>> good morning, everyone, and welcome to the san francisco board of supervisors budget and finance committee meeting for wednesday, february 13th, 2013. my name is supervisor mark farrell, i am the chair of this committee. we are joined by supervisor eric mar, vice-chair, and supervisor john avalos. i would like to thank the sfgtv members covering this meeting, marks bunch and michael freeman, and the clerk of the board mr. victor young. mr. clerk, do we have any announcements? >> yes. please turnoff all phones and electronic devices. completed speaker cards and copies of any documents to be included as part of the file should be submitted to the clerk. items acted upon today will appear on the february 26th, 2013 board of supervisors agenda unless otherwise stated. >> thank you very much, mr. clerk. we are going to call two items

out of order. first items number 4 and 5, mr. eries kin has other commitments elsewhere. so, thank you for being here. can we please call item number 4, first? >> item number 4, resolution approving a lease agreement between the city and county of san francisco and the city of san francisco japan center garage corporation for the japan center public parking garage, for an annual base rent of $1 plus surplus, with an initial term of 10 years with two 5-year options. item number 5, resolution approving a lease agreement between the city and county of san francisco and the city of san francisco uptown parking corporation for the sutter stockton public parking garage, for an annual base rent of $1 plus surplus, with an initial term of 10 years with two five-year options. >> thank you very much. mr. reiskin, thank you for being here. >> thank you, mr. chair. members. thank you for accommodating the agenda adjustment. so, before you are two proposed leases with two different nonprofit corporations for two different garages that the sfmta manages. so, a little context here.

we manage about 20 parking garages across the city. a number of them had nonprofits established in the 1950s and 1960s to manage the garages on behalf of the city. the main purpose of these nonprofits when they were established were to issue debt in order to facilitate capital improvements and expansions in these garages. over the course of the intervening 50 or 60 years, some of these nonprofit entities that have been managing the garages during that time, the role has really expanded into providing neighborhood-specific expertise and perspective, what they bring to bear on the management of the garages on behalf of the city, now the mta. they're typically populating the boards of these corporations or typically populated by merchants and other key neighborhood stakeholders that have an understanding of the specific

neighborhood issues that are relevant to their specific garage and bring with them an understanding of the impact that the garages have to the neighborhood, very kind of localized issues. so, in 2008 when the voters approved proposition a, they gave the mta the authority to issue its own debt, which we have subsequently done. and what we did in the process or as part of doing that was we issued debt to refund all the outstanding garage debt. so, we've taken those corporations out of the role of being debt issuers for those garages. we have now assumed that role. so, that purpose of the corporations no longer exist. the subsequent purpose that has developed still remains. so, where we are today, in order to both issue the debt and also for us to issue the debt to refinance the garage debt, and also as a result of a

number of recommendations that came from a controller's audit that was performed in 2011, we restructured all the leases. we developed a standard lease form that incorporates many of the recommendations from the controller's office and also other things that we needed to have in place in order to issue the debtorthat we wanted to have in place in order to issue the debt. so, we've been working through the different garages to get the new lease terms in place. you recently approved two leases for -- one for the [speaker not understood] garage and one for the 5th and mission garage. in some of these cases the existing nonprofit entities have decided to change their role and shift to a more advisory structure and that's what happened with ellis o'farrell at 5th and mission. in other cases such as the two that are before you today, the nonprofit has wished to remain in place and continue serving the function that i referenced.

so, what we have before you are those two leases. they were here under the previous budget and finance committee about a month ago. they were continued to give us an opportunity or to request from us additional information and context which we have since provided, both in the form of a letter and in briefings to you or endeavored to provide. so, it's the same proposed leases that were before you. i believe there are representatives from both of the corporations here available to answer any questions of them. also have mta garage and finance staff to answer any specific questions about the leases themselves. they're largely a similar form as the ones we previously approved with the difference being that these two retain the nonprofit corporations in place. so, that's kind of an update from where we were a month ago. again, we have our technical people as well as the corporation people here to answer any questions that you might have.

>> thank you, mr. reiskin. colleagues, first, any questions from you guys? okay. just in context, i understand the principle here and certainly have heard from a lot of the members of the japantown community about the value of having this involvement. the question is obviously, it seems like there is just a middleman here in place. valuable to the community, but we're paying them, what, $276,000 a year for a corporate manager and 125 grand -- 126 for corporate manager, 125 for accounting. should we just be having them as an advisory board as well? and couldn't they perform the same duties? why are we siphoning off money to them when the mta could be doing this? >> well, so, there's no question the mta could perform the technical functions of operating the garages. we do that in many other places around town. in terms of the value that they

bring and the direct management, they are much closer to the kind of pulse of the neighborhoods and the needs of the neighborhoods. again, a lot of these are merchants in the neighborhoods whose business is related to or dependent on the operation of the garage. so, they're a level closer to the ground than we would be managing from 1 south van ness. how exactly to value, you know, the worth of that, frankly it's difficult to do, but it's a function they've been serving for more than 50 years. they've got deep roots into the community. they have a deep understanding of the garage operations and its functioning relative to the surrounding community. so, we felt, and as we've brought this through the m toshibation a board, that was a value worth retaining if they were interested in doing so. * mta >> but i guess in terms of -- i hear you and it makes a lot of sense. i've been going to japantown my whole life.

