the first 7 units in 6 locations have been approved by the city, and we appreciate your support for those. the three rooms in the north beach housing buildings at 2449 and 2450 taylor street are very important. this is the location. at the end of the powell street cable car line. they are important for a restroom, a break room for the operator bes and other field staff, and for a ticket sales office. prior to demolition of the former san francisco housing authority development we negotiated a lease for these facilities. there was an operator restroom and a transit shelter on the adjacent sidewalk. those were demolished and these new facilities were constructed. the previous lease expired december 23rd, 2013, it had been for 9 years with a 6-year

option to extend. rather than only extend for 6 years because these facilities are so critical to our operators and other field staff, we decided to negotiate a 10 year lease with a 10 year option to renew. so that is what is before you today. we weigh the advantages and came up with the 20 year lease. the first year rent is $7,920, increasing 3 percent per year with a proposed 10 year extension through december 31, 2033. and the rent payments are a total of $212,813 over 20 years under the proposed lease, which is, if you look at the net present value which the budget analyst office did, there is a savings of $13,835 over the 20 years. so i would be happy to answer any questions.

>> okay, colleagues, any questions? okay, mr. rose, can we go to your report, please? >> mr. chairman and members of the committee, let me start off by saying that our recommendation to approve was a close call in our office which i have previously explained to the supervisors. as you note on the bottom of page 19 of our report and as the department has indicated, they now have an existing option for 6 years at $6,000 a year, $36,000. that's a flat rate that they would otherwise pay if you did not approve this lease. we're recommending that you do approve it. the new lease represents a 32 percent increase in rent for the first year and that goes up by a cost of living each year.

so it was a difficult decision as we looked at this, it was a close call, and when we did the present value savings with the real estate division and the department, we concur that there would be a savings, although it's minimal, of about $14,000 over a 20 year term. the 10 year lease that you are approving, if you approve it, plus a 10-year option. >> just -- you know, this is comparatively a small item here. >> yes. >> we're locking in a long-term lease in the height of a real estate market. i'm questioning the generic theory right now. >> right, that's why i said to you that this was a close call on our part. the department right now, if you did not approve this lease, the department has a guaranteed rent for the next 6 years of $6,000 a year. if you approve this lease and not exercise

that option the department is automatically paying 32 percent more in the first year and that's going to go up for the next 20 years. however, when we look at the entire 20 year period and discussed this with the real estate division as well as with the department, it turns out that the calculation for the net present value savings based upon the real estate division's and the department's projected rent over the next 20 years, which is a guess to a certain 20 --. >> can i hear from mt on this? first of all what are your assumptions? obviously in order to be from four grand a month to 7900 a month and say we are saving money means your (inaudible) needs to be pretty high. if you have for 6 years right now locked in at six grand, why are we doing this?

>> one reason is because it's a critical location and it's difficult to find other restrooms in thary and there are no facilities including across the entire city where there is also a break room and a ticket sales office included in the deal. so this is a unique location with a unique set of needs so we have looked at comps through online services that the mta subscribes to, including costar and loop net, and comps were that this is a reasonable rent and that rents, yes, are, they are high now but who knows what they will do in the future. they could go up and they dwo down, but in order to have less uncertainty regarding this location and will we nose to ask for a 10 year lease with a 10 year option. >> 20 years. >> yes, so it's a 20 year total. >> okay, sorry, mr. rose,

anything more? >> no, i want to emphasize, it's your very question that i started off my presentation by saying it was a close call in our office by making this recommendation to approve. we stand by that recommendation but i did want the committee to understand that. so our recommendation is simply to amend for retro activity, this is a lease that is effective january 1st, 2014 and to approve as amended. >> colleagues, any questions? we'll open up to public comment. any public comment on item 3? seeing no public comment, public comment is closed. look, it's pretty close for me. i don't understand, i get the value of the space, it's a unique space and you can look at costar and loop net and do things like that. i think however locking in long-term things i'm not so sure the

wisdom of that, but this is ultimately smaller dollar amounts and if there is security i will bow to that with the mta to make sure -- and i know having restroom facilities on our drivers is incredibly important for the right places but i think when we do these types of things during these boom times, if you will, we talk about rents, we are talking about affordability, i think there needs to be a broader discussion on that going forward. i am probably laying exactly where mr. rose did. >> move to amend the proposed resolution for retroactive and approve the resolution as amended. >> motion to amend, can we do that without objection? so moved. and the underlying item as amended? can we do that as well? madam clerk. >> item no. 4 is a resolution authorizing the issuance of up

to $30 million aggregated principal amount of port revenue bonds for the purpose of financing or refinancing certain capital improvements related to the port, approving the forms of documents relating there to, approving the issuance there to, having a public hearing with the director of public finance. >> elaine ford, support staff. just as a bit of contextual information, the port starting in 2010 re-entered the bond market after a bit of a hiatus due to increasing our internal financial capacity and also with the support of the mayor's office and the board of supervisors to make more investments in capital, in our capital infrastructure, and the intention of the revenue bond program is really to invest in larger scale investments and with your approval today will be at about $100 million since

