the developer had already approached the port in 2006 and 2007 about combining the property. we told them we could not do this directly. at which time, to create -- we went back to our advisory group and we created a subcommittee to come up with policies and procedures based on independent community-based goals for the project. we proceeded on an rfp process outside of the developer. president chiu: i'm not sure if you were involved in the communications here, but from what i have been able to tell,

it covers parking studies, easements and rights of ways, construction cost estimates, the types of information that would be relevant for an rfp. we have been advised in the past of the city attorney's offices of instances where contracts are entered into, but because of the undue influence, contracts have been declared void. i don't think it's necessary for us to get into. but from my perspective, what i learned this, it was troubling. >> that concludes my presentation and taught me and ports that are available for any further questions.

supervisor chu: thank you. if there are no further questions, i would like to proceed to the budget analyst report. >> good morning. what is before you today in terms of decisions are the purchase and sale agreement of the sea wall lot three under 51, the trust's exchange that would remain seawall lot 351, a 66- year lease for the public open space between the developer and the port and a maintenance agreement between the port and developer which the developer would commit to maintaining the open space improvement. also before you is the intent to form an ifd, a project area that was formally approved and discussed here. the actual funding and how the

money in -- how the money would accrue to the general fund is not before you. that is a board of supervisors' decision. the other point was brought which is this just involves public property, but there is an intent for the poor to come back and include the private portion at some future date. we have very different testament on the fiscal benefit to the city from the port says. our numbers are much more conservative. we give the number of $63 million. there are some areas of agreement -- president chiu: $63 million compared to the $144 million which the developer says is the net present value? >> that's correct. the differences are we included numbers we felt were validated that represented to us at that

time the report went out. we did not actually consider them to be a public benefit in the same way included in the port estimate. there is one no. i think we what add to today's discussion and that is the transfer taxes at time of the sale. that's not something that was included in our report. they give an estimate of $4 million. we do not have the documentation on that estimate that there will be transfer taxes we did not include in our report. another number that is different is the $3.6 million for the maintenance of the park which we addressed in our report but do not have a number. my understanding is that would actually be funded by the condominium owners through the community facilities district. our recommendation, unless you ought to go into more detail on

our estimates, the recommendations are -- president chiu: $63 million out of $144 million, that's about 45% of the benefits we were told the port we were getting. those are the only benefits you've been able to document at this point. >> the differences in the numbers, if you want to go through that, they include transfer taxes, which we did not. they include permitting koses -- permitting costs which we did not include because this the costs can be subtracted from that. in terms of the revenue that would be generated, we use a different calculation and a different time to calculate those revenues. on port payments of 14 $20 million, we agreed to those numbers but subtract out lost revenues from future parking

that would have accrued. the $12 million -- there are a couple of differences there. we are working off the appraised value and in our discussions this morning, there is a small strip of land that was not included in the appraisal. we have no way to verify the value of that land. there is not an appraisal on that. the other piece of the $12 million is there is an exchange going on. there is city property developer would be receiving, $12 million is not a net value. the cost of improvements to park lands, they say $12.7 million. we had understood it was $8 million. it has been an increase in that sense the time we submitted a report, but we don't have any specific validation on that number coming from the developer.

we don't have any other documentation on it. we don't necessarily agree that there should be a parking subsidy. we have not seen those numbers. my understanding is they're coming from the developer. this is the first we have heard of it but we don't think that would be a subsidy or benefit to the city. president chiu: in other works, the fact the developers spending money to build a parking lot that is larger than many of us would want and is claiming somehow that's a value to the city if he is not being reimbursed to that, you are saying that should not be included as part of the benefits because we have not done it that way in the past? >> we don't have any documentation of the costs are, what the revenues would be or that or be a difference. finally, we simply don't believe a private club would be included as a public benefit. those are the major areas of differences in our numbers. recommendations on page 8.

we have two recommendations to amend the proposed ordinance. one is under the agreement, the developer would developed a restaurant cafe, retail building on the public open space, and enter into a ground lease with the port and the port would receive 15% of the income from that property, but there is no minimum annual guarantee. we recommended amending the resolution to go back and negotiate a minimum annual guaranteed. this would be standard in port lease. as the agreement now stands, the port says the developer would pay the port 100 to $7,000 for lost revenues -- $150,000 for the three-year construction time frame of the development. we think that number is it too low and recommend it increased by $73,000 to make the porthole

in terms of what we estimate the revenue lost to be. we have another policy issue that has been discussed here. the development agreement which is not before the board assumes the port would reimburse the developer $5 million for the public improvements in the open space. our recommendation is in fact that the developer pay for those costs and that not be from the ifd. the board has not approved a plan for this ifd. this is consistent with state law which allows and jurisdiction to provide public benefits for the conditional use and the right to develop and proceed with the development process. president chiu: i want to follow up on some of the concerns

