me they could not pressure the contractor to hire cent and cisco residents. it is a joke. i need to be put to work. everybody working there now sees on the other side of the day. no tax is being paid in cent francisco. i know this already because i am not working. supervisor chiu: thank you. are there any other members of the public that wish to speak in this public, with regards to the warriors? seeing none, public comment is closed. colleagues, unless there are any questions for discussion for city staff, what we consider this hearing to have been held and closed. with regards to the underlying resolution, we have a couple of motions to amend. collets, can we take the motion

without objection? without objection, the amendment is adopted. supervisor campos had a motion to amend. can we take that without objection? without objection, that shall be the case. mr. clark, could you read the role? >> on item 30 as amended -- supervisor olague: aye. supervisor avalos: aye. supervisor campos: aye. supervisor chiu: aye. supervisor chu: aye. supervisor cohen: aye. supervisor elsbernd: aye. supervisor farrell: aye. supervisor kim: aye. supervisor mar: aye. >> there are 11 ayes. supervisor chiu: the resolution as amended will be adopted. it could call the items related to eight washington -- that will be items 20, 21, 27, and 20, out of land use and out of budget. >> item 20 is a resolution approving a public trust

exchange, an agreement to sell a portion of seawall lot 351 in exchange for a portion of block 168-lot 50, block 171-lot 69, and block 201-lot 12, approval of lease and maintenance agreement. 21 is an amendment -- amending resolution of intention to form water from infrastructure financing district. item 27 is an ordinance amending the zoning map to change the height and bulk district classification of two areas along the drum street frontage property. item 28 is amending the general plan amendment for the washington street project. >> thank you. as you recall, in the middle of may, we considered the eir for this project. most of you know that last week, both at land use and at our budget committee, there were two hearings to consider various items related to the project approvals, which we have in

front of us. in case not every single one of you watched every single minute of those hearings, i wanted to take a moment to summarize the main points we learned in those two committees. for the record, both committees pass these items out without a recommendation. first of all, out of land use, we understand that this is a project asking for truly significant an extraordinary violence. the 62% hike increase, 200% will increase, 400% parking increase. many of us were eager to learn from the budget committee what benefits the city would receive in return for providing the developer the extraordinary entitlements that he could be provided through the project approvals today. many of us were surprised to hear from our budget analyst at our budget analyst estimates for the financial benefits to the city for this project were about $50 million less than what the

port or developer were telling us. $96 million compared to $145 million. colleagues, i hope that he would take a moment to think about this. what we were told we -- were going to be provided to us by this project was 1/3 less -- literally close to $50 million less value. in the budget analyst report, they point out that there are few financial benefits to the project -- beyond what is required by statute, and there are questions whether the transfer fee mechanism is a tax that could be deemed legal down the road. the budget also questioned why the city has to pay the developer $5 million to create open space. supervisor kim suggested and i know she worked out with the developer for the number of parking spots to be reduced. one thing i mentioned, the developer stated to was that each parking spot had a value of about $150,000, which is expensive, given that we are

essentially building a back up into a water basin -- a bath tub into a water basin right along the waterfront. i wonder if you could say a few words about your budget analyst analysis. i know you amended your statement, and provided us with an addendum. it could give us a little bit of information about your analysis and thoughts at this time. >> mr. president, members of the board, yes, as you know, the budget and finance committee did request that we go back and see if we can reconcile the differences between the port's numbers and hours. as shown in the table -- this is on the second page of our june 8, 2012 memorandum to the board of supervisors, we estimate that the net present value of financial benefits for the city are $96,301,820, and that is

$48,630,017 less than the financial benefits, estimated by the port, and if you wish, ms. campbell can clarify this offenses. supervisor chiu: that would be great. >> good afternoon. i will just follow up on what mr. rose said, which is we -- the $40 million defense, we disagreed with $34 million, but they included in financial benefits to the city that we do not believe our financial benefits. that includes $3.8 million in permit revenues, which the city departments would occur in cough, but we do not think that could be included. $2.3 million for what they consider to be the increased value.

