special enough that we need to give them special protection to make sure it all go to safe routes. commissioner avalos: thank you. next speaker please. >> when the young lady spoke about equity, we had everybody jumping and asking questions because this city does not like to hear the truth. now, if in the southeast sector, which is the last frontier, we know there is a high incidence of cancer, asthma, and other chronic diseases. it is a requirement -- i will push for this at the mtc. i will push for this at a congressional hearing. you folks, if you dare to build so-called affordable housing on contaminated soil, and in an area where the bay area air

quality management district daily shows a report in excess of asbestos structures, this has to be reflected in our decision making. now, there are some agencies, because they are governed by state laws, which you have not read, and which the san francisco county transportation authority thinks it can hoodwink people in the southeast sector. we will bring them forward. discretion of equity has to be discussed in the community itself. city hall can discuss it and make some policies and think everything is ok, but we need to go to the community so that we can tell them exactly over a 20- year period how we are going to address quality of life issues. we need to keep this simple. a lot has been said.

a lot havs been diatribe, verbosity. we need to keep it simple. affordable housing needs to be built in an area that addresses quality of life issues. thank you. commissioner avalos: thank you, if there are no members of the public that would like to comment, we will close public comment next item. >> item 8. recommend adoption of the fiscal year 2012/2013 transportation fund for clean air local expenditure criteria. this is an action item. >> good morning. tfca come from a registration fee on motor vehicles. of the $4 collected, 60% goes to the bay area air quality management district. as the program manager for these funds, the authority develops the program and projects for

these 40% of funds returned to san francisco, which are about $700,000 a year. part of this process includes reviewing the local expenditure criteria. project eligibility in terms of project type and cost effectiveness criteria are largely determined by the air district and by the tfca legislation. local expenditure criteria presented today are similar to those used in the past several cycles and have worked well for other tfca programs. the tfca program is generally not oversubscribed and the authority's projects have tended to fund all other projects. with that, i can take questions on the tfca project or the item in front of you. commissioner avalos: thank you for your presentation. we can go on to public comment. seeing none, public comment is closed.

colleagues, this is an action item. without objection. next item. >> >> item 9. introduction of new items. >commissioner avalos: any new items? next comment. >> public comment. >commissioner avalos: seeing none, we will close public comment. >> item 10. adjournment. commissioner avalos: we are adjourned. [horns honking] announcer: the first step to getting into college is finding someone who can help.

for the next steps, go to knowhow2.org. supervisor chu: good afternoon, welcome to the regular meeting of the budget finance committee. i am joined by supervisor avalos, we will be joined by supervisor kim shortly. sfgtv we have john ross -- do we

have announcements? >> turn off cell phones and electronic devices. documents to be included as part of the file should be submitted to the clerk. items will appear on the february 28, 2012 board of supervisors agenda unless otherwise stated. supervisor chu: item one please. >> terminal 3 boarding area between -- the city and county of santa it is acting by and through the airport commission. >> good afternoon, chair. cathy widener with san francisco airport. we are seeking a seven-year lease for a 1062 square feet of retail terminal for a news and store in terminal 3. the proposed lease is for a

competitive proposal process and has a 7 per posers. the process resulted in paradies with the highest ranking responsible proposal. this lease carries an annual rent either the greater of the percentage of gross sales that you see, or a minimum guarantee of approximately $400,000. the budget analyst austin -- office estimates they will pay -- the report also points out that we have an existing tenant that runs a similar sized news in store in terminal 3 that carries a much higher minimum annual guarantee of $577,000 a year, $177,000 less than the proposed haul before you today.

they have advised that market conditions have changed since the current higher bid was eightt years ago. it is also worth noting that the higher mag newsstand was the last bid at the airport conducted. since then, we have moved to an rfp that has a minimum annual guaranteed somewhere between 10% and 15% of the total. it eliminates a case like we have now or someone will come in and bid way above the proposed mag in order to get the space. it is worth mentioning that the other six proposals for this space, it was right in line for what was before you today. the budget analyst recommends approval and i would be happy to answer any questions you have. supervisor chu: supervisor avalos. supervisor avalos: thank you,

miss widener. just curiosity about who response to the rfp first base at the airport, how many are local business enterprises that make responses? it seems a lot of the names here on national that probably have contracts with the airport nomination. i wonder what we do to encourage local participation? >> particularly in the news and a brand, there are paradies -- those on national names, you will see at other airports. the sfo, they have a local subcontractor or a local component that as part of the request for proposal process. we waive the local factor in the overall score as well. using a request for proposal that does not plenty mag or the money as the only qualification gives us a lot more flexibility to get local folks in there.

