supervisor chu: welcome to the budget and finance subcommittee. i'm joined by a chain kim and we will be joined by a supervisor avalos shortly. do you have any announcements today? >> please silent also phones and electronic devices. completed at speaker cards should be submitted to the clerk. items acted upon today will be on the supervisors agenda unless

otherwise indicated. supervisor chu: would you please call item no. 1? >> international terminal equipment maintenance and operating agreement -- resolution approving the international terminal equipment maintenance and operating agreement between the san francisco terminal equipment company and the city and county of san francisco. >> i am with the san francisco airport. at that airport is seeking your approval of a new nine-year international terminal equipment, maintenance and operating agreement with san francisco terminal equipment company. the agreement carries a one- you're -- one-share offer to extend. this is the third agreement of this type that has been brought to you. previous agreements were approved in 2000 when we opened our new international terminal and again in 2005.

because the airport does operate in this common use space in our international terminal, the airlines formed a consortium made up of the 30 airlines that have operations in the international terminal. this was created by the airlines that operate in the international terminal and represents the airlines as they pump filter maintenance and operating obligations under their individual leases with the airport. the new agreement before you today continues the practice we have had in the past of maintaining, offering, and scheduling the use of city-owned equipment and operating systems as well as scheduling the use of joint i.t. functions like ticket counters and gates and allocates the associated costs related to city-owned equipment and operating systems for the users of the equipment in that international terminal. due to the integrated nature of this system and the services

used to provide customer service to airport passengers in the international terminal, this represents the most efficient and cost-effective way for the airport to share in their use. they are responsible for the custodial, electrical fees, water and sewer charges as well as their own portion of the telecom charges for internet and access. based on fiscal year 11-12, they paid $12.8 million for the services and in turn, the airport cost portion of the agreement in fiscal year 11-12 was approximately $1.6 million. the budget analysts recommend approval but makes the suggestion for two amendments in the resolution the airport concurs with -- one to provide retroactivity for a start date of july 1, 2012 as well as including a not to exceed amount for the entire contract term of

$18 million. i would be happy to answer any questions and i'm also joined by airport associate deputy director for aviation management. he could answer specific questions. supervisor chu: thank you. why we go to the budget analyst report? >> thank you. on page 6 of our report, we report the estimated net payment to the airport over the 10-year agreement, that would include the one-year option, the amount they would pay to the airport is estimated at $1,500,000 and we recommend you provide retroactive approval through july 1, 2012 and in the resolution to reflect the not to exceed amount of $80 million to

be paid and the -- and approve the resolution as amended. supervisor chu: are there members of the public who wish to speak on this item? seeing none, public comment is closed. we have and and and and it to forward the item as amended. we will do that without objection. item number two, please. >> resolution authorizing the department of environment retroactively except and expand an american recovery and reinvestment act of 2009 funded grant in the month of $1 million from the california energy commission state energy program through the local government commission for green finance assets. -- green finance sf.

>> i'm with the department of the environment. this authorizes the department of the environment to accept and expand a grant in the amount of $1 million from the california state energy commission. essentially to assist the development of san francisco's development finance program. the funds will be used as a service reserve fund which would make financing more attractive, hopefully with a lower interest- rate, and more widely available to property owners to have deep retrofit opportunities. the funds will cover payment delinquencies for investors. the last time i appeared before this committee, i indicated we were trying to advance the projects and i'm pleased to report a first project is now underway. it's a $1.4 million energy

upgrade in a multi-tenant commercial building in san francisco which includes lighting retrofit and a new solar photovoltaic systems. i hope this project will lead to other additional products -- and other additional projects and this will make it more attractive for property owners. i'm happy to answer any questions. supervisor chu: i believe for this item we do not have a budget analyst report. are there any members of the public who wish to speak on item number two? >> i have graphics. this is what they need. $1 million. ♪ budget lean, budget lean, but to lean ♪ please keep your budget green.

