period that prompted us to request a 14-year contract. the contracts do not bind the sfpuc to use these consultants, to use consultants that are performing poorly and we can terminate the contracts at any time. we appreciate the efforts made by the budget and legislative analyst staff to succinctly and accurately summarize the contracting process. mr. ramirez and i are here for your questions. >> okay, thank you very much. colleagues, any questions right now for puc staff? thanks for presenting. we have a budget analyst report, mr. rose? >> mr. chairman, members of the committee, on page 22 of our report, we note that the puc is requesting to enter into four separate agreements, each for a not to exceed $5 million total of up to $20 million. currently the puc is expending approximately $500,000 annually for professional services to assist in the monitoring and

managing the necessary environmental work as described. the average hourly rates currently range from $85, $465. with the completion of the water system improvement program, such monitoring and management requirements are proposed to increase to approximately 1.5 million to 1.8 million annually for the first seven years to approximately 2013 to 2020 for a total cost of approximately $10.5 million to 12.6 million through 2020. i would note that the total not to exceed 20 million for the four contracts over a 14-year period is an estimate and cannot be specifically calculated per year or contract. we recommend that you approve the proposed resolution. >> thank you, mr. rose. colleagues, do we have any questions for the our budget analyst? okay, seeing none, let's open this up to public comment. anybody wish to publicly comment on item number 4? okay, public comment is closed. [gavel]

>> we are missing mr. paulson here. colleagues, any comments or can i have a motion to approve item number 4? okay, we can do that without opposition. [gavel] >> so moved. mr. clerk, can you please call item number 5? >> item number 5, resolution authorizing a potential five-year lease of up to 20,000 square feet at 1145 market street for space for the san francisco law library from 1145 market street lp, a california limited partnership, at an initial monthly cost of $42,753.75 for the period of july 1, 2013, through june 30, 2014. >> okay, thank you very much. we have mr. updike back again. welcome back, mr. updike. >> thank you, chair farrell, members of the committee. good afternoon. john updike, director real estate. so, previously the board approved a 20,000 square foot lease at 1200 van ness for this item or to negotiate other suitable space if that did not come to fruition.

obviously it did not or i would not be in front of you today. at that time we detailed the state law and charter provisions that guide our actions in this matter so i'm not going to reiterate all of those. i think those are all on record. and in the budget analyst report. since the board approval in april, the city was successful in its argument to the court as to the suitable and unsufficient size of our law library. when we learned that ownership of 1200 van ness had decided to sign a lease with a tenant who offered frankly a better deal with conditions that the city was not able to compete with, we began a search for an interim location. concurrently, war memorial veterans building development staff modified their construction project. so as to maintain their july 1 start date. ~ but also permit the law library to remain open for business during that construction until

such time as the interim location was ready for their occupancy. today we bring you an agreement for that interim space. it is at 1145 market street. and this will facilitate the interim occupancy. i want to stress that. the lease is structured in a way that allows us to expand the premises, however, consistent with state law and charter guidance and the recent court direction on a suitable and sufficient size of a law library. so, we'll be doing so in terms of space planning and in a collaborative fashion with the law library staff. the lease places the law library on the fourth floor of 1145 market street. it is in 13,155 square feet and allows for an expansion to the second floor, a portion of the second floor. that would be subsequent to the health services system relocation from that floor, the next item for discussion. and that would be 6,845

additional square feet which would take us to the magic number of 20,000 square feet which you might recall from our previous discussion. the expansion is compact or high density shelving that allows the law library to increase their volumes that are readily accessible to their patrons. this interim space afford nearly 5,000 linear feet of shelf space that could accommodate somewhere upwards of 30,000 volumes. it provides reception and reserve desks and [speaker not understood], reserve book room, kitchen, 10 computer seats, 32 tabled seats, and staff accommodations for 17. i do have a space plan. this is still undergoing discussions. i'll turn it so it fits here. so, you see the stacks in the center of the facility all on

one floor. you see the [speaker not understood] room, reserve book location, staff offices on one end, reception to greet folks as they come in off the elevator bay. and the other items. this is still being negotiated between my team and the law library team that we think we're on a very good path to successful interim space plan for this floor. when compared to the disparate suites within the veterans building on the fourth floor, we think this was actually a much more efficient design than what they have today, although admittedly smaller, hopefully they will use some efficiencies from this design all in one location. keeping staff and patrons and activities all together. so, the term of the lease take us from occupancy until june

