campaigns. he's had a lot of success on capital campaigns with public land. we are also getting this project ready with entitlement and be able to shop it to groups and there is a lot of interest already from people. in fact we have a lot of pro bono work that's gone into this project so far that is significant. and that work is going to lead to greater success and the capital campaign. >> is there going to be a non-profit that runs the organization through a non-profit that is created or non-profit that is competitively bid in order to be responsible for managing the facility? >> i think at that point when we get to, when it's designed or run it? >> to run it? >> that hasn't been worked out yet. we expect that there could be, it would have to be actively competitively bid. it would have to be competitively bid. i'm sure that could go to non-profit. it's also a model

of parks and recreation running programs there as well or some kind of hybrid possibility. but this could be perhaps like the african american arts and cultural complex and how that's run and the cultural center. that kind of modeling hasn't been decided. although we do want to see that the project, the building is used for theatre and for art space and for performance and for small business incubator. these are all the things that we know we are going into it once it's in operation. >> i will tell you that i know that from experience just managing and maintaining arts organizations without a consistent source of revenue is really difficult. fortunately for our city owned cultural centers there is consistent level revenues but challenges that continue to

exist. so when moving this project forward which i think is an amazing project, i think it will provide a tremendous community benefit that we keep that in mind and make sure that the folks who are actively engaged are willing to be actively involved in this for the long run and that raising funds just to build it is not just going to be the only thing that they are going to need to do. consistency is going to be key to opening the doors and keeping the doors open so that it can be the kind of space that the community wants and deserves to have. i think it's an absolutely beautiful building and it has so much potential. i think it can be an asset because arts is at the center of the plan of this project. i'm really excited about it and i just think that from my experience of working with the arts community and artist and other folks, sometimes, the business side of what's

necessary can ge lost and i want to make sure that we keep that in mind and i think supervisor avalos you are working here in city hall when we went through the whole process and the redevelopment agency came in and said we want to do something with this particular building, they forced -- a small organization centered around the arts to suddenly become an entity that they were never intended to be which made things challenging for them to even develop the space even when the money was given to them to do so. i just wanted to put that out there because we have some incredible arts organizations. we have some incredible facilities but sometimes the bureaucratic process of the city can interest fear -- interfere with the success of these entities. i'm glad there is a renowned architect and

hopefully after this they stay actively engaged and raise money for this organization and i'm glad there are friends to the car barn that have donated many hours to see this project become a success. it requires a significant commitment and significant business sense and requires the city to make sure that they stay actively engaged and we go in there and thinking about all it entails. >> thank you. i appreciate your comments. let me say this as well, i talk about san francisco a lot and we don't get the equitable distribution for resources that we can get. we don't have many arts organizations on this part of san francisco yet there are many many artist who live in my district, people who actually are involved in arts

all over san francisco. so it will be bringing a venue to this part of the city. someone was just tweeting to me a second ago about how horrible the transit is around san jose avenue where you have the m line that disengorges piece right -- people right on the street. it's been like that for decades and the city doesn't pay attention to that. i talk about it until i'm blue in the face and we have not seen a lot of resources come. basically the money tends to stay in the part of san francisco where the money is happening and there is already wealth. how can we use the wealth that is generated in the neighborhoods that don't see a lot come our way. this is the project where we can see that happening. by this being already involved and doing this pro bono work, it has to work and has to be

sustain able and i agree. and your comments are spot on. >> okay. colleagues, we'll skip over the -- do we have language? >> actually we have a member as a whole which includes new language that will enable this to be accurate ordinance. ms. avrl if you can please describe the amendment that we have here before us, exactly what it does? >> the amendment does two things: one it describes a little bit more clearly what the $870,000 contract will provide and that will be 100 percent design documentation and 50 percent construction documentation. secondly it allows us to amend the contract up to $1.3 million

