financial advisers, if the finaf the city would issue approximately $75 million in certificates on behalf of the mta instead of the mta issuing its own $75 million in revenue bonds, the sfmta would realize debt service savings of approximately $860,000 over 30 years, about $28,000 in savings per year. our recommendations are listed on page 20, our recommendation is to propose the various changes submitted by the sfmta. and that you replace the ceqa language on pay five -- page 52 instead state and all the proposed projects have now received categorical exemptions, in accordance with ceqa requirements, that you amend the proposed requirement 11.3 0.31

to require the comptroller's office work with the sfmta to report back to the board of supervisors within six months. after the series 2012 issuance of costs and benefits of using outside financial advisers using in hass city debt management staff and sfmta's initial bonn references, you amend the 11.3 0.41 resolution to reduce to request of $160 million to issue revenue bonds by $80 million. that would be $80 million left, which would allow the mta to launch the initial a and b revenue bonds, sufficient time for deep debbie to to complete its parking garage assessment to determine the amount and party for improvements and for the controller's office to report the to the board of supervisors on the costs and benefits of the initial sfmta bond issuance and that you amend the proposed ordinance of 0.24032 place $1.6

million designated for the muni system ready replacement system project on budget finance committee reserve, pending conditions from quite -- coit. it could actually be less expensive for the city itself to issue debt, rather than for the sfmta -- rather than the mta issuing debt itself pit we urge this to be a policy decision for the boot -- board of supervisors. supervisor avalos: just a follow up on the last point. it seems like it is pretty close between if the city were to issue debt versus the mta. what are the advantages to doing it with the we are seeking to do so today? >> it is close, less than $30,000 a year difference. we feel it would be different --

important for us to establish our own credit rating and get into the credit markets, given the size of our capital needs, given the uncertain feature of federal and state funding. we foresee needing to enter the markets again. our long-term capital markets plan, we anticipate issuing debt on a periodic basis in order to bring our system into a state of repair. it is not just this one time. it is something you want to establish, the ability to do, and again, i think it is in line with the authorization of the prop a. it also keeps us out of the city's cop pool, identify an asset to pledge. given it is a small amount, it

would get us on course to having the independent ability with the board of supervisors approval to issue debt. we think it is worth in the small differential. supervisor avalos: what is the issue which you are seeking today? how does that compare to the overall debt capacity for mta? >> in terms of oour operating budget, this is less than 2%. we did establish -- and it is referenced in the budget analyst report. we did establish debt policy, and that is something we have reviewed by the comptroller's office and public finance office. i do not know offhand but the capacity is, but we will not be anywhere near any kind of policy debt capacity with this issuance. the long-term debt service is on

the order of $10 million a year, relative to hit hundred million dollars a year budget. it is a modest step for the issuance. supervisor chu: thank you. why don't we open this up for public comment. is there anyone on the public that wants to speak on these items, 5, 6, 7, 8? >> good morning, supervisors, my name is douglas yeyepp. i have lived in san francisco for 50 years. i would like to limit my comments and rivers to items 5 and 6. item five, i am opposed to the mta having the ability to issue revenue bonds. i think it is common knowledge, especially among long-term residents of san francisco, that

the mta has been deficient in doing its basic functions, so if you are deficient and cannot do the basics, why are we giving you new authority? in regards to $170 million, it is pretty obvious, given the current economic conditions, public agencies are supposed to be downsizing. $170 million seems like an awful lot of money in regards to so- called downsizing. the city can finance the debt in other ways. in my opinion, if a project is worth financing, it should be done privately, and if you cannot privately finance it, it usually brings up red flags that may be the project has certain problems, so you have to go through other means, like those participation certificates, which i consider to be a bit of a wall street

construction. anyway, in regards to the parking garage, what ever happened to those operational scandals reported by "the chronicle" and "examiner? "? perhaps you should be more focused on that. i also believe the mta needs to focus on the basics, rather than trying to expand its so-called scope of operations. thank you. supervisor chu: is there any other members of the public of wish to speak on these items? seeing none, public comment is closed. colleagues, are there any other questions? supervisor kim. supervisor kim: i know i missed a presentation, so i do not want to bring up something that may have been addressed, but one of my questions is something in

our budget and legislative analyst report, questions around the cost of using outside financial advisers versus using in-house city debt management staff. i am interested in pursuing that recommendation. hoping that you could speak to that. i know the city has spent $1.6 million for outside financial advisers in the past five years. the mta is requesting $6 million. there seems to be a big price differential. i wonder if you have any thoughts about this? >> if there is a way we can secure services more cost effectively, we would be happy to. we established a while back the as needed contract and a larger amount because at that time there was any anticipation -- and anticipation that we would be doing more than we are currently doing my understanding is the rate it in our contract is comparable, if not lower, than the city's fa rate.