30th of 2018. it also includes a one five-year option that would be reset at 95% of fair market rent to be determined at that time. the base rent is $39 per square foot. that is net of electricity. there are 4% annual increases. we think that's reflective of market. in fact, probably a little bit below market. you might recall the prior lease agreement that we brought to you for 1200 van ness was $36 a square foot, but that excluded janitorial service. so, these are roughly equivalent rates that you saw the last time this item moved to the board. the big difference, however, is the tenant improvement allowance. you may recall at 1200 van ness, we had no allowance provided by ownership. in this case we have is he kao a $500,000 tenant improvement allowance. so, those are improvements the landlord will make on our behalf toward our space plan at their cost. ~ we've also reduced the city's

anticipated capital contribution. you may recall we estimated that initially at $1 million. we have brought that down now to a projected $5 20,000. as soon as we have the exact numbers for you ~ we will submit a letter requesting the release of reserve from this committee for that funding amount. if there are necessary additional improvements required, owner will amortize those at 7%. there is an early termination clause in this lease. that is with 180 days notice. should some event occur, such as a permanent location determined to be not at this location or other events that require us to look at other locations, we've built in a safety valve for us to be able to terminate this lease with fully modest payments for unamortized value of improvements made by the owner. the other item in the lease agreement is a right of first

offer to purchase. we feel that's important that we secure some sort of ownership potential in any building we lease if we feel there is a chance we could be leasing up a substantial portion of that building. so, it's just smart business on behalf of the city. it is not an option, and you are not really being asked to make any decision relative to a purchase this time. also want to note that you are in receipt of a letter from the counsel to the law library wherein they do accept this interim space with certain conditions. so, i want to touch on those condition and the city's position relative to those. the space plan will be developed collaboratively. we certainly agree with that and that has been the case for the last several weeks. but given the time and fiscal constraints that we have to remove this operation from the veterans building, the city really needs to be the final arbeter of the space plan. i feel confident we will have a plan that both parties are happy with as well as the owner, of course. ~ they are a party at the table

as well. but nonetheless we wanted to make it clear that at the end of the day, the city needs to move this project forward in a timely fashion. we will effect a transition to permanent corridors within one year. that is the deadline that is sought by the law library counsel. we agree to that condition. the owner has also demanded expanded hours of operation as part of this move. the city has denied that request and respectfully the city's position at this point at my recommendation is na we really don't have evidence to suggest there is a need for expanded hours upon the move to an interim location. we're only talking about a couple of hours, but they're key expensive hours into the evening on weekdays that require the entire building systems to be on. and that's a cost that would be borne by the city as tenant. so, we believe it's prudent to maintain the hours that they have currently at the veterans

building, but not expand them upon the move. we can revisit this at a later date, but we think for the interim occasion that is an important issue for us. lastly there is a request to use brooks hall as a staging as an off-site shelving location from which they can page so we can create an ability to have them have access to additional materials given the limited amount of space at 1145 market street. we agree with this condition, and we have every intention of creating that shelving system promptly within brooks hall and that is still over to the law library at no additional cost to the law library. so, once the library is [speaker not understood] permanently, we would want to make progress in removing the materials from brooks hall to a reading process, a thoughtful effort to migrate as much as we can to the permanent location and perhaps move elsewhere the other materials in brooks hall so that we can better utilize that space under the civic

