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 strategic planning effort in the summer of 2013 with a possible strategic plan to be completed in the fall of 2013 and also as mr. updike just indicated, hss is requesting new positions in the mayor's proposed fiscal 13-14 budget for implementation of the wellness center. so, our conclusion is that the controller has not yet begun the strategic planning process for the proposed city-wide

wellness program and the board of supervisors has not yet approved the hss fiscal year 13-14 budget, the board of supervisors should consider alternative -- alternatives to approving the proposed increase in space for hss and actually our recommendations are consistent with what i understand mr. updike just stated. so, we seem to be in agreement. our recommendations on page 38 are to amend the proposed resolution, to clarify that the resolution is authorizing a potential 10-year lease based on provisions of the letter of intent rather than the actual lease -- oh, that got changed, i'm sorry. i withdraw that recommendation. the second recommendation is we recommend that you amend the proposed resolution to request that the director of real estate find alternative or interim uses for the first floor space currently designated for the wellness center including locating other city difficultthtionv in that

space and it's really the hss. just to clarify that's contingent on your approval of positions in the budget and what the result of the controller's strategic study on the wellness center plan for the city is, and finally we recommend that you approve the resolution as amended. so, i'm not recommending any reduction in space, but i do not believe that the lease should lock in right now 4,00 5 square feet of space for the wellness center specifically for hss at this time. >> okay, thank you, mr. rose. colleagues, any questions? can i ask, [speaker not understood], in terms of the timing on the wellness center, can you talk to us about that? >>yes, mr. chairman and members of the committee, monique zamuda from the wellness office. we did conduct a [speaker not understood] with the department of human resources as well as health services, the major client, if you will. we've contracted with an outside expert in this area.

we're doing a tremendous amount of data analysis with the consultant, looking at the various needs of the employees and what has worked in other places and doing benchmarking. we are very well underway. we are planning to release the report in the fall that will provide recommendations. we certainly agree with the health service system and the director of human resources that a wellness program should begin next fiscal year. there are a number of funding requests including the space and individuals and so on to begin the program. we do know from all of the data that we've reviewed and research that we've done that wellness is a way of stemming the increase of health care. and we believe that there are a number of steps that the city can take to do that without reducing benefits.

and, so, you will be seeing that report in the early fall. >> okay, thank you very much. also want to give -- we have lisa gape here who is the interim director of hss, wellness is out taking care of business. do you want to add any additional comments? >> thank you, chairman farrell, supervisors. i'm lisa gape, the chief operating officer for the health system and currently the acting director while our director dodd is out on a medical leave. we do appreciate your support for this lease resolution. it is important to the department for our current activities as well as our potential expansion. under the direction of director dodd's management of hss has for the last few years really undertaken a deep dive into our compliance requirements under all of the laws that regulate employee benefits. one area that is addressing our

need to prohibit compliance is the need to separate our areas where we speak with our members and allow privacy and also our areas where we do open enrollment and where we have seminars, and making sure those are areas that are separate and completely distinct from where we hold our members' personal records. so, [speaker not understood] expansion on the first floor does for purposes, it does give us the opportunity to grow into the potential wellness activities of the future. but it also helps us secure the activities that we're currently doing in wellness, and that there are substantial seminars and training classes, et cetera, that we do including our [speaker not understood] assistance program. and we do need a [speaker not understood] place for that separate from our work activities. so, we appreciate your support. >> supervisor breed? >> i think mine is just a general question as to -- i

just have a real concern with approving a lease for potential future needs in terms of space and we haven't approved the upcoming fiscal year's budget. and i do understand that these two leases he, with both the law library and hss, are somewhat linked and there could be potential compromises ~, but i'm just not understanding why this was actually not dealt with differently in order to make sure that before we moved into this particular direction that the budget was approved. >> mr. updike, do you want to comment? >> certainly. thank you, chair farrell. supervisor breed, good question because this often comes up this time of year. unfortunately our real estate

issues, no fiscal year boundaries, but you're right it's a bit difficult. we're either just before or just after the lease. but that lease resolution is subject to appropriation. so, way want to make that clear while you're making a decision about a space commitment which is necessary for us to engage the landlord to begin the process of prepping the space which will take us sometime into the fall so that hss can execute the mood [speaker not understood] labor day, that's why we need to make these decisions now so we can make the legal commitment. but that commitment is subject to appropriation. so, there is still that issue out there that could reflect a potential change if, indeed, an appropriation was not made. so, i hope that helps address your question. >> supervisor breed, any other questions? okay.

okay, if none, if no other comments right now, we'll open this up to public comment. if there is any member of the public that wishes to comment on item number 6, please step forward. ♪ you go a-walking after midnight all down market street like you used to do you go out walking after midnight searching for your medical health place you go out searching, searching after midnight after midnight out in the full moonlight you go out searching after midnight down market street looking for your health care services >> okay, anybody else? all right, seeing none, public comment is closed.

[gavel] >> colleagues, we have this item before us as well as recommendations. supervisor breed? >> just a follow-up question. where in the resolution does it say based on appropriation, what page number and line number? >> unfortunately, my apologies, i don't have the resolution in front of me, but i believe it is at the tail end. it usually is contained in one of the final paragraphs, perhaps ms. zamuda can help me. >> if i might, through the chair to supervisor breed, the very last sentence of the resolution lines 10 and 11, said lease shall be subject to certification as to fund by the controller pursuant to section 31 05 of the charter.

and then when the controller signs the resolution, we do note that funding is available pending approval of the budget. and, so, in both of those areas it secures the requirement that funds have to be appropriated by the mayor and the board of supervisors to make this lease effective. and that's boilerplate language for all of our leases and all of our staff looking to the budget, every lease, and certify that money is available. if it's not available, then we state that. >> okay, all right. colleagues, i just want to add as a member of the health service system board now and working with the department staff and [speaker not understood] who does a good job, wellness is obviously a big push forward as a city. i know there seems to be a time

lag issue here and certainly per mr. rose's recommendations which i absolutely appreciate, i do understand where he's coming from. i think without a doubt this space will be used for a wellness center. been talking about some of the folks involved na study. and in addition as we think about implementing president obama's health care act on the federal level where we are going to be adding head count for sure, ~ within the health service system. and, so, i certainly have no doubt na we will be able to utilize that space. but i do take mr. rose's recommendations to heart. so, mighty suggest a slight tweak to it in saying that approval of this item, but make an amendment to say that we would direct the director of real estate -- if after the wellness study is completed by a controller's offic there is not suitable uses from the health service system to then direct the director of real

estate to find alternative uses for the current space designated for the wellness center. that would be a suggestion from my point of view. mr. rose? >> [speaker not understood] recommendation. >> perfect. and from a health service system, was that -- >> speaking on behalf of my client department, yes, we would be amenable to that. thank you. >> perfect, thank you. can we have a motion to take that amendment? >> may we also add the additional resolved clause to request the department provide an executed copy of the contract for the file once it's complete? >> we will do that. mr. updike, maybe in the future we can include that resolve clause in every single thing we bring forward. yes, we don't have to talk about it at committee. can we do this without opposition? thanks, so moved. and the underlying item as amended can we take that without opposition? so moved. [gavel] >> thank you very much. mr. clerk, can you please call em