supervisor chu: good morning and welcome to the regular meeting of the budget and finance committee. supervisor mirkarimi, believe, will not be joining us today. i want to wish everyone a new year and hope 2012 is a good one. victor young is our clerk of the day. do we have any announcements? >> [clerk announcements]

supervisor chu: thank you. please call item 1. >> item 1. resolution authorizing the mayor's office of housing to retroactively accept and expend a grant from the u.s. department of housing and urban development for lead-based paint hazard reduction in the amount of $2,500,000 and program income not to exceed $200,000. supervisor chu: thank you. we have sonya and daniel. >> the mayor's office of housing has been awarded $2.5 million from the hot office of helping homes and lead hazard control. award will provide grants to control of the volumes and homes. this is the fifth type of award in the past years. as part of the award, the mayor's office of housing has

collaborated with department of public health to provide $895,000 in matching funds. 57% of those funds are from already appropriated community development block grant funds. the remaining 43% are from dph. this 43% from dph is an in kind contribution for the award and is funded by local general fund , local revenue fund, and state funding. this contribution support dph's children's environmental health promotion and lead programs existing staff in performing lead property inspections, held investigations, and forth and of the health code, community outreach, lead testing, and public health case management. imagining the the city to compete for a larger lead hazard grant from hud by leveraging

existing city funding. the award will not add any new steps to either department during the 36-month performance period. supervisor chu: thank you. you have a question from supervisor kim. supervisor kim: i was curious about the 125 qualified units. do these units. like, have been tested, and the mediation needs to happen? >> in order to qualify, we do a series of things. most of our properties come to us from direct referral from the the part of public health, where a lead hazard has been identified. or a child with lead blood poisoning has been identified. we take those cases and do a risk assessment and the lead paint inspection. we determine what are the

hazards, conditions of the paint, and then we draft a scope of work to address those hazards. we do the work, cleared it, we have to meet certain clearance levels from the department of public health. during which time, we occupied the -- relocate the occupants, so they are not exposed to additional hazards. supervisor kim: will the grants cover all of the qualified units on the list? >> correct. supervisor kim: is it possible to get a list of where these districts and neighborhoods are located? >> i can certainly forward that to you. a lot of our work is in the 94110, 94114 zip codes.

>supervisor chu: is this primarily because we see much more prevalence of lead-based paints in those areas? >> actually, there is a lead- based paint all over the city. it is more deteriorated there, so there is a greater chance of exposure. supervisor chu: thank you. there is no budget analyst report. let's open up the item for public comment. is there anyone from the public that would like to comment on this item? seeing none, public comment is closed. may we have a motion to send item for with recommendation? without objection. thank you. item two. >> item 2. ordinance waiving the competitive bid requirements of san francisco administrative code chapter 6, approving a modified indemnification clause pursuant to the requirements of chapter 6, and authorizing the airport commission to award a contract to complete the design of a runway safety area engineered material arresting system.

supervisor chu: thank you. we have cathie whitener from sfo. >> good morning. the airport is requesting a waiver of the competitive bid requirements of the sentences and administrative code chapter 6. the approval of a modified indemnification clause in order to award a contract to complete the federally required design of a runway safety area, also known as the rsa. the board of supervisors approved a feasibility study for this project in may 2010. some brief background on the project. the faa regulates the runways at san francisco international airport and enforces requirements for runway layout, land, and safety. the faa has required commercial

airports that receive federal grant funds must come to the extent possible, implement runway safety areas. runway safety area enhancements -- are enhancements of cleared and gray areas at the end of runways, meant to minimize damage to passengers and aircraft in the case that the aircraft travel beyond the runway service area. in 2005, the faa prepared an improvement plan which mandated all commercial airports that do not have the ability to accommodate the 1,000 feet beyond the end of each run away, install and engineered arresting system by december 31, 2015 of the airport's four runways, the staff was able to look at a variety of options and was able to modify our two longer runways, in order to achieve the 1,000 feet safety distance.

however, our two shorter runways, 1l, 19r, are bordered by the 101 and san francisco bay. in this case, we were not able to provide the space required, so now we are using a credible concrete material at the end of each of the shorter runways. the airport is requesting a waiver of the competitive bid requirements in order to enter into a $420,000 contract with engineered arrested systems corporations to design the material arresting system at the end of the shorter runways. they are the only company that the faa has approved to provide this material. additionally, because the use information provided by airport staff in order to design the system, such as type of aircraft, volume, a number of landings, and are not able to verify this data independently,

they have proposed rise indemnification language to limit the responsibility for any problems that result from their 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