and so part of the package is to extend this for a high-rise building. we would also provide limited ability for the 20% inclusionary reduction, so they would not be eligible for the reduction. those that have not commence construction could come in for a one-year extension. excuse me. a at a one-year -- a one-year reduction. this would require approval and would be based on necessity or that this is critical. again come projects that have not received their building permit would not be eligible. and finally, to talk about on-

site production. the inclusionary housing program is really the primary mechanism for producing moderate-income housing. by maintaining the off-site fees, it maintains an incentive for developers to choose the on site option. there are currently three, and in some cases of four new are, off-site options. we are also looking to have a buy up program. this would be negotiated private the bloopers and would allow us to potentially increase -- this would be negotiated and would allow us to potentially increase them.

supervisor kim: 1 member can no longer stay because of child care issues, so in terms of understanding as to how we appropriate general fund revenue into the housing trust fund, i want to give an opportunity for community members to ask questions, and we do have one. i apologize, and then we will go back to the presentation. >> thank you very much. supervisor kim: thank you. i do not know if you want to store a very quickly go three mechanisms. i just have one question. when they calculate baselines,

some of the questions as to how that occurs. >> hello, i am with the comptroller's office. there are a couple of different types of baselines, but the base line funding requirement for children's programs are based on a measure of aggregate discretionary revenue in the general fund, which is primarily our local tax revenues. arbs general fund which excludes federal, state, in charges -- our fat -- our general fund. we look at those, and those baselines grow.

they would been treated as non discretionary -- they would be treated as non discretionary. a couple of persons to the other baselines would not be allocated from those particular revenues -- a couple of persons -- % -- [per -- percents to the other baselines. supervisor kim: i am sorry. i am just want to go back. we're not talking about the new revenue, or if it is through a

transfer tax, what is that process, and how does that affect the other base lines? >> the measure itself does not specify. as we says there will be $20 million. that will rise after a certain point, rising by discretionary revenues. it does not specify this. that is the understanding that this money is available to the general fund because of these other sources rising, but the measure itself does not specify that. >> this is at the same time as we allocate to the housing trust fund?

>> the general fund has been growing every year. >> including this year, what we gain from the redevelopment agency. that flowed to the general fund. >> this year, there has not really been a gain because they have basically been able to use all of the funds that are allocated to them, so we have not seen that yet, but in the future, it is likely but declining obligations that that would free up what would have otherwise gone to the redevelopment agency. there is another kind of set aside, which is the property tax, the charter guarantee to the children's fund, 3% from the basic 1% property-tax on the valuation. some goes to the library fund, 2% is open space. those would not be affected and

would continue. >> ok. thank you. are there any other questions from committee members? thank you for being here. supervisor kim: thank you, mr. adams. >> if we could just start the powerpoint again. i was just talking about the program, and then part of our conversation with our stakeholders internally has been the need and desire to provide flexibility with how we do our inclusionary program. it allows us to better attend to meet a diverse set of needs throughout san francisco, said this describes, this would be part of, companion legislation would be designed outside of the charter amendment. there is the current requirement, 20%.

of your affordable housing fee and your of such requirements, and then at the bottom, a 15% on such requirement. that is our current fee and levels, and our current ami levels, 95% of the 55%, there is the inclusionary requirement that i described previously. it is a reduction to 12%. we have structured the mine which in the charter such that you are not tapping or fixing 12%. we are fixing a housing obligation, so if we were to design a program where there was an option to increase the ami values, the below-market homes that are being sold, we could also increase the homes that are being sold, and conversely, if we wanted to attend to a deeper

affordability, we would have the ability to decrease the percentage of on site requirements. it is crafting the appropriate language allows us that type of flexibility. that has been part of our process. we are excited to have this flexibility moving forward. so a quick summary. we want to increase housing options for our divorce population, by its support to households to remain in their homes through the housing stable program, and stimulate development of our local economy. and no presentation is complete but out a chart. this is a chart that describes kind of a different component of our package measures. our revenue side from one or two sources, and then as a completely separate measure, and

then the charter amendment itself, and revenue capture mechanism, funding for housing production, and the authorization to use the funds for a complete neighborhoods program. the house an obligation reduction and cap, and then the mayoral veto and the 30-year term. that is all dialed in, specified in the charter. there is our buying up program, the inclusionary program also to be designed, and the referral. and then expanding in refining our program and establishing this would be done administratively. so that lays out the chart, different pieces. i did want to leave with this. what has brought as here today is this very bleak time.