this would be existing property, but at the same time, they are also counting the cost of improvements that would increase the value. we did not agree with any of the $15 million in parking benefits. parking is revenue-generating and did not provide anything to show that the developer's cost of constructing and maintaining the parking would exceed any revenue, and $12 million for construction does not have any public benefit. that is the $34 million they included that we do not consider public benefits. $1.9 million is work on parking revenue is that the port would

otherwise have received as maintaining it as a parking lot. $7.5 million means the actual value, and the port did not consider it a value that the developer would receive from that property. and $5 million in infrastructure, financially distinct revenues that the city under paid to a developer. that summarizes the $40 million. supervisor chiu: thank you, and a very much want to thank the budget analyst for their work on this. as you probably heard, the developer has thrown in a couple of last-minute sweeteners into this project. from my perspective, i view these as pennies into a half million dollar deal. if i could summarize a couple of them, the developer will allow 12 kits to the department to use the pool for 12 hours a week.

it is currently open seven hours a week, so allow two hours of 70 is less than 1%, not as generous as i would have hoped. you have seen the clarification letter that says that current club users will have reciprocal memberships at other facilities during the construction. i do know that mr. snow growth has repeated this obvious commitment for a number of years. certainly, as you probably saw in e-mail today, the developer has agreed that the recreation parcel will be in perpetuity, but i would point out this is not something that the developer has given up but something that the land owner has given up. given the fact that this deal is worth a significant amount of money, one of the issues that many of us have had questions about is if the city is getting inappropriate level of benefits based on the level of profits that the developer is receiving. i have circulated to all of you my understanding of what some of the financials in this project

could entail. i will summarize a couple of them. as i have stated a couple of weeks ago, the projected sales of the condos -- and this was confirmed by the developer and in our budget analyst report -- is close to half a billion dollars. we're talking $470 million that the developer hopes to get from the project. the construction costs that we know $177 million. even assuming 35% of costs on top of this, which i have been told is quite generous from real-estate developers, we're talking to low-cost for the developer of around $274 million. that would suggest a 72% return on the investment. colleagues, if you remember the lennar-hunters point project, the numbers we received suggested that project was about a 22% rate of return. this is a project that has an awful lot of money in it that we are all a bit mystified about and i still have questions

about, but i wanted to ask our budget analyst -- do you know if they port ever did it there- party analysis to determine whether the developer was receiving a fair rate of return with any kind of credible and reasonable standards? and mr. president, members of the board, supervisor chiu, we do not know. we have not been provided with that and permission. supervisor chiu: thank you. let me mention a couple of other things. first of all, the agenda item we have has hundreds of pages of documents, and i suspect that not a single one of us here have an opportunity to go through every single one of those pages, but if you did, you would realize we have not been provided all the documents that i think are relevant for analysis here. literally, many of these documents are simply the first page of documents that the port should have provided us in

total. on page 57, we just have the cover page. on page 58, we just have the cover page. on page 59, the first page of a memo to the port commission. on page 61, we have the cover page of the purchasing sales agreement. there are countless free- floating documents in the filed today, and i would suggest, colleagues, in order for us to make a truly informed decision, we ought to have all those documents. i want to ask our city attorney -- is it orthodox for us not to receive all the documents we should have in the file? i would just know that if you want to go through the file, you

will see the we do not have all of your documents in the file. i want to know that for the record, we have a court reporter here, to make it clear that we do not have all the documents that we should in front of us. i do have a couple of questions for the port. there has been a change in the number of parking spots related to the project by 50. could you explain the rationale? and how will this project be redesigned based on that? i assume the size of the parking garage may change, but there has been no indication to us as to how the change will impact the project. >> thank you. jonathan stern from the port of san francisco. director would like to be here at this stage, but he is unable, given the fact that the commission is meeting right now.