so that we can continue our work without a break and finish final construction documentation. the contract would be administered by the city. so the friends would donate their $475,000 to complete the final construction documentation to the city so we can continue to over see the contract and there is consistency there. but that's really the other amendment and the contract is just an allowing us to amend that contract up to $1.3 to finish the construction documentation. >> thank you. i would like to adopt a motion to accept the whole. >> can we go to the budget analyst before we take any action. >> mr. rhodes? >> mr. chairman on the bottom of page 6; we report that the city's administrative code

section 6.60 provide for a number of exemptions and alternatives to competitive bidding including emergency repair work and contracts design build contracts as needed contracts and integrated project delivery contracts. we state that however none of these exemptions and alternatives are being cited as receiving an award contract to aild. we notice that $833,000 was previously awarded to this project by the neighborhood park general improvement funds and table 5, page 8 is a proposed design development preliminary construction design budget. that totals $837, 863 in related engineering and especially consultant providers as subcontractors and table 5 shows a table design budget

costing $475, 891, to a million. we show no funding has been raised by the friends for the estimated $475,000 construction design phase. there is no guarantee the friends will be able to rise the funds by the target date of november 2014, there is no guarantee the friends will raise the additional funds required to complete the car barn project. we also report on page 10 that even if the entire $475, 951 funds raising by friends and applied for potential funding sources are identified, there is no guarantee that the potential funding sources would be

realized by the city. the funding opportunity is realized at the completion of the $1.3 million design at the official design of the funding will need to be secured from other funding sources of the construction of 21.4 million of the geneva car barn project. however the budget legislative analyst also acknowledges at the bottom of page 10 that the geneva car barn is a construction facility and received direct financial support over the last 10 years. aild has already provided $205,000 serves to the car barn projects including the concept and schematic design in restoration and approval. the 863 funding was approved by

the board of supervisors on the 2000 neighborhood for the car barn projects. if the friends can raise the additional funds can complete the design phase by early 2015. our recommendation, we recommend that you amend the ordinance by the parks and recreation department and further amend this ordinance to in accrues -- increase the funds to $475, 951 and we consider approval of this ordinance as amended to be a policy matter for the board of supervisors. >> thank you mr. rhodes. supervisor breed, you are still on the roster. any questions. >> deputy city attorney john gibner. supervisor avalos

has distributed amendments. one of those amendments allow contracts in the future from the friends. i would recommend making a slight change to the language that supervisor avalos to make it explicit that they can make the amendment as long as it does not require additional city funds other than the funds received as a gift from the friends. we can draft that language and provide it to the clerk after the meeting if the committee wants to make that change. >> thank you. i will move we accept the language as -- described by our deputy city

attorney. >> in addition to mr. rhodes amendment on dollar amount and as well as mr. gibner's amendment on the future funds. can we take those items together as one motion to amend? >> so moved. can we take that without objection? okay. i just really quickly want to say, thank you all for being here and to supervisor avalos. having projects like this, i understand some of mr. rhodes projects about the neighborhood projects, and projects that can bring neighborhoods together like this in san francisco is invaluable. i know it's challenging for sure but certainly fundraising a big part of that. but when it comes to fruition, it's special. i think we should be doing in all areas of san francisco as we can. and supervisor avalos i pledge my support in whatever manner i

can going forward. so, supervisor breed? >> i just wanted to add because i'm always looking at the nuts and bolts and business side of things. any other -- i know this project has going on for a long time and a lot of people committed countless of hours to volunteer to make this a reality. i hope they stay involved and i hope the support for this contract to do the architectural design gives them the encouragement they need to continue on. i think it's a long hall but it's going to be a great project, not just for that district, but in san francisco. it's a central area. it's a beautiful building and i can't wait to participate somehow in the opening of this amazing arts facility and a part of our community that definitely deserves it. thank you. >> thank you. >> okay. so can i have a motion on the underlying item