center plaza. i'm happy to answer any questions you might have about this item. >> [speaker not understood]. so, you're viewing this as a temporary space? >> that is correct. >> okay. do you have -- does that mean you're going to continue actively looking for additional space or is this kind of temporary for a number of years and therefore you're going to put it on hold for a while? >> the temporary space is the single floor in which we will relocate them, the fourth floor. the issue is the expansion of premises onto the second floor. we believe if we effect that and work collaboratively with law library staff, i think we'll find jointly that that's an excellent permanent solution delivering 20,000 square foot of space to them. so, my hope would be that this agreement before you takes us to that point of a permanent solution. >> you know, i received the

legal brief from one of their attorneys talking about they will accept this is a temporary location if and only if hours are met and so forth. did they communicate to you what they're going to do if they don't? i mean, they've already sued us which i find pretty egregious and offensive that we're increasing their square footage and they're suing us at the same time. but we've kind of went down that road a few months ago, but there are some relatively threatening comments. i'm trying to get an understanding from your perspective if they communicated what they will do if not. >> perhaps the city attorney givner can help elaborate on. this i think the communications between our litigator on this matter [speaker not understood] and their counsel have been very positive. and the sense i have with respect to hours, while i can understand the ask, there really hasn't been any metrics provided to us that substantiate the request. and i'm not sure that is a true

deal-breaking issue with respect to the interim space. i think this is an opportunity for them to ask staff. if i were representing them, i probably would ask as well. >> okay. this is a good opportunity, mr. givner, just to really, since our last budget meeting and when we heard this item, i believe the mandate was denied by the courts. they filed preliminary injunction. can you give us a status where we are with the courts? >> sure, deputy city attorney jon givner. after the board approved their initial resolution, the court denied the writ. the action is still pending. the law library filed a preliminary injunction that was set to be heard this month. and as of earlier this week, maybe it was late last week, the law library's counsel took that motion off calendar. so, they're not currently seeking to preliminarily enjoin

the city from removing them from [speaker not understood], that doesn't mean that the litigation is over and there may be additional motions in the future. but for now there is no -- no motion pending trying to stop us from moving them to 1145 market and no -- and we don't anticipate in the immediate future that that's going to be an issue. >> thank you. thanks, mr. updike. colleagues, any questions for mr. updike? okay. seeing none, we have a budget analyst report, mr. rose? >> mr. chairman, members of the committee, on page 29 of our report, we report that as shown in table 4, the total estimated lease and related costs for the nibble five-year term of the lease would be $4,6 30,0 06

which would all be general fund v tours subject to appropriation approval by the board of supervisors. ~ the law library's rent utilities costs are 5 77,3 72 and 13-14 of the proposed lease are $386,94 1 or approximately 203% more than the 13 occupancy fee paid by the law library to the war memorial of [speaker not understood]. on page 30 of our report we note that the 20,000 square footage is an increase of approximately 7,000 [speaker not understood] net square feet of 56% more than the law library's existing space of 12,8 16 square feet. and, mr. chairman, with respect to your increase, our report states based on information provided that the law library outlined several conditions, including that the city

complete layout designs and plans for tenant improvements at 1145 market. the lease period 1145 market street is no more than one year. this lease is five years, before the city identifies a permanent space for the law library and lose the law library into that permanent space. and the library's hours of operation extended ha been stated [speaker not understood]. so, for those reasons we consider, among others, we consider approval of the proposed resolution to be a policy decision for the board of supervisors. >> okay, thank you very much, mr. rose. colleagues, any questions for mr. rose? okay, seeing none, we'll open this up to public comment. if there is anybody who would like to publicly comment on item number 5, please step forward. [gavel] >> i can't believe we asked for mr. paulson and here he is. >> good afternoon, budget and finance. ~ ♪ i'm wild about [speaker not understood]

