before the board of supervisors provides protection for the city. while the sale price is at below market value, there are a number of safeguards included to insure expectations of the community are met. i would like to highlight a few of those. included is a performance benchmark similar to the mark about the transactions in the area. this ensures the product is built in a timely fashion. again, mirrors the market rate of projects. the limitations on successors. the boys and girls club may not assign the bretton obligations associated with this ring without the written consent of the city. city participation is a residential component of our list of the ship that that component were to take. the city would participate in 50% of the profits generated by that sale. similar to market rate transactions, we require the

declaration of economic justice covenants, as required for all transactions in this area. also, the buyer project declaration, boys and girls club must enter into a declaration of covenants and restrictions, including a use restriction at the silly remain in community- serving facility for low income youth residing in the san francisco. after hearing the constructive comments and concerns and input, we would like to propose three amendments to the agreement that would enhance the protections to the city. the first proposed amendment would extend the use restriction i just described from 30 years to 40 years. the second amendment would include a buyback provision. after 10 years, the city would have the right to buy back the property, at acquisition cost, should boys and girls club a

fault in any way. this would be a violation of the above use restriction or failure to perform under performance benchmarks. the third amendment would be after the 40-year expiration, the city receives proceeds associate with the sale of the property. were the boys and drug club to sell the property after that use restriction expired, the city would participate in that sale. in conclusion, we believe this transaction allows for a critical needed facility and trusted city partners to further their mission in an ever that would benefit clearly from their presence. this is at no cost to the city other than forgone revenue at a below-market returns action, and the city would see no ongoing maintenance and upkeep requirement. finally, the transaction is structured in a way that the city can ensure this facility continues to run the service and intended fashion while simultaneously containing to participate in revenue or profit generated by the site. this concludes my remarks,

having to answer any questions. supervisor chu: with regard to the three amendments being proposed, would those require us to continue the items? they are not substantive? thank you. supervisor mirkarimi? supervisor mirkarimi: i do not know if this is for office or for boys and girls club themselves. when i came into office in 2005, the sector in the city had been really resource for with regard to the kinds of services that boys and girls clubs are offering. now it has grown substantially where there is substantial change it resources. you are taking away a resource in the upper heat, the boys and girls club. i would like to hear from the

city, what is the plan to compensate for the resource we are taking away from another part of the district that is now shifting to a needed portion of the city, but a portion that we have been working hard on building the portfolio of services there as well? who would like to speak to that? >> i am the president of boys and girls club san francisco. thank you for the question. i think you know this. that club in the haight does not really serve those kids. they have been serving lower hate, western valley, since the 1960's. that is our mandate, what our mission is. to reach the kids that need us most. while there are kids the certainly made us in the haight,

it is not a sizable population. there are more substantial me there in the count -- and the community that we are reaching. you know this, and other members of the budget committee know, we have been in this process going back to 2005, 2006. our club at page street is falling down around us. it was built in 1952. something needs to be done. it is not up to the standards of what boys and girls clubs operates. we set out to find a location that best serves that population of the lower haight, hayes valley, western addition. we have looked at private sites, public sites. we have a conversations about the muni substation. we looked at the sacred heart church. that came with a bunch of complications. we looked at a property on peers

and golden gate. all these properties fell through for a number of reasons, and we have a couple of people here who will speak about some of the limitations about where you cannot just take a boys and girls club and plop it down in any part of the community. there are factors about safety and where kids will go. we have a lot of strict parameters in terms of where we are looking in order to reach that population that i referred to earlier. we are always looking to be on the periphery of the community so that all kids from the community would come safely. i am glad you made the point about the other services that have come up in the western addition area. that was another constraint, finding a location that was on top of another youth-serving organization. when hamilton was built, that became one of the anchor points in which we want to be away from as well. a couple of other points, i

think members of the budget committee know boys and girls club was founded here in san francisco's south of market street on hundred 20 years ago. we reached 16,000 kids in the city. we are an important institution across the city and we are an institution that is fully committed for a long time to this city. that is one of the unique characteristics of why we are the right partner on this. the second unit characteristic is we actually want to build a youth center and we have raised money to build a youth center. we think those are some other characteristics that distinguish us. we appreciate it back a two of the members of the committee here have clubs in their district. this location is right on the line between to provide him and supervisor mirkarimi's district. technically, it is in supervisor kim's district. you heard some of the numbers before.

