but just be a person who needs clean water people who need clean water are the luckiest people in the h20 we needed world ♪ supervisor chu: thank you. are there other members of the public who wish to speak on items number 5 through 11? the seeing none, public comment is closed. colleagues, could we take a motion to continue items number 5 and number 11 to the call of the chair? mercury become motion to continue. we >> supervisor chu: we have a motion and second. items six through 10. supervisor mirkarimi: emotion. >> we can send these out with recommendation. we will do that without objection. thank you very much.

item number 12. >> item 12, resolution making findings under the california environmental quality act and approving a new market tax credit indemnification agreement with u.s. bancorp community development corporation in connection with the investment of $11,104,275 for the new sfjazz building at 205 franklin street. supervisor chu: thank you. we have a me brown here and the city administrator. >> thank you. good morning. i am the acting city administrator. thank you for hearing us. i know it has been a little bit of a rush to get this before the committee, so we do appreciate your forbearance in moving this forward quickly and especially to the sponsor, supervisor kim. i am here to give you background

on the sacramento community investment fund and on the item and then i will turn it over to the redevelopment agency deputy director to get into more specifics about the project and the community benefits, as well as if you have questions about the tax credit program. he is truly the expert in that area, much more than i am. to give you background on the san francisco community investment fund, the office of economic and workforce development and the redevelop the agency realized, in late to dozen in the early 2010, that they were seeing projects in the pipeline that would be very beneficial to our low-income communities throughout san francisco. but those projects were having trouble putting together their full program of financing. they were ever of the fact that some other cities had started to form non-profit entities to be able to apply for new market tax credits and bring that type of

financing as national average for projects to make them happen. that can often attract not only the private capital that results from the new market tax credits, but also other investors to go ahead and sign on to projects. oewd worked with the redevelopment agency to form a nonprofit corporation. the san francisco community investment fund. and asked the executive director of the agency, fred blackwell, to serve as the president of that board, and asked myself, then serving as director of real estate, but i have continued in that role as city administrator, along with michael cohen as the director, and now that position has been taken over. the agency formed this nonprofit. the agency agreed to provide staff for the entity. we applied for and received

recognition as a community development entity, and we had to have that status before we could apply for the new markets tax credit. then in in february 2010, we put in our first application for an allocation of new markets tax credits, and we're very happy because oftentimes you do not get any allocation for your first application. we were very happy to have been awarded $35 million in tax credits. there are rules that apply to those where you have to spend them with then, i believe, 18 months. so for us, we have to get those allocations deployed into the community by september 30, 2013 or we will lose the ability to use those. our first allocation was to the college track project in the bayview. that was in the amount of $8.7 million in tax credits. that was a perfect example of why we wanted to form this non- profit and seek tax credits, because that is a project that everyone wanted to see happen for a long time in the city, but

it did need that extra nudge to get them over the top and be able to successfully put together their financing package. in connection with that allocation, it the investors who put the cash into the project in exchange for being able to receive the tax credit was u.s. bancorp, and asked for an indemnification agreement. we're told that that is pretty standard, particularly with, like the community investment fund, new or entities that do not have a long track record of deploying tax credits out into the community. the redevelopment agency was able to negotiate and enter into an indemnification agreement that satisfied the investor and allow the deal to move forward. now we are ready to do our second allocation of tax credit to the san francisco jazz center project at the corner of franklin and fell.

another good project that we're excited about that we think will bring a lot of good community benefits to not only that area but throughout the city, as well as be a job generator for construction jobs and some permanent jobs in connection with the program. it is a bigger allocation. we have committed, on september 16, to use $50 million in tax credit allocations for the project. there are three other community development entities that are also committing tax credits to that project, but where the largest. and we are a very crucial part of their financing package the investor happens to be the same investor as with the college track program, and they haven't come forward and ask for an indemnification agreement. now, however, the redevelopment agency is precluded from entering into any new obligations as a result of the supreme court stayed that was entered into the vacation over it -- with the state.

