is built right into the agreement. those are the reasons why we have recommended, first of all, we recommend that the proposed resolution be amended to provide for rec -- for activity, and because the board of supervisors cannot amend an agreement, can only approve, disapprove, or continue, we recommend a discontinuance to amend the agreement to require, and unless again we have misread the agreement, there is no requirement that a study be undertaken to determine how much of the cost of the paratransit program, including the administrative expenses should be reimbursed bybar bart to the mta. as we understand, the way the agreement has been submitted to you, that is the last obligation date for bart to pay the 8% for administrative costs. then on page 10 we recommend

you amend the cautionary agreement to reflect that any future -- that is another thing i want to make that clear. let's assume they do this study. they do this study and the study finds that bart should pay less to the city, or pay more, either way. under the way this agreement has been written, the board of supervisors would add no further authority. there could be a fiscal impact of the city, and yet, if you approve it now, there would be these automatic renewals without further oversight of the board of supervisors. that is why we say that should be amended to make sure if there's a fiscal impact to the city, that that comes back to the board for the board's approval. those are our recommendations.

supervisor chu: thank you very much. supervisor mirkarimi. >supervisor mirkarimi: the costs are somewhat disproportionate. what would you recommend in terms of us being able to have greater say -- >> my specific recommendation, supervisor, i am saying two things. do not approve this now, continue this item. specifically request that the mta amend the agreement with burt to recommend the study be undertaken and what are the results, that would be the continuation of paying the administrative as well as beyond the two years that bart is obligated to pay under this agreement. and then, as a further oversight the board should have, depending

on the results of the study, i do not believe you should give the mta the authority to adjust the agreement without your approval it there is a fiscal impact to the city, such as perhaps a decrease that bart would be paying. those are my specific recommendations. supervisor chu: thank you. i think an area where there seems to be disagreement between what the budget analyst report as saying verses what i hear you saying is the budget analyst seems to believe we're not say specifically part has to continue paying administrative fee for the duration of 10 years in order for us to approve this contract. it seems what the budget analyst this thing is that bart is locked in for the first two years, but beyond that they have no obligation to pay it. >> there are two things going

on here. we have asked for the study. we have talked with staff, and they agreed to do the study. the word anticipate means we will are going to do the study. we have both got their agreement and we're going to do this study. the study will look at the cautionary allocation and the administrative speak, and that is why bart was concerned about a grain to the 5% fee if the study shows it was less than that. and that is why they put the of two years, because they assumed within the two years we would get a study done. we're want to do the study. with the study will look at the cost allocation as well was the administrative fee. and then we would come back. i am fine with coming back to you, either sending you a letter

and report to let you know what came out of the study, what is the cost allocation percentage, and the administrative fee that came out of the study. we can come back to you in a more official way. that is up to you. supervisor chu: given that you have agreed to a study, -- >> correct. what we are expected to do is hired nelson to do the study. three have gone to the point of talking to the consultant. we both feel they would be a good company to do this. they have this kind of experience. we can provide the data to them. supervisor chu: i think we're fighting over something very small. it seems like you did not necessarily disagree with the budget analyst and we are what

to do this study. and absolutely. they were concerned administrative fee be applied, and so was finance, because in the past there have not been at the administrative fee. we are all in agreement on that. i think the issue that the budget analyst is bringing up is making sure those things happen. that the study happen and the administrative phebe continue to be charged after the -- administrative fee continue to be charged after the study. the issue is we would need to come back with a steady, with this agreement after the study is completed, and we can do that. the two years are already captured in the study. after that, which it captured in the agreement.

after that there needs to be a study to determine whether the 5% continues to be the peak or whether it is something other than that or less than that. and-- continues to be the fee or whether it is something other than that or less than that. it is fine to except the budget analyst recommendation, but it makes sense to bring it back to after we of the study so we can tell you what the percentage is and what the administrative fee is. the do>> madam chair and memberf the committee, there is nothing in the agreement that legally fines of the study to be done. i understand miss williams stated that part agrees they will do the study, but you are reproving a 10-year agreement and there is nothing legally binding it. our reading of the agreement means there is nothing legally

binding that there would be this study. after the study, bart has to agree to the amount, and the amount can be done without board of supervisors oversight. it could go down. as you point out, it is very low now. the 5 percent signed is not even based on an actual, it is based on another agreement with mta pays bart 5 percent signed factor. it is not based on any objective cost data. i guess my concern is i believe the board should maintain fiscal oversight over this agreement, and i think my recommendations would make that happen. supervisor chu: thank you. why don't we open this up for

public comment. any members of the public that would like to comment on this item? seeing none, this item is closed. we have this item before us. it sounds like we could probably take the budget analyst first recommendation to propose to provide for retroactivity without objection. we will do that. with regards to amending the resolution, i think the administrative fee that we would be collecting and asking them to come back to is very small considering all the other thing is and is more like $10,000 in any given year. it is not a huge amount that we would be overseeing. i understand the budget analyst's point about this, but if you are already intending to undergo some kind of analysis to understand what the appropriate methodology would be, would it hurt you to come back with an amendment to either the underlying document to say

