of ucsf is both the nonprofit that is obligated under this redevelopment area plan to pay fees. so, there's was a negotiation. ken rich is here from mayor's office of economic development and we also do have christine ma her from ocii to present on the item to discuss the negotiation and what will come forward from the proceeds from those funds. >> thank you, supervisor kim. before we proceed on this item, it was just brought to my attention by deputy city attorney apparently on the last item we actually had gotten the numbers wrong. so, if i could ask for deputy city attorney, i think we need to rescind the vote and recast the vote to properly affirm the approval of the mitigated negative declaration. but anything else you want to add to that? >> deputy city attorney jon givner. so, the board voted to affirm the final mitigated negative declaration which was item 17, and to table the item 18. but you also adopted item 19 and that item should be tabled as well. >> right. >> so, colleagues, if we could briefly go back and recall that

item, and supervisor kim, if you first want to make your motion to rescind your motion. >> i will make a motion to rescind. my pool jai for that. second by supervisor campos. without objection, that should be the case. [gavel] >> supervisor kim, if you want to make the motion as provided by city attorney givner. >> [speaker not understood]. >> colleagues, you want to take that without objection? without objection that should be the case. [gavel] >> now back to regarding the item of mission gay. ~ bay. with that we have [speaker not understood] related to citith agencies. i want to welcome mr. rich from oed. >> good afternoon, ken rich from oed. my office is representing the city. occ, office of community investment and infrastructure. to negotiate to action with cssf. i want to thank the members of the budget committee for bearing with us as we explain.

how this transaction needs to occur, i think we edved up with a deal with ucsf that is good for the city and good for mission bay and good for ucsf. the agreement with ucsf provides funds for housing that are greater and come to us sooner than what we would have gotten with oci would have gotten for use in mission bay if a regular taxing entity had been on the property. in addition, ocio received money to go to infrastructure in mission bay. that is expected on this property. the ability for ucsf by building this new large facility in mission bay to release several properties they currently own and rent around the city were put back onto the tax rolls for funds -- including a portion of which would go to the general fund, far in excess of ocii is not able to collect through the

dissolution procedure you'll hear about in a minute. lastly, this allows ucsf to consolidate more of its activities in mission bay which makes sense for a number of reasons that i think the board is well aware of. so, with that i'm going to ask christine ma her from ocii to come up and stake you through the detail. we have staff from ocii as well as ucsf afterwards for any questions that you might have. >> good afternoon, supervisors. the board is being asked today to act in two different capacities. first, approving as a legislative body as a successor agency to the former agency, changes to the affordable housing obligationses and mission bay south. namely, the up front payment of the 10.2 million rather than ongoing payments in lieu of

taxes through 20 43. and secondly, consenting as a legislative body of the city to the transfer of blocks 33 and 34 from sales force to ucsf with an up front payment of 32.1 million. l i'd like to start the presentation with a quick introduction to the site as we're talking about today. as you can see on the slide blocks 33 and 34 are located on third street in mission bay south across from ucsf medical center and campus sites. the site which is about 4 acres, can accommodate up to 500,000 square feet of office and commercial uses. this next slide gives you a quick overview of the framework that governs development in mission bay south. the south is governed by the south redevelopment plan, the south owner participation agreement with fossil, the master developer, and related agreements.

under redevelopment dissolution law, ocii is required to allocate funds that it receives to the fulfillment of its enforceable obligations. in mission bay south these enforceable obligations are primarily public infrastructure and affordable housing. ocii is required to reimburse fossil for the cost of constructing the public infrastructure and in the south and ocii is also required to use a minimum of 20% of tax increment generated in the south for affordable housing. units will target low-income families, formerly homeless families and individuals and seniors. the south opa was amended back in 2005 to include a requirement for a payment in lieu of taxes agreement or a pilot on many remaining parcel in mission bay south including blocks 33 and 34. upon transfer of the parcel to a tax exempt entity, the pilot requires a payment in lieu of

the full amount of taxes that otherwise would have been assessed. alternatively, the pilot allows ocii and the city to consent to a transfer to a tax exempt sept it without a pilot in place. ~ entity the primary intent of the pilot was to maintain ocii's ability to maintain infrastructure and affordable housing with tax increment even if properties were purchased ore leased by tax exempt entities. i'd also like to note that since dissolution, ocii can only use funds that it receives under the pilot to fulfill its enforceable obligations in the south which again are affordable housing and infrastructure. next some background on ucsf and the proposed transaction. as traditionally mentioned ucsf currently controls 57 acres in mission bay for its campus and medical center sites. the university is now proposing to acquire blocks 33 and 34 from sales force and develop up

