michael and steve, as well as the mayor's office. because this program is fairly early in its process, there is definitely more study that can be done on looking at the impact of the feed development program. we have not definitively said come to a conclusion about the impact. we will have to feel that out anyway. more study needs to be done looking at this time of which buildings in which developers are taking advantage of the program. clearly, when we forgo the money at the mayor's office, it came at a worse time.

the time when we had cuts at the whole program and there was a great uncertainty and was making loans. we are not going to stand up here and say that that did not have the impact, because it came at the worst possible time in terms of our resources pulling forward. to the extent that we have sort of weathered two years' worth of deferrals, there are projects that have had been -- that have made it down and on the deferrals -- downpayment on the deferrals that may be coming back to make the 85% payment, and i think we are in agreement

that the revenue line has not only shifted to the right by two years, but it does increase based upon the incremental feet. at this point, we are not prepared to either -- we need more time to look at how this whole question of feed deferral and other incentives fit into the larger picture of what this administration might be doing on affordable housing and housing production over all. as supervisors are well aware, we are working on trying to come up with the proposed housing trust fund. the housing trust fund and the exclusionary tactics, all of those things must be seen together to look at our overall picture for the market rate and

affordable housing production. as we come to some resolution on the house in line, moving along the inclusion very effects on the business committee, we will have a much better understanding on how any program might fit into the administration policies going forward. supervisor wiener: thank you. so, ultimately and presumably would be collecting them all? >> correct,sd plus interest defense -- plus interest. correct, plus interest. supervisor wiener: not having that under some circumstances, that is less realistic in the long run?

>> the economic argument for the fee is two things. housing will increase the revenue force and what we call traditional affordable housing subsidies based upon the fact that we have the interest on the deferred feet. the other item that might be spoken of was the stimulative effect of encouraging development at the time on the margin, being able to defer affordable housing with approximated differences on the go, no go decision. >> in terms of the site permit and occupancy? >> 18 to 24 months. supervisor wiener: but the timing and of the ordinance was enacted by a site permit?

>> yes. the original fee program, 100% of the fee is due at the end of the permit. it shifted to the first construction permit and file certificate of occupancy. supervisor wiener: let's say that from the moment it was enacted one decade ago, eventually over time there is a certain cash flow and read them of when the fees are coming in. if you work on it over time, presumably in the and it would not matter, the same amount would be coming in and it would flow on a similar timetable. >> clearly, if the program had

been in place when it was adopted originally, that's where it would be at this point. covering what we would not have gotten under the regional program. supervisor wiener: the upside of having the site permit is the construction make the investments earlier. the potential downside is for the projects where you have to wind up refunding them. can you give me a sense for how often that occurs? also, how much later do you typically wind up refunding? >> the fees that we have refunded, to my knowledge, were under extremely unusual circumstances. i do not recall it happening

before. did we actually have to refund any fees? [inaudible] those were the only four and they were dealt with in the boom and bust cycle of real-estate development, getting into the ground, entitlement, with the developer making the decision that they had missed a cycle. supervisor mar: you are saying that between march and august of 2007 was a period of economic downturn that led to those? >> yes, i think that in part people were looking at what was happening in the market and trying to predict if there would be a real estate bust.

there for supporting the investment. supervisor wiener: there is always the risk that the project? happen or fall apart. so, when you get particularly into a major project that is paying a very significant feat, the money comes in and how does -- how do they make sure when you repay that money, one year later, having to fend it -- how do you defend that? >> we have a process internally we're basically they will have the trigger on whether to release money from a particular

account where we are never in the situation of having to take money and refund it again. of supervisor wiener: what is the trigger? >> at some point the fee is not refundable. if they move forward with, under the original program, moving forward with the first structural addendum, at that point it is not refundable and it will be spent on a project that, if it stalls for another reason, that is with fees paid. supervisor wiener: how long is that the leg, typically? >> there is nothing typical. going through the entire process in pulling a site permit is different from getting all of your financing in place.

>> that sounds a little bit like a deferral. -- supervisor wiener: that sounds a bit like a deferral. >> it is a situation where moat would have the fees and they would be placed with the treasurer's office and invested. we would be holding all the fees. supervisor wiener: you would have it in hand, but it would not be stimulative to the developer? >> it would not be, perce, but we would proceed as soon as the developer pulled the permit that may defeat not refundable. supervisor wiener: to be clear, all the money is coming in. it is a timing issue, here?

believe me, i represent -- i understand the area and the infrastructure needs. i would love to be able to have that money immediately to do the work that we want to do, but i have also always been under the impression that that money will come in in we will be able to do the work. >> that money will definitely come in, once they have chosen feed deferral. they are in the process of pulling their first construction permit. they are going to go forward with this development. because the program is so new, we have never had a situation where the developer basically paid the down payment and went out of business in the middle of the construction. i do not know if there are

provisions for indemnifying the city of that deal or not. again, we have never had that situation. supervisor wiener: if we know that a certain fee is coming in and we know we will use the dawn, is there anything stopping the community or the city from planting their interest on getting ready understanding that that a quarter million is going to come in -- we do not have to sit around and do nothing until the fee comes in and the >> part of it depends on our financing partners. we do not want to be in the -- he comes in? >> part of it depends on our financing partners. we do not want to not have the money in hand. so, it does the leg us in some respects. we do not want to actually

