>> all right, good morning, everyone. welcome to the san francisco board of supervisors budget and finance subcommittee meeting for wednesday, april 16th, 2014. my name is supervisor mark farrell, i will be chairing this committee. i am joined by supervisor john avalos. i want to thank the members of sfgov-tv covering this meeting jennifer low and bill dill on as well as the clerk of the committee, ms. linda wong. madam clerk do we have any announcements? >> yes, mr. chair. please silence 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 april 22nd board of supervisors agenda unless otherwise stated. >> okay. i appreciate everyone's patience this morning. we will get through this agenda as quickly as we can. madam clerk, can you call item

number 1 diderction item number 6? >> time number 6 is resolution authorizing the san francisco municipal transportation agency to execute a transit advertising contract with titan outdoor, llc, for a term commencing july 1, 2014, and ending june 30, 2019, which offers a minimum guarantee to the sfmta of $28,500,000 over the term of the contract. >> okay, thank you. we have mr. reiskin here. welcome. >> good morning, chair farrell, supervisor avalos. thank you for having us and thank you for bumping this up. we'll try to be quick. the sfmta is your transportation agency. we have a number of assets we're responsible for, for owning and maintaining and stewarding to get the most value for the people of san francisco to make sure that the transportation system works well for them. one of our main assets is our vehicles as well as our facilities and we have an obligation as part of that stewardship of those assets to capture value that we can from them in order to help fund the transportation system. the contract before you today is an advertising contract that

was competitively procured, approved by the mta board and is before you for approval. it's more or less very similar to the contract that we have currently in place that's expiring at the end of this fiscal year. it's our responsibility to make sure that we are capturing that value so that we can fund the services that were chartered, mandated to deliver. that's what this contract is here before. we're very grateful, as always, thorough analysis by the budget and legislative analyst and their recommendation for your support. want to ask my staff member gail stein to give you a brief overview of the contract and then we'll be happy to answer any questions. >> okay. we can be brief about it, too. >> yes, gail stein from the mta. it's just a five-year contract with two five-year options to renew at the discorrecttionv of the mta. it has a minimum annual guarantee and a 65% revenue share which the budget analyst has gone into.

wanted to point out that the [speaker not understood] is responsible for cleaning the graffiti on the advertisements and that is something that is very helpful to us because it's basically one less thing for our staff to have to do. it also helps to chief of police our fleet clean. we just have a very short video to show you. i know the wraps have sometimes been an issue. the material has been improving over time. if you would like to see it. if you don't want to see it, it's fine also. >> i'm okay. we don't need to see it shall thanks. >> with that, we're here for any questions. ~ >> okay, supervisor avalos. >> well, [speaker not understood] from the budget analyst first. >> mr. rose, can we have your report, please? >> yes, mr. chairman and members of the committee. supervisor avalos, on the bottom of page 27 of our report, we note that under the proposed agreement titan is required to pay the sfmta the greater of 65% of its

advertising revenues or the minimum annual guarantee. the minimum annual guarantee for the first year of the agreement is 5.4 million, which is 5 37,975, or 11% more than the minimum annual guarantee for the final year of the existing agreement of 4,862,025. the minimum annual guarantee ~ is subject to annual cpi adjustments over the remaining term of the agreement. titan is also required to pay the sfmta annual administrative fee of 150,000 and an annual marketing fee of $150,000. on the top of page 28 we state that as shown in table 3, the total minimum annual guarantee payable by titan to sfmta over the initial five-year term of the agreement is $28,500,000 and the total revenues payable to sfmta by titan over the entire five-year period is $30 million. based on the competitive process, we recommend that you

approve this legislation. >> okay. supervisor avalos? >> thank you. i appreciate the budget analyst report. i actually appreciate the mta coming forward with, you know, a reasonable contract. my concern is that if hollywood were to actually create shrek 4, i would not want to see that ad wrapping the windows of buses. actually the timing of this is particularly galling for me that we have potential contract that would potentially put wraps on buses and even put in new technology to have digital displays on buses he when we actually repealed sunday metering yesterday. i'm told the mta board repealed metering. it's like $9 million that sunday metering brought in. we're a transit first city. we made it we're not a transit

