design but then can be traced to false information the received. the city attorney's office and city risk manager have both found a modified indemnification language is reasonable, based on the unique situation, and the fact it is necessary to enter into this agreement in order to comply with federal mandate. the budget analysts office has recommended approval, and i would be happy to answer questions you might have. supervisor chu: thank you. this is an ability for the department to go forward with a for the $20,000 planning contract. in terms of implementation, we do not know what that costs will be until after the planning process? -- $420,000 planning contract. >> that is included in the capital budget and fiscal feasibility study. this is just asking your approval to enter into an agreement with this particular company, as they are the on the

one that can provide material that the faa has required we use, since we cannot accommodate the 1,000 feet at the end of the shorter runways. supervisor chu: in terms of implementation, after the study period, after we decided with the organization, there is already a budget for that? >> yes. supervisor chu: do you know what that level is? >> not off the top of my head, but i would be happy to get that break down for you. supervisor chu: thank you. let's go to the budget analyst report. >> good morning, supervisors. happy new year. the cost, as indicated, the faa has only approved the engineering arresting systems corp., which has a proprietary design for use of this material

at airports, and because the city attorney has determined it is reasonable to provide this modified indemnification, we are recommending approval of the proposed resolution. i would also note, the $420,000 cost has already been approved in airports budget. supervisor chu: thank you. is there anyone from the public that would like to comment on this item? seeing none, public comment is closed. we have a motion to send item for with recommendations. without objection. item three. >> item 3. resolution approving amendment no. 1 to boarding area "f" principal retail concession lease no. 04-0139 between pacific gateway concessions, llc, and the city and county of san francisco, acting by and through its airport commission. supervisor chu: thank you. we also have kathy widener on

this report. >> the airport is requesting that this item be tabled. i apologize. the request to withdraw the early termination did not occur before it appeared on the calendar, due to some timing issues. the contract will expire next month, so we do not need to terminate early. i apologize for the confusion. supervisor chu: thank you. why don't we open this up to public comment. is there anyone from the public that would like to comment on this item? seeing none, public comment is closed. motion to table the item. without objection. item four, please. >> item 4. resolution approving and authorizing the execution of modification no. 1 of lease l00-0464 at plot 6 with united air lines, inc., at san francisco international airport

to: 1) extend the term; 2) reduce the demised premises; 3) modify the annual rent; 4) provide for a deferred city improvements payment to city; and 5) provide for certain terms of retroactivity relating to the rent and the deferred city improvements payment. supervisor chu: thank you. this is the last airport item. kathy widener. >> the airport is seeking your approval for modification #one to its ground lease with a united airlines in order to extend the term of the lease and to reduce the premise by approximately 3.5 acres. this current lease between united and the airport consists of 16.04 acres, known as plot six, including building five, 75, and 85 at the airport. it is located on north mcdonnell the road, adjacent to the

international terminal on the g side, and is used for various aviation functions. the proposed modification seeks to amend our existing 12-year lease with united to retroactively extend the term by an additional 10 years, from july 1, 2011, to june 30, 2021, in order to produce the current promises to account for the airport has subleased back from indicted since october 2008. this was necessary in order to accommodate various airport provisions that needed to be relocated as a result of lost space during terminal to construction. modification #one will reduce united's annual rent on this plot from approximately $2 million annually, to $1.6 million annually. based on the reduction of space

airport now uses permanently for employee offices. it is known as sfo business center. the airport has been subleasing this approximately 39,000 sq. ft. in building 575, as well as employee parking spaces back from united, for two years, from july 1, 2009 through june 38, 2011, for $985,000 a year. this two years of payment to united has been put towards the approximately $2.4 million of a remediation of hazardous material that was required in the building before we could move employees in. united is responsible for these costs. when you apply the two years of rent from the airport to the $2.4 million in the remediation that was necessary, that leaves a balance of $696,000 that united will pay to the airport

