good morning. i'm a 25-year resident of park merced in a garden apartment.