we have been using them for a broader range of things. we use a contractor is close to secure -- contract vehicles to maintain the condition of the parking garages. we have only spent a fraction of that money. we do not expect to extend the full 600. we do is accept the budget analysts recommendation and would be happy to work with the comptroller's office to the money but how we are using its financial advisers, and if there is a better way to do so. supervisor chu: thank you, supervisor kim. we have heard from the part and budget analyst. we have a number of items in terms of amendments. first, i want to thank our city staff for coming together on this. this is a big deal at the mta is going forward with its own debt. for many reasons, this is something that makes sense to go

forward with. not only in terms of the savings we would see on the parking garages, in terms of new projects outlined. i think they do make sense. i am a little bit less sure about the second issuance, so i am glad the department has accepted the budget analysts recognition -- recommendation to only do the million dollars in issuance. in terms of building the mta's about the credit, the impact of issuing a city cop compared to the mta, a relatively small number at the same time and preserving them on the general fund side is something that compels me to support this. i just want to thank the department for bringing this item forward and cleaning it up. the budget analyst report did indicate there was some amendments. i would like to make a motion for that. the amendment is already reflected -- the changes are reflected in the budget analyst

report. they are pretty standard items. it lowers the principal amount to $160 million. we would again lower that further based on the budget analysts recommendation, to $80 million. additional items would be to make sure the maximum maturity and any new bond money is 30 years. that is pretty typical. we also indicate the parameter we want for refunding of bonds is a 3% savings calculated on present about the basis. that is pretty standard for our debt issuance. it also proves to form the official statement subject to final approval by the mta board and all other changes or modifications should be done in consultation with the comptroller and the office of public finance. these are pretty standard and technical items, so i hope we can accept that amendment as a whole. we have a motion to accept the amendment. without objection.

in terms of the budget analysts recommendation, they have itemized a number of different things caugh. all the proposed projects have received category exemption from the planning department. we already except no. 1, the amendment on the whole. item three, in terms of the recommendation, is to amend item six, to request their controller's office work with the mta to report back to the board within six months after it the series a and b issuance on the cost benefit analysis of using outside advisers versus using in-house city debt management staff. i think we're all in agreement with accepting that recommendation. item four we spoke to, which is to amend it down further. instead of $160 million, further down to $80 million. that would allow the department to go forward with revenue bonds but allows dpw and the mta

to come back to us for the rationale behind the second $80 million, which makes a lot of sense. finally, on item 5, to amend item seven, to place $1.6 million on reserves. this is for the new system ready replacement project, to put this on the budget and finance committee pending recommendations of coit, and that makes sense. colleague, can mix of those recommendations? >supervisor avalos: i forgot to ask one question. probably a simple answer, but that is the chart on page 6 and the line item around the river project. series a and b and then some other sources. if mr. reiskin could explain what those sources would be for the remainder of the project, which is the bulk of the project.

>> the largest project -- a chunk is federal funds. the great majority is federal funds. i do not know to what extent we have others. supervisor avalos: are these funding sources accounted for? are we looking to close any gaps? >> this will be the last piece to funding this project. supervisor chu: thank you. colleagues, we have the items before us. >> madam chair, supervisor at avalos, if you could refer to page 26 of our report, in the bottom left corner, there is a breakdown for the muni system ready replacement project for all the different funding sources. >supervisor chu: thank you for that additional information. colleagues, can we except the recommendations? without objection. colleagues, on the items to four