as amended. >> we can take that without objection. okay. madam clerk, can we call item no. 2. city clerk: item 2: [hearing - update to city's five-year financial plan]1402052.sponsor: farrellhearing to receive an update from the controller's office and mayor's budget office on the updated city's five-year financial plan. 3/4/14; received and assigned to the budget andsf 21234 >> okay. thank you very much. mr. rose field and -- is here to present on this item. >> good morning, ben rosen field controller. we are here to give you an overview of the city's financial plan update. this is required from your three financial offices to prepare annually. this was published several weeks ago. it's a document in four or 5 years depending on the cycle and represents the best thinking of the three financial offices. the controllers, the mayor's budget office and the board of supervisors budget office and

all have collaborated on this report and that i say joint report for that reason. at the highest level, the report shows an improving financial picture over the next 4 years versus the on the look a year ago and over the last several years but with challenges we maining. -- remaining and we've seen in the most recent years. expenditures leading to growing shortfalls in the 4-year period as you go. in the summary slide we projected at the time of the preparation of this report approximately $67 million general fund shortfall in 14-15 growing to $133 million in the year after and 282 and 339, the years after that. this is a cumulative projection. so the extent that the mayor and the board use on going solutions

for the balance is worth remembering that it has a rippling effect. example as required of the budget. $15 million in on going solutions were used, it would reduce each of the subsequent years by $15 million. that very high level we are walk through some of the details. the report is available on all of our websites and there are copies here for members of the public. >> good afternoon, supervisors, kate howard, the mayor's budget director. i will talk to you a little bit about what's changed since budget instructions and speak a bit about some of the assumptions that our offices has made and ben will come back up and talk a bit about our revenue outlook and i will speak about the smend expenditure projections. the

mayor issued budget instructions back in december and we projected $1.7 million shortfall in the first year and $118 million in the second year. this slide lays out for you how these numbers have changed and what's changed since our prior projection. in the first year, the projection is brought down most significantly by good news on the revenue side and on the fund balance side. so our updated revenue projections based on our current year actuals is what's contributing on the first line and the second line is the fund balance. in the budget and revenues better than we budgeted. you know that when revenues grow we see our base lines as well as our receive. that is

what's reflected there. we've also made a change in our assumptions about what we need to plan for in terms of salaries and benefit cost. so, in our last projection, when we issued budget instructions we assumed no cpi, no wage increase for our employees in either of first 2 years. this cult station -- consultation and budget analyst for revised wages in the second year. we also changed our assumption for the city to change, for the radio replacement project as well as our financial system replacement project. both of those projects currently have estimated cost of about $70 million each. so $15 million really serves as a down payment on any project

of that magnitude. you can see also the cost of the homeless supplemental are in this projection. kind of stepping back to a higher level, the projection over all takes the budget that was adopted by the board last year as it's starting point. it doesn't, it uses that as the basis for projections. the projection assumes that the economy continues to recover and that's reflected in our revenue of growth projections, but the pace of that recovery will be dependent both on the national economy as well as what happened in our local technology industry in particular. we do not project a recession in the 4-year period, so every year of this projection, we assume that revenues will continue to grow. we make, we don't

assume any major changes to service level and the number of employers beyond the levels that we have already assumed. for example, we know that the voters have approved a rebuild of our san francisco general hospital. we assume that we need to staff that hospital and pay for furnishings, fixtures and equipment. we don't assume significant growth in other departments. we assume that there will be no change in close labor contracts and then our open contracts we assume no wage increase in the first year beyond those that were already negotiated and then we assume an inflationary increase in the subsequent three 3 years of the projection. that's between 2 1/2 percent each year. on our health, dental and retirement contribution.

