supervisor mar: good morning, everyone. good morning, everyone. this is the tuesday, may 24, 2011 meeting of the land use and economic development committee of the san francisco board of supervisors. to my right is supervisors cohen. to my left is supervisors wiener. we're also joined by a sponsor of the number of the measures, supervisor elsbernd. >> please make sure to turn off all cellphones and pages. items will be on the agenda, unless otherwise stated. supervisor mar: thank you to the

staff of sfgtv for broadcasting this today. we have nine items. there's an overflow room. we plan to be recessing this meeting shortly at a little bit before 10:00 a.m. for about 10 minutes to 15 minutes. 4for the five items on our agenda, we should call the first item first and the next items altogether. could you please call item 1? >> item 1. supervisor mar: do we have a representative from the mayor's office? >> good morning. good morning, supervisor mar, supervisors cohen, and supervisors wiener. i'm here to request your approval to move it from the

city to the san francisco housing authority. alice griffith is undergoing revitalization as one of the five developments. this community is also one of the six finalists in the initiative. the goal is to transform distressed public housing developments into vibrant communities and enhancing the lives of the residents. once revitalized, alice griffith will replace 256 public housing units and approximately 700 below market rate and market rate home ownership. the hope of hope sf to connect residents and all the things that they will enhance their lives is just as important as revitalization. that is why we're here today, to ask for your approval of the transfer of the property over to san francisco housing authority. we firmly believe that the alice griffith opportunity center, which is on the alice griffith

public housing development, is critical to this type of support. alice griffith opportunity center currently serves as a community hub in the neighborhood where programs and services are delivered to the residents it also houses the hope sf service connection team. currently in the center there are quite a number of services offered. there is after school program. there is staff that links residents to employment training and job placement. there's child care. it also houses a computer lab and it runs a program called peacekeepers, which works with violence prevention in the neighborhood. in the future, we're hoping the center will be even more robust. we are hoping to offer tutoring, after school

programming, and extending the services of workforce placement to transitional youth. there's a great new partnership that will be held in the alice griffith opportunity center. alice griffith residents has partnered with urban strategies and they will be running the garden program out of the alice griffith opportunity center. there's a great program that has just started. they will work with the residents to grow, plant, and buy food from the garden. the program will be operated at the center. the transfer of this facility to the housing authority is important for two main reasons. we feel like the proper management of this facility is best kept with the housing authority because it is such an active facility and it has such a late programming that having the on-site staff and the residents is really important. we also feel like, as a hub in the neighborhood, the residents

would be the best words and making sure it remains active and is best maintained and we can make sure it goes on with other services in a robust way. supervisors, we would appreciate your approval of this transfer and i'm happy to answer any questions you may have. supervisor mar: any questions? supervisors cohen? supervisors cohen: is there anyone here from the housing authority? >> the housing authority staff, unfortunately, cannot be here today, but i'm having to take any questions back, supervisors cohen. supervisors cohen: i do not have any questions. i just wanted to know if they were here to represent themselves. supervisor mar: with no other questions, let's open this up for public comment. is there any public comment? seeing none, public comment is close. colleagues, can we move this forward without objection? thank you. can you please call items two through five.

we're also joined by supervisor chu. >> elsberndordinance approving a the city and county of san francisco and parkmerced investors, llc, for certain real property located in the lake merced district of san francisco, commonly referred to as parkmerced, generally bounded. item four, ordinance reflecting the special district. item #5. supervisor mar: thank you. before i introduce supervisor elsbernd, let me just say we have a lot of public comment today. we will limit it to two minutes per person. i urge people to keep it as short as possible. brief remarks in the mibeginning 39 yen, he will talk about amendments or changes. supervisor elsbernd? mr. yardeni, would you like to

make opening remarks? >> good morning, supervisors. i will keep my remarks very brief. i think this committee has received several informational presentations. i will focus today on the revisions to the draft development agreement that was submitted to the clerk on friday. supervisors csupervisors cohen:k that members from the public restraint supervisor mar: conversationsmar thank you. please continue. >> i'm going to highlight key sections where there are red lined changes. the red lined documents are also available with the clerk's office. i will move through the

sections. i do want to note that there were some organizational and technical cleanups' made to the dinedocument. there's no substance to the change, other than adding clarity to the documents. beginning with section 3.5.3 of the development agreement -- excuse me. 3.5.3 of the development agreement. we have clarified the ccnr's to provide permanent maintenance of all sidewalks, parks, basically

most common areas open to the public. this amendment was to explain how those get recorded in phases as the development is built out. 3.13. 3.13, we have added a public power section. this would require that a feasibility study be conducted as to whether the project could contract with the sf puc to provide public power post approval. the basis for this language is derived from a similar language from the shipyard candlestick transaction. it was based on fe bic -- based on feedback from the sf puc. per supervisors cohen's request, we provided a one-for-one replacement for the existing

preschool child care space on site. this is to clarify the notice of special restrictions that would be recorded against that property to ensure that no matter what, over time, there will always be 4000 square feet of preschool on the site, even if the service had to be moved. nsr would essentially say it does not have to remain in a particular location, but there always has to be 4000 square feet on the site. supervisor mar: it does not mean that the school that currently exists will be there, but it locks in a future child care center. >> correct. presumably any number of child care providers could bid or offer to use that . we are not going to predetermine who the ultimate user is. as section 3.15 added, at request of supervisor chu, 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