to the full board with recommendations, item five and 8, and to forward to the full board with recommendations as amended, items 6 and 7. can you send those out without objection? we will do that. and if i can make a request to the department to make sure that you submit all of the amended red line versions to our court by the end of the day today so that we can have it for today's meeting. 5:00. thank you. item nine. >> item 9. ordinance: 1) recognizing small business month in may 2012; 2) amending the san francisco planning and building codes to waive fees for the month of may for certain façade improvements; 3) making findings including environmental findings, findings of consistency with the general plan, and priority policies of planning code section 101.1. supervisor chu: thank you. this is an item that i have pulled together. it is a fairly simple one. it is a small business permit

fee waiver for the month of may which is all this this month. we have a number of individuals here to answer any questions. in particular, i want to thank chris from the office of small business, as well as nicole from our core management area. this is a permit fee waiver for awning replacements and installation of pedestrian-the lighting. the waivers apply only to permits issued in the month of may, which is the city's traditionally celebrated small- business month. waivers apply only to small businesses defined as 100 or fewer employees. this was a recommendation that was put to us and we have accepted. the rationale behind this is on the replacements and storefront improvements really do help to create a more vibrant commercial corridor area and encourages residents and visitors to feel welcome in the neighborhood. in terms of the rationale

behind of the best in the lighting, it is just to make sure we are improving public safety as we're moving forward. there are many layers of fees through dbi and the planning department. there are separate fees for the awning covers, replete cent of structures, and of course, if there is wording. these can add up to hundreds of dollars for most -- even the most basic science. this item is simply a fee waiver for the month of may to allow for easier movement forward of awning replacement and insulation of small or pedestrian-level lighting. the fee waiver legislation has been approved and supported by the small business commission. dbi's coded by surry counsel and the building inspection commission and plans department as well. in terms of the financial impact, we believe it will be relatively small. in the last three years, the average revenue for on a permit for dbi in the month of may was $12,000, so it is a relatively

small amount. right now, we believe there are an outstanding projects that might be coming in the month of may in the excelsior district, which would be great to have in place. in terms of outreach, which we have often heard from this committee about how it is we would try to spread the word, we would be working with office of small business and zero two d and have already translated fires in place. he hoped to work with supervisors' offices to get the word out to aren't local merchants associations. this is a time-limit proposal and i hope that my colleagues will be supportive. no presentation from the department at this time, but they are available for questions. this item also does not have a budget analyst report given the small the impact of this legislation. colleagues, if there any questions? if not, we can go to public comment. let's open this up to public comment. any members of the public at wish to speak on item 9?

>> good morning, everybody. my name is nicole. i am the corridor manager at excelsior action group. we are a community and economic development organization. we were to revitalize the corridor of mission street and the excelsior. i am here today to strongly support this fee waiver program for our small businesses in the month of may. working daily with low incomes small businesses as a court or manager, i realize they have very little working capital and for them, a facade improvement is a luxury. they do not get the sought improvements for years if not decades. the impact really shows. our commercial corridor right now is dirty, dated, and in general, has a blighted appearance. residents note this as well. in a community needs session that we conducted in october

2011, we found storefront appeared as a top concern for people in the excelsior. there are 13 businesses that will benefit directly from this program. 11 of them are enrolled in the excelsior action groups, and an additional two are enrolled in the sf shine passat improvement program. both of these programs are matching programs. even though the improvements generally come from public funds, the businesses are very much invested in their facade improvements as well. in conclusion, i very much support this and hope that we can make this happen for our businesses. thank you. supervisor chu: thank you. any other members of the public that would like to speak on item 9? seeing none, public comment is closed. supervisor kim? supervisor kim: i just want to express my support for this

resolution. i think it is important comments as we talk about supporting our small businesses, that we recognize them in more of the ways than one in the month of may. i appreciate this coming before us. in particular, not just because we are trying to support small businesses, but this will also support neighborhoods by increasing lighting and passat improvements to our neighborhoods, which i know is a big issue all across the city. so i am pleased to see this before us and am happy to support this. supervisor chu: thank you. i also wanted to provide you with an opportunity to say anything if you wanted to, chris, bill. >> i could speak briefly. on march 12, 2012, the commission voted 7-0 to recommend approval. we found waiving these fees will

serve as incentive for many businesses, especially those that operate in low profit margins, to replace these awnings and replace lighting. i did want to note this is an opportunity to offer an incentive to businesses that cannot typically qualify for tax credits or other incentives the city offers. we just wanted to reiterate our support and offered to help without reach and other assistance. supervisor chu: thank you. >> bill strong with the department of building direction. we are excited about supporting this on behalf of small businesses. we want people to have permits for improvements they are making. we think this is an excellent attempt at the program. we look forward to supporting it. thank you. supervisor chu: we have for public comment. do we have a motion to send the item forward?