2010. the city issued cop's on our behalf in 2013 around this will round it off. you did previously approve our ability to issue bonds in the amount of 25.3 million in may of 2013, you gave us access to the city's commercial paper program which allowed us to keep phase ii of the cruise ship terminal on target. the purpose of these bonds is phase ii of the cruise ship terminal and also to make improvements at pier 31 in the northern waterfront in the amount of 1.9 million and we're using additional funds for pier 31, but that will allow us to open up red tagged facility, meaning it's shut to public use for private leasing and we're very excited about that project. today we have the financing documents for your review and final approval and that's the preliminary official statement, the second supplement to the

indenture, the bond purchase contract and the continuing disclosure agreement. the budget analyst report notes that from your prior approval the resolution has increased 4.29 million dollars. you will see in the budget analyst's report we're not increasing the project amount and actually bond issuance costs are going down a bit. we increased this amount when we went through the commission process because we thought interest rates might be trending upward. fortunately they did not trend upward to the extent we thought so we don't need this additional reserve at sale so we wouldn't need the appropriation amount but we're keeping the amount consistent with what the commission approved. we concur with the budget analyst's approval and i want to end with thanking you for your support of the cruise ship project. our cruise calls are coming in higher, we have 75 this year, for next year we already have

82 bookings and that means about 300,000 people coming and visiting us through cruise calls so it's good for the economy and it's good for the port. it's just been, we're really happy we've made the investment with your support. so i'm here to answer any questions. >> thank you, miss ford. colleagues, any questions? okay, mr. rose, can we go to your report, please? >> mr. chairman and members of the committee, on the bottom of page 24 of our report as shown in table 1 of the total qued not to exceed amount of $30 million, the port estimates that 29.5 million would be expended, which is 4,4 85,000 which is more than the port's previous expenditures and as the department has indicated this is for the cruise terminal project and the northern waterfront historic structures project. and also as miss ford

has indicated, this increase not to exceed is comprised of two components, bond issue costs which would go down by about $760,000 and then the bond reserve cost which miss ford indicated she will not need of about $5,050,000. >> anybody wish to comment on this item? okay, seeing none, public comment is closed. so, colleagues, we have no. 4 in front of us with a recommendation to approve. >> we have a motion to send this item forward we can take it without objection. madam clerk. >> item no. 5 is a resolution finding the proposed hall of justice jail replacement

project is fiscally feezable pursuant to chapter 29. >> brian strong, director of capital planning. good morning, thank you very much for having us here. i'm just going to quickly introduce this fiscal feasibility study that the department of public works introduced and they will walk through it. jauft as a reminder, this is one of several pieces of legislation on the jail that will be coming before you and again this has been a key item in our capital plan since 2006 and you are aware of the seismic vulnerabilities in the hall of justice which is why we are trying to move as quickly as we can to get this jail replacement project going forward. so i'm going to introduce jamoke taylor, she is the project manager for the

jail replacement project. we also have chef tee chief sheriff matt free man here to answer any questions. >> good morning, supervisors, i'm going to run through the presentation, i think you have a copy of it. the project introduced by dpw on behalf of the sheriff's department. we are seeking authorization, in order to proceed with our environmental implementation process. it's important for us to obtain a ceqa clearance, sb1022 we believe will be around again sometime next year so this would help prepare the project to be able to, to be

eligible for that funding when it comes up and also admin code 29 does require that we seek your determination before we proceed with the environmental evaluation process. the budget analyst's report also recommends that you approve this resolution because we found that the project is fiscally responsible and there is also an opportunity for you to, for us to seek your approval at a later date and the approval would be on the bed count for the facility and to also approve the funding in december 2015. this is the schedule, i just ran through the schedule of when we will be coming before you again to seek your approval on the bed count and also on the funding. now the background, brian had mentioned

that this project has been part of the capital plan since 2006. and this is part of the overall justice facilities improvement program. the hoj, we all know that it is seismickally vulnerable and it's important for us to have a replacement facility before the hoj becomes non-operable at some point in the future. the 640 bed came from, it was arranged from the controller's forecast of 2013 and they have predicted needing between 481 and 688 new beds and the sheriff came up with 640 as a prudent number to work with now. and having that number in the environmental application, it's better for us to submit with a higher number and then if the forecasters come with lower numbers it's easier for us to move down as oh poed to

ramp back up. that's why we are going with the 640 now. the new forecast update will be available late spring. this is the site. we're looking at two sites for the environmental application and that is site a and site b site a is the block directly opposite the hall of justice and option b is the west wing of the hall of justice. so the new facility is going to move from the currently designed to the podular design, moving from the traditional linear design to the podular design.

