♪ ♪ ♪ ♪ >> 9:06 and the special meeting for the community investment and infrastructure and the agency commission, of the san francisco redevelopment agency, for friday, october ten, 2014. welcome. madam secretary, call the roll.

>> commissioner mondejar. >> absent. >> singh. >> here. >> and all other members of the commission are present announcements, the next regularly commission meeting will be held on tuesday, october 21 at 1:00 p.m. at city hall, 416.tue (11/18) fidelity investments 8:30:00 am 10:30:00 am 2.00

tue (11/18) fidelity investments 8:30:00 am 10:30:00 am 2.00 >> the next business is item four, matters of unfinished business on the september 12, 2014, item four a, approving a variation to the transbay, redevelopment plan, on site affordable housing requirement, as it applies to the mixed use, project at 181 freemont street, subject to approval by the board of supervisors of the city and county of san francisco in its capacity as legislative body for the successor agencies for the san francisco redevelopment agency in authorizing the acceptance of a future payment of $13.85 million, for the use in the area, and resolution, number

80-2014. madam director. >> thank you, madam secretary, good morning, welcome back, commissioner and good morning, members of the public and thank you for joining us, commissioner thises item was continued from your last meeting it is a variation on the redevelopment plans, however, the staff and the significant, for the on sight, bmr, condo owners that would have been at 181 freemont at this particular project under the planning department jurisdiction and also allows us to produce, more affordable housing in the transbay area and so with that, i would like to ask, chris tien, who is a senior real estate development, who will present the spefbs of this item. >> good afternoon, commissioners and thank you, director. mentioned that the item before

you for consideration, is granting variation from transbay, on site affordable obligation, and acceptance of a $13.85 housing fee the item was continued from the meeting on september 12th in order to allow the staff to respond to questions raised by the commission at that meeting. the office, and just a quick summary of the project, as you can see here on the map, the project is located on freemont street just south of the transit center. it is in zone two of the project areas and under the jurisdiction of the planning

department, the planning department approved the project in the summer of 2012 and it is currently under construction, the project is 52 storiries, with 400,000 of offices and 74 for sale residential units on the highest 15 floors of the tower, 11 of the 84 residential units must be available to moderate households earning 100 percent of median income. the project developer estimates that the fees for these units will exceed $2,000 per month. both the planning code and the redevelopment plan, require that all housing developments in the project area contain a minimum of 15 percent, on site affordable housing,, the requirement was put in place to

comply with bill 812, 35 percent of all units in the project area be affordable to low and moderate income households the developer of the project, has requested a variation from the on site requirement that will allow for the conversion of the 11 on site affordable unit to market rate units, instead the developer will make a contribution of $13.8 for development of affordable housing in the project area. it provides the procedure to meet, in order to grant a variation from the housing requirement, specifically the commission needs to make findings, that there are unique physical constraints or other extraordinary circumstances applicable to the property. and that that enforcement will result in practical difficultis for development creating undue hardship for the property owner

and constitute unreasonable for the plan. and if i could pause for a moment and i think that there are two versions of the powerpoint presentation on the lap top and maybe that is what is causing the confusion. that was the problem and now we are back in business. what is going on? and so, as i just mentioned, the commission needs to make the finding that there are extraordinary circumstances applicable to the project, which is definitely the case here.

the highlights of developments approved or proposed in the project area, it is the only mixed use development with commercial, office and residential uses, and it has the smallest number of residential units of any of these projects. and in addition p as i mentioned the residential units are located on the upper 15 floors of the tower. as i mentioned the commission also has to make findings that the on site requirement creates practical difficulties for the project, as well as undue hardship for the future owners of the inclusionary bmr units. and in this case, the small number of units at the top of a luxury tower with very high hoa fees creates practical difficulties and undue hardships, the hoa cannot be adjusted based on the status of the unit or the income level of the owner, they are required to

