positions. last is a non-recurring grants, one time grant. every year, the department and applies for and received grants from the state government, federal government, and foundations to support new and existing initiatives. the total for 12-13 to date is it to quit $1 million we have raised in non-recurring grants. i want to back up to one slide that i skipped over. i wanted to mention -- this is our budget broken down by program area where you will see line items for the zero waste and toxins and many other program areas. our two largest program areas are zero ways and toxics and energy and climate. i'm sorry i skipped over that periot.

what i have just outlined supports about 85% of our positions. the one variable source of funding supports 12.9 positions which represents about 11.5% of our funding. the department does need to raise about $1.5 million annually to support these positions. just to give a sense of the track record, in fiscal 2010- 2011, we raised [unintelligible] and to date, we have raised about $1.8 million in new grants. just this week, we learned our department received a $400,000

federal grant for our brownfield work. i was asked to address creation of jobs and our program areas help small businesses so i want to spend a moment talking about that. most of the programs not only help small and medium-sized businesses but helped to create jobs. one of the best examples we have is our energy watch program outlined on this slide. over the past three years, the san francisco energy watch program, a program where our auditors work with small businesses to provide free energy audits. once they take action, they are able to save money on their energy bill and reduce carbon emissions. this has saved over 4000 commercial and multifamily properties an average of $4,500 in annual utility bills and

reduced carbon emissions by 40,000 tons. this cycle of having programs that benefit jobs and the economy and help our environment does repeat itself multiple times. for instance, are commercial waste program, 4600 businesses have been visited. businesses are saving 50% on garbage bills which helps the bottom line. as they comply with composting laws, they are able to see a reduction in their garbage bill which helps their bottom line. we have a number of retrofit programs and home improvement programs which help to stimulate the market and put contractors back to work, working in homes and commercial buildings. i was asked to talk about our job training program.

we have a program called "environment now." is our green jobs training program. there are currently 18 team members throughout san francisco and our core to the outreach effort. their activity is extensive. they do monitoring, recycling, composting, knocking on doors to promote energy efficiency, talking with small-business owners of reducing energy use and bills, and tabling at fairs and festivals to educate about the zero waste. as part of this program, they participate in a number of work- force training activities. that includes environmental literacy, which uses the curriculum to teach sustainability, soft and technical skills development with training focus on skills like public speaking, outreach, customer service, data collection and waste and energy

auditing. there is also a project-specific training where they learn about the many innovative environmental policies in san francisco and interagency coordination. another critical component is the on the job experience. they have done work in the residential sector on energy efficiency and zero waste and energy efficiency and toxin reduction. the progress update shows the different cohorts' we have had. we have 60 participants when the program was supported by the federal jobs now fund. in the past couple of years, we have had 18 participants. to date, 50% of graduates are placed in permanent positions elsewhere. one other thing regarding use

opportunities, there is staff dedicated to a volunteer program. annually, we employ about 30 internes and engage over 300 volunteers in department programs. most of those are folks under 24. supervisor cohen: you say 50% of the graduates have jobs. where are they being placed? >> ecology, waste auditing, they're mostly local jobs. supervisor cohen: are any of them in the department of environment? >> we do have to who are in the department of an barman. we just promoted one to a leader who is leading the environment now team. supervisor cohen: what is the

criteria that you use to evaluate will be accepted into the program? >> we work with quite a few nonprofits that do the kind of work we do in that community. we have close partnerships with goodwill, the san francisco conservation corps, we work with a lot of development programs where they have maybe six or eight week program and provide an opportunity for participants to do a two-year stint with us. it's a much longer opportunity. we work with a lot of partners and that's the main way we have been recruiting. >>supervisor cohen: these are paid positions? >> yes. i believe the hourly rate is $14 an hour. supervisor cohen: this is 18-24? >> not all of them, but many of

them. supervisor cohen: is there an age limit? >> there is not an age limit. the department of the environment has 30 staff whose primary responsibility is an outreach. 90% of our outreach staff are bilingual. they speak cantonese, mandarin, spanish and other language fluently. they conduct grass-roots outrage to residents and businesses that are strategic and it focused on environmental behavior change. a key tactic for the program and department is to deploy the multi-lingual staff in business corridors of the highest need throughout san francisco. in addition to bilingual staff, we produce a wide variety of educational material in different languages. all of our commercial programs have an outreach materials and

languages other than english. there is one example for our fluorescent lighting program. there are many other examples of materials in other languages. shifting gears, i would like to talk about our lease and why we are planning to move. you have before you resolution asking the budget and finance committee to approve a lease for the department of environment to move to 1455 market. currently, the department of the environment is located in two spaces -- 11 growth where we have four floors as well as 401 van ness where we have 30 staff. that is a city property. at that location, staff work with no access to the shared drive for the department of environment and have no centralized phone system. being in two locations as you can imagine makes communication and coordination quite difficult and efficient at times.