we expect this club house will reach up to 3500 kids a year. one of the other things i will say, and i will step away, the central nature of this club house is important. one of the things we are doing is putting our main offices in this club, if we can get this done. we would be moving from a downtown location on hawthorne street into the club. kids from all our clubhouses access our main office as well. we run a lot of different programs, including teen employment programs at our main office. for kids to be able to access that, we have to be close to public transportation. and then the central nature of other things by this. i have asked the club house director. the central nature of this location is not only tremendous

asset to the western addition, hayes valley, is an asset to the entire city because of its proximity to public transportation. supervisor mirkarimi: what is the prospect for building -- for the building that you would be moving to? >> we would be selling out location. we need this proceeds to go into this facility. this will be at least $18 million project for us. the more detail we have gone through in the past couple of days on how to make the deal more attractive to the budget committee -- is a scary proposition. $18 million is a lot of money, a long-term investment. on top of that, sustaining it for the next 14 years. we are going to sell about location and reinvest those funds into the club at this location. supervisor mirkarimi: any idea

-- there are no restrictions on that. that is a sizable parcel of land. most likely, and we are talking about housing. >> that is right. would be knocked down and rebuilt for housing. we're going to go out with a process in january. the realistic people we have talked about on the periphery have said, if you can find someone to use it for how it is built now, you can get more money rather than someone coming in to knock it down to build housing. but i agree, i think housing will be a more attractive option. supervisor chu: thank you, supervisor mirkarimi. supervisor kim? supervisor kim: in the budget analyst report, it said that this would be the 10 club house. we're really talking about maintaining the nine currently. first off, i know i have asked a lot of questions about this item. i was very excited about this

location. we know these have been an amazing and said both to the tenderloin and treasure island. the staff there have been phenomenal. i appreciate the boys and girls club. a lot of my concerns were outside of the players that are involved in this item. i just had some quick questions. i'm not familiar with how the other parcels were given. if you could go over that. i know that several have been slowing housing. how was that done? >> it during 2000 the city entered into the corporate of agreement, there was 20 time

does 22 parcels. 8 of those were sold to the redevelopment agency. early those funds that allow for the construction of a octavia boulevard. franklin was one of the first to be completed. the remaining parcels, and it or does that was referenced -- in the ordinance that was a reference, there was the sale of those remaining parcels. we have sold four parcels and relying on that legislation to

add purchase and sales agreements. >> for those that were given for the building of affordable housing, i assume that that went through this process? >> i was not with the city at that time. >> the relationship between the city and the redevelopment agency, those were transactions that ad market value. direct sales, not a competitive sale to an agency that is not the city and then the redevelopment agency engages in their process to secure the housing developer. some that have been completed, some underway. >> how were those nonprofits selected?

i assume that the previous process went through this. >> the initial transfer of those parcels that were sold to the redevelopment agency were not done through the public solicitation process. i believe that the redevelopment agency goes through the solicitation process an order to partner with developers on a case by case this basis. >> i know that this is not a frequent occurrence, the city has parcels of land. i believe that we don't have enough parcels. i'm wondering if we have a process by which we go through planning for land and how we go through deciding who we sell the land too.

>> as i mentioned earlier, this is a departure from our normal process. this is not by code that our process has been to offer properties on the market through some mechanism which is an auction. we have used this to dispose of some of the parcels within the octavia footprint. we sold other surplus properties through that mechanism. the experiences we have had, particularly in the nonprofit world, where there is a directed transaction. typically there are leases. we have found that there have been some problems associated as well because this is a city

asset. there are some lingering liability and capital obligations that we then maintain under a lease. there is a project where a noncompetitive 20-year lease was provided for that facility. we have provided operators upon a termination of that lease. that is our more frequent experience, a directed, noncompetitive community survey use. that is not as viable a solution here but they definitely would not have had a situation. ownership is really imperative for capital fund-raising opportunities as well as any fund raising opportunities.