can't get my fill and the lawyers cost you're gonna get your bill placing public [speaker not understood] like the picture show and ferry basin you know may not be new and you're gonna lace the i'd like to lease it why not you i'm wild about law books i know you can't get your fill and the lawyers' bill you're gonna get it filled the public stand like the picture show and perry mason, you know may not be new and i'd like to lisa it ~ lease it why not you and the sign says you got to have a library card to get inside sign, sign everywhere a sign locking up a library

chasing my mind do this, don't do that can't you read the library sign and the sign says you got to have some money, too, to get inside thank you. >> thank you very much, mr. paulson. any other members of the public who wish to comment? all right, seeing none, public comment is closed. [gavel] >> mr. chairman, i would like to make the recommendation that we add language concerning the department providing a copy of the executed contract for the file when it is available. >> we should be doing that as well. so, colleagues, we include an amendment here to make sure that that once this contract is signed we submit it to the clerk of the committee. can we take that amendment? without opposition? so moved. [gavel] >> the underlying item as amended can we take that without opposition as well? supervisor breed? >> could you explain that, please? >> the amendment?

>> what amendment? >> we just made an amendment to make sure that once the final contract is signed that -- >> i thought we just approved that. >> we just made that amendment and we have to approve the underlying item as amended. >> oh, got it, i'm not ready to do that just yet. >> supervisor breed, then. >> you're going kind of fast for me. did i miss something here? i just had a question, because it was my understanding that the reason why we are actually, i guess, in some instances required to do this is because it's in the city charter. am i correct? >> mr. updike? >> yes, supervisor breed, the mandate here is actually found in both the city's charter as well as in the state law. this is the first county library in the state of california. so, we have an underlying 18 70 statute which drives this mandate ~ and then that's

further, really, copied in the charter language. >> and can i get clarity as to why it's not included in the resolution or did i miss that part? >> that's a very good point. the reference is made to the buyer resolution adopted in april on this matter which included a fairly robust outline of the legal mandates. so, we felt rather than just repeating that, we have made a reference in the resolution reciting what we discussed on the prior adopted resolution, further ratify any actions taken there. >> as it relates to both the city charter as well as state law? >> that is correct. >> okay. and then in that particular -- because i haven't been able to reference it, that doesn't necessarily specify the footage or anything like that? ~ square footage doesn't specify square footage, right? >> that is correct. that was a court issue which was determined subsequent to

the board's action. >> supervisor breed, to add to that, that was part of our larger debate last time that we approved the initial lease. >> yes. >> it was a third-party consult that thectionv determined the 20,000 square feet was reasonable and adequate, which mr. givner, it was of the exact standard that is outlined? >> deputy city attorney jon givner. the charterv requires to us provide suitable and sufficient space for the library. and in reviewing the initial lease, the consultant who we had retained for the purpose of the litigation conclude that had that standard was met, that space was suitable and sufficient. and the resolution the board adopted in april conclude that had 20,000 square feet of space did meet that standard. >> thank you. i just want to say before we approve this, i'm not really happy that we're spending all of this money on a space for this particular purpose mostly because we are entering into -- and i know this was something that supervisor kim mentioned

when we had this discussion the last time -- we're entering into more technologically advanced stage of how we do business. and this is just a lot of money. and not really happy about it, but i do understand our obligation under the charter and our obligation to move this forward and the issues around litigation. and i just really am not happy about it, but i'm prepared to move it forward. >> okay, thank you, supervisor breed. i think everyone echoed those comments and shared those feelings. colleagues, can we take the underlying item as amended without objection? okay, we can do so. [gavel] >> mr. clerk, can you please call item number 6? >> item number 6, resolution authorizing a 10-year lease of 19,560 square feet at 1145 market street for office space for the health service system from 1145 market street lp, for an initial annual rent of $743,280.