we are here for questions and hopefully answer is, and i will turn it back over. supervisor kim: thank you. i just have some very quick questions before begin to supervisor campos. the first is authorizing the housing trust fund for the neighborhood and the structure grant program. that was something that was new, and i know it was a small amount of a housing trust fund, but this is going towards the production. hopefully you can speak to the infrastructure grant program. >> what we were trying to figure out is the opportunity to have non housing funds doing things like infrastructure, related to supporting the housing, and

also, one example, one of my freedom examples, we were able to put money into that facility. that is not to do clinics on every single building, but that is the type of things to look for. but it is for also repairing things. it is both the market rate and the affordable developers as they build their residential projects within neighborhoods. they are doing this in the context of the other neighborhood needs. supervisor kim: sorry.

liasson quorum of issues that we are dealing not, and i understand that this -- we have some rick warren issues. this meeting is going on ravenna we expectant. i am so glad we were able -- this meeting is going on her than we expected. are we limiting this? >> we have not designed the program yet. we called this an infrastructure program. based upon this. but we felt was important to help the neighborhood infrastructure vote for the market rate and the affordable development, so it is not limited solely to the affordable developments. supervisor kim: i have some concerned about that -- some concerns about that. we asked them to help us build up infrastructure, whether it

is transit or streetscape, like what we saw at mission bay. i understand we helped to fund the infrastructure, but being that a housing trust fund is dedicated to affordable housing, i would hope that we would limit it to affordable housing developments, the elements that are increasing or are requiring affordable housing. that sort of stuff. i know there is the huge dollar amount, because the maximum is $2 million or a percentage, and i do not know if you have any thoughts on that currently. >> i think, again, the intent was as part of supporting all that we would have the opportunity with the residential developments.

clearly, the affordable developers have less resources to do things, like the clinics, like the store fronts, etc., but i think the intent was to help in anyway. this is as opposed to the developer, and that is what we are trying to do with those funds. supervisor kim: and just to clarify the mayoral veto, could you walk us through that? >> it is the related and not related revenue measures, and the mayor has to make a decision about the financial feasibility of going forward with a housing trust fund, so in this charter, the mayor is given an opportunity to be to know the housing trust fund should there not be the revenues to support it. supervisor kim: and that is any

time between january 1, 2013? >> yes. supervisor kim: and then the last one under the infrastructure grant program, allowing a sufficient amount from the trust fund to pay for administrative costs, which i agree with, but i does want to understand if there are parameters we have spent four these administrative costs, to make sure that as much dollars as possible goes to the infrastructure. >> the mayor's office on costs, we have to pay for the city attorney to review all of our loans and grants. there are some typical of administrative costs, and that line was intended to cover what we currently are utilizing as administrative costs. it is not an expansion of staff.

it is not an expansion of the type of administrative costs that we intend to do. it is currently we are billing for or whether it is four quarters to the other city departments, so it is what it costs us to actually do the work in terms of getting the funds out, and the other part is the ongoing monitoring of the affordable housing. there is a lot of work done on the asset management side. once we build it, we want to make sure that they keep to their promises and that we have that ongoing affordable housing, and we need to pay staff to make sure that those properties are sufficiently monitored. supervisor kim: thank you. supervisor campos? supervisor campos: thank you very much. ipg the presentation and all of the work that has gone into this.

i do not know if these questions are for mr. adams, but the one overarching question that i have is in terms of the amount of money that is involved, i am wondering for purposes of clarifying what is a very complicated presentation, what the amount of money we are talking about is for the next five years and then 30 years. if you can sort of give us -- how much money are you creating or putting aside for the first year, two, three, four, five? just to give members of the public an idea of how much money we are talking about. >> it gets more complicated as the years go on, but it is $20 million in the first year. there are potential commitments that we would need to start to make, so we have an obligation under the charter to spend $50 million on homeownership programs, so one way to do that

would be a $3 million per year allocation. you are under no restriction to do that. we probably ramp up spending. the first year could include up to $3 million for home ownership program. it could also include $3 million for our housing stabilization program, and then potentially and up to about four or infrastructure program. supervisor campos: how much for the infrastructure? >> we do not have a number, but we have some funds that were allocated from the current production, but of the initial year, the affordable housing

could be anywhere from the full $20 million, or i would say $12 million, so it would be in that range of $12 million them $20 million. supervisor campos: so $12 million them $20 million. -- to $20 million. how does that go? >> we have looked across the 30 years, and we see approximately 90% of the funds over time going to affordable housing production, the housing production programs, with approximately 10%. these are rough numbers being dedicated to housing stabilization, home ownership, and infrastructure. given the slide that i presented earlier, the dissolution of redevelopment and the impact on the production, we see this as a powerful engine for a back,