first city yesterday. we make a decision, parts of our mta operation are transit first, we're going to make it -- we're going to wrap our buses and give people confining space to use our buses in. so me this is not something that i want to support. it's only that aspect of this contract that i'm concerned about. if it's, you know, i'm not sure what the bus wraps mean in terms of revenue, but there is a way that the mta can go back and say that we're not going to actually have our buses wrapped, i'm totally fine and have this technology on our buses, i'm totally fine to support this contract. but as is right now, i am not in favor of supporting it knowing that it's going to lead to our buses being wrapped, even though i'm told -- i've seen that -- that people actually don't have their visibility blocked. they don't have a sense of confinement in the buses. to see shrek 4 ad in the

future, if they put it on the buses he and really removing the brand of muni in san francisco, i find very problematic. >> okay. mr. reiskin? >> thank you. and i very much appreciate the comments. the timing of this is because the contract is coming due. in term of the wraps, they are limited in number. the video we were going to show was going to speak to the issue of transparency and how easy -- how the technology, the wrap technology has gotten better. so, in terms of being able to see out of the bus which i know is one of the concerns, i think we address that had in this new contract. it is a matter of maximizing the value of the assets that we have rolling through the city which do have value from an advertising perspective. we understand that there's concern about that, which is why we have limits in the contract, but it does generate additional revenue that goes

right into muni service and is not revenue that's coming out of the pockets of muni riders or san franciscans. so, it seems a responsible use of our assets. we did go through a competitive process. it is a very good contract for mta and for the city. so, i absolutely hear your concerns, but on balance we think this is absolutely the right thing for muni and the mta and the city. >> optickically it's really challenging as well. we approved a shuttle bus program for stops in san francisco at dollar stop. the shuttle buses -- shuttle bus he that we have are completely unmarked. you have no idea what, you know, except for the transportation company itself. so, we have private companies that have completely unmarked buses. we have public buses that actually have the muni brand that are covered up with huge ads. not all the buses as you say, but some of the buses. to me is not how we should be using our public resources in

such a way, even if it raises revenue. weing actually had choice about how much revenue we could raise and we low balled it. even though you say that there has been a nexus about how much we can charge, we repealed sunday immediatether erring. if it's really about revenue, we haven't done everything we can do to raise revenue for this department and i'm not ready to support this contract with the ads the way they are. if you want to, you know, send it back, negotiate new ads, i'm fine with that. it seems like it's a very small part of what this contract is about. it's one that i hope that muni can forego, and we can come back at another time to actually discuss the contract when we have the ads removed. >> mr. reiskin, can you just mention the terms of the ads? and i appreciate the policy decision questions here. i'm one that thought the sunday meter trade-off versus putting wraps on buses i'm very comfortable with, but how many buses are -- is there a potential to put wraps on versus how many are in your

fleet? because i believe that number was at least, as i recall, was very, very small. >> yes, gail stein from the mta again. currently we are allowed to wrap up to 15 at a time. this would allow up to 30. it would be at the discretion of mr. reiskin to fix it between 15 and 30. we'd have to give the contractor notice because they do sell these well in advance. right now, i'll give you an example, there are 7 buses that are wrapped, 7 vehicles that are wrapped. in practice, you probably get -- you might get over 15, sort of the october, november time of the year when you have back to school and halloween and the holidays. we don't anticipate that we'd have 30 buses wrapped all the time. and the fleet is over a thousand vehicles. so, it's less than 3% of the fleet. with us the minimum of 15 wraps that would be $325,000 each year. that is the agreement with the contractor. >> okay.

to our -- mr. city attorney, sorry. mr. city attorney, just in terms of our option here at committee, i assume we have a full up or down vote on the entire vote, correct? >> deputy city attorney jon givner, that's correct. they come back with a different contract in their discretion. >> he okay. why don't we -- let's open this up to public comment and then we'll have final discussion. unless mr. reiskin, is there anything else you want to add at this point? >> i was just going to offer, you know, because we have our current contract expiring, we'd prefer not to fully send it back if it's possible to perhaps advance without recommendation. we can discuss with the contractor, with our board, with members of the board of supervisors what options we might have to address this, if this is the one concern to address it. >> okay. we'll consider that in a sec. so, why don't we open this up

to public comment. anybody wishing to comment on item number 1? i don't know much about the issue, but don't give away my muni logo. that logo has been in the city -- i'm serious -- for a long time. and i wouldn't change. everything got to develop, but y'all changing too much in my city, man. so, keep my muni logo. >> okay, thank you. anybody else wish to comment on item number 1? okay, seeing none, public comment is closed. [gavel] >> so, i think we can do two things. we can either forward this out without recommendation or we can continue it to the call of the chair in committee.