we have a motion to send item forward with recommendations. i want to again thank regina and chris from dbi. without objection. thank you. item 10. >> item 10. ordinance amending the san francisco administrative code by adding chapter 14c, sections 14c.1 through 14c.3 to provide for a downward adjustment in price or upward adjustment in rating of a proposal or bid from a california benefit corporation for a competitively- solicited city contract. supervisor chu: thank you. this was an item that was before us three weeks ago at this committee. i would like to allow supervisor chu -- president chu, to say a few words. >> i want to thank all of the city staffers have worked hard since last year to get this legislation to where it is today. this legislation has probably been revised in its entirety since its original introduction. i want to thank the human rights

commission and particularly the director and her staff, who are here to say a few words on it. i want to think the small business commission that spent a number of meetings talking about this. i want to thank oca for their review of this, and i also want to thank the budget analyst. we have incorporated recommendations that are the rose has made with regard to the legislation. i want to take a moment and do a quick summary of where we are because it is different from what we had initially proposed last year. with regards to who would potentially benefits from a benefit corporation discount, we have made it clear, the lbe world will not be touched. the matter your size, if you are competing for a bid, there will not be a benefit corporation discount provided that would

potentially knock out an lbe, all things being equal. i know there were issues around contracting. we did put in an amendment to also make clear no nonprofit contractor would lose a contract to the benefit corporation that receive a discount. there were some questions raised about whether non-san francisco benefit corporations could potentially receive a discount and beat out a san francisco business that was not either and lbe or nonprofit. we have included language to insure that does not happen. at the last meeting, three weeks ago, supervisor avalos brought up the idea of the so-called chevron subsidiary issue, the possibility that a subsidiary that was a benefit corporation could still be potentially controlled by a larger parent company that was not a benefit corporation to address that

concern, we have put in language to explicitly not permit those types of subsidiaries to apply for this benefit. in addition to those changes, we have also made it clear, this is a discount program that would only apply to contracts that less than $10 million in size, because that was raised by some of our enterprise departments as a concern. colleagues, as you know, we have significantly reduced the discount size. initially, i propose a% discount. at about a 4% discount. i have also initially proposed if you were an lbe and benefit corporation, you could receive 12% of the discount. that additional 2% that lbe's receive is no longer part of the legislation. also concerns raised by the budget analyst and several of the committee members about how we ensure benefit corporations are doing the right thing,

providing the types of benefits to the world and our community that we want. we have included a number of amendments to address that. first of all, there is now a requirement that any business that is applying for this discount need to have been incorporated as a benefit corp. for at least six months preceding the application of the discount. on top of that, this legislation does not go into effect for three months, to give the agencies time to adapt to the possible use of this discount. one thing that was suggested by the budget analyst was to provide hrc with a greater role of ensuring the verification of corporate statuses. there are two additional amendments placed on this legislation to address that. hrc will have a role in not verifying the corporate state. in addition, there would promulgate regulations to insure third-party verify hours that are part of the benefit court

industry will be required -- better corporation will be required to give third-party for vacation. this is comparable to what other states have required of the benefit corporation. finally, we have included amendments to track the impact of this legislation. for the next two years, every six months, hrc, in coordination with the comptroller, will provide an evaluation of the impact of the program, and after the first two years, every year, there will be a similar evaluation done. unless there are any questions, i want to bring of the director theresa sparks to talk about the legislation from her perspective. i want to thank her and her staff for all the work she had done with this. >> good morning, supervisors. i want to thank supervisor chiu's office for the work they

have put on this. with limited staff, we have made some contributions, along with the budget analyst, which makes this a cleaner and easier ordinance to implement. the things we were worried about where the complexity of the verification and complexity of analysis of the benefit of these corporations were providing. this piece of legislation now, which we totally support, actually addresses those issues. one, is it gives thehrc the ability to contact the secretary of state's office to verify these organizations are benefit corporations in good standing, and have been for at least six months. on the back end, it gives us the ability to promulgate rules and regulations to determine the benefit and what the impact of the benefit is overall. we have determined