i just mentioned some of the benefits of moving from that traditional lineal design to the podular design. also i think one of the important features with the new design is the program space that the sheriff has for the rehabilitation aspect of this jail and also the medical and mental health units that would be part of the new facility. just a few slides to go on the fiscal feasibility office, the bureau office already prepared a report. we feel the direct and indirect financial benefits to the cd to brief the benefits of the new facility before the hoj becomes non-operable, we don't want to ramp up costs, there would be associated costs with temporary jails if, in the event of an earthquake, the hoy

becomes non-operable we would have to find temporary space for the current inmates and also the cost of expedited construction and the savings from inflation construction inflation if we do construct a facility before the hoj becomes non-operable and the capital plan also states that there will be about 2800 new jobs as a result of construction to the city in san francisco. so the estimated capital project budget is about $290 million. that's what is estimated right now for the 640 beds. and the available financing, according to the office of public finance, is through the issuance of certificate of participation and it would be paid back over a period of about 23 years. the debt load would be

$629,610,000 with an annual debt service payment of $29,634,000 and they do note it will not exceed the city's 3.25 limit. the operating and maintenance costs, the current operating and maintenance costs of cj5 was used as a benchmark because of the similarity of design they are estimating $930,000 a year in operating costs. and that's the end of the presentation and do you have any questions for me? >> colleagues, any questions? actually i'll just ask this one but maybe it's more directed to

i'm sure deputy sheriff friedman. the 640 bed number, i know you said having it high and reducing it if we see a trend of reducing the jail population, i'm just wondering, given the previous hearings we have had with the decrease from different alternative programs in the community and a lot of the people that are opposed to a new jail have been saying the number should be reduced downward and i'm wondering why that 640 number is on the high end of the 688 versus in the middle of the 481 to the 688 bed range. i'm wondering if deputy sheriff friedman or miss kaylor could address that question. >> well, to go to both issues that you have raised, the use of what we call alternatives to

incarceration or to pre-sentence release programs are well established, well in place, have been for some 20-plus years and will continue to be used. and in terms of ultimate bed count for the replacement facility, we continue to work with controller's office and the jail planning team to regularly review what the appropriate number is. >> then i definitely understand the need for fiscal feasibility, especially given the need to rebuild with a pod system versus the linear system that miss taylor explained and i appreciate you walking me through san bruno but also the hall of justice facility as well. >> part of the budget analyst's recommendation was amending it to say that we'll consider the appropriate size of the jail and the project in

the future, which i totally am fine with. he did suggest though in the spring of 2016 --. >> mr. chairman, members of the committee, i was going to state to you that that is incorrect, it should be 2050. >> never mind then. mr. rose, you are up. >> mr. chairman, members of the committee, on page 31 of our report we note that the construction of the replacement jail would be financed by the issuance of certificates of participation. the certificates of participation would be paid back over a period of 23 years, ending in 2038-39, total debt service including principle interest are estimated at 629.6 million. estimated annual debt service payments would be 27.3 million dollars. on the bottom of page 31 we point out that our office previously submitted a report to the board of supervisors in

january of 2014 indicating what supervisor mar has mentioned about the size of the jail. our information indicated that there could be a jail as low as 384 beds if the current average daily population remained the same. that would save about 96 million dollars if the bed count were lowered. so our recommendation, mr. chairman, as you have already stated, is to amend the resolution to specify that the board of supervisors will consider the appropriate size of the proposed replacement jail and associated project costs as part of the board of supervisors approval of the city's 10 year capital plan and you are correct, mr. chairman, it should say 2015 instead of 2016. we recommend that you approve the resolution as amended. >> thank you, mr. rose. colleagues, any questions? supervisor mar >> i just had a question of

mr. rose. given the numbers you just said, i think you said 380 bed jail is something i would like more information on. i think there's a budget analyst report that's being worked on; can you tell us when that might be completed? >> supervisors, (inaudible) budget analyst's office. we submitted a report and had a hearing earlier this year that contained those numbers and those were based, our projection of 384 beds was based on the population at that time. >> is there a report being worked on at this time as well? >> no, it's my understanding the controller's office is doing an assessment. >> any further comments or questions? so we will open up to public comment? anybody wish to comment on item 5? seeing none, public comment is closed. colleagues, may i have a motion to move item 5 forward to the full board?

>> so moved. >> would you like to adopt mr. rose's recommendation? >> yes, absolutely. can i have a motion to approve the budget analyst's recommendation first? we can take that without objection. then the underlying item as amended. thank you, miss wong. madam clerk, do we have any other business in front of us? >> no, mr. chairman. >> all right, we are adjourned. (meeting adjourned).you. >> ♪ ♪ ♪ ♪ ♪ ♪ ♪

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