at least to preserve this dialogue going forward. so, supervisor avalos, do you have a preference? >> i really don't want to see it move forward. so, i would -- i would motion to continue to to the call of the chair. >> okay, we'll do that. so, a motion to continue this to the call of the chair. we can take that without objection. i think let's commit to work together very quickly on this and make sure the timeliness of this contract doesn't lapse so there isn't more money not earned, if you will. so, we'll take that without objection. [gavel] >> all right, madam clerk, can you please call aye tell number 2 -- i'm sorry, item number 1, please? >> item number 1 is a resolution authorizing the port of san francisco to accept and expend a grant in the amount of $698,625 from the department of homeland security's 2013 port security grant program, including $186,750 for an all-hazards training series and exercise, and $511,875 for high-security fencing, for the period of june 1, 2014, through may 31, 2015.

>> okay, thank you very much. welcome. >> good morning, chair farrell, members of the committee. elaine ford, port staff. as the clerk has described, this would allow the port to accept and expend homeland security funds both for training and fencing that provide security for port property. and we appreciate your consideration and urge approval of this accept and expend. thank you. >> okay, thank you very much. mr. rose, can we go to your report, please? >> yes, mr. chairman. on page 3 of our report we note that the required port matching funds of $232,875 or 25% of the total budget cost of 93 1,500 and that's shown in table 1 of page 4 of that report. such matching funds would be allocated from port revenues which were previously appropriated by the board of supervisors and we recommend that you approve this resolution. >> okay, thank you. supervisor avalos, any questions? okay. we'll open this up to public comment.

anybody wishing to comment on item number 1? good morning. dr. espinola jackson. i'd just like to know where this training -- where this training is supposed to be because i have concerns about training that's going on in bayview hunters point, especially close to the shipyard when my people are buying out there. and a lot of people have gotten sick. and some of those trainers are not using, you know, the proper gear, with this clean up and things they got going on. so, i would just like to know what this training is about. thank you. >> thank you very much. is there anybody else who wishes to comment? public comment on item number 1? 2? excuse me. public comment is closed. [gavel] >> do you want to address that real quick? >> certainly. our training occurs on port property. typically we schedule the training proximate to the ferry building and we utilize the

entire 7-1/2 miles of the waterfront. we propose a set of circumstances related to potential hazardous and emergency issues. the group plans its response and then he we deploy resources across port property ~. but the center is usually right next to our building at pier 1 in between us and the ferry building and then we utilize, of course, our offices for the command center [inaudible]. >> okay, thank you very much. colleagues, any questions? comments? okay. could i have a motion to send item number 1 forward to the full board with recommendation? >> so moved. >> take that without objection. so moved. [gavel] >> okay, madam clerk, can you please call item number 2? >> item number 2 is an ordinance waiving the fee required by public works code, section 724.1(b), for temporary street space occupancy permits on certain designated city streets on saturday, may 10, 2014, saturday, may 17, 2014, and saturday, june 21, 2014, as part of small business week sidewalk sales.

>> good morning, chair farrell, supervisor avalos. my name is christian murdock. i'm here on behalf of office of small business director he [speaker not understood] who is out of town and unable to attend. i'm requesting your support for this legislation [speaker not understood]. and the small business commission voted unanimously to support this legislation last monday, april 14th. our office is grateful to supervisor katy tang for introducing this legislation as well her introduction to waive fees for awning signs and awning pedestrian level information. [speaker not understood] small business month. this is the 10th year of coordinated sidewalk sales in honor of small business month and this would be the th month of [speaker not understood]. the office has decided to pair these sidewalk sales with the other small business week celebration scheduled for may 12 through 16. also in their 10th year, small business week as you know provides a showcase for city's