>> okay, thanks. mr. updike, back again. >> thank you, chair farrell. so, the health and service -- health services system has been located at 1145 market street since about 1977. they are currently on a month to month hold over while we have commenced and concluded now our lease negotiations for that site, but also looked at any other locations and frankly tried to find the most efficient spot for them to be located in the civic center at the best price, providing the best space for them. and that's what's before you today. so, this particular lease is a 10-year lease. it is for 19,560 square feet. takes us to occupancy through november 30th of 2023.

there is one five-year extension. that's renewable at 95% of fair market rent. the leased premises is all of the third floor at 1145 market as well as a portion of the first floor. and in a moment we'll take a look at the floor plans because we want you to see the prospective layout and standard operational needs. the lease agreement includes two free months rent or rent abatement. it includes a base rate of $38 a square foot. that is net of the electric cost only. there is also a very robust tenant improvement allowance in this case negotiated of $1,0 36,680. ~ there is an early termination right for the city in this lease at a .7-1/2 years after commencement. that was thoughtfully introduced into the lease negotiations as we are looking at some longer term space options ~.

again, in our effort to try to consolidate human resource related activities at one location, we believe there may be an opportunity and around that timeline. if we're going to have that chance if we needed to vacate, we have that built into the lease and owner agreed to that. page 36 of your report from the budget analyst does detail the space allocation and the improvements. just want to touch on those briefly for you. so, within the space we have open enrollment, much easier to handle open enrollment and, of course, the large crush of folks we have in and out of the facility during that time. there is a wellness component to this floor plan. seminar screening locations as well as, employee assistance program is a much better space for them to do their confidential business within the premises. and i think most importantly, to meet the standards that govern how their operationses

need to maintain confidentiality, we've done a good job in separating certain areas of the conversations individual members have regarding their health issues can be can hethv confidential. right now their current space plan really does not afford them the opportunity to have those conversations ~ in a way they should. so, briefly, i want to just show you the floor plans. in the report there is some discussion about whether this is an appropriate size for this particular operation. i thought perhaps the visual wasv might help better orchestrate where we stand. one thing unique to the health services system is your filing. as you can imagine, every member that they service, there is a piece of paper associated with them. lots of paper associated with them and that is no fault of their own. they need to maintain those records. so, there is a very large file facility in the center core area of this floor plan. so, you can see that laid out

here with offices, modest offices and a number of cubicle locations. this is their main working floor. on the first level the premises is not highlighted. in white here is the premises on the first floor. we wanted to put the open enrollment and wellness aspects on the first floor. so, it would be much more welcoming, accessible to all of the members. and then there is also a very large conference facility which actually will be shared not only amongst meeting health services needs, but other needs as well. and then there are some other employee assistance program offices where private conversations can be had. i mentioned that earlier. so, we think this space plan is not over the top in any way. it is something that's been developed over a number of

months working collaboratively between ownership and my staff and a team assigned by health services to look at the best floor plan available. so, with that said, the recommendation does suggest the director of property should secure alternative usies for the first floor. what i'd respectfully suggest is you'll be having some policy discussions going forward, of course a budget approval process ahead of you relative to any fte increases that this space accommodates. might be wise to allow that to play out if, indeed, these program issues are adopted. then we have the space available for them and we move forward with what is in front of you. if not, i feel confident we can find alternative uses for the first floor if that's the case. but i'd like to keep our options open in that regard. and i think what we presented

here allows us to do that. happy to answer any questions and i'm joined here by my colleagues at hss as well. >> thank you, mr. updike. colleagues, any questions right now? okay, thanks. why don't we go to our budget analyst report. >> mr. chairman, members of the committee, on page 37 of our report as shown in table 3, the total first year cost hss under the proposed new lease are $643,263. and on that same page the report that is shown on table 2 on page 36 of our report, the proposed lease rentals results in a total square footage increase of 5,98 4 square feet or 44% compared to the current lease. ~ now, approximately 4,00 5 square feet are to be used as a wellness center. the controller's office will begin a strategipl