i can get you the numbers. i know that we looked at it recently in the terminal 2 space. below ba -- the local bay area ownership was quite high, right around 70%. i can get you the numbers. supervisor avalos: that would be great for t2 and other terminals at the airport. i would love to see those numbers. you kind of touched upon the loophole -- local airports that serve the bay area. >> when we ran the numbers, we used 11 bay area counties for addresses. i am sure i can give you a narrower region if he were interested. supervisor avalos: i think it makes sense for the bay area. if you can break it down by san francisco and and and it is county, i think that will be very helpful. -- and san francisco county, i

think that will be very helpful. supervisor chu: thank you for those questions, why don't we go to the budget analyst report. >> on page four of the report, we point out -- sorry. that's good. just be happy. that was a song, right? as i was dating, we point out that this proposal requires a minimum investment by the lessee. that is $371,700 as well as the promotional fee that is an annual charge of $1 per square foot. 1062 square feet -- we also point out that based on the payment of the minimum guarantee

as she stated, $401,000 over the seven-year term of the proposed lease. the lessee would pay the airport approximately $2,870,000, and there would be cost of living adjustments on the minimum annual guaranteed. we recommend based on the competitive process that you approve this with resolution. supervisor chu: are there members of the public that wish to comment on item number one? supervisor avalos: motion to move forward with recommendations. supervisor chu: we will do that without objection. item two, please. >> authorizing the issuance of a revocable permit by the san francisco public utilities commission to union sanitary district for the improvements to the regional water supply system, otherwise known as project # cuw35302, for pipeline

numbers three and four for a term in excess of 10 years. supervisor chu: we have a representative from the puc with us. >> good afternoon, members of the board. thank you for hearing this item today. i am the project manager with the san francisco public utilities commission. the resolution before you authorizes the sfpuc to enter into long-term permit with the sanitary district to relocate as part of the seismic upgrade of the pipelines 3 and 4 project. it is one of 86 projects under the puc water system improvement program established to seismically upgrade the aging water transmission and distribution system.

this project would upgrade two pipelines, three and four in the city of fremont. an innovative pipeline system will be installed to insure the survival of one of the pipelines following an earthquake at this location. our facility is located at a place where it is in direct conflict with the sanitary district sewer lines. to eliminate this conflict, we have asked them to relocate these you relied on to ofpuc land and -- on to sfpuc land. the diagram shows the existing sewer line and pipeline system. to get you oriented, this is mission boulevard. highway 680 is down and the lower left-hand corner of the page. the two white lines that you see

here are the extent of the puc's 80-foot right of way. we also have the dashed green line that represents the sanitary district sewer line. this yellow line represents the trace of the hayward fault. we expect to see 5 feet of movement. at this location, we will install the innovative pipeline system to withstand an earthquake and continue to deliver water following an earthquake. to eliminate the conflict between the existing sewer line and the new pipeline we intend to install, which is represented by the dotted line and white boxed shaded araea, we will have the sanitation district

relocate the airline has shown. the area of work is the portion that leads us to the sfpuc lands on the top part of the page where it will go into the right of way, up, over, down, and exits the right of way. the sanitary district is concerned that the project will require another sewer line relocation to address -- relocation. to address their concern, we have agreed to cover the cost as part of this project and fully cover the relocation costs xinhua the sfpuc -- should the sfpuc require another project relocation. the permit is agreeable to the sfpuc and sanitary district. both agencies are ready to start work. thank you for your time and i

will gladly answer any questions. supervisor chu: this item does not have a budget analyst report, but this is to allow us to continue to begin the work of retrofitting or creating safer improvements to pipelines three and four. >> correct. supervisor chu: the puc is offering 76% of those costs with the school district paying the remaining 24%. is this already anticipated in the budget? >> correct, the union sanitary district. supervisor chu: ok. thank you. why don't we open this item up for public comment? are there members of the public that wish to speak on item number two? seeing none, public comment is closed. supervisor avalos: motion to move forward with recommendations. supervisor chu: that has been

seconded and we will do it without objection. >> item three. hearing to include financial of data and information on budget instructions and process for fiscal year 2012 and 2013. supervisor chu: this item as an item that we typically bring forward in order to get a budget of eight for the year. we wanted to make sure that we had the mayor's budget office come forward to talk briefly about budget instructions since we haven't yet heard those instructions. given the department are already submitted those budgets to the mayor's budget office. but we wanted to touch upon the six-month report that would come out and get an update on revenues, states news, changes and deficits, supplementals. we have a number of people presenting today. kate howard from the mayor's budget office as well as someone from the comptroller's office.

>> i'm from the comptroller's office. i will quickly walk through the salient points of the comptroller six month report that was issued on february 22. essentially, it is good news. the projected general fund and in balance for the current year is estimated at $129 million. this is $129 million more than we anticipated for the current year. revenues have improved by $122 million compared to what is projected in the budget. fortunately, it is due to economic activity increasing, improved outlook for all of our property taxes, transfer taxes, sales taxes, hotel and business taxes. we do have some uncertainty, still. the impact of the dissolution

of the redevelopment agency into the city assuming the successor agency, appeals are still backlogged and the value of the refunds are not known. there is still potential for fluctuation in general tax revenue, but we hope that future fluctuation will be to the positive. the outcome of the state's ability to investigate the in- from services program and the medical rates are pending in a lawsuit. it we might see reductions from the state in this fiscal year that we are not certain about. looking at this $129 million fund balance, we see that the city wide revenue surplus is $122 million of that amount. we need to provide a certain percentage to the baseline, including mta, parking, traffic,

so forth. it is almost $60 million. under department of operations, these are the pluses and minuses in looking at department spending, a possible $10.6 million. and changes to our reserves of $4.9 million. there was a supplemental appropriation when we issued this report pending, and it was reduced from the available balance. supervisor chu: in terms of the $15.8 million that goes from the general fund to different baselines, how much of that was themt mta portion? >> if you bear with me one moment, that is one slide further and we will show you those numbers. these are discretionary revenues, qc practically everything on this table is in the plus.