[speaker not understood] it was a lot more fun, i thought. but paying them a few hundred thousand dollars a year for a manager and accounting staff, if you will as a middle person, i mean, i assume they could just do this -- be board members involved in the community without having to pay a general manager, if you will. >> it is possible that they could do that as well. they would obviously have less of a direct role in the day to day serving just as an advisory capacity than as the direct manager and we would step in and fill that latter role if that were to be the case, which is what we're doing with some of the other garages. >> all right. supervisor mar. >> i just wanted to thank mr. reiskin for the recommendations, and also the controller and the budget analyst for their recommendations, too. i think one of the historical contexts of japantown is the history of the interment camps and redevelopment of '50s and '60s many in the communities -- and we've received letters from

steve, sandy and many others that there is a sense that the community was devastated, that in many ways to have a community based nonprofit run the garage, building the community relations and maintaining an ethnic heritage and community is really, really important for japantown. and i support that. and i think the relations, whether it's with the cherry blossom festivals or the [speaker not understood] street fair, and there is actually a day of remembrance program coming up this coming sunday. but there are so many different community-based events and to have a nonprofit run the garage is really important in building that relation. especially as the whole japantown area is still being considered for different developments and other things. so, i think it's an important expenditure of money that builds better community relations and i think this nonprofit has done a great job doing it and i'm glad that the mta is supportive of that. >> okay. thank you, mr. reiskin.

so, the budget and legislative analyst. >> mr. chair, members of the committee, we consider approval of this legislation to be a policy matter for the board. we have previously testified on this and we would be happy to respond to any questions. >> colleagues, any questions? okay. seeing none, at this point i'd like to open up to public comment. if there are any members of the public that wish to comment on item number 4, please step forward. if there's more than ms. chang, please feel free to line up. * against the wall there and every speaker will have two minutes. good morning. claudine chang, legal counsel for the japantown garage corporation. i'm glad chairman farrell brought up the question of paying a middleman [speaker not understood]. actually this lease is not about $1. why we pay $1 and what are we getting back? if i were in your shoes i'd ask

exactly the same question it is a very valid question. i want to bring up a point. when garage lease was first approved in 1988, [speaker not understood] realized unique economic benefits by entering into this lease. again, director's message to the committee, he talked about oversight and community relations. and [speaker not understood] benefits. i would like to bring to your attention these benefits are not just intangible. they are pretty quantifiable because over the last few many years, the japan center garage contributed to the city's transportation fund of over $1.1 million every year to the city's transportation fund. and on top of that, the japantown, according to [speaker not understood] office, had an increase of 70.7 percentage on sales tax relative to the city's average of 4.2%. these are real dollars contributed to the city and these dollars are benefit apparently have fallen onto the merchants and therefore, you

know, at the benefits are not intangible. we are talking about tangible benefits. these are exactly the purposes of -- this is exactly the purpose of why the nonprofits were brought into being in the first place. they have been doing exactly just that. so, i'd like to ask you to approve this lease on the basis of these tangible benefits and the fact that the corporation keeps its purpose since 1988. thank you. >> thank you. next speaker, please. hi, my name is [speaker not understood]. i'm chair of the board of the [speaker not understood] garage. although the current lease will run through 2017 with an option to renew additional 15 years, our board approved the new lease in order to participate in a capital improvement program. we applaud the mta for years of long-term planning that result in the issuing of capital improvement bond in july of last year.

and japan center garage looks forward to the opportunity to address some long overdue capital improvements. another key reason why the board approved the new lease is to continue the current management of the garage by the nonprofit organization. the board appreciates, it's a working relationship with the mta staff and the opportunity to give input to policy and programs affecting the garage. if the board is replaced by the advisory committee, the level of input will be advisory only and it's not the same. thank you. >> thank you very much. next speaker, please. hello, my name is emilie [speaker not understood], i own the [speaker not understood] restaurant in san francisco and i'm a board director on the japantown garage corporation board and i've been so for four years. two quick points i wanted to make. one is that my restaurant and

my business are at an interesting intersection of jazz district, fillmore street, and japantown. and i really see the value that with you come together with making decisions as merchants for the neighborhood and connecting people between these three neighborhoods which are all very unique and very special to the city. and i have been amazed in the past four years at how much we actually accomplished making decisions, not just giving advice [speaker not understood], operating a garage and how much it benefits the community. so, the continuance of that i think has real monetary value and we definitely see how we impact commerce by coming together in this way and building the amount of visitation and things happening between these three neighborhoods. the other thing i just wanted to say is that as a volunteer, you know, i'm there spending my time simply because, you know, we make decisions because we're