looking at a 90% allocation. supervisor campos: one concern that i have, and i have said this to you before, when you look at the numbers, even sort of the highest amount that the fund can grow in a given year, $50 million, around that number, that is not a lot of money given what the affordable housing needs of the city are, and in the first year, you are talking about the fun having $20 million, and perhaps only $12 million going to affordable housing, so how did we get to such a low number? if the idea here was to create a permanent source of funding for affordable housing, why not actually go with a number that actually, you know, is going to make a big difference in terms of the needs? relative to the needs, this is a drop in the bucket, so i am

wondering if you can talk about how it is we got such a low number here. >> a couple of things. for those of us who work in the industry, we always recognize that there is a need for funding, and that is just a reality that we deal with day in and day out. from my perspective, it is a balancing act to try to find the right revenue sources. we have spent a lot of time looking to find out how we could be as neutral to the fund as possible. there is always that tension. >> i want to emphasize that we modeled this on the service, so we do have some money from the hotel tax bonds, and there is some money from supplemental revenue, but really, the housing trust fund was modeled on the

debt service repayment from the redevelopment bonds, so since all of those bonds are outstanding, there is not a lot going on, and that is another reason why the additional revenue from the transfer tax or the gross receipts tax, whatever, is so important. we will not be idled during this period. one of the things that we are doing, and now we are the combined house and office for the city of san francisco. we are going to be working through the redevelopment agency, which the current balance is approximately $200 million, and we will be using that through the next few years as we get those projects. those $200 million are identified. the majority of funds are identified, and we will be working with our affordable housing the element community to get those projects through the

pipeline, as the housing trust fund ramps up. though the number, $20 million is not a lot of money. i was at the redevelopment agency early on. i only got $3 million for affordable housing, when $3 million was worked a lot of money, and i know the impact on the pipeline tree and i think our goal was, one, to be as neutral as possible to the general fund and also to allow us to work through the funds that we had for redevelopment, and that was sort of the perceived dip in the amount of funds is sort of balance out, but clearly, more is better, but we are trying to balance all of the needs of the other constituencies who are also dependent on the general fund and trying to be as revenue neutral as possible to the

general fund. supervisor campos: thank you. in terms of the issue about whether it would be funded through a transfer tax or a gross receipts tax, i have to say that i am concerned about the mixing of two issues which are independently very important in many respects disconnected from one another as a member -- matter of policy. we do need to have tax reform. we do need to create a source of affordable housing. wine mixed these two issues up? i also legally wonder whether or not you can do that, given that when you take something to voters, you are supposed to focus on one issue, so if you can talk to them, and i have to say when you mix two things, two important issues, i have a fear that you are watering down

your approach to each one of the two. >> i am going to ask jeff. >> so the mayor's office believes that it makes sense to reach a consensus. i noted that has its own separate course moving forward. i know that there are two separate measures that are going to be heard at committee tomorrow at budget and finance, but one thing that i think is important is the policy rationale behind potentially having a new revenue source from the business tax reform measure, and i think the idea is that that like this, it has been a process, and i think through that process, the mayor's office and some of my colleagues have engaged with the community. one thing they have been able to achieve is a recognition that

affordable housing is the nexus between housing that is affordable and the business community and the jobs they create. it is something that the business community understood and got, and so it is an achievement to be able to attain that, and that was also through negotiations, through a consensus process. i certainly understand your concerns. i would say that as i mentioned before, they are trying to have a consensus measure for the tax reform, and we hope 3 process that will unfold, that will occur. supervisor campos: i appreciate that, mr. buckley, and i do not want to belabor that point, but there are problems with the approach in the sense that i think that the moment you mix

two issues, and you are allocating part of the gross receipts to deal with the affordable housing trust fund, you are necessarily shortchanging that gross receipts measure, and in so doing, you are arguably shortchanging the affordable housing as well, so i understand the reasoning, but i think that there are real concerns that i have about that, but i appreciate the approach. >> one less clear fine thing, if i could add, these are two separate measures before you. there is no reference within the charter amendment to any specific funding source, so i think that is just an important clarifying point to mention. supervisor campos: no, i understand that, and i now want to ask about the issue of trade talks, which i think is really, for me, the focus, sort of my concerns.

given that we are not talking about a lot of money, if you want to have an understanding of what it is we are giving up, one of the things that we are giving up as you noted in your presentation is what is happening to the on-site market, the 20% reduction, and so i am wondering if you can talk a little bit more about the value of what we are giving up and cost-benefit analysis that has been done to make sure that we have a complete understanding of what it is that we are giving up through that reduction. >> so i should preface this by saying i think that calculating that overtime is difficult, in particular because we intend this to have a stimulus effect, that people will choose to do on site. of course, that option will always be there,