on a reduced basis, the port had been seeking waterfront for the very building waterfront area for a long time. the 255 spaces proposed by the developer we thought was a reasonable amount of parking. we have contractual obligations in the order of 175 spaces. there is additional parking demand needs created on site by users. we thought that, given the fact that the supervisor was seeking a reduction in parking, that 200 parking spaces was sufficient to meet those obligations and sufficient to serve the ferry building waterfront area. the question is -- do you? faster design, the 255-based -- 255-space garage was something that as the developer went from contextual design to design and development, was proving that those -- that level parking would only be achievable

through a pretty compact scheme, so it is not clear whether at this point it is necessary, or if it will at this point be achievable and permissible. given that the developer has redesigned at this point, that is something we will endeavor to do with the construction. supervisor chiu: one of the questions people have is whether you will simply restripe the garage to have fewer spaces, and how we know the we are talking about a garage that will house fewer cars? >> it was not clear -- 255 spaces became quite thin. it was not clear and would operate well on that basis. i think the 200-parking-space garage will be in assets of

people can pull cars in and get them out quickly. add to will be only permitted to use 200 spaces under the plan could. supervisor chiu: did the port ever get a third-party analysis on this deal of what the appropriate profit margin of to be for the developer? >> respectfully, we did not. in the sense that we have been negotiating this deal on a land comp basis or a land sale basis. i thought it would be held but on the comparisons and showed the amounts you alluded to -- i thought it would be helpful to put down the comparisons and show the amounts you alluded to. the 2/3 an acre parcel that is currently own. approximately 7000 square feet. so i think that even that there are some policy questions about this two different numbers, i

think that is still pretty major compensation the port has negotiated. therefore, since we are negotiating this on a land bases, we believe we have exceeded the $7.5 million of value. i think that was the basis of our analysis. that said, it is not that we have ignored the developers as their part of the negotiation. they did submit a pro forma of their project in 2008. we reviewed that. a number things have changed since that time. one is additional cost. primarily on the soft cost basis. some of those costs you just alluded to that become city benefits, including additional affordable housing fees. there are also -- the numbers -- hard cost numbers of originally

submitted we have had the opportunity to review, and i have to say that they are relatively in line with those 2008 estimates, which is good news, given the fact that four or five years have gone by since that time. usually, there will be some construction of a patient. however, at that time, revenues just from the residential sales, which are the main sales that would have in immediately, and we reversed the developer for their money -- card costs, soft costs, and risks and i to update the project -- those numbers have gone down -- card costs, soft costs, and -- hard costs, soft costs, and risks put in to update the project here the $470 million -- that is the correct number. that is the value of the entire project. or, not all of the other commercial uses will be sold

right away. it is not like cash that will be coming into the developer in the timeframe of construction, development of sales. those will be value-created. supervisor chiu: again, i just want to clarify -- the port did not do an independent analysis. you just look at the land part of the deal. >> that is correct. we had a $7 million appraised value on a land asset, and we parlayed it into a public benefits package, and that was our goal in this project. supervisor chiu: thank you very much. one thing i will note is that i know the developer shop around -- shopped around some pro formas, and i discovered in the last 24 hours that there are some mistakes in the math, which is why i wanted to lay this out.

colleagues, obviously, no surprise that i have had issues with this project. i have a number of amendments i would like us to consider. because this is a complicated project, i suspect it might be easier to consider the amendments one at a time. i have circulated them to you. first i would like to propose hast to deal with the $5 million that would be paid from the city to the developer in order to create the public improvements that are supposed to be a benefit to the city. mr. rose and his team in the budget analyst report pointed this out as a bit of an anomaly because typically when a developer says to us, "we will provided the benefit of open space" they pay for that. in this case, the city is paying the developer $5 million in order for us to receive that. i did not think you can get credit for a community benefit

if the city is going to pay for it. i have proposed an amendment to item 20, which says -- refers to that fact and states that our approval of this resolution is contingent on a revision that removes the public reimbursement of $5 million. you have the language in front of you. colleagues, at this time, i would like to move that amendment. that is there any comment on the amendment? supervisor kim? supervisor kim: i had a question regarding the city's general practice regarding with the developer friends that cost. i do know what happens in district 6, and i know that with several of the open space parcels that the developer has spread to the financing for, i just want a sense of

consistency. it would be great to get a sense of what it looks like and when it happened. i know with rincon hill, in that case, the open space that is built out there, we are reversing the developers their 50% for the open space they are building in that area, so -- and in mission bay, which is a redevelopment area, which also have repaid -- i think up to 100% of the streets keeping an open space where the developers have fronted in the costs in those plans. >> i believe the examples you are siding are accurate and timely examples where tax increments have been used to reimburse developers for public open spaces. i think specifically at ring contel, certainly the hard costs that 50% were being paid