>> in the sale, we did not mandate that residential unit to be built on site to help augment the fund. >> there was a 50% affordability target. we met that 50% affordability target. this had always been allocated as market rate. actually, in conversation we brought up the idea as possibly an additional affordable housing opportunity because this is outside of any redevelopment area and given the redevelopment agency's changing future.

it seems that they are at the lower end of their priorities. >> why did we not mandate that in the sale? if residential is still on side, that will get 50% of the proceeds. that was not mandated as part of the development. i'm curious why we did not do that. that would go back to the plan for enhancement, transit, infrastructure. >> this is a fair observation. in this case, the residential element becomes a financial principle to help the non- profit. this speaks to being market rate. this plan would address on a parcel by parcel basis, the

required contribution. we are alone in the plan that the board had adopted to dictate what affordable components might be required as part of the project. >> i am not answering the question. why didn't the mandate residential building as part of the sale to the boys and girls club? >> right now it is an option. i'm wondering why we did not mandate to this as part of the sale and they would build both the center and market rate housing which would be more funding for the plan. >> part of that is that it is very conceptual in nature. we are not sure of the efficacy and finance ability of the financial component. mandating it, we felt that it might overload their

requirements we're placing on the nonprofit. their plan is first and foremost the community service element. >> i want to maximize. we have land and we want to be will too maximize its value to the city. >> you are correct. this is not require that residential is construction on the side. it does it require that should be constructed, not only does the city participate but we try to negotiate. i do think that there is some openness into including a provision. there would be sensitivity to

allowing this to be sensitive enough for them to find what they're looking for. your concern is a valid one. >> it is my understanding that this is zoned residential so other uses are not allowable. >> commercial on the bottom, residential above. if another use will be built, that would have to come back to the board? >> any type of sony change would have to come back to the board. "it's one thing that would make me more comfortable if another uses determined, for example market rate office, verses commercial space. if they came to the board for a change in use, we was to be able to share profits from that scenario as well. i very much appreciate the amendment on the proceeds of a

land sale, if that were to happen in 40 years. >> this is a 70% discount. obviously, the boys and girls club will put tremendous investment on the land. i was wondering how this was calculated. >> we should go to the budget analyst report. i do have some questions of my own. >> madame chair and members of the committee, as was stated, the city would sell a parcel f to the boys and girls club to hit below market rate.

this is 43% less than the estimated market sales rate. it could be developed on parcel and it has significant community service benefits and investment. the real estate division has provided no documentation with respect to quantify such a benefit. also there has been no requirement for development of the residential units and the proposed sales agreement provides that if the boys and girls club the votes residential units, the city would receive 50% of the net sale or proceeds. there is a potential that would be reviewed.

and the revenue in the future will be shared between the city and caltrans 4 specified street transportation and projects such as recreation projects. i will go right to our recommendations. the budget and legislative analyst cannot recommend approval of legislation because the sales price of too fine -- 2.5 million. less than a state it than the estimate its sales price. we might add that the property was previously approved by the board of supervisors ed market rate prices. the real estate division did not intend to elicit other

agencies or developers to purchase the subject property or auction it to the highest bidder as is usual procedure. the workforce development not conduct a formal plan in process to determine the best use of the parcel. the agreement does not require the boys and girls club too have a certificate of occupancy. the agreement does not require development of residential units. if commercial is available and this does not require the boys and girls club to the city. after 30 years, if the property

is sold, the boys and girls club would maintain these proceeds. we would be happy to respond to the 20 questions. >> i was wondering if you had the opportunity to evaluate and review the amendments? >> there received an e-mail today and certainly this improves the deal without a question. it does not address all of the issues that we will state it improves the deal. >> the department, to you have a response to supervisor campos question -- supervisor kim's question? >> the participation reflects the increased value of the land.

that allows the boys and girls club to recoup the cost of building and maintaining and operating the facility. we can share some of those numbers and calculations with you and make sure that that hits the goal. that was taking into account the future value of the land. >> what happens to the abandoned property? there is no swap that is part of this deal. the land that would be sold would be sold at market rate, correct? >> correct. this would be helping with the sizable funding at the burroughs and -- the boys and girls club need. >> is the 18 million that was

mentioned already implicated in the sale of that land? >> i don't believe that we have assessed that land but i believe that it goes to the cost but i will let rob answer that. >> i think that we have heard numbers as low as three and a half million. our thought is that that begins to lower the cost. the sale of the number would go into the area of 13 million.

we had an $8 billion boys and girls club. this has been a significant amount of money to race to build centers around the city. >> i would say in that part of our area, he would command a much higher price. you are right next to the new wholefoods and you are literally looking at golden gate park. >> in terms of the committee benefit, many of us are aware of what the boys and girls club does and they're very