you've raised. thank you for your analysis. i absolutely agree that the $5 million the port is paying to the developer to provide the so- called community benefit back to the city has never been sent to me. colleagues, i think that's something we need to think about whether it's appropriate as part of the steel. your second policy consideration which i want to review on page 22, affect the city will receive limited financial benefits beyond that required by statute pavement, i think that needs to be underscored as budget analysts point out, the majority of these fees are required by statute. there has been a suggestion that somehow this project is very generous to the city and i would just point out that they are by and large doing what they're required to do despite the fact is going to entail the most expensive condos the city has seen. they have been discussions around affordable housing and whether that's enough for -- an

appropriate level and i would submit, colleagues, we need to think hard about fact we are being provided the equivalent of 2.3% of the overall project value in affordable housing fees. the last thing i want to mention is whether the transfer fee is a transfer tax. if you remember, a number of years ago, we had this discussion at the board about whether or not we should consider transfer fees of this type in prior legislation we considered. one of the main reasons we did not move toward what this so- called transfer fee or transfer tax was legal analysis that suggested if we were to lock down these transfer fees, later down the line, when the property was transferred, it could be quite easy for a new property and owner to sue the city, to essentially get out of the obligation to pay that transfer fee. this idea that the transfer fees

are going to accrue to the city, i am concerned about. part of my concern has to do with the partner of this project, the golden gateway. for those of you who may have read the san francisco weekly article, the golden gateway is a silent partner in this transaction. they have been able to get away with not paying the city anywhere from $25 million to $30 million of back taxes related to what they suggested were not transactions that occurred, but what any plain reading of the statute would suggest for transactions. essentially, these are financial partners to have been able to escape paying taxes in the past. my concern is even though we have not change the transfer fee to trigger was the second sale, if we are not having a transfer tax or fee applied for sale, we are not able to record that transaction costs. which means later down the line, we may never see the transfer

fees or transfer taxes we're talking about here. i just want to thank the budget analyst for raising this issue. it is something that has concerned me and i thought was interesting support staff's only example when this has been done before involved the north star result -- north star resort at lake tahoe. it's a question that is still of concern to me and i would love to your other perspectives on this, but i think it's something we have to think about. supervisor chu: to the port, having heard from the budget analyst and your analyst -- and your perspective, the number is -- the numbers of very quite significantly. it's $144 million -- you said it was about $63 million according to the budget analyst. there are a number of reasons why there is a discrepancy and i want to be very careful and walk through them because this does the public a disservice if we say one is right or the other.

we need to understand why it is they are different. if we could walk three summary of the public benefits you have laid out in your spreadsheet and let's go through them and make sure we understand why it is the port is saying one number and the budget analyst says another. i think president chiu has laid this out but i would like to be on public record. if you could walk us through beginning with the inclusion rehousing fee, you have about $11 million. the budget analyst roughly has the same level, correct? there's no disagreement there. with regard to other city fees and taxes, you have laid out $9 million. the budget analyst only has $1 million. >> i believe they lined out the other impact fees. >> we made our table a little differently than the port dead.

-- than the port did. we came up with a similar number in terms of the development impact fees but affordable housing, under the $9 million, the impact fees and taxes, we had about $1 million with housing linkage and impact fees under that. there is another $4 million which is not in our report, but we agree should be there. there's another $4 million of permitting fees to the city. permitting fees are associated with city costs and we did not include that number. supervisor chu: the differences, according to your chart, you have $4 million associated with permits and -- >> our numbers are broken out a little differently. we would say about $5 million for other impact fees other than

affordable housing. supervisor chu: the area where you differ is on terms of permits that would come to fund the department, but you believe is associated with the work, so you are not counting it? payment to the ports and tax increments -- it looks like the increments is just a matter of the time used for your calculation. 45 years as opposed to 30 years. there's not necessarily a disagreement with the numbers as there is the time which are counting. the port is making that assertion over the life of the ifd, which is 45 years and the budget analysis shows 30 years. why did you choose to 30 years? >> that was the initial time provided by the port. 45 years did not match any other estimates we were provided. we had talked about retaining the 30-year time frame and we were concerned when we saw the number because it went back to

an earlier discussion which we have agreed on being appropriate. supervisor chu: on the payment to port, it looks like a discrepancy -- can you explain that? >> we subtracted out what we consider to be future lost revenues at sea wall lot 351. supervisor chu: the value of the park lands? we have heard consistently from the port it's worth $12 million, but the budget analysts has $8 million? >> aide was the -- $8 million was the appraised value we are told there was a strip of land, about 9000 scripps -- 9000 square feet. we have no way to calculate that number. this does not account for the $7 million loss that would be transferred to the developer.

chairperson chu: the budget analyst recognizes there was a strip of land and did not have a parade -- an appraisal with it, so you did not include that. and going down to the park lands with the difference between the ports numbers, what is the difference there? >> i believe, you're talking about the difference between the six multimillion-dollar sandy $12 million for the improvement -- $16 million and the $12 million for the improvement? >chairperson chu: know. >> the project costs are the best that we could come up with in the discussions. that is the basis of our review.