pay the same amounts as other owners. second, while the city and oci, have programs that affordable of the units there are is no program that will hip with the increase of the hoa fees over time. the members may approve increases in the fees without the support of bmr owners because they particularly in the development like this with inclusionary units typically constitute a small minority of the membership and finally a hov fees do increase, bmr owners may have difficult making the higher monthly payments for these hoa fees, and the result is that housing costs may become unaffordable and some bmr owners will face the hardship of having to sell it at reduced prices. at the hearing on september 12th, the commission expressed

concerns about not giving bmr home buyers the opportunity to purchase the units in this project, despite the high hoa fees, to that end, the staff worked with the mayor's office with housing and community development to obtain additional information about the impacts of these higher hoa fees on the bmr buyers and units themselves and because the project is located in zone two of the project area, it is actually the public agency responsible for applying the city's inclusionary affordable housing program to the project and the long term enforcement of the affordability of the units in this project, and with the commission's permission, i would like to ask, maria benjamin who is the director of the home ownership to come up and just walk you through some of these impacts and explain, why it is in support of this variation request and then i will come back up and finish off the presentation. >> good morning, commissioners.

when i heard 2000 dollar hoa fees, the hairs on my neck, i just... there are many reasons that we can see that it would behoof the population that we are trying to serve with these opportunities to (inaudible), $2,000 in hoa dues at the start, that is just the start. so hoa fees go up every year. and it will create an artificially low mortgage payment for these folks which will first of all lower their tax deductions so one of the benefits of home ownership is that we get to deduct our mortgage interest that we are paying and so say that i bought the place for $100,000 because

it is priced with the hoa dues and taken into consideration that hoa dues, and my mortgage is only going to be $15,000. so, i am only getting the mortgage interest on a small tiny little mortgage and that tiny mortgage, also lends to all kinds of, you know, what we saw what happened when people had lots of equity in their homes, this is the public record, that i only have a $15,000 mortgage on a unit that at first glance looks like it is worth a million dollars. and so, i am going to get targeted for those second mortgages, those equity lines of credit. those things that are very tantalizing who is struggling to pay a $2,000 hoa fee. and i think even more significantly, the way that

because these units are going to come in as mohcd units and inclusionary program the way that we priced, at first we priced the units, the initial sales price takes into consideration the hoa dues. but, at resale, we do not take into consideration in the sales price, the hoa dues, and so the sales price is based on ami. and so, the next person coming on board, has to be able to afford that ami sales price, plus, afford the hoa dues. and so, you know, that is a huge gap. when it is $2,000 a month, taking up like 85 percent of their affordable payment. and so that means that they would need in order to afford to buy those units they would need that much down payment assistance to be able to even afford the unit at the resale

price. and so,, it is sort of a big bang for your buck, i think would be much more useful to have those extra 44 units because of those large, and another impact is that where we will require the folks to put 5 percent down and so when they are putting 5 percent down of the total sales price. and 5 percent down of $100,000, and then they are only going to get back, and they might not recoup that even the initial investment and no less, the other benefits of home ownership. and so i encourage you to take the money and run. thank you, any questions? >> i am sorry. >> i could not hear you. >> well, it is all right.

>> thank you. >> all right. so next, the affordable housing payments. and the previously mentioned, it will make a payment of $13.85 million for the development of affordable housing in the project area as a down of approval of this variation. and the payment has been met in the additional revenue that will accrue to the developer if the 11 on site units were converted. and this amount is based on the analysis by the group that took into consideration, the exact location of the 11 on site affordable units within the project in order to determine the value consistent with other come parable high-rise sales prices. at the hearing on september

12th, the commission inquired whether the 13.85 million is reflective of today's values given the price increases that have occurred, since the analysis was finished. >> it is difficult to say how much real variation there will be in the values for a number of reasons, first the project is unique and it has a variable set of come parable property and there has been evidence of significant activity and price increases in the middle of the market, there is less evidence at the high end of the market where this project is located and therefore it is difficult to say how much if any the values for this project would have increased over the last year. and second, the value of the bmr units may also increase in the near future as the incomes are expected to rise, and such increases in value could mitigate the increases in value for the market rate units and third the analysis is based on the project that is still under