you would complete some type of cost sharing analysis by the end of june 30, 2012, and the contract's going forward would reflect those changes? it does not sound like that would be a difficult thing to amend. >> in terms of sending a letter to you -- this was enough to go back to the bart board for approval. in terms of the cost sharing agreement, we want to do that now. we can send you a letter indicating that we agree to do that and that bart has agreed to do the cost sharing analysis of you know that is happening, and then we can report back to you after that is done. >> my apologies for being late. this was a concern to me. i missed some of this, but is there a commitment to do this study 2012? that is something we could

amend in this resolution. >> you could amend it in terms of the resolution. in your resolution, absolutely. we have every intention to do this study and we have gotten bart sap to agree to do the study. supervisor chu: i would feel more comfortable having that here. the last study was done in 1994. the last -- >> it is a percentage. i agree with you that an expert extends to the study, and we are intending to do the study. supervisor chu: thank you. so i know supervisor mirkarimi is on the roster, but i would suggest that perhaps we can skip over this item and leave it open for a while and see if you can work with the city attorney to see how we might be able to reflect the resolution to see some of the things we want to see, which is making sure we have some kind of analysis that accurately depicts what the

shares should be in terms of recovery and that we have some way to make sure we are recovering for those costs, because i think that is what we generally want. supervisor kim: why don't skip over action on this item and have you work with the city attorney, and then we will go to the next item. >> item number five, resolution authorizing to mta to enter into one or more consensual termination agreements with equity investors and other parties that participated in the leveraged lease transactions ackees -- executed in 2002 and 2003 with respect to the san francisco mta brenda light rail . .

>> janet bartonson. good morning. we had spoken to you about not being able to be present until 11:00. is it possible to hold this over? supervisor chu: why don't hold this item over. >> item number 6. resolution authorizing the director of public works to execute an amendment to the owner control the insurance program for the laguna honda hospital replacement program. >> john thomas, a project manager of the look and a honda hospital replacement program. the modification increases the total contract by 1.9 $4 million

to a new total of 17,323,400. the extension is critical to the program, as it provides continue its insurance coverage for the remaining work. the remaining work being the remodel and adjust the compensation estimated peril to reflect actual project costs. this is by way of background. it was a competitively-bid rf2 process that resulted in the department of public works and drink and to contract in june of 2005. i am happy to answer any questions you may have. supervisor chu: can we talk a little bit about the time line in which we think the work would be completed. >> it was to cover all phases of the project from the new work now completed and the remodeled at it existinof the existing h .

h wing resulted in some delays. that held us up on that phase, but the work has been more difficult than anticipated. a significant section of the roof, over 60% has had to be removed all the way to the concrete and replaced, so that has extended our contract out into late 2012. this contract now will extend coverage through december 31, 2012, which is slightly beyond our completion date. supervisor chu: thank you. why don't we go to the budget analyst report. >> madam chair and members of the committee, on page 6 of the report will show the elements of why this requested $1.9 million increase in insurance services

is needed, and we concur with that. there is a technical amendment that needs to be done. there is an incorrect amount, and on page 7 we recommend you amend the resolution to execute the sixth amendment to the program from not to exceed amount 15,000,382t. we recommend you approve this as amended. presideded. supervisor chu: any members of the public that would like to comment. >> my name is douglas yep, and i live in the same district as laguna honda hospital. i am glad to see this item come up for discussion. i am glad the sponsor has

something to say regarding laguna honda hospital. according to my research on the internet, i do not see very many comments in regards to laguna honda hospital said by my district supervisor, so i am glad he is doing something in regards to laguna honda hospital, since it is a common fact that it is in his district. secondly, i would like to oppose this resolution, and the reason why i hope pose this resolution is that even though i am not an insurance expert, i always feel hesitant when an entity has to self insure itself. given the size of the insurance market, it should be fairly easy to get an insurance company to ensure your project. usually you cannot get insurance because there is a valid reason why you cannot. since i do not know very much about this particular sell insurance project, it just the

concept of being self insured makes me a little hesitant to see why it should be self insured since most entities, especially hospitals, should be able to get insurance in the open market. in regards to laguna honda hospital, this is another example of where people point to which other and say it is not my fault that there is something wrong. in regards to that, someone has to be accountable for that situation. that is kind of like mr. miller saying that i am not responsible for our city's bankruptcy. it is not my fault. notice he did the right thing and it allowed the bankruptcy, because he is basically

admitting the problem, even though everyone knows it is just one agency that caused the problem in harrisburg, not a systemic failure. the problem as it relates to the situation is that laguna honda hospital basically needs more examinations and more hearings like them. in terms of the resolution, i think we should debate it and maybe have the sponsor sit here and answer some questions, rather than just sponsoring the legislation that were made a totally silent. for $2 million i think we should spend a little more time. it the city is that free with the money, could you hand me to million-dollar scum and i guarantee i will make a profit with the money. thank you. supervisor chu: thank you. next speaker, please. >> my name is as washington.