for the removal of this material. the modification allows for an ongoing least for aviation- related services with our largest air carrier, will also accommodate additional space the airport needed for employee offices. happy to answer any questions. supervisor chu: thank you. let's go to the budget analyst report. >> debra newman. as indicated, this is a land lease with united airlines reducing the amount of space they have from 16.04 acres, to 12.55 acres. united airlines currently pays $129,743 per acre now under the proposed lease, united airlines would pay $139,900, about $1,000

more. because of the reduction in acreage, the total will be a reduction of $443,000 in annual revenue to the airport. however, as shown on page five of our report, although there would be a reduction from the immediate release that is being opposed, because of additional subleases that would be terminated by the airport, where the airport has been paid over $1 million to united airlines to sublease some space, and then a permit that the airport would enter into with united airlines for an additional $550,000 of revenue in building 575, the net affect, if approved, and subsequent subleases and permits are entered into separately, would result in about $1.1 million of additional

revenue to the airport. as was also indicated, there is an additional $696,000 of remediation payments still owed by united airlines to the airport, which will likely be paid in monthly installments over the next five years. we, therefore, recommend approval of the legislation. supervisor chu: thank you. supervisor kim? supervisor kim: could you describe the retroactive status of the agreement? >> two things going on. the airport was not certain if we would be able to recapture the office space we lost in terminal 2. we are trying to be strategic about the space we needed to take back from united, -- if it was going to be temporary to accommodate construction, or permanent. it turned out to be permanent. the second issue, united and

continental emerged during this time. we were dealing with a whole new set of property folks in chicago, who had not dealt with before, and were not part of the initial negotiations. it took us awhile to bring them up to speed and get the required signatures in order to bring it to you for approval. supervisor chu: thank you. let's open this up to public comment. seeing none, public comment is closed. is there anyone from the public that would like to comment on this item? seeing none, public comment is closed. motion to send item forward with recommendations. without objection. item five, please. >> item 5. resolution: 1) authorizing the general manager of the san francisco public utilities commission to execute a 20 year lease for an approximately 11.73 acre pipeline right-of- way near the san antonio reservoir in alameda county to chevron pipe line company at an initial rent of $12,500 per year; 2)

adopting environmental findings; and 3) authorizing other actions in furtherance of this resolution. supervisor chu: ken thank you. john updike from real estate. >> good morning. acting director of real-estate. happy new year. this item before to is a 20-year lease between the sfpuc and chevron for an existing pipeline. location is on the overhead near the san antonio reservoir with an alameda county. it is 5.4 miles of pipeline ranging in the whip of 20 feet to 40 feet, covering a total acreage of 11 acres. it is located to the north of the reservoir, south of 680.

as i mentioned, a 20-year term lease. the lease has annual cpi in flavors, as well as a reset to fair market rental value every five years during the 20-year term. this pipeline has been on the property since 1967. . as part of litigation matters that were resolved in 2001, there was a slight change made to the path of the pipelines that then led to this lease agreement before you today. i am showing on the overhead and outlined area here, crosshatched, that will be abandoned in place. the new pipeline slightly above that. this particular lease provision, although the lease

rate at 12,005 color dollars a year seems low, as you can see, -- $12,500 a year seems low, as you can see, this is san francisco. appraisal data suggests the fair market lease rate might be even lower than it must post today at $12,500 a year for the base rate. secondly, due to the nature of the pipeline use, there is a robust security deposit of $1 million associated. heavily negotiated items protecting the property, flora and fauna, watercourse, watershed, equipment, traversing the property, to protect the sfpuc from potential damage to the the pipeline facility we have in the area, or our watershed, of course.