your budget is like a breath of spring ♪ i know that your budget will take wing. ♪ budget lean, budget lean, budget lane, i'm begging you please keep it green. ♪ and your budget is going to make a good budget dream and i knew you would keep it green ♪ budget weaned. supervisor chu: thank you. are there other members of the public who wish to speak on item number two? we will send out four without objection. item #3. >> of rising the san francisco arts commission to accept an expanded ground -- accept and expand a grant in the amount of

$300,000. supervisor chu: do we have a representative from the arts commission? >> i'm with the public arts commission. to give a brief introduction to the item, the arts commission was approached by arch stone and the planning department with a gift of $300,000 to commission a new public artwork for a new park located on the right of way running through a planned mixed use development in the showplace square neighborhood. this would be located between sixth street, 17th street and hubbell street in district 10. this will allow the arts commission to accept and expand three fund transfers from arched down in three phases coinciding with the budget start up. i'm happy to answer any questions. supervisor chu: on the funding component -- it looks like the amount is $300,000 an amount expected for contractual services is $200,000. what is the rest for customer >>

that is less the of the ministry of cost which allows the audit commission -- they allow the arts commission to implement a competitive selection process and manage the artists' contracts through the duration of the project. supervisor chu: there is no budget analyst report on this item. a question for the arts commission when you come back -- it doesn't have to be an answer for today but it sounds like a fairly high administrative cost to the actual grant going on, so i would like to understand that better. perhaps between when it goes to the full board of supervisors you could answer that question. it seems high when one-third of the cost is for administrative. >> we are happy to have proper clarification. supervisor chu: are there members of the public who wish to speak on item number three? >> ♪ got a pay our dues when using the budget blues and you

know money doesn't come easy ♪ you don't have to shout, just to bring the money about and make the rtc ♪ please remember art is how we made it. ♪ bring the budget there and it will make it all the better ♪ i'm not asking for much, i am just asking for art trust ♪ we will be part about and you know it's going to be really breezy ♪ please remember love and art is going to be better and we're going to make it a great and we are going to bring it to every city place supervisor chu: are there any other members of the public who wish to speak on item number three? seeing none, public comment is closed.

i'm going to motion to move this forward with no recommendation. we have a motion and we can do that without objection. item #4. >> item #4, resolution authorizing the san francisco department of public health to retroactively accept and expand a grant in the amount of five under $45,759 from the public health foundation enterprises inc. to participate in a program entitled "implementing new directions in hiv prevention in san francisco -- a comprehensive." supervisor chu: we have a representative from dph. >> i'm with the hiv prevention section and this is part of a in incentive to implement a national aids strategy established by president obama in 2010. san francisco is one of falsities to be fortunate to be

awarded this grant and this is the second year of the grant. san francisco is considered a leader in the nation on hiv and this is to help us implement a national strategy locally. the funds will help us implement some high impact, innovative strategies and -- including expanding hiv testing to populations at risk for hiv in san francisco, particularly at the san francisco municipal st the clinic and to make sure folks have access to knowing their hiv status. this would provide linkage to care for those provided -- for those with hiv in the city. as a side note, i'm here on behalf of the acting director who is currently at the international aids conference in washington d.c. i am happy to answer any questions. supervisor chu: i believe there

is no budget analysts report on this item. are there members of the public to wish to speak on item number four? seeing none, public comment is closed. do we have a motion to send the item forward with recommendations? we can do that without objection. item #5. >> resolution authorizing the san francisco department of public health to retroactively accept and expand a grant in the amount of $298,144 from the public health foundation to participate in a program called addressing system act through program collaboration service integration. >> hello. this is a grant from the center for disease control and prevention to promote innovative screening services for hiv,

hepatitis, sexually transmitted diseases and tuberculosis. this is a grant to help us work toward better outcome for the communities affected by these multiple diseases. this is the second year of a three-year grant and it will support activities including disease registry matching to determine where these disease overlap so that we can appropriately target services, include the development of innovative guidelines to support sharing of information among department public health staff when appropriate and the development of clinical guidelines for screening and treatment for various populations, for example, how often should hiv positive people be screened for tuberculosis and hepatitis and including our laboratory to purchase rapid hepatitis c testing equipment. supervisor chu: there is also not a budget analyst report on this item.