execute a document of affordable housing borrowers where they are reliant on it in the lending institutions and investors or all relying on it until the money is in hand. in that respect it would delay it until the time we actually received the fee. we could plan for it by observing the process of development without actually executing or proving that mum until the money was in hand. supervisor wiener: within your purview, you could do even more significant planning, understanding the fee of transit improvements in safety improvements. >> perhaps. supervisor mar: i just wanted to thank you and mr. yan ni and

staff for the presentations. this with the use me a handle on how we spark small to large developments, delayed for two years, making me feel more secure that the money will come in. i have similar concerns over the need for infrastructure and below market rate construction. mr. lee, you are saying that you do not think -- it is not conclusive, the impact on the unit's production based on the feed the furlough program. understanding that if it is a disincentive -- >> exactly. we value the on site p.m. areb -- mr's as part of the on site

portable housing production. they are a part of getting the units quicker. you do not have to try to leverage the additional sources. at the same time, we were not quite sure if this program created extra incentive for people to be out where they otherwise would have done on site development. there are all kinds of construction tides and maybe the notion of luxury housing regardless of the structure might be sort of the delineating factor on whether the developer ' comes out or not. those of the things i am trying to take a look at.

that kind of luxury of inclusion their units is built into the very high age away's. units are built into the limits of homeowners to adjust, which might change at a greater rate. as well as how any fee deferral policy or recommendation would fit into our overall housing production affordable market rate developers. supervisor mar: thank you. i wanted to thank mr. levin and mrs. e. in for the presentation. let's open this up for public comment. we received a letter from jason henderson in our records.

i know that peter and fernandez just stepped out, but i will call the cards and anyone that would like to speak, please come forward. jim, carrot, joe? thank you. it looks like we need to limit this to two minutes per person. a bell will go off with 30 seconds to go. again, i should ask you, peter, who just left the room, to someone let them know? thank you. >> good afternoon, supervisors. my first observation would be -- only in san francisco might this

measure be considered unusual or out of the ordinary. we got a call in response to the crash of 2008 and 2009, eliminating fees, reducing them is a way of increasing economic activity to save jobs. this measure in no way harms the city budgets. it is paid to the city instead of private equity firms and banks, money that stays in the city. under the old system, the city did not spend the fees because of the risk of having to refund them. it is not as though collecting them immediately resulted in spending on infrastructure. as you have just seen and discussed, they had to refund an enormous amount of fees under the old system, where a developer would pay an enormous fee burden, go away for months

or years before they could figure out what action was going to be taken. this money is the first of the table and the highest risk. this curious process helped to keep the risk adjustment rate of return very high, making all housing more affordable, incrementally. the old system was very much less favorable to small developers compared to large ones who have institutional money. if san francisco is ever going to address its increasingly dire affordability and housing problems, it must think more clearly on how they charge in these the deferral programs. supervisor mar: thank you. can fernandez come forward?

>> good afternoon, supervisors. i was not expecting to go early in the process, but let me share with you some thoughts. speaking from a housing standpoint, the deferral covers everything and we do not want to be presumptuous about the implications for sewer hookups for housing, which is the ball. there are two issues. the first is cash flow. we have heard about what it has done over the last fiscal year. the other is the policy implication for where the inflationary fever program directs its purpose. we were involved very early in the inclusion process.

the san francisco ordinance was designed to produce modern income housing and it is difficult to subsidize. this was thought to be the first step for producing actual units for moderate income families. to the extent that the deferral, as an unintended consequence, has temporary implications for whether or not a developer might choose to do on-site fee deferral, is significant. it may be a policy called in a down economy, which may have made sense. discussing this as the new norm, we would suggest that to be more cautious about it, we are not the advocacy organization that has been fundamentally organized to make sure we are not undermining the modern income program as well.

supervisor mar: based on the data from the report, does it show a disincentive to create these units in now the sample is small. i don't want to nitpick but i will say there is a 19% reduction in costs. it is a policy tradeoff.

good afternoon. to follow on the issue of moderate income housing, there were large projects that might be on the margins that might or might not produce that housing. 199 north montgomery, 88 townsend provided 13. 77 [unintelligible] provided ten. that is 10 to 120% that might not be produced.

i wanted to speak about the impacts on neighborhoods. i was wroking on the eastern neighborhood. we wanted complete neighborhood. the fee would create the infrastructure. it is beling delay because of the fee deferral program. we should be able to move forward. we started this long process of prioritization, making these lists without knowing what

money. there is an incentive to move forward. we have prioritized this. >> you worked on infractructre. was there also discussion on transportation >> the priority area is infrastructure. there other pieces like childcare. the other mnoey is deferred. in market it is $1 million.

we made a decision about a park, that was a year ago. >> once the financing is available, will you come back to the table? we coulud have started planning. the fees is a mitigation for the impacts. you want the park on its way. it is in the pipeline. supervisioor mar; i will call some names.

>> good afternoon. i am with panoramic interests. i wanted to speak about a smaller project that is under construction that benefited from the fee deferral. we have 22%. there is a 3700 square foot lot. we received fee deferrals for the eastern neighborhood fees and it was beneficial. we do not have the deep

pockets. it was a benefit not to raise extra money. we can pay for the fees and they are more affordable. it helped get our project and helped it happen. supervisor mar: thank you. >> good day. i am with the residential builders. these three or four years were the worst i have seen in construction. i have been building for over 35 years, any help would be

appreciated. we have been in the doldrums. you are not getting the fees. anything to give us incentive to build again would be greatly appreciated. thank you. supervisor mar: it does work if you put it in the screen. >> i am from the residential builders. i would like to take you back to march. there was a rally on the stops of city