so the city has been asked to be the provider of that indemnification agreement, and that is what brings us here before you today. the indemnity agreement basically protect the investor, u.s. bancorp, in the event of a recapture event. that is when the irs determines, during the seven-year compliance time for the tax credit, that the project is no longer eligible for the tax credit. the recapture events are very narrowly defined. basically, the indemnification could be triggered if we fail to maintain our community developed into the status, if we fail to have at least 85% of the investments received from the tax credit being used for this project actually invested into the project. if we make impermissible redemptions, if we receive money back, such as if there is a foreclosure and we do not redeploy them to another eligible project, or if there is some kind of bad -- they

actually call the the bad boy act exception. so if there is willful negligence or criminal act that results in a problem with respect to the tax credits are capital generated therefrom. four very limited instances. all comics of the bad boy act, very much under the control of the agency staff and the board. to maintain the corporate status and comply with corporate filings, to ensure that at least 85% of the money generated is invested in to the project. in this instance, we are investing about 90%. so we have crossed that one off for any potential liability. and then the third one, if many comes back to us to make sure we use it for another proper purses. so very limited instances of possible indemnification here. the risk is also limited, because, again, with respect to all of the categories, except the bad boy act, the irs would

have to give us notice and a 12- month period. we would get notice from the irs and would get 12 months to correct that. clearly, we would do so. it is in our control to ensure compliance in those instances. also, we have been able to negotiate through the very good work of the deputy general counsel for the agency and the city attorney's office, caps on two areas of liability. for the deployment of capital and the impermissible redemptions, we had caps of no more than $5 million exposure on those. they have negotiated a very protective indemnification agreement for the city. and then, finally, the most important reason that i think this is very low risk and therefore ask for your approval is that in the nearly 10 years that the new markets tax credit program has been in existence, there has not been a single instance of the irs declaring a

recapture event. anywhere where there has been deployment of new markets tax credits, there has never been a recapture even. we view this as an extremely low risk contingent liability. it is certainly the kind of contingent liability that the city of dense incurs in entering into agreements with indemnification. it is different than many of the agreements we entered into, because it is so low risk. there are so many and limitations of the ways in which we could possibly be liable that we feel like this is a very safe agreement to ask you to enter into. again, i want to apologize for the rush. i mentioned that there are four community development entities that are investing. we're one, and we're the largest. two of the other three are bumping up against that kapor they have to deploy their tax credits or they are going to expire. it they expire, then those investments generated from their

tax credits are lost to the projects and it will have to scramble to get additional financing. it will delay the project for several months. a pretty significant delay that would result. because of their timelines, the financing deal will have to close by october 4. that is what we're pushing so hard. i really appreciate debra newman working with us. i am appreciative of the fact that you allowed this to go forward without a budget analyst report under these circumstances that led to this rush. unless you have questions, i would like to turn the podium over to stephen, you can get away more into the details. supervisor chu: sure, supervisors, would you like to ask questions? supervisor kim: i will wait until after the presentation. >> good morning, supervisors. thank you very much for giving us the opportunity to talk to you about our indemnity

agreement for the project. i'd like to thank supervisor kim for sponsoring this program. i also served as chief operating officer of the san francisco community investment fund. as it was pointed at, we're seeking a recommendation for an indemnification agreement for the jazz center new facility on franklin in san francisco. i am pretty sure you have a copy of the draft of the and executed indemnification agreement, resolution, community benefits agreement, as well as the market tax credit powerpoint. i will talk about the pressure quickly. then i will drop into the community benefits agreement. then i will take questions about the program. the project is a $55 million project sponsored by the san francisco jazz center. a local nonprofit cbo that's

mission is to really focus on the development and use of jazz music throughout san francisco, san francisco proper as well as the bay area in general. it is a group that has been very committed over the past several years to jazz in san francisco, from an art standpoint, from an education standpoint, and also from a community development standpoint. the current project is roughly about $55 million. the goal of this project is to really give sfjazz the home that they have never had before, particularly a home in san francisco, which we're all quite excited about. this job will probably generate roughly 95 new construction jobs, and that is a 95 fte's, roughly working about 35 hours a week, opposed to about 200

construction jobs averaging about 10 hours a week and of those 95 jobs, the sentences could jazz center agreed to guarantee maximum -- a minimum of 50% local firm san francisco hires. the second is that all the jobs that are generated for construction will also pay livable wages and basically union-scale wages for the job. the their community benefit is related to 25 permanent jobs that will be generated. of those 25 jobs, 10 are specialized jobs, which really are jobs for specialized musicians or musician trainers, and they wanted the flexibility to find applicants for those positions wherever they could. but the remaining 15 jobs, they have agreed to make the best effort to make 100% of those jobs local san francisco hire. but they have committed to making 55% san francisco