are the members of the public who wish to speak on item number five? seeing none, public comment is closed. we have a motion to send the item forward with recommendations and we will do that without objection. item number six, please. >> resolution approving the contract modification between the city and county of san francisco and the tenderloin housing clinic to provide mass release housing for formerly homeless single adults at the mayfair hotel for a time of august 1, 2011 through june 30, 2015 in the amount of $93,070,856. >> good afternoon. the resolution in front of you, we are seeking retroactive approval to modify the contract with tenderloin housing clinic to both the extent that term at the mayfair hotel, a hotel we added in late 2010 and 2011 to find a home for displaced

homeless families. the tenderloin housing clinic stepped up and put the house on a master lease and accepted compass community services as the tenant to run 24 rooms specifically designed for homeless families. those families were formerly in hotels which lost the release and we were able to move them into this one. they received a grant from tipping point to do the modifications to the hotel to accommodate the families and we incorporated this as the 16th hotel in that tenderloin housing clinics portfolio of hotels. i would like to take this opportunity to think the budget analyst office for the expediency of the report on this and the accuracy -- helped us go back and unravel a hotel contract and the report is accurate and we are in complete concurrence with it. supervisor chu: the department is in agreement with the recommendation? >> yes.

we concur. supervisor kim: i was hoping you could go into the detail of the retroactivity on this contract. we've just seen a couple that were retroactive as well, but not quite to the length of retroactivity here. >> this was the second hotel we looked at as a site for the homeless families. we began looking at this when they lost their lease in i want to say late spring of 2010. when we finally identified the one hotel, the deal fell through. we went to the mayfair hotel and the mayfair hotel is currently not under contract with any city clients. that hotel was undergoing renovations by the owners, so we had to wait until those renovations were completed and wait until renovations to specifically accommodate the families were done. those construction's took a little over a year before we move the families and. the hotel was actually under

lease but not occupied for that time. that's why we had this lag before we brought it to you to modify the contract. supervisor kim: the second amendment which took place on july 2010 -- the hotel at that time was not ready yet because the owners were doing rehabilitation work? >> correct. supervisor kim: when was the hotel opened? >> the hotel actually opened in august of 2011. >> -- supervisor kim: why is this coming to us in july of 2012 as opposed to last year? >> when we brought this before you, it was 45-year set of hotels that $82 million that expired june 15, -- june 30, 2015. when we first contemplated this, we were within the overall authority of the prior

modification and we wanted to make sure we have all of the details of what was going on with the hotel before we brought back to clean up the resolution. we were still within that term and dollar -- not to exceed dollar amount of the prior resolution. that is when we went through and decided we needed to clean up all the avenues. as you can imagine, managing a contract with 16 different hotels, 16 different budgets, many shifts around in the hotel budget. at the end of the year, we have some hotels that run over budget and some run under budget and we are shifting things around. we were mindful to stay within the overall for the board had granted as and it was only when we got this hotel up and running and started filling the residual rooms with a single adults that we thought we would bring it back at this time. supervisor kim: i understand that within the parameters of having to come back to the board of supervisors, because you are staying under the actual dollar

amount that there was not necessarily an need, is that you are saying? >> correct. supervisor kim: i would still ask you come to us sooner regardless of whether there are amendments to the contract. i understand what you are saying, it's just not clear to me why it took an entire year for it to come to the board even if you stayed within the dollar amounts. >> we will certainly try to be a little quicker to the board in the future. supervisor chu: thank you. to follow up on that, it sounds like in the past, the department received a master lease approval through the board from 2010 through 2015 with a not to exceed amount and during the course of several years, some of the actual locations might have changed or there were things that moved around a bit. going back to supervisor kim's

point, if people were beginning to occupied hotel in july of 2010, it seems like there was a lot of time that passed -- >> 2011. excuse me. the reservations were finished and it was occupied of august of that 2011. it still has been almost 12 months since the hotel was occupied. supervisor chu: so there was a time when it seems like you could have come back quicker. i'm wondering does the department see this is an issue? would there be a challenge coming back to the board more frequently to update us about where things are changing or do you perceive this as within the contract authority? help us understand that. >> the code says we need to come back when we modify the contract in excess of $500,000. at the time we were doing this, we were not quite at that threshold.