to 500,000 square feet of office space and related parking. under the california constitution, university is exempt from local land use and redevelopment regulations and from local property taxes. however, ucsf is subject to third-party contractual obligationses that run with the land, in this case the south opa and the pilot agreement. under the pilot, if uc were to pay the full amount up front, it would pay approximately 39.8 million, which is the net present a value of the taxes that a taxable entity would owe for a similar development program. however, given its tax exempt status as a state agency, uc and ocii have negotiated one-time lump sum payments totaling 32.1 million instead of these annual payments over time. the affordable housing payment is a one-time lump sum payment to ocii of 10.2 million for

construction of affordable housing and the infrastructure payment as one-time lump shim payment to fossil of 21.9 million for public infrastructure. in addition, uc has agreed to pay the special taxes authorized in the oci number 5, for parks and open space in mission bay south and csd 6 which helps fund infrastructure in the south. uc estimates the net present value of these payments is approximately $10 million. although uc's proposed payment is what would be less than owed under the pilot it is substantial in the affordable housing program. first the payment is 6% or approximately $10 million more than oci would have received from a taxable entity. second, the payment is up front and will provide immediately available fund for the production of affordable housing in the south. currently there is approximately 750 units left to be built in mission bay south. the affordable housing payment will allow for two affordable

housing projects to be built in the next five years rather than two in the next 10 years. and there is no impact to the housing trust fund. these two projects that we're talking about are blocks 6 east which will be 135 units of family rental housing or 27 units for formerly homeless families and block 3 east, 101 units of supportive housing for formerly homeless individuals. in addition to the affordable housing benefits, the transaction will also generate a benefit to the city's general fund over the next few years. ucsf anticipates that development of blocks 33 and 34 will allow for the consolidation of its operations and relocation from other sites in the city. if taxable entities were to take over these spaces, then the return of these properties to the city tax rolls could generate new general fund revenues to the city and tax revenues to the other taxing agencies. the net present value of these

revenues is an estimated 16.2 million which was vetted by ocii's consultant oha [speaker not understood] and reviewed by the budget analyst. of the 16.2 million, approximately 9.1 would go to the city and of this 9.1 approximately 6.6 would go to the general fund. while these revenues are not guaranteed, uc stated purpose for purchasing the site is consolidation of its operationses to mission bay south. it is currently paying below market rent on several lease he he he set to expire in 2018 and 2022. upon expiration they plan to move operations to mission bay. even if for some reason uc didn't give up all this lease space, it is likely there would still be a benefit to the general fund because 16.2 million is double what is foregone into the pilot. in addition [speaker not understood] which will free up additional tax revenues was not included as part of this analysis. in closing, i'd like to just

quickly point out that there are some additional policy considerations for the board to take into account. that is ucsf is the second-largest employer in the city and its substantial contributions to the city overall economy. that concludes the presentation. representatives from ocii and oewd, [speaker not understood] economics and ucsd are available to answer any questions. thank you. >> thank you. colleagues, any questions to city staff? is there any further discussion? if not, why don't we hear from members of the public that wish to speak on this matter. please step up. good afternoon, supervisors. my name is don marcus on with the university [speaker not understood]. i'm here to support block 33

and 34 ucsf. the city is [speaker not understood] for the rest of san francisco. and we need that job development momentum going and this project will help do that. i heard in the news last night or yesterday the average house price in san francisco is a million dollars now. so, there's a lot of issues and a lot of item that need to be addressed. and what we hope for is a speedy and fair resolution of other issues just as important as employment. but as far as workforce development, i'm confident that the ucsf construction team and development team have put together a strong outreach and recruitment of san francisco residents to work in the project. i'm here again to ask for your support and thank you for your consideration.

>> colleagues -- next speaker. ♪ lot of city people went sailing on the san francisco renters bay and we like affordable housing and that's what we'd like to say call it whatever you want to ride along to another city shore we'd like more affordable housing and be free once more ride, city ride upon your mystery rent in the city we're going to have no more bad money spent calling eversiti person a lot of people to ride along to another shore ~ we'd like affordable housing and be free once more ♪ thank you. (applause)

>> next speaker. and if i may, those who are in the board chamber, members of the audience either not supporting with applause or expressing opposition with hissing or booing in order to keep the conversation going smoothly. so, let's hear from the next speaker. thank you. we have two minutes for public comment. you know normally when we came to this auguste chamber you would get three minutes. we're now to two minutes. so, mr. president, i want you to make note of that. so, having said that, let me tell you the entire mission bay area public trust line so all these affordable housing that you are talking -- that ucsf is talking about has to be put in perspective. affordable is two rooms. [speaker not understood] when they say it's affordable to talk more about low-income and no income. so, what i hear you is a lot of