residents, so we are excited about this. this is to exceed the city's new construction hire policy. in terms of education-related community benefits, we're really excited to announce that sfjazz is going to provide aid family magnate's per year for free, targeting residents of the fillmore district, which is close to where the new center is going to be. eight family matinees that are free, so we're excited about that. secondly, they have agreed to provide their discovered jazz educational program, particularly to local residents, and they agreed to provide scholarships to at least 10% of the total audience for low- income individuals. i have also agreed to provide 12 low-cost performances per year, roughly $5 per year, also for

low-income residents. they have also agreed to provide one free concert per year that is targeted for youth and families in low-income communities, delivered by their sfjazz high school all stars, which is one of the core programs. lastly, they have agreed to expand the jazz and mental program from two schools to a total of six schools. two of which will be title one schools, so we're pretty excited about that as well. the other schools will be located in disadvantaged communities of san francisco. the other to the benefits relate to out reach in terms of their ability to reach out to populations that are not typically served by facility like this. they have agreed to provide service to 100 used to their facility per year, particularly from disadvantaged communities. and they have agreed to make sure that they make concerted efforts to market all the jazz

activities toward lowering tom -- towards low-income communities. and in essence, they have agreed in the next six months to develop a comprehensive community outreach program which highlights the strategies and resources they're going to commit to actually making all of this happen. lastly, from the community benefits standpoint, they have agreed to hire 25 young people per year, to provide internship opportunities in jazz administration, production, digital music. basically provide ought to burn your opportunities for 25 units per year. -- of entrepreneur opportunities. they have agreed to open up community space, 80 hours of community free space per year. as part of the program, they are required to submit an annual report about the measure of how

they perform in the community benefits agreement. what we're currently doing is we're looking to talk with the bank about if there is some way to help monetize that. i had that discussion with them two days ago. they're looking into that now to ensure that these things do not happen, that there's some other way to benefit the community. i think, in general, this is a fairly robust community development benefits agreement, particularly for this type of project. we talked to some other non- combat -- non markets, and they're basically taking our lead, the lead which we have taken from other city projects in terms of really getting into great detail about the benefits of a particular project and what it will generate for local community residents. i feel as though we're on the front burner in terms of innovation in this aspect of this particular project. i think i would like to go ahead and take any questions that you

may have about the project. supervisor chu: thank you. i actually want to thank you for checking in with the bank in regards to how we hold the developer accountable. i know we had a conversation about what happens that those community benefits are not delivered and whether there is recourse. i appreciate that you followed up on that. >> thank you. supervisor mirkarimi: i think this is an exciting project, but it is one that early on in its concept, i met with the sponsors and asked them to be as sensitive as possible to the fact that this is in the proximity of the fillmore jazz festival in the film more heritage jazz area. i tell them that i really want to see a committee benefits agreement that reflects a more entwined relationship. i know that this is a city-wide in bay area service, but i have to admit, i am a little underwhelmed by of what the

speed -- by what this community benefits agreement stipulates. when i see 10% of low-income that is being sort of afforded to people in a given community, that does not speak well to me. when i hear about -- what is it, eight events? >> yes, eight matinees, yes. supervisor mirkarimi: considering the money and investment we're putting up on this and considering the fact that i am concerned that this presents a level of competition to a struggling area in the fillmore corridor, i insisted to the planners of this the the need to work more intimately with those who are really challenged by trying to revive, resuscitate, and i think endure so that there is a more prosperous, you know, corridor that is also capitalizing on its

jazz history. which is the original corridor in san francisco. so i had hoped that in the community benefits agreement, that there would be more delineation of, one, you're on the border of the western addition. two, the area hardest hit from redevelopment, despite that is new redevelopment with vision and the approach may be in the bay view, is not the same for the fillmore. 3, we bank in terms of a local economy on the jazz theme. and four, we're struggling in this economy to be able to really leverage that to the degree i would want us to leverage it to. so the new business, which i think is a great business, is able to sort of modernize that theme and open it up as a gateway to all that i would have

thought, based on sort of the prior discussions, more input and formalization of the community benefits agreement would reflect those relationships with the fillmore and in itself. >> well, we can certainly go back to the sponsor and have a discussion about that. i was unaware that you had a conversation about this. so i can certainly talk about the tangible linkages we can create a trend the jazz center and the fillmore community. supervisor mirkarimi: the fact that you are aware of that, and i had a very thorough discussion twice, is bothersome. i am elected as the chief advocate for my district. you're putting something in there that i welcome that is on the border of my district and in an area that has been well impact into the original community that where jazz was put on the map west of the mississippi, and so we're trying