almost $20 million of additional payroll taxes and sales taxes cut by $12 million. hotel room taxes are up by almost $12 million. we have had two very positive quarters and we are back to peak hotel tax revenue. if you look at the bottom of this table, a property transfer tax, we are up to the peak of transfer tax collections. $162 million, almost $44 million more than budgeted. supervisor avalos: thank you. monique, can you talk about the real estate transfer tax change , the trends? is it the highest and property, where are we seeing the change? >> this is the highest year we are projecting. we have had fluctuations of $100 million over the last three years, it is a very volatile

revenue. increasing the rate of four properties over $5 million, we have had a number of commercial transactions tax that the higher rates. that makes up a large portion of the net increase. the recent adjustment has added, i believe it is in the order of magnitude of $30 million more. supervisor avalos: the adjustment has not presented the sale of commercial properties? >> it has definitely continued. we initially projected that there would be a lot of activity toward december of 2010, when the old rate was being changd. ed. and there was a lot of activity in december, there was much more activity in january and february when the new rate came into effect.

supervisor avalos: looking at retail rates, it looks like that space is being occupied as well? got to the payroll tax and unemployment figures are higher than we would like -- >> the payroll tax and unemployment figures are higher than we would like. the payroll tax has been increasing. the number of vacancies has also declined. you are correct that a lot of these large, commercial properties are beginning to fill up again. supervisor chu: just a quick question, in terms of the negative trends -- do we believe that these are trends that will continue to see a negative outlook? is this a momentary issue? >> the utility user's tax has been lower than projected for the third year in a row. we will need to adjust that down a little bit. i think it is relatively flat.

the motor vehicle in lieu -- i can't recall how we did in the last couple of years, but it is such a small amount of money that it is minimal to us. here is the spreadsheet and the table that shows the base line transfers, supervisor chu. then, at the lower part of the chart, 80% of parking tax being transferred to the mta with an additional $2.7 million, a total of $13 million allocation to the mta above and beyond what they expected. library baseline its $2.5 million and public education gets $300,000. supervisor chu: on the mta baseline, that will be extra $10.2 million transferred over

as a result of the better than expected news? is there a building component for the budget -- >> exactly. the property tax estimate for the budget year 12-13 will increase because of this increased space. it will grow from there. the mta will get a double bond. a bunt in the current year and additional money in the budget year as well. the department productions, this is the $10.6 million i referred to earlier -- projections, this is the $10.6 million are referred to earlier. public health is suffering significant deficits. they do have additional revenue from san francisco general and the amount of approximately $28 million. on the expenditure side, both hospitals have significant spending deficits amounting to $34 million.

we expect a supplemental appropriation to be submitted to the committee. we prefer that the health department, for the mayor and the board of supervisors to get authorization to continue to spend beyond their budget. this will be an approximate hit to the general fund of about $6.5 million if the current numbers hold. we spoke with these departments and will be meeting with them tomorrow to go over in detail. the mayor's office is working with them as well to see if there is any way of reducing the general fund allocation to the health department. this is beyond additional funding that might be proposed, that is another piece of legislation in the pipeline. the city attorney has a $3.2 million shortfall largely based on work that is being done for general fund apartments above and beyond what they had budgeted. this year, we don't believe

that the city attorney will be able to close that. of the mayor's office and the comptroller's office are working closely with the city attorney to see if there are reductions that can occur or if they can shift some of their work to the enterprise departments that have the ability to pay. supervisor avalos: when the budget was set last year, was very believe that this could have happened to the city attorney? that they were right on the cusp of viability? >> no, we did not anticipate this overage. the police department has a small revenue shortfall as does the recreation and parks department. we believe that those two may be closed over the course of the year, but we are counting teh net -- the net surplus. supervisor chu: on the city attorney, were there large cases or issues that led to the $3.2 million over spending?

>> i know a lot of it is land use issues. in the planning department, there was a significant overage in city attorney use. i don't necessarily think it represents legal cases, but rather legal advice and assistance that the city attorney is providing to departments. the departments that have a significant surplus, the human services agency has the largest surplus, almost $16 million. this is largely due to state cuts that were anticipated that did not come through to the extent that we had estimated. they had mroe general fund -- a more general fund allocation that was anticipn was anticipat. the assessor-controller probation share of also have some small surpluses --