other factors driving our need to move is the lease at 11 growth expires on may 31, next week. real estate has worked us to have a hold over least the -- holdover least through november 1, at which time our red will go up 25%. -- rand will go up 25% in allocation. -- rand will go up 25¢ -- 25% in that location. we are very crowded where we are and one manager has an office in a closet. that is actually true. we have grown from six full-time positions the 2006 to 115 full- time positions in 2012. it is a 109% increase over six

years. over the past 18 months, we have been working with real estate to find suitable places to be located. we have learned -- looked from market street all the way to embarcadero as well as van nuys and selma. the main criteria has been access to city hall, public transit, as well as a location for the public. of course, something that can fit within our budget and it's consistent with market rates and with a priority to put all our staff in one location. realistic and the department of the and armin have been working with hudson properties on the proposed lease at 1455 market. we have completed this negotiation process on the base lease and we have a mutually

agreed upon document ready for signature appeared on this side are the favorable terms included in that base lease. these terms include the 24,440 square feet of space. the term would be seven years with the option to renew. the the baseline rent will increase annually by $1. and the landlord has -- has included an allowance for renovations to the space. this is a shelf space that needs to be led out. right now, real-estate does

project the buildout cost is too -- is likely to be $75 per square foot. additional costs will be covered by in-kind or cash donations and may be amortized if necessary. the department offered us the opportunity to borrow at a rate of $10 per square foot in order to cover the costs. the way the lease is described, we will only exercise that option if the upcoming funding efforts did not pan out the way we anticipate a well. we currently have quite a few companies that do work in green buildings that are interested in either providing free or at- crossed services and technologies to the department of environment office to be negotiated with the space in the city. supervisor avalos: are any of those companies aware of the total costs it will take to build up? >> we have not gotten to that stage.

most of the companies are waiting to see a final lease and then we can take it to that next level. if i may, i would like to bring out director of real-estate john update, to talk about conditions of the lease. >> thank you, john updike, acting director of real estate. you have seen previous issues of finance relative to the budget. their comparables to those members on the screen before you now. this is considerably below market rates that we think are actually in the mid 30's to the mid 40's, moving very quickly, unfortunately, in this rapidly changing civic center market. as you average over time the

cost for this particular location, it is on average a $30 per square foot rate over a seven-year term. that is a favorable position for the city to be in. and the tenant improvement amount is equivalent or slightly better than what the market is indicating. i will be happy to answer any questions that you might have about the lease proposal itself. chairperson chu: supervisor kim? supervisor kim: i'm happy to see the amount -- immense amount of work that has gone into finding the space that will allow the organization to be in one space, but together they given the market conditions. my question was actually on the tenant improvement. if your asset up to about budgets, i'm wondering what the budget with the like if you only had $61 per square foot, and what it would look like you at $75 per square foot.

>> we have not gotten to the point of setting up those budgets yet. it is a bit of a chicken and egg situation where without a signed lease we have not been able to engage a contractor to give us a cost estimate. but i will tell you the $61 we know is going to go to the basic infrastructure that we will need regardless. the chp systems, the lighting, the wiring for computer and phone systems, the preliminary architectural design that the building's architect has done for us, which does include a core for private offices for senior staff as well as the conference room. if we cannot for some reason fund up to the $75, we may have to adjust the architectural design so that we have less private space. that would make us look more like some of the many tech companies that have much more open collaborative environment, which we tend to want anyway. we think that is where some of the trade-offs might be, in the construction costs.

supervisor kim: i know i asked esther -- yesterday what the comparable costs were at this site. have you as other agencies to get a sense of what this cost is? >> that is somewhat still in flux for final numbers, but this is very comparable. we are at about 10% of what the transportation authority is for their space. the space they have selected is slightly different in terms of the initial build-out. it is not exactly an apple for apple comparison. but it is closed and their needs are similar as well. supervisor kim: thank you. >> i just have two final slides. one of them is regarding lead certification. as is named for the green city

index, we do think it is necessary for us to lead by example and had a goal of approaching the platinum interior. lead stands for leadership in energy and environmental design. it is a point base system for achieving sustainable and green neighborhoods. leed provides building owners and operators a framework for identifying practical solutions for green building design, construction and operation, and maintenance. in san francisco, we have a minimum requirement in the environmental code drop -- chapter 72 reach leed goals. our leadership goal is to reach platinum, which would require 80 points or more. as you see on the side, our initial take at reaching leed platinum status in the current status right now is that we can

count on 75 points, and there are five more that are not secured. considerations for reaching leed in this interior are the hvac systems, electrical, lighting, the type of flooring, interior walls, as well as furniture. and using an existing building is consistent with overall sustainability. in sum, we have been working with real estate for 18 months to identify a location. we're very excited about this opportunity to move into one unified space that is sustainably designed. added that a highly competitive rate. we firmly believe it is a good investment for the department of the environment as well as for the city as a whole. if we delay, we could face a host of negative consequences for the department, which do in committee increased costs.