i do agree that threshold has passed during the past 12 months and it was just a matter of taking a number of resolutions, some of which you saw yesterday and bundling them altogether and bringing them at one time. we can certainly take these individually as changes come up and we would be more than willing to do that. supervisor chu: i think there is a balance -- you don't department to be coming back all the time and there is some level of efficiency, so i get that but i'm just wondering what the department will be doing to implement changes such that you will be seeing when it's an appropriate time. a year seems like a long time. >> i agree and i can probably apologize for that. it's just one of those things we kept putting off during the course of the year. we will adhere to it strictly and as soon as we reach the $500,000 threshold, we will bring it right back to you. supervisor chu: thank you.

to the budget analyst. >> madam chair and a supervisor kim, on the bottom of page three, we point out the master lease budget includes an annual 3% cost-of-living adjustment for each of these residential hotels. but those moneys were not appropriated for the 3% in the past three fiscal years, unlike this fiscal year or the board of supervisors has appropriated it. as a result, the actual nine- tend through a 11-12 please of expenditures are about $2 million less than budget. our recommendation as stated on page 4, we recommend you approve the proposed resolution and specifically for the items cited on page 4 of our report, which includes a reduction by $2 million from $93 million to $91

million for the cost i just referenced and you approve the resolution as amended. supervisor chu: thank you. supervisor kim: i have one question for the budget analyst. and of the board was unable to allocate a call for any of our nonprofit contract in this year we were able to allocate to the mayor's budget a 1% cola starting in july of this year and another 1% starting in august through the board. does that mean the coal being approved for this contract mirrors that 1% or -- the cola being approved for this country mayors that 1%? >> what the recommendation is doing here is simply taking out something that was never allocated as a cost of living. what the board did in this new fiscal year is across the living increase in the next year's budget and this recommendation

doesn't have any impact. i'm not sure if i fully responded to your question. supervisor kim: you are saying this contract allows for a 3% cola increase? >> it provided -- department -- the department anticipated moneys would have been appropriated for a cola but the moneys were not appropriated by either the mayor or board of supervisors. >> perhaps i can help clarify -- >> it does continue to have the 3% increase. supervisor kim: the contract will have a 3% -- >> that is not correct. when we take a multi-year contract, we put an escalator on a of 3% for the outgoing years. should we not have the budget to fund it, it does not going to the contract. it only gives us the authority to go up to the not to exceed amount. in fiscal year 12-13, the

increase would be 1.9%. in the outgoing years, we still have 3% should the board, mayor or should we have the budget to fund it. we always put these escalators in the contract's going forward in case things change. supervisor kim: the budget analyst did it recommend a $2 million reduction? we have not allocated previously -- does that include 1% less -- >> it is just for the prior years. it has no impact on the fiscal year beginning july 1 of this year. supervisor kim: would have been appropriate to include the 1%? we are only allocating 2%. >> what we are reporting is that as a matter of fact, funding was not appropriated by

the mayor and the board of supervisors for any cola increases for the fiscal year increases preceding this fiscal year. ours is just a clean up amendment to make the budget consistent with what the mayor and board of supervisors has previously done. it just cleans up the actual situation. there was no cost-of-living increase. supervisor kim: i completely understand the previous three years. i don't think there's any disagreement about that. my question is shouldn't the decrees also include a 1% reduction for this year as well? seeing that the board has already allocated only 80% increase. >> this legislation before you today only goes through june 30 of 2012. that's all it is applicable to.

supervisor kim: i thought it went through 2015. >> we were very conservative and not recommend a reduction and not to exceed amount for the years going forward. for instance, this year's budget, a 1% of that -- that would be about $150,000. >> if i could get a clarification -- the 3% escalator we have is for the cost of doing business increase and could be for other increases. a lot of the actual leases have built in escalators each year. even though we are only funding 1.9% of the cost of doing business, we still have other escalators that could cause the contract to go up but it would not exceed 3%. supervisor kim: i actually support escalators in all of our leases. especially the nonprofit especially the nonprofit building owners.