construction and it does not exist, and it is at a certain, fixed point in time and so it is impossible to really know exactly what the market dynamics are going to be at the point in time when the units are actually sold. and mr. corn well concluded that given the above considerations the analysis is still valid today. the affordable housing payment, which is about 2.5 times the amount of the affordable housing fee that will be paid for the city's affordable housing program will help oci, meet the affordable housing obligations in the transbay, and initially the staff estimated that up to 55 stand alone, affordable housing units on the public land parcels could be funded on the payment, with the assumption of $250,000 per unit in subsidy, and however, based on the review of the stand alone, affordable

projects under way in the project area, currently, the majority which are rental, it could be reduced to $200,000 for a rental project, for example, the sponsor for the transbay block 8 is required to develop a stand alone affordable project that requires no more than $200,000 per unit in ocii subsidy and therefore, if ocii were to use the 13.85 payment, with the transbay block 8, the payment could subsidize over 69 affordable units which is a net increase of 68 units over the 11 that would be generated by the project on site. and at the hearing on the 12th, the commission expressed concerns about whether approving this variation would set a precedent for other

housing projects. it is unlikely because the project is so unique, it is the only approved or proposed mixed use of housing development in the entire area and it has the smallest number of residential units of any high-rise building in the area and residential units are located on the upper 15 floors of the 52-story tower and then if we look outside of the project area, they already have the option of what the transbay cannot currently do. and then, finally, the next steps, the approval today is subject to approval by the board of supervisors, in its capacity as the legislative body for ocii, and because it

is constitutes a change to the program, the planning commission and the board of supervisors will be considering a development agreement with the developer that will be consist he want with this action and will provide the leap for the plan that is in the planning code and require the developer to pay the housing fee to ocii and the agreement also requires the developer to participate in the community facility's district that was authorized by the board of supervisors, the items are schedule for the planning commission on october 16th, and the land use committee of the board of supervisors on october 20th. >> and that concludes my presentation, and we have representatives from the developer, jay, paul here as well as myself and maria available for any questions that you might have. >> thank you. >> thank you. >> madam secretary, do we have any speaker cards? >> we have two speaker cards. >> april, and marty.

>> good morning, commissioners, my name is april and i am the legislative aid for supervisor jane kim whose district is a district for 181 freemont and i am here to experience our support for this variation from the transbay, redevelopment plan, in general, the supervisors supports on site affordability, and but that just something that is important to her that is related to mixed income neighborhoods and i think that this is a unique circumstance that the supervisor has examined carefully with the advice from the staff, and this is a variation that would yield at dishal affordable units in the project area moving forward on our 35 percent goal for the area, this is a unique circumstance in which the supervisor supports this change. while i agree with the staff

position that this is unlikely to set a precedent for other projects in the project area, i do feel the supervisor feels that this is an important precedent in the unique precedent that set and that relates to a developer, that is able and willing to pay a higher fee. and so, i think that in that case, the ability to have additional affordable units is one of her overriding considerations. and so, thank you again, for having the opportunity for our office to speak in support of this item and we ask for your support as well. >> thank you. next speaker? >> thank you, my name is marty with the council of community housing organizations and i just want to let you know that we are support of it variation. and as april mentioned earlier, we wanted to make sure that this does not set a precedent

for in general buildings, feing out and it does set, i think an interesting precedent in both how we got to the number, through an independent third party review and got looked at opportunity costs and a precedent that where, typically in inclusionary housing, when the developer pays the fee, city wide, and not within the redevelopment areas, it averages 250,000 a unit and this is averaging 1.4 million per unit and it let's us know how much a gap there is in what we have set already. and what is available in particular, and luxury projects. and i do want to mention a couple of issues to flag, and as i said before, we support units be provided on site, typically and this is a unique situation that we don't want to lose that 15 percent on site and the question that perhaps the commission might want to

look at and what are the hoa dues, in the projects as you look at other buildings that will have on site home ownership and is it preferable to build those units off site, where the bmr units are paying their own and setting their own and paying their own hoa fees. and so thank you very much and again, we want to say that we are supportive of this and we want to be sure that it does not set a precedent for all projects being out. >> thank you. >> are there any other members of the public. >> no other speaker cards. >> we will close public comment. and turn it to the commissioners, commissioner singh? >> yeah. thank you. and madam president, and i have gone through already targeting this, and actually, i like this project, now, and i don't know before and also, i agree that it counts enough and so