baloney that, you know, we need affordable housing, but i bet you, it's one of few representatives. you haven't read the housing element. you haven't read the housing element that reflects what the needs of our city the next 10 years. and you haven't bothered to see whether the standards or the [speaker not understood] of the last housing element were provided. so, i'm asking ucsf and i'm asking all these so-called rich people that, please, pay attention to those san francisco an who contributed a lot to san francisco but who just happen to be low-income and no income. ~ san franciscans and i'm asking you representatives to give us three minutes to express ourselves because y'all run your tongues and you know you

can run your tongues because the tongue has no bone. thank you very much. >> thank you. are there any other members of the public that wish to speak? ~ apart of this hearing? please step up. roberta [speaker not understood] ucsf, campus planning. i just want to submit for the record letters from the mission bay citizens advisory committee, nomad mission hiring hall and [speaker not understood] services. >> duly noted. next speaker. board of supervisors, [speaker not understood] open government. just as i spoke earlier, it does offer an opportunity for consolidating 8 campus he and putting them in one location which in the end will provide reduction in parking problems. when people have to go for appointments and they go from one place to another place to another place, that causes

extra traffic, pollution, and also is a parking issue. consolidating in this way is a very effective way of getting parking not in control, but at least in a better stance. and opening up taxable property at another location or other location is something the city obviously can use during the discussion relating to the wraps over the buses. you know, we're quibbling over half a million dollars and here we're talk about many, many millions of dollars. i would, however, agree with the prior speaker in the sense that when he we talk about affordable housing, this seldom ends up to be affordable housing. it ends up usually very expensive housing which people of moderate or low-income cannot afford and people who are retired on social security or whatever can definitely not afford. we do need to talk about no income and very low-income

housing because that's the real need for this city. we're forcing long-term residents, some people who have lived in the city their entire lives get to the end of their life and are on social security and as a result find themselves unable to stay in the city. you know, we talk about the history of san francisco. the history doesn't go away at one fell swoop. it disappears one piece at a time. and each individual who is forced out because of economic reasons diminishes our city. >> any other members of the public wish to speak in this hearing? okay, seeing none this hearing is now closed. [gavel] >> and items 21 and 22 are in the hands of the board. supervisor kim. >> thank you. i want to first of all thank the budget committee for their really detailed review. i think it's really important that we have a lot of eyes on the deal that came before us. it is a deal that does bring us less dollars that would have normally been for another

entity per se or even for ucsf under pilot. but i think it's important to evaluate what the benefits of an up front payment would mean, particularly towards accelerating the production of affordable housing in mission bay south. bringing it to fruition in five years versus 10 i think is a huge benefit. but i think looking at ucsf properties city-wide and looking at the benefits of freeing up properties in other cities to be taxable in the future is really important. so, i really appreciate the lengthy discussion that happened at budget committee. i certainly feel more confident supporting this deal now after it's gone through the process that it has. >> supervisor yee. >> this is an appropriate time to ask for a clarifying question of the city staff? >> sure. >> i just wanted to make sure i understand the statement of

returning these properties to the tax rolls which generate general funds revenue of 16.2 million. my question here is in the analysis alh economics and their analysis, what year did they start calculating the return of the portion that uc is running now to the tax rule? are they basing this on 30 years of revenues from that potential or is it since ucsf is still occupying these spaces? so, i'm just curious, where does it start? >> christine maher, [speaker not understood]. the calculation would start in 2018 which is when [speaker not understood] would be given up by uc and they run it to 20 45. it's that time frame 2018 to 20

45. >> can i -- i'm a layperson. by 2018, then we're assuming that ucsf would have built a building to accommodate all these people to move in? >> yes. the construction will start in 2017 on the first phase in mission bay south. so, yes, that's the assumption is that when [speaker not understood] are up, uc would be able to move those employees starting in 2018 and then again in 2022 when the next round of leases is freed up. >> i guess the question is whether or not there is any guarantee. it doesn't seem like it, that ucsf will actually move out of those other buildings. >> as i mentioned in my presentation, there is certainly no guarantee. however, ucsf has indicate and had they can speak to that if you'd like, that they are

paying below market rate rents in these spaces and anticipate the rents are going to go up. the reason for acquiring this property in mission bay south is to be able to move those operations out of those lease space into mission bay. >> makes sense, i don't even know if it's appropriate at this point since it went through the budget committee and so forth, that if ucsff -- ucsf cannot move out for a few years beyond reasons we thought, is it possible for us not to exempt them, then, from the property tax piece? >> i'll try to address that. ken rich again from oewd. a couple of points. i really don't have the ability to reach forward in time and [speaker not understood]. the reason we're comfortable is