i am here speaking basically in parallel. -- ace washington. it comes down to a couple of issues, particularly when you were dealing with city government. i have been and will continue to advocate community perform. people have been asking, what is committed to perform? i will unveil that slowly. i gave some of that to by supervisor a year or so ago. i brought it to him in a big sheet of what might interpretation of community perform is. that gentleman just spoke, i know him somewhat, but we are right there on issues right now, because number one, city and county -- you guys come equipped with your analysts', your liaisons', consultants -- you have all of those things for city and county, but go to the community and there is nothing.

you do not have a consultant, do not have an analyst, none of those things. and we need to flip flop it and drop it for the community. we need liaisons' to the city and county. you have all of the money that you can spend any time you want to. make these bond request and do what ever you want to do. most of the supervisors are here eight years. our community lives here inevitably. we're here to suffer whatever decisions you make, which we have no input. those days have -- simply have to stop, at least here in san francisco. my question is and will be through the election, who was in control here in san francisco? i would like to know. it is simply not the mayor. whoever is controlling him -- i dare not say it, but i will say it -- willie brown. i am not scared to say his name.

there was an interested -- incident where the man was questioned and willie brown, but he was interrupted by someone in there was a big uproar, and there was a big uproar because we want to know who is in control. ladies and gentlemen, i have no ties to no one. i fear no one. i am almost like martin luther king. i could draw you a plan for what the community needs to do, but who knows? right now i done made history at city hall, but now they're trying to get rid of me in the press room. i am here to show a parallel that the community has to wake up, and i will speak of for my community. we need community reform. we need analysts. we need consultants. we need all of that on this side of the ledger. so that when we come to city hall we will be prepared, because those days are over right now. supervisor chu: thank you.

are there other members of the public that like to comment on this item, item number six? seeing none, public comment is closed. can we take this without objection? we will do that without objection. to the underlying item as amended, a question to the city attorney whether it is substantive or not? i do not believe it is, because the not to exceed amount has not changed. thank you. the underlying item as amended, we can do that without objection. thank you. item number four, just wondering if we come to language that will work? >> andrew shen. i think we have proposed an additional where as paragraph

for the resolution requiring the completion of the study that you've discussed. the new whereas pair press started on page 2 line at 10 the, whereas the sfmta and bart shall complete a study of cost as described in 4a of the cost- sharing agreement by june 30, 2012, reflecting the agreement to commit the steady and those additional impact it would have in the agreement. supervisor mirkarimi: mr. rose's contention is he wants to make sure that is honored and at least be somewhat bilateral. does that reinforce the spirit of the agreement? i am asking the deputy city attorney. does that reenforce the intent that we can at least rest, because resolutions are not mandatory. >> supervisor mirkarimi,

strictly speaking, the agreement does not require this be done by a date certain, but i believe mr. rose is satisfied with this change in a reason to doubt -- supervisor mirkarimi: memorializes it certainly helps. motion to except the amendment. supervisor chu: thank you. we can take that without objection. that will be the case. on the underlying item as amended, would that require a continuance? ok. given that on the underlying amendment item as amended, can we take that without objection? great. we will do that. think every much. why don't we return to item number 5. -- thank you very much.

>> sorry i was late. thank you for hearing this item. i have with me peter ross from roscoe mitchell advisers who was here when the transaction was done. a -- i have with me peter ross from across mitchell advisers. the transactions that are subject to the legislation were entered into in 200012 into -- 2001 and 2003. the transactions were extremely complicated and were structured to enable equity investors to take certain tax benefits. these were similar to the kinds of transactions that other agencies across the agency were entering into at that time, and encouraged to get some capital into the transit system across

the nation. since 2003, however, the tax laws have changed, and the irs has determined the equity investors are no longer able to take its vantage of the tax benefit, and that was their risk, and that was clearly articulated in the documents. the transaction at that time generated 40 million to the new system. we receive the entire benefit of front, and have seen nothing on an ongoing basis. the lease payments have been made to certain funding arrangements that are part of the transaction, and all payments on behalf of the mta were made, and they did not incur any additional payments that were required. part of the original funding agreement involves a purchase of securities that mature at the end of the transaction in 2000 -- 2026 and 23 respectively.

because interest rates are significantly lower today than i 2003 and 2000n 2003, the valus increased substantially. why would we want to consider terminating early? we benefits in several ways. one, it would avoid a potential future technical default, as we will no longer have to comply with certain documents for the replacement of certain financial participants if the rating falls below certain levels. one of the financial participants insured guarantee it is currently rated three close to the technical default level. second, it will simplify the financial reporting on financial statements. third, and maybe one of the most important items, it removes all liens on the least related to

light rail vehicles. equity investors would benefit from an early termination, because they will gain control of the federal securities and use the increased value to offset the investment losses created by future tax benefits. the proposed legislation before you authorizes us to enter into early consentual termination without obtaining additional improvement 5 in '88 ford and you under different parameters. -- additional imapproved it by you in the mtand the mta . we will report back to you on any termination as soon as they occur. we need this authority to terminate to avoid interest-rate swings that might otherwise occur during the normal approval process, authorization process.