it feeds right into the reservoir. additionally, there are also protections if there is construction activity. serious monitoring and mitigation measures required. because this is alan the county, they process the ceqa and information. i have evidence of a rather sensitive process getting to the final environmental impact report, which has been approved. mitigation measures also approved. the sfpuc approved the transaction in their commission meeting on october 25, 2011, and now before you for final approval. happy to answer any questions. supervisor chu: thank you. in terms of the puc representative, anything that you would add? thank you. mr. updike, in terms of the lease negotiations, the core

rate is roughly $12,500 a year in terms of fair market value, based and where is located, probably higher than what about the would be -- market? >> yes, according to one appraisal report, the rate could be considered slightly lower. we feel comfortable where we are at. certainly, no less than fair market rental values. supervisor chu: the puc has three options to adjust the rest? >> that is correct. supervisor chu: we cannot have a budget analyst report for this. is there anyone from the public that would like to comment on this item? seeing none, public comment is closed. motion to send item 5 forward with recommendations. without objection. please call item 6, 7, and eight

together. >> item 6. resolution authorizing the office of contract administration to enter into the third amendment between the city and xtech (part of the technology store procurement vehicle), in which the amendment shall increase the contract limit from $41,000,000 to $51,000,000. item 7. resolution authorizing the office of contract administration to enter into the fourth amendment between the city and xtech (part of the technology store procurement vehicle), in which the amendment shall increase the contract limit from $40,000,000 to $60,000,000. item 8. resolution authorizing the office of contract administration to enter into the third amendment between the city and county of san francisco and en pointe technology sales, inc. ("en pointe", part of the technology store procurement vehicle), in which the amendment shall increase the contract limit from $28,475,000 to $38,000,000. supervisor chu: thank you. for this item, from the office of contract the ministration, gabe. >> good morning, supervisors. purchaser at the office of contracts and administration. i am here to present a petition on the three contract amendments

associated with the technology store. the technology store was a competitively bid process, through an rfp. we were awarded a number of contracts. these three contracts are before you for an increase in the contract limits, as well as read out to you. i am happy to answer any questions you might have. supervisor chu: why don't you go through each of the items for the benefit of the public to explain what each contract and are, extensions are, and whether we are entering into the third, fourth amendment respectively. explain how many more amendments we have, more ability we have to exercise that extension, and when we have to go back out to bid again. >> there were seven contracts awarded, four under category one, for services and related products. three, four products only. the contracts were awarded in a

group, effective january 1, 2009, for a period of two years. they would have ended december 31, 2011, just a week ago. the office of contract administration has extended these contracts by virtue of exercising an option to renew. every two options to renew available, so we have exercised the first of each of those options. there are still -- there is one more option to renew by an additional year after 2012 is about to end, going into 2013. the first item before you is for a product contract with xtech. excuse me. it is complicated because of the

way that it is composed. in the major issue with the product contract has to do with the products that the city departments wish to purchase. any purchase order worth over $100,000 must be a bit out, must be outreached to three of the technology store vendors. to this point, xtech has been the successful bidder for a number of purchase orders. the second item is for a fourth amendment to a services and related products contract with xtech. initially, we had set it up for $12 million. it was clear that xtech -- by the way, they are the product of a joint venture of two locally-based organizations. these two firms were certified

local business enterprises. they have been so successful, that they have graduated from the program. we have had to modify the contract up words. it currently stands at $40 million. this current contract modification is $20 million for and not to exceed the limit of $60 million. the third items -- supervisor chu: in terms of the difference between six and seven, extensions for the xtech contract? >> additions to the contract limit. the first one is for products only. the second one is for services and related products. the issue has to do mostly with the fact that services tend to be in big chunks, in terms of big projects, so they tend to come up with larger dollar values. the third item is an amendment

to the existing contract en pointe technology sales. we came before the board of supervisors in june for an increase. at the time, they were reaching their limit of $24 million on the product side. we increased by about $4 million. we currently have enough funds in the contract for another 30 days at the core rate of spending. therefore, we are asking for an increase in the contract limit, for en pointe technology sales. in all three of these contracts, the contract increase enables our administration to continue utilizing these contracts to continue having competition for any purchase orders or acquisitions above $100,000. we recommend approval. the budget analyst office recommends approval. it enables the department to

get good, competitive prices, having all of the vendors able to compete. supervisor chu: in general, the way the city does business in terms of technology contracts, we either purchased services or products. we do this through a competitive bid process where we go out and say, give us your best prices for computers, certain services, etc. we get a number of bidders to win the bid. we have a pool of vendors which the city goes out and purchase the products and services from. what you had said was that we had already extended one option for a one-year renewal, but we still need to increase the contract limit value, so these companies can continue to receive the business, correct? >> correct. supervisor chu: as individual departments have dollars in