in the community that benefit us and benefits the people. you can't really replace that with a group that's outside of the neighborhood. so, thank you for considering this. >> thank you very much. next speaker, please. good morning, supervisors. my name is mineta white, i'm on [speaker not understood], i also sit on the board of the japantown parking garage. parking is a critical issue to neighborhood businesses throughout the city. being the owner of a restaurant on a busy corridor on fillmore street, i know firsthand how the garage successful management has a positive impact on our bottom line. our customers know there's no problem with parking. furthermore, because parking is so important to our business, being able to be a part of this nonprofit board and having opportunity to give input to how the garage should be managed and operate really helps. i wish that there were more garages like this serving other neighborhoods in commercial

districts in san francisco. i thank you and i urge you to support the lease. thank you. >> thank you very much. next speaker, please. [speaker not understood], members of the committee, arnold townsend, reverend arnold townsend. i just wanted to very briefly support this nonprofit in japantown garage. it's been around the fillmore district for, getting close to 50 years now. hard to fathom, but it's actually true. and this garage is one of the most tremendous assets we have in our community run the way it's been run since i've been in town. it is not just a parking garage, it is a community partner. they participate in every activity that goes on in fillmore from both sides of the overpass. they put in that overpass and kind of divided and separated communities that have never

been divided and separated before. and yet we have overcome that overpass and continued to work together and rich hashimoto and the people of the japantown garage have been part of that. you may save $200,000, but what you would lose in terms of community involvement and community activity will be a far higher price to pay. and let me just say this, and no disrespect to mta and mr. reiskin. it will not be better run. you may save some money, but you will have a much less -- one, just because these folk devote their entire time toward the garage, and that's it. so, go ahead and approve this and let us do things the way we've been doing doing them. we really do know best. thank you so much. >> thank you very much. next speaker, please. good morning, supervisors.

my name is nancy, i'm the vice president of marketing for sun dance cinemas where we own and operate theater at 18 [speaker not understood]. when we took over the theater in 2006 we spent several million dollars on the remodel and i'm proud to say we're a very successful destination and part of the japantown fabric. i'm here today to state my support for the current management of the japantown garages. our patrons utilize a very large percentage of the parking in the two lots. when we first took ore the location, we met with community leaders in japantown and fillmore and we learned about all of the great events that took place * historically at our theater, including the cherry blossom festival, [speaker not understood] spirit awards, annual day of remembrance you just mentioned, the asian film festival, san francisco international film festival. all of these events, it's very important to us that our patrons continue to enjoy the perfect experience they have based on the parking. we host a wide variety of events with high profile

meetings and on several occasions large, well known artists including our group president. robert redford has been in attendance. all these events are different and they demand close attention to detail. we've had an excellent and ongoing relationship with the management of the garage. so, often we need to make special arrangements for events, coordinate hours, reserve spaces, and other important issues that come up within minutes of the event. they are responsive and cooperative and have been an important part of our success. i urge you to continue the garage corporation's oversight of the japantown center garage. thank you very much. >> thank you very much. next speaker, please. >> good morning, supervisors. my name is [speaker not understood]. i am on the board. i am also a merchant in japantown. i own the [speaker not understood] photo shop booth. i also work at [speaker not understood]. so, i already know the benefits

of being a merchant and having a garage and being on the board. it's great. * having that connection. but i think one thing that hasn't been stated yet is this $200,000 whatever line item, it's an investment in diversity. it's an investment in community. and it's an investment in all of what san francisco is. so, i think in that matter, you really -- it's hard to take that away. and i feel like this board is a great and integral fabric to what the community and what it is and what the city is. thank you. >> thank you. next speaker, please. good morning, supervisors. my name is bob hamagucci, and i'm on the board of the garage corporation as well. i'm also a board member of the san francisco japantown foundation and executive director of the japantown task force. the task force is focused on the planning, preservation, and promotion of san francisco's

japantown. we are a grantee of the mayor's office of the economic and workforce development providing advisory services to small businesses in the japantown area. i am here to urge you to support the amendment of the lease with sfmta. in my experience with the task force, work and cannot be quantified. i urge your support. thank you very much.