we seen some increase by 5 percent a year. we are hopeful that based on the surveys, kaiser and blue shield will come below those projections and that would reduce the pro just a -- projected shortfall. we know that our retirement cost continue to grow year over year. however, we have just gotten some news from the retirement system that they have not grown as fast and they will be about $11 million as a -- savings this year as a result of that. all non-salary operating cost will grow by cpe in the 3-year projections. these are where we project the cola and

non-profit cost. i'm going to hand it back to the controller to talk about -- >> sure. to briefly run you through the assumption report we are hitting high levels of numbers here and there is a lot more information and assumptions in the report. running some of the major changes in the first year in particular . as you know the funds are taken from the projected balance in the 1 year and spend that in the budget over the next 2 years. how that ending balance in the city account changes year to year is the budget outlook. given we are expected to change the current year with money less and last year, that reduces that use of starting balance available for the budget by approximately $16 million. that's the bad revenue

and we have seen a revenue growth over the last 3 years, and continue to be very strong. we expect $79 million in prop tax this year. we did not experience property tax losses. and the city and number of people applying for appeals has declined and again relatively stable level of taxing for redevelopment agency. hotel taxes have been a leading driver of our economic activity in recent years. again we expect to see continued growth, well over 5 percent in the earlier projection, high occupancy and room rate will drive that up. lastly the business taxes the

$31 million expected next year that's really being driven by private employment growth, wage and the adoption of prop e last year will fuel business registration fees population up in the current year. by about $28.5 million and continuing in the next budget year. transit tax, our most volatile revenue source is high and we continue to see it in the next budget year. with about $133 million. that would be a new record for us. we expect that level in these projections to continue for the next 2 years and decline in years 3 and 4. the projection. the table at the bottom of this slide really shows you

kind of cumulatively where we expect to end the current fiscal year and where we expect to be at the end of the 4-year projection. as you can see here we are expected to see continued strong growth during this horizon. 25 percent of cumulative growth and 25 percent in business tax and all continuing strong rates of growth. the only places where we expect to see some diminution and taxes in year 3 and 4 of the projection tax where the assumption here is we remain at the $230 million in the budget year plus one and it begins to pull back down in years 3 and 4. of course stadium admission taxes with the departure of the 49ers. >> mr. rows field, quick question. what is left with

the stadium admission tax when the 9ers are gone? >> we see a tax on pack bell at&t park, so that's the piece that remains. >> thanks. >> as you know the voter adopted base lines, increased revenues means for a set of dedicated uses. for every tax dollar in tax growth for the baseline. here is some of the highlights in the budget increases in the budget year and there is more detail in the report itself. but our allocation of the public enrichment fund will increase by $4 million and next year given these projections and the housing trust fund an $8.2 million steps for many years. so those are scheduled throughout this period, $2.8 million in the budget year

and $5.8 million in the base years. and the library consume about $9.3 million and the majority is our mta which is our larger stream line. as you noticed is the change are requirements adopted by the rainy day or local policy such as the budget stabilization reserves. it's really driven off higher transfer tax projections than we previously assumed and fee slightly higher. stabilization receive of $6.8 million. offsetting that is a reduction in the assumed need to feed the general fund reserve next year. we expect to end the current year with more money in the general reserve than we previously anticipated. that means the amount of money that is funded into reserve next

year to meet mandatory levels is lower. we expect 6.4 million. we've assumed a $6.4 million increase primarily to litigation expenses in each of the 4 years and we can talk off line of that assumption and lastly 6.4 use of direct parks and recreation reserve in 14-15. i will turn it back to ms. howard. >> this slide highlights to you about what our best cost in the next 4 years. as i mentioned a few moments ago, we assumed, if you look at the first section of this slide

you can see total cost on salaries and you can see that we are in the budget last year we included a number of new positions and that cost us about $14 million. we have close labor agreements with two of our employees groups and we are experiencing the annualization of wage increase for everyone else. that third line is showing you what is happening over labor agreement and what are we projecting for planning purposes. in the first year we are not assuming any cost increases there and as i mentioned to you before, i think that's appropriate for planning purposes, but there is some risk. we don't know what will happen with our negotiations. the second section really highlights for you what is happening on our be