their budget, they can go forward and solicit among this pool of vendors. whoever has the best price is the one they go with. this allows xtech and en pointe to continue to compete for that business? >> yes. supervisor chu: let's go to the budget analyst report. >> madam chair, supervisor kim, there are these three resolutions before you come as shown in our report on page 4, for the technology services and products contracts. xtech, of the four authorized vendors, has received 68% of the purchases, which is a lot of the rationale for why they are requesting the increase before you. from the $40,000 to $60,000

limit. in addition, on table 2, page five, en pointe and xtech have been the predominant vendors that the city has used to purchase and their technology equipment. as you have indicated, all expenditures for certification -- for technology services and products are subject to separate appropriation approval in each of the city department budgets, subject to the border supervisors approval. based on our expenditure data, based on the average monthly spending by all city departments, from january 1, 2009 through november 30, 2011, coupled with three specific pending requests by the puc and the airport, we concur with the amount that the department is requesting. therefore, we recommend approval

of the three resolutions. supervisor chu: thank you. supervisor kim? supervisor kim: you had mentioned xtech was part of our local business program. is en pointe also a local business? >> they have an office here, but are based in gardenia, calif.. supervisor kim: how many of these companies are locally based? >> we have a set aside program for micro lbe's. four contracts, the vendors. xtech is a joint venture. cornerstone is a joint venture between one firm here in san francisco, and another international firm. supervisor kim: thank you. supervisor chu: thank you. why don't we open up these comments -- these items to public comment. is there anyone from the public that would like to comment on this item? seeing none, public comment is

closed. we have a motion to send these three items forward with recommendations. motion. we can do that without objection. thank you. item 9. >> item 9. resolution approving port commission lease no. l-15004 with bauer intelligent transportation, inc., a california corporation, for certain real property located at pier 50, sheds a and c, in the city and county of san francisco, for a term of ten years. >> good morning. my name is jay edwards. we are here today to seek board approval -- committee approval to move forward with the lease with bauer intelligent transportation systems, it is a 10-year lease at pier 50, comprised of 4370 square feet of

office space, 60,777 square feet of shed space, and approximately 50,0034 7 feet of pay the spirit -- exterior space. our transportation has been a tenet of the port since 1999. we have worked over the last year closely with them to secure a new location at pier 50, adjacent to the ballpark. it is a facility that will allow them to expand their operations and retain them as a tenant and employer in the city of san francisco. we have negotiated the terms of the lease, which include some additional rent abatement and credits, as well as the escalating rental payments over the term of the lease. we concur with the budget analysts report on the financial aspects of it. we are here to answer any questions you might have.

supervisor chu: thank you. why don't we go to supervisor kim. supervisor kim: thank you. i was wondering if you could explain the rationale behind the port's policy on rent abatement and credits only apply to leases five years and under. why was it specifically articulated for short-term leases? >> that would allow us -- on a lease of five years or under, we can go to the port commission for approval on a parameter, with up to three months of rent abatement. otherwise, we have to seek board approval. supervisor kim: in general, the ports policy is silent on whether it can apply to long- term leases. >> that is my understanding. supervisor kim: have we applied it to leases that are 10 years or older? >> have there been rent credits? yes, there have been. supervisor chu: thank you,

supervisor kim. let's go the budget analyst report? >> madam chair, supervisor, i am from the budget and legislative analyst office. under the proposed new lease, the total net revenues to the port over the 10-year term would be about $8.45 million, a total of $9.3 million in total rent revenues plus the $871,000 in rent credits and abatement. as indicated, these revenues are about 20,000 more than the estimated rent of the port of $8.4 million based on the rental rate parameters established by the port commission we discussed. based on this, we recommend approval of the proposed resolution to enter into a 10- year lease with bauer intelligence. supervisor chu: thank you very supervisor chu: thank you very much