>> thank you very much. next speaker, please. good morning, supervisors. my name is an son lee. i am the corporate manager for the uptown parking corporation overseeing the [speaker not understood] garage as well as the union square plaza and garage. prior to my over eight years of serving as the corporate manager for uptown, my experiences with private parking operators for over 13 years. we or i come from experience of parking management, but over this last 8 to 10 years of working with my nonprofit board really, really allowed me to grow, understanding, serving the community which this garage is not a stand alone business. it really is an amenity to the district and area including japantown, including the downtown area. although the controller's report did mention the initial

purpose of the nonprofit corporation over 50 years ago of funding and construction of these garages, but the intent was to maintain the vitality of these shopping district, neighborhood district, and that commitment still stands today with the nonprofit board that i serve under, i've been privileged to serve under because they really are committed to bettering the community for which these garages are residing in. and one example i wanted to give you as far as really trying to quantify the knowledge and experience and commitment, retail [speaker not understood]. i'm happy to say we're fully occupied and there's no vacancies at the sutter stockton garage currently with about 11 retail spaces. we conducted the last three retail leases with no brokers fees. we were with the experience of our nonprofit board. we continue to have full occupancy in our retail and

that's because of their knowledge and experience in business, in the community. and i really want to urge you to approve this item. thank you. >> supervisor mar. >> i had a question. i know the community makeup for the japantown center nonprofit [speaker not understood]. could you just describe a little bit about what makes up uptown's nonprofit board? just like what types of merchants and who is involved. sure. the nonprofit board at the uptown corporation, we currently have 11 members. there's 13 available seats. majority of them are made up of business management, property owners, hotel hospitality. we have a couple small businesses as well. majority of our board actually have served for numbers of years who have a history of the challenges of the downtown area. i believe several letters have been submitted to each one of

you on the committee. our vice president who could not be here today, ms. linda, served as the executive director of the union square business district. our board president is about to speak behind me, mr. sidney good will, has been a business owner, property owner in the downtown area. we have various other retail and hospitality hotels, restaurants, so on, so forth. i myself who have been involved with the community is also currently serving as a director with the union square business improvement district. >> thank you very much. >> excuse me, a question for you, then. you're both the manager of the japantown and sutter stockton? no, i am for the sutter stockton garage and we also oversee the union square garage with a lease pending for recreation and parks department. >> okay. so, you're not involved with the day to day of jpg town? no, i'm not. >> okay. thank you. thank you. >> next speaker, please.

[speaker not understood], i'm the president of the uptown parking corporation. i served on this board upwards of 25 years. in answer to your question, our board makeup of people like neiman's and sak's and barnies. we serve the community, the customers that come there. i also want to point out that our corporate manager and the accountant, that's our entire staff. and we share that with our union square garage. and if the city were to take that over -- mta would take it over, they'd have to use those people or hire somebody anyway. it's just normal bookkeeping, paying our bills and dealing with the tenants in the area. we're here to serve. i think we have a good [speaker not understood]. i think if we run -- it's a pleasure to come into the sutter stockton garage and i'd like to keep it that way. thank you very much.

>> thank you very much. next speaker, please. good morning, supervisors. coner johnston, legislative aid to supervisor london breed. i want to offer a brief statement on behalf of supervisor breed. the japan center garage is in district 5 and the members of the japantown community, many of whom are here today, have expressed how much they value having a community entity involved in the management of this garage. they want this lease to continue and supervisor breed wishes to support them in that effort. the nonprofit corporation wasn't created solely to sell bonds. supervisor breed served on the redevelopment agency commission which had a tragic legislate is of pushing out japanese and african-american property owners in the city. as supervisor mar mentioned earlier, this corporation and its predecessor served as a check against that, a voice for the community. and supervisor breed thinks that's something valuable that should continue. the corporation incurs about

$276,000 per year in management costs, which may seem excessive or unnecessary, but bear in mind that mta would incur some costs if they were managing the garage, perhaps not as much, but at least some percentage of an fte. the members of the corporation, all of whom are respected community leaders, do not receive any pay for their service and the corporation acts as a strong voice for the community and a booster for the businesses whose customers use this garage. their efforts increase the number of visitors to japantown and to the japan center garage and thus the garage's gross revenues. it's likely offsets much of the net costs of the corporation itself. just as a side note, supervisor breed is not taking a position on the correlated lease with uptown parking corporation, but she does ask you to pay defrends to the mta and the members of the japantown community and please approve the new lease for the japan center garage. >> thank you very much. thank you. >> any other members of the public who wish to comment on item number 4? seeing none, public comment is

closed. quick question for mr. reiskin. two item. one, i notice that in the bla report, they mention $2,000,000 was a deferred maintenance account that is getting transferred to the mta as part of this for operational expenses; is that correct? >> supervisors, steve lee. yes. if this lease is approved, the japan center garage corporation has accumulated $2 million in their capital improvement fund which they would transfer to the mta for mta operations. >> i'm just wondering how to think about it kind of capital improvement account going towards operational expenses. that to me is one pool that's not fit for the other pool of money and i'm just trying to get an understanding of how you guys are thinking about this that and why it's appropriate. >> well, the garage itself, in terms of operations and the operating budget and the capital account, for any amounts that