to endeavor to help create or recreate something that does not take away but adds to the communities reinvestment. this building, which i think is an important asset in this part of the town, cannot just give a perfunctory kind of community benefit by sending 95 construction jobs and 35 hours per week. naturally in the state of the economy, you will have people from all over the city, especially from low-income neighborhoods, that are going to be rushing towards the opportunity to get these jobs. great. you'll probably have many people have oily take advantage of the eight concerts' that take place of it as well advertised. but what i am talking about is a little deeper and further. i do not think it is school that this be detached in the way that it is being presented from the fillmore. i have got people in the fillmore talking about this now, and i made it clear to the

sponsors of this project to please reach out. and i have not heard that that has happened, other than talking to the owners of yoshi's. i have talked to the lush life gallery, which is right next to the fillmore. this is a very important project to us, too, yet it seems to remain separate from an area that we banged on so that it brings a certain level of prosperity and theme to the fillmore community. >> ok, well, during public comment, the chief operating officer of sfjazz can probably come in and talk about their efforts to reach out to the fillmore committee, to give you more insight. supervisor mirkarimi: just so you know, i am moralizing this agreement before me. i cannot do that. i cannot do that. and made it very clear that, you know, they need to -- they need

to do the due diligence, and it was not done. i even went to the ground breaking, albeit late, but i went to the ground breaking for this thing. so i have been shadowing this thing from beginning, middle, and to the point where it is now. so has my office on this. >> ok. supervisor chu: thank you. amy, do have something to add? >> if i may, technically, to be perfectly clear, it is only the indemnification agreement that we're seeking your action on today. we're certainly very happy to continue working on the community benefits agreement, which is not something that the city is directly party to, that we will definitely continue working on that as part of making sure we get the best part -- possible package of community benefits and we try and address the issues you have raised today. supervisor mirkarimi: but because redevelopment is in flux the way it is, the city has

quite often umpired committee benefits agreement. because redevelopment is in flux, i do not want the city to sidestep its obligation in making sure that an effective committee benefits agreement is established with the impacted community. i do not think that is that they're excused, because redevelopment is in an uncertain time right now, and i expect, as i would advocate for, that there be, i think, a well-written agreement. the community benefits agreements that have been assigned to the development projects in the bay view have been exponentially more, i think, beneficial to the community in that the baby. and this is something that is riding on the theme that has come up for 60 years, been part of the fillmore, and it is on the doorstep of our community. i made this very clear to the

sponsors of this project. and what i see before me does not reflect the conversation. >> i was just trying to reassure you that action today does not put in stone what is in the community benefits and that we're not moving that forward. so we can continue to have the discussion, and we will represent that position back. supervisor mirkarimi: to why. supervisor kim: thank you. i appreciate the presentation. it is complicated. i appreciated being very understandable. i am very excited about the opening of sfjazz center. i think it will complement what we have, celebrating the symphony, the opera, and the ballet here. jazz is america's classical music, and i think it deserves a center here in san francisco. i do want to be very sensitive to the concerns as supervisor mirkarimi has brought up, and he is much more familiar with the western addition fillmore

community. i also want to be sensitive to that, acknowledging that the sfjazz center will be blocks away from the fillmore jazz district. so if we could -- if redevelopment could work with his office to ensure that the appropriate committee groups and schools and housing committees in the western addition maybe could be included as places of initial outrage for some of the matinees and the educational programs. i think that would be appropriate. i know in the meeting, i guess it is now six middle school programs that would be included. i believe that marina is on that list and francisco. the two schools. we can look back at that. we can look at zip codes of enrollment at each of the middle schools. i think it is important to ensure that the students coming

from the western addition community, that those get priority. because there's not a middle school in the western addition. although gateway middle school, i believe, is opening this year. but that is a charter middle school. and i believe the change i asked about has been included, but i want to clarify. i know that it said up to 10%, but it has been changed to at least 10%. >> yes. supervisor kim: i appreciate that change as well. i know we're still waiting on a report from harvey rose, and that will be coming to us next week. so i do feel comfortable putting this out with no recommendation until that report comes to the full board next week. but i do appreciate your work on this, and i hope that during this time, we can work with supervisor mirkarimi's office. >> yes. supervisor kim: we do want to have a focus in that particular have a focus in that particular neighborhood.