unique small businesses. similar legislation waiving [speaker not understood] co-sponsored by different supervisors over the years. 24 merchant's corridors are hoping to participate by presenting each of the city's supervisorial districts. we're thankful for pro local who helped with the outreach who helped to in crease participation to such a high level compared to previous years. as you know there is one merchant area that couldn't participate and that would be june 21st, the castro merchant [speaker not understood]. supervisors respectfully request your support of legislation to benefit the small business groups. thank you. >> thanks very much. supervisor avalos? >> thank you. i'll be supporting legislation and i've been a sponsor in the past. how is it ocean avenue is not on here? it's been typically on here year after year. is it certain district? >> sir, i'd have to check our partner for pro local as i

mentioned did the one on one engagement due to our staff in the office. i'll report back to you. >> that would be great. >> colleagues, any questions? okay, we'll open up item number 2 to public comment. anybody wishing to comment on item number 2? okay, seeing none, public comment is closed. [gavel] >> motion to approve and send item number 2 forward with recommendation. and we can take that without objection. [gavel] >> okay, madam clerk, can you please call items 3, 4, 5 together, please? >> item number 3 is the resolution finding the proposed plot 700 development project at san francisco international airport fiscally feasible pursuant to administrative code, chapter 29. item number 4 is ordinance appropriating $1,969,830,773 of proceeds from the sale of bonds for capital improvement projects to the airport commission for fiscal year 2013-2014, and placing the total appropriation of $1,969,830,773 on controller's reserve pending sale of the bonds. item number 5 is the resolution approving the issuance of up to $1,969,830,773 aggregated principal amount of airport commission capital plan bonds; and approving certain related

matters. >> okay, thank you. cathy wiener, welcome back. >> thank you. good morning, chair farrell, member of the committee. cathy wagoner with the san francisco international airport ~. i am joined today by the airport's budget manager bruce robertson who will also be available to address some questions you may have. but i will start with just giving you a brief overview on item number 3, which is the fiscal feasibility of a project called plot 70. the airport is seeking your approval of the proposed projects associated with a plot -- excuse me, plot 700 project, as being fiscally feasible. this is required by chapter 29 of the san francisco administrative code on capital projects with a projected construction cost in excess of $25 million. the proposed plot 700 project is estimated to cost $3 million

and includes construction of a new ground transportation unit as well as a bus maintenance facility on six acres of airport property in our north cargo area. this is a parcel of land that was previously part of a lease with united airlines that became available to be returned to the airport for this use when we got a new lease with united. the project has been approved by the airport commission as well as by the city's capital planning committee and will be funded by airport bonds which are included in the next two item that you have before you. so, funding for this project will come out of the bonding authority and the supplemental appropriation request before you in the next two items if they should be approved. consolidating these two airport functions in a new permanent location will allow for a better use of the space, and both facilities are well beyond their useful life. they were built in 1992 as

temporary -- temporary structures. so, it is now time to consolidate them and move these support services off of a pretty busy location away from mcdonald road which serve as a major roadway, providing public access to airport terminals as well as to our rental car center. so, this will move these two fa smelts ~ facilities away from that road. the [speaker not understood] beyond enhancing the planning and permitting needs include an estimate 2 27 new jobs in construction and related positions. the airport believes this project is fiscally feasible and the budget analyst recommends approval, but i would be happy to answer questions. >> okay. >> do you want me to go into the other two or do you want to hear from -- >> we'll take it all at once. supervisor avalos, do you have a question now? >> just a real quick question. do we have any sense of how many end use jobs will be created? >> i'm sorry, one more time, how many what? >> end use jobs.

>> these jobs that i cited, the 2 27, would be construction related jobs. currently there are, i'm going to estimate, i'm thinking there are up to about 40 people that are employed between the two different functions at the airport. those are permanent jobs that wouldn't change based on moving these locations off of mcdonald road. >> thank you. >> why don't we go into the other two right now. >> okay. the next two items involve the request of your authorization to sell bonds associated with the supplemental appropriation request totaling $1.97 billion. the appropriation will support the portion of the capital plan that is funded by general airport revenue bonds. the airport ha seen dramatic growth in traffic over the last six years and projections for continued moderate traffic growth, growth over the next

five years. this capital plan supplemental will address the airport as need for additional facilities as well as the enhancement of several existing facilities. the projects included in the supplemental request are terminal projects primarily for the redevelopment of terminal one boarding area b, the renovation of terminal 3 east, and improvements to the terminal 3 boarding area s area of the airport as well as airport service projects for the new air traffic control tower and the support buildings that will connect the tower with our existing terminals. also included in the airport service project section of the appropriation is the funding for plot 700 which was the item i just addressed before. ground side projects include a new long-term parking garage facility as well as an extension of our air train,