(inaudible) so i think that i like to move this. >> commissioner do you have any questions? >> no i just would like to second that. >> thank you. >> and the motion has been made and seconded, could you call the roll? >> commissioner singh, >> yes. commissioner bustos. >> yes. >> and madam chair. >> yes. >> three ayes and one absent. >> item five, consent agenda, approval of minutes, august 19, 2014. >> madam chair? >> yes, i believe that first we need to call for public comment? do we have any speaker cards? >> i have no speaker cards. >> so there is no speaker cards and are there any comments or questions, edits to the minutes? >> i move the minutes.

>> motion, by commissioner singh. >> second. >> i think that it is appropriate for commissioner bustos to second. >> yes. and so the motion has been moved and seconded call the roll. >> commissioners announce your vote when i call your fame. >> commissioner singh? >> yes. >> commissioner bustos,. >> yes. >> madam rosales. >> yes. >> three ayes and one absent. >> next item. >> next order of business is regular agenda, 5 b, resolution authorizing and direct concern actions to be taken with respect to the election of the city and county san francisco community facilities district no, 2014-1, transbay transit center and, transbay redevelopment project area and discussion and action, resolution number 84-2014. madam director. >> thank you, madam secretary, commissioners the board of supervisors recently completed a number of steps to fill the district in transbay, and it

will cover the entire transbay redevelopment project area and your jurisdiction as well as planning and as we know in the other project areas, these special tax districts are critical to implementing the over all vision for the project and the infrastructure and the improvements and the marks and the like and with that, i would like to ask, sally our deputy directors for the programs and project management to present this item. >> thank you, director, and good morning, commissioners. and so, today i am here to seek approval of the resolution, authoritying the executive director to execute a ballot in favor of the city transbay, transit center and ocii currently owns a parcel of land, known as transbay block one which is planned to be sold to private ownership and will be subject to the tax. >> before going to the specifics of the cfd, i wanted to give you an over all time line for the adoption of this

proposed district. and the board of supervisors has already taken several legislative actions in september, to approve the resolution of formation, and the resolution of determining the necessity to incur the debt and the resolution for calling for the landowner election, and then, the final hearings are schedule for december of this year. >> also, a little more background, just in general about transbay and the key plan dates. and there has been a long standing goal, to expand downtown south of market to the area around the transbay transit center. and the city has been engaged in planning these efforts including significant public out reach and engagement for the area surrounding the center for ten years and our focus for this work is to build up the transit oriented growth under the new transit center and to help to pay for the center as well as a downtown rail extension, from the fourth and king, cal train station and sometimes, it is referred to as the dpx.

and so, here is some key milestones that have occurred in the area when some of the planning work and the plan itself and the redevelopment plan was created in 2005 and the various, review and the planning steps in 2009, there was a draft, transit center plan released but that was finally approved in 2012. so, in an overview of the cfd, but that transit center plan as i mentioned was adopted in 2012, included a requirement that the major new development will be required to join a community facilities district or a special tax district and established the general terms for the rates at 0.55 percent, of the value, and a term of a maximum of 30 years. and i have called for in the implementation document, the city has done a study to develop, a rate and method of a portionment of those taxes or an rm a and based on an updated

valuation study performed by the concord group. and that included looking at how the taxes will be assessed on major new development and required by the planning code. and it assumed that the existing development does not pay and that the tax based and the taxes based on land use, consistent with the value is described in the transit center district plan and based on that evaluation performed by the group and the land use category and residential, and looking at those for sale and rental and the office and hotel, retail, and the initial maximum special rates for each property, based on a fiscal year of 13, 14, base rates and the base rate increases by an annual infrastructure cost inflation estimate each year and which is consistent with the impact fees and there is a gap and a floor of a 4 percent change. and after project receives its certificate of occupancy and then there will be a