-- i think specifically at rincon hill. essentially, the public was openly paying for approximately 100% of the hard costs in the case, in - standing of both the hunters point, mission bay, and treasurer of the cases -- in my understanding. the commitment is that those proceeds will pay back as much of the public improvements as they are able to pay back. i believe in treasure island, it is in the order of 2/3 is projected to be paid back. supervisor kim: 3 of these is where we have asked the developer to pay 100%. >> off the top of my head, i am not aware. supervisor kim: i do not want to argue what i think should be policy decisions for the board. certainly in terms of the benefits that will extract, i

certainly do not ever had issues with us asking for more than is the precedent, but i want to make clear that, you know, we have in cases where we do prepay a portion if not all of the open space infrastructure that developers build up front. supervisor avalos: i will be supporting president chiu was emotion and the other motions as well. i do not believe we have gotten the strong level of information we have gotten, and i believe others in the past have shown a greater amount, and rincon hill i believe is greater than what is being stated. we should have a more affordable level of housing coming out of this project. i truly believe that with the profit margin that the president has indicated, it is not a lot to ask that we could mitigate the impact of developments happening and help them make

sure that we could do more to construct affordable housing in san francisco, so i will be voting in favor of president chiu's motion. supervisor kim: actually, i do want to respond to supervisor avalos' comments about the apparent benefits to -- and not just market results, but comparing solely to luxury projects we have had here in san francisco. i think we have looked a lot at real-estate development because it occurs a lot in our district, and in a lot of cases, we approve and support development that we often do not need. i think we all agree here that we do not need more luxury condos in san francisco. we already know we are building over that, but oftentimes that this is a way for us to be able to partner with developments on the profits we have achieved to return community benefits. if we want to compare how the stands up to other projects, our

office did our own research in terms of what that looked like, and we determined we do not have the staffing capacity the other departments have, but we looked at the millennium towers, and in every case, what we found -- with the watermark and millennium, on the watermark, we had on-site that was built in. with the millennium, they built exactly 20% off site to provide housing. with one rincon hill, which was one of the projects that receive the most community attention in terms of negotiating benefits for communities and stabilization, giving -- given the market development, we looked at what the developer had promised and what was viewed as a victory for the community in terms of community benefits. in that case, the developer contributed $12.2 million to

our inflationary housing fund. they built 376 units. in the long term, they plan on building 2200. in this case, we have 134 units built, and in the case, the developer is contributing to a 11 million, roughly 1.2 million less. what made 1 rincon hill innovative was a way to give more benefits to communities that did other sorts of stabilization, not just community housing. we priced out how much that would raise the city, and the total brought in $5.7 million, so when we divide that by the number of units, it came to $46,000 per unit for phase one. if rincon hill was able to build that to thousand 200 units, we

found that the total per unit is 47,947. with eight washington, 134 units that they are building. they are giving us $82,000 -- $82,089 per unit. we could talk about whether we want more benefits from the developer. i certainly never argued that. supervisor campos: i just had a question to staff through the chair. we received some numbers in terms of the total revenue to the developer for this project, and then looking at the total cost and the profit -- do you

have any questions or concerns or disagreement with the numbers that have been put forth? and i have not seen the numbers supervisor chiu provided, so i cannot comment on them. i do know that the numbers i have seen from the developer, other than the variations i have seen before, are in line with the original performance that we analyze it 2008-2009. the one addition, which i think is important, is that the money has been at risk for approximately an additional three to four years, so that kind of time increase of a project of this magnitude, which is a relatively small project, can really mean the difference between making a project that is making a good profit or making a project that is