the property that uc has indicated they would move out in 2018 and 2022 would put about twice as much funds back into the general fund as we're foregoing through the pilot. so, even -- we have a margin of error of 100%. even if only half those properties were released and we think it will be more, we would still come out ahead. not to mention you may have noticed in the newspaper covering the last few days, on large lowell heights property, ihop i don't have the number, many numbers of more magnitude of tax money potential. uc has reached an exclusive negotiating number with two local developers to go ahead and develop that property. and, so, laurel heights would put many order of magnitude more back on the tax roll and that's moving forward. we don't have a guarantee, but we have a lot of room for error. even if some of the properties didn't go back on the tax rolls, we have a lot of room

before this would even come to an even deal. >> thank you very much. >> supervisor breed. >> thank you. thank you, supervisor yee, for your questions and pointing out the particular situation. i think one of the challenges i've had as a former redevelopment agency commissioner is oftentimes we talk about good faith. we talk about good faith in hiring. we talk about good faith in terms of development. we talk about good faith in terms of being a good neighbor. but, again, there are no guarantees. the reason why i didn't support this particular item is because there isn't any guarantee. and i do understand the business side of thing as it relates to receiving a large lump sum up front and discounting that amount and instead of the annual revenues that are expected to receive and taxes from this particular property because uc is exempt from taxes, but the taxes are tied to the particular property. the reason why i didn't support

this is because we don't receive taxes from ucsf. and unfortunately we have a significant amount of work that we need to do, whether it be infrastructure at mission bay, whether it be transportation needs at mission bay, whether it be housing in mission bay and i do realize there are limits to where this funding can go. but i just think that they should be paying the entire amount up froth or paying the entire amount over the duration of the 30 years. i don't see why it should be discounted because the city is not collecting property taxes in any other instance from ucsf and in this particular case our one shot, our one chance at collecting some level of significant revenue is basically turned into a deal. i think they should pay the full amount and that's the reason why because there are no guarantees that they'll move out of the space. and the fact that that's even introduced in any way to make an argument is just -- i don't

support that argument because we can't force them to do that. i think over the years the agency has had a great relationship with ucsf and working with them in the mission bay. it's taken on, just really become this incredible neighborhood. but now transportation resources are being redirected from other neighborhoods that are further on the outskirts of san francisco in order to serve employees and residents of mission bay. no, i don't necessarily have the data, but clearly we have to make sure that we are serving the entire city of san francisco and i think that every who is doing the development throughout san francisco should have to pay to support an increase in transportation needs so that various communities don't suffer as a result of an increase in the population whether living or working in a particular neighborhood.

so, it's the main reason why i didn't support this project. i think as a good neighbor, as a good faith effort that ucsf should have given the entire amount, whether it's over the course of 30 years or it's within one lump sum. i think that that shows good faith, especially since they're not obligated to pay the city any taxes nor are they obligated to contribute to the infrastructure outside of what they need to do to build their buildings. and i think that's what my big heest issue is about. i did not support this item in committee and i don't plan to support it today at the board. ~ >> supervisor wiener. >> thank you, mr. president. so, i also had expressed concern similar to supervisor breed relating to the fact that ucsf is not paying any transit impact development fees on this project. colleagues, you'll recall i carried legislation a few years ago to close or start closing the >> aye.

gigantic loopholes in the tidf because we were seeing projects coming through because they were residential which has a blanket exemption or because they were nonprofit which has a blanket exemption and these projects with significant impacts were paying nothing in terms of transit impact development. we're willing to try again to fix that when the transit sustainability program comes back to the board after the eir is done. in the meantime i'm very skeptical about any project that comes forward that has been negotiated that does not include transit impact development fees because there are projects that require extensive negotiation and tidf can be negotiated for a budget city team. so, when i first saw this i was concerned about that and considered joining supervisor breed in not sub poderthing the project. as i learned more about why the

fees come forward the way they are, i am convinced that we really are not able to extract tidf from ucsf that, in fact, the only reason ucsf is paying the fees that it is paying, the $32 million in discounted net present value, is because ucsf stepped into the shoes of sales force and because these fees were effectively reported against the property. so, you know, i don't think that there was a way to get tidf from ucsf if i thought that we could. i would be insisting that we do, but i think this is a very unique situation and, so, i will be supporting the project. >> colleague, any additional questions? okay, i understand we need to take a roll call vote separately on items 21 and 22. so, on item 21 roll call vote,

madam clerk. >> supervisor yee? >> supervisor yee he? ~ yee? >> item 21 is to separate the project, correct? >> yes. >> i just want to make sure i'm voting on the right one. yes. >> yee aye. supervisor avalos? avalos aye. supervisor breed? breed aye. supervisor campos? campos aye. supervisor chiu? chiu aye. supervisor cohen? cohen aye. supervisor farrell? farrell aye. supervisor kim? kim aye. supervisor mar? mar aye. supervisor tang? tang aye. supervisor wiener? wiener aye. there are 11 ayes. >> the resolution is adopted. [gavel] >> and on 22, colleagues, can we take this item same house same call? >> roll call vote. >>l