airfieldprojects include runway safety area projects and other taxi land improvements. there is also included utility projects such as a new industrial waste treatment facility, recycled water distribution pipeline, and other infrastructure improvements. the proposed resolution and ordinance are before you today instead of moving, as it traditionally would as part of airport's budget, in order to ensure the financing necessary as we ramp up the completion of our runway safety program. starting next month, the program will really become -- it will get as large as it's ever going to become as we close two of our runways for four months to finish the project. the supplemental request has been reviewed by -- and approved by both the airport commission and the airport financial advisory committee. also by the city's capital planning committee. and as i mentioned, i am joined here by the airport budget director if you have specific

questions on some of these projects. he can address that. >> okay, thank you. colleague, any questions at this point? supervisor mar? >> actually, i appreciate the detail of the capital improvements. do you know yet where the waste treatment facility or the water treatment plants are going to be cited? >> i believe that we do, yes. i'm going to ask robert to address that. ~ >> bruce robertson [speaker not understood] for the airport. supervisor, we have a existing sanitary treatment plant and an existing industrial waste treatment plant and we have some vacant land by the waste treatment plant where we will house the new one. >> where are they located? >> that is currently in what would be the northeast part of the airport where the north cargo area is. so, away from our terminal complex. >> okay, thank you. >> thank you.

>> colleague, if there is no further comment, we'll move to our budget analyst report. mr. rose, can we go through 3, 4, 5? >> yes, mr. chairman, members of the committee. regarding item 3, on page 11 of our report in the fiscal impact section, we note that funding of the plot 700 development project is contingent upon approval by the board of supervisors of the issuance and appropriation of up to 1.9 billion in airport [speaker not understood] and that's under files 14 0 237 which we'll get to in a minute and 1403 2. the annual debt service on the pro positived bond is paid for by annual operating revenue which includes payments to the airport by the airlines under their lease agreements with the airport and airport concession and other airport revenues. as you know, the airport operates under a residual rate setting methodology, otherwise known as the break even policy. and that's used by the airport

to determine runway related fees and other fees by all the airlines. the increases in the airport's operating costs due to increased debt service would be funded by the increased [speaker not understood] under the lease agreementses with thev airport. so, we recommend that you approve the proposed resolution contingent on the board of supervisors's approval of the pending resolution authorizing the issuance of the airport revenue bonds a file 1403 27 and the related supplemental appropriation file 1402 32 ~. and going to those two items, items 4 and 5, i would note on page 15 of our report that the proposed resolution would authorize the airport to issue the 1.9 billion which i just previously referenced in airport bonds. that includes 1,456,4 34,700 dollars in direct costs, and [speaker not understood] in related costs and that's shown

in table 2 on page 15 of our report. the project costs are detailed in table 3 on page 17 of our report with additional detail shown in the attachment on page 20 of our report. on page 16 of our report, we note that according to the estimates provided by airport staff, the proposed revenue bonds would be sold with an interest rate of 6.12% over 30 years. the airport's first year debt service is estimated to be approximately 10.2 billion in fiscal year -- excuse me, million, 10 million 244,901 in fiscal '14 with total debt service payments of 4 billion [speaker not understood] over the full 30-year term of the bonds of which approximately 1.9 billion is the principal amount and 2.4 billion is the amount for interest and related costs.

on page 18 of our report, as discussed, we note that the proposed appropriation includes the 30.2 million in construction and design costs for the plot 70 development project which cannot be completed without additional board of supervisors approval of the environmental review findings in accordance with the california environmental quality act. so, our recommendations on page 19 are that we recommend that you amend the proposed ordinance as file 1403 32 to request the appropriation 40,9 29 [speaker not understood] budget and finance committee reserve, pending approval of the board of supervisors by the c-e-q-a findings for this project and we recommend that you approve the proposed resolution file 1403 27 and the proposed ordinance file 1402 32 as amended. i'd be happy to respond to any questions, supervisors. >> thank you, mr. rose. colleagues, any questions at this time? okay, why don't we open this up to public comment. anybody wish