chairperson chu: so, it sounds like an earlier version or a preliminary estimate versus the later estimate. that the discrepancy that we are seeing? >> correct. chairperson chu: in terms of the ongoing maintenance component, you have laid out very clearly that it is about $100,000 or more for park maintenance. that is the value, but it is not covered in the budget analyst report? >> we did not have the information at the time. we talked about the maintenance agreement and that the developer would have that responsibility. these will be paid for by the consumer financial responsibility district. but we did not have that at the time. chairperson chu: and necessity for the garage parking the, the budget analyst did not have that counted in the benefits, but for

you, you have about $60 million. >> that is correct. given the fact that it is largely for filling our contractual obligations to provide parking in this area, we thought it was appropriate for consideration of this committee and the board. chairperson chu: and if you were not to fulfill your contractual obligations through this, you would still have 150 parking spaces + the 175 contractually obligated parking spaces that you would not be able to fill. what would be poured be doing to fulfill that otherwise -- what with the port be doing to fill that otherwise? >> we would have to continue parking over water in its vicinity, or we would have to construct similar facilities at a similar cross. >> and i know that supervisor

chiu spoke to the fact that he does not necessarily see the public parking garage at a public benefit. i do think there is a need for public parking spaces and i do think there's a benefit for the public for it. >> specifically in your district. i anders and the difference between the budget and the analyst -- i understand the difference between the budget and the analyst report. but it does sound like that is a public verses private facility, correct? >> correct. >> thank you. supervisor chiu, did you have additional questions? brecht's president chiu: unfortunately -- president chiu: unfortunately i do have a speaking engagement that i committed to some time ago, so i

will be going. i want to thank my colleagues for your consideration and the city staff and everyone from the public involved. gregg's thank you, president chiu. to the -- chairperson chu: thank you president chiu. there were ongoing items that were not necessarily captured in your report, i believe. >> they are calculated on page 18. chairperson chu: but they are not calculated in the 144 vs the 63. you are capturing that separately? rex i think we're talking about the $14 million -- >> i think we are talking about the $14 million that they have their calculations. we calculate $12.4 million. you can see it on at page 18 of our report.

the one time $1.3 million. the revenue from the 66-year ground lease. subtracting out from that would be the revenue numbers. that is a different spirit chairperson chu: i wonder if the port might be able -- that is the difference. chairperson chu: i wonder if the port might be able to clarify the contract different. can you speak to that? >> there are a number of examples, specifically the bart land that has been approved. i do not think it's a unique or new mechanism.

it has been considered since the last time the board looked at this. with that, with the city attorney like to add any legal announcements? rex madam chair, a deputy city attorney cheryl adams. we do not consider the transfer teach -- transfer fee to be a tax. we consider it to be enforceable. it is part of the transaction and a term of the sale. chairperson chu: supervisor chu, are you on the roster? supervisor kim? supervisor kim: i think it is a little disingenuous to include a private club as a part of a public benefit of the value. i would disagree with including that in the public's memory because it is not open to the public.

putting the $12 million value should not be included, because we're also giving the value of a parcel that we are exchanging. >> if i may speak to that, supervisor kim, first of all, i agree with you that this is a gray area. the $12 million of improvements -- not land, but improvements to the facility for a new poll, they thought it was germane. maybe it should be put outside of the overall public benefits, but is still important to the area. some of the other differences are almost stylistically in terms of net verses growth analysis. you could say that i was trying to say that we are going -- for

growing $7.3 million of land value. -- foregoing $7.3 million of land value. in turn, the items not included, you could see that the 63 bases of profit for the public. that is pure public. and we have some disagreement about certain items that should be considered. >> i want to bring up what could potentially be a benefit to this private -- private recreation space. are there ways that we can have some public benefit in terms of recreational uses that are used by the city? what is being proposed is a summing pull. i think we have roughly nine or

10 swimming pools provided by the city. what is the gap that is going on here? i know parks and rekha -- rec and park's could not be here today, but they said a half 1400 kids on a waiting list for swimming lessons because the number of pools are limited. is there any commitment at this point either from golden gate or the developer in terms of what we can give back to the city in terms of this being a new swimming pool that is built in? is there any way for it the use who want to get a swimming lessons? >> this has been an issue under discussion between the developer and rec and park. i would like to refer to my private partner for discussion. -- a d for two my private

partner for discussion. but -- i would like to defer to my private partner for discussion. >> in response, we would like to clarify we are not partners with the seller of this land. and we are not partners with the others. we are happy to accommodate the request. we will contact the seller and the residual owner and the athletic club. it is a very good idea of something we can do chairperson chu: i do think that golden gate is a beneficiary of this as well prepared -- as well. we do have 1400 kids that are on a waiting list for swimming

lessons. maybe we can figure out how to accommodate that gap with efforts going forward. i would like to see that as part of this deal. >> we will get back to you. chairperson chu: thank you. my second question was on the two other recommendations brought output by our budget analysts. they were the request for the port to negotiate the minimum annual guaranteed by which is required for other agreements between the port and the developer, and the second agreement of money for the lost parking revenue. i'm not sure who can address that, but i think those are valid recommendations that have been brought up from budget analysis. i'm not sure if there is a response to that recommendation clacks we concur