the holdover lease that has been negotiated will have a 25% increase in our rent at 11 grove starting in november. as part of these -- this hold over negotiation, the ego- centered is off the table -- eco-center is off the table soon. and we will have displaced employees, 30, that will have to relocate to to the renovation. we are requesting that the budget and finance committee approved the lease resolution with a favorable recommendation to the full board. we have a final lease negotiated, which is ready for signature, and we cannot conduct a fund-raising campaign and secure the funding sources and to lease is approved. regarding the budget, would you agree with all of the recommended cuts to our budget that the budget analysts recommend. i along with my director as well as the real-estate director are

happy to answer any questions. thank you chairperson chu: before we go to the budget analyst report, just a quick question. i do not know which allegedly were far in these budget analyst recommendations for cats. >> we are ok with them. >> madam chair, members of the committee, on the budget on page 84 of our report off -- page 8 of our report of our recommended reductions it is shown in 26 and 27, totaling $47,806 in 2012-13. these reductions would still allow an increase of 107% in the department's budget for 2012-13.

regarding the lease, we have several comments on the bottom left page -- the bottom left of page 5. the annual costs would go up by 191,000 four hundred $71, or about 39% -- $191,471 or seven -- or 39%. the real estate division estimates that the department of environment's tenant improvement will cost about $75 per square foot. and there is a funding gap of about $342,000. and the department comments that there are three possibilities,

including fund raising, to pay for that gap. we recommended on page 8 that -- and as i am understand it, there's still not a final executed a lease. we recommended a continuance to see the final executed lease as well as since the 340 two thousand dollars has -- $342,000 has not been secured, we want to see how that will be paid for. we will answer any questions. chairperson chu: colleagues, any questions about any components of it? >> we do have an executed these as of about 15 minutes ago.

it in -- executed lease as of about 50 minutes ago. it is in our hands. chairperson chu: that is good news. we are moving quickly. colleagues, if we can't i know there is an agreement with regard to the budget analyst recommendation -- if we can, i know there is an agreement with the regard to budget analyst recommendations. can we take that first? supervisor avalos: you have a final executive lease, which is good to hear. but it is impossible to approve the lease separate from the improvements. that is where we do not have certainty about how we will cover those costs. to what extent are you able to move in without the tenant improvements come off or is

there movement in that area? >> if i can clarify on the execution of a lease, it is executed by the landlord delivered to the city pending the board authorizing it. just to clarify. the good question about bifurcating the base lease from the tenant package. the challenge that we have is that for the project to move forward and our timeline to be met, we need to engage in design and construction services team from hudson pacific. the ownership needs to have confidence that the tenant improvement package is something that is approved as well by their tenants before moving forward. it is difficult to do one without the other and not have a serious schedule impact. we would be on hold taking the design to the next level to price this and get it into construction. supervisor kim: one other

recommendation i would make is that we would be happy to come back to the board -- >> one other recommendation i would make is that we would be happy to come back to the board to clarify improvements. we know that we have the $61. we can hit the ground running on a fund-raising campaign. i would be happy to come back and report to this committee or to the full board about how things are going, or at a time certain to provide more information. but as the director said, they are entering the plea linked. -- a intrinsically linked. supervisor kim: i do not feel comfortable with approving tenant improvements at the $75 per square foot. i think we either should have two architectural plans going forward, or you should commit to the plan once the fund -- the money is fund raised.

but i do not feel comfortable with the potential alternative, which is increased rent, barred and amortized which seems to cover what seemed to be not necessarily tenant improvements. but i feel comfortable with the lease as a whole. i'm happy to see the work that way into it. i'm trying to figure out how we can move forward on this with what the property owner has committed to for tenant improvements. >> what we're looking for is approval from the budget and finance committee to borrow the funds from the property manager, if necessary, for the extra dollars. we do not intend to exercise that unless absolutely necessary. we did try to put the language in the least that is not something that we plan to use. if we do have to execute it, if

worst-case scenario happened and we actually do need to borrow the $10 from the property managers at the 8% rate, that would have a budget impact of about $45,000 per year that we would have more time to fund raise four. that is what we are hoping to do. we're hoping to get the budget approval to exercise that option, but now that we are taking the approach to backfill the money that we think we will need to fill that out. chairperson chu: we have to take a break and then we can take public comment before we act on the item in any case. perhaps, we can do is go on to recess for half an hour and then return at 12:45 p.m. and then in the ensuing time, the department of environment can work with us to see what would be a good solution we are not sure whether it is necessary to have that additional $300,000 in additional improvements. i think there is a lack of desire to want to see it

amortized over the rent. and to see it fund raised a few years down the line to pay for the amortization of improvements from a few years ago, i think he will have a harder time fund- raising for it than you would in the beginning. let's have a quick conversation offline about that and then we can decide on the item later. colleagues, if we can, we have already taken the recommendations from the budget analyst with agreement. withh