will continue to be a part of this team, we will continue to vet needs versus wants for space. that will be a continued tension point as it should be as we move forward to design and space planning and you'll see more of that when we come back to you. happy to answer any questions and we do not have any concerns about the suggested amendment and will of course provide the amended docs in a timely fashion. >> thank you, mr. updike, i want to thank you for being so thorough in your briefings and well in advance, i appreciate that from you and your team. to everyone involved, i know this is a big deal for our city and i cannot tell you how many comments i get about having to go to so many different buildings for permits and what have you and the consolidation, aside from the other things happening with this project is very exciting i think for our city. if no other questions mr. rose

why don't we go to your report. >> mr. chairman, supervisor avalos, i am actually shocked because i thought we had eliminated mr. liddy's position so this is a surprise to me. >> you can do that 25 years later. >> as shown in table 3 on page 71 of our report if the city decides to terminate the agreement prior to the city's acquisition to the site, the city could be liable to pay the developer up to $8,322,000 in damages. on page 73 of our report we note that in addition to the $326.7 million project costs, the office of public finance notes there will be additional if furniture fixture and equipment moving and department of technology costs to complete and occupy a city-owned building that would result in total project cost of $338 million. the sources of funding would be the 1,250,000

which was previously appropriated by the board of supervisors and authorized an 83,100,000. on page 77 of our report we state that because the future commitment of significant city funds, because of that significant expenditure the budget and legislative analyst considers approval of the proposed ordinance authorizing the conditional land acquisition to be a policy matte for the board of supervisors. according to mr. updike if the board of supervisors does not approve the proposed ordinances the city would likely lose the opportunity to purchase 1500-1580 mission street. our recommendation as mr. updike

alluded to. we recommend you amend the proposed ordinance to change the reference from 466,400 gross square feet to the most recent estimated size of the city's office building and as i stated we consider approval of this legislation to be a policy matter for the board of supervisors. >> okay, thank you very much, mr. rose. we'll move to public comment. anybody wish to comment on items 13 or 14? okay, seeing none, public comment is closed. we have one recommendation from our budget analyst. >> so motion to approve the budget analyst's recommendation and since this is a policy matter i agree with the policy, i think it makes a lot of sense that we are consolidating our permitting functions and also creating, consolidating our offices of the city and it

makes sense cost-wise as well, so i appreciate all the work that's been done putting this together and i'll motion to approve the budget analyst's recommendation and the underlying ordinance. >> as amended. we can take that without objection. madam clerk, why don't we call items 1 through 3 and see if supervisor wiener and his office will get here. >> item 1, resolution the (inaudible) city for initial term of 10 years and authorizing the planning director to execute the historical property contract. item 2, resolution approving the historic property contract between the owners of 563 to 567 wallase street and the city for an initial term of 10 years and authorizing the plan director to execute the contract. item 3, resolution approving

the historical property contract between the owners of 621 wallace street and authorizing the planning director to execute the historic property contract. >> thank you, madam clerk. supervisor wiener, why don't we turn it over to you. >> colleagues, two years ago i authored legislation to the board of supervisors to reform our local process around mills act contracts. i worked closely with san francisco architectural heritage and the assessor's office in drafting that legislation. the mills act is a state law that incentivizes owners of historic properties to maintain their properties in historically appropriate way. the intent of the legislation was to increase access to the mills act which helps home

owners make costly improvements to historic structure and in doing so to preserve the historic integrity of those structures for future generations. san francisco has deeply embraced historic preservation. we want be to preserve our historic architecture and we want home owners to make sure to keep up their buildings in a historically authentic way and the mills act is a key policy tool for doing that. the mills act provides for property tax credits in exchange for an owner's agreement to a strict 10 year maintenance plan. it applies to properties that are contributing properties to a local state or federal historic district or properties that have been individually landmarked. the mills act is a way to really incentivize people to

landmark their property, to participate in historic districts, and to maintain their buildings in historically appropriate way. san francisco has lagged in terms of the number of mills act contracts in our city. as of 2012 other counties have had much more robust mills act programs. for example, los angeles currently has 601 active mills act contracts. san diego has 1100 active contracts. even oakland, our sister city across the bay, has 24 active contracts. san francisco since creating its program in 1996, nearly 20 years ago, has only entered into about 13 contracts. so there's three mills act contracts before the budget committee today reflect our

affirmation that mills act matters need help to ensure that historic resources are preserved for upcoming generations. all three of these contracts have been recommended for approval by the historic preservation commission. mike buehler was here earlier and had to leave and we have with us today tim fry from the planning department for a presentation on these contracts. >> good morning, i'm eilesh tape with the planning department staff. the items before you were received by the

planning department on may 1st of this year and reviewed by the historic preservation commission in october. as mentioned each of the properties are contributing buildings within both the (inaudible) district. the properties owners filed an application to enter into a contract with the city. the property types included this year include two single family residences and one multiple dwelling unit building and each owner with the help of our staff has outlined a rehabilitation and maintenance plan that meets the exacting standards for rehabilitation. those standards are a very high bar to meet and often times it requires really skilled artisans to accomplish some of this rehabilitation and repair work in a manner that's acceptable for preservation. all three applications before you are expected to receive a

property tax savings beginning in october of 2015 and on behalf of the preservation commission the planning department recommends approval of these mills act contracts in conformance with the hpc's unanimous recommendation for approval on october 1st of this year. they were approved on a basis that all work completed and proposed is appropriate and consistent wtd requirements established in the mills act. mike buehler with san francisco heritage was here earlier, he apologized he had to leave because he had a scheduling conflict but wanted us to add that sf heritage is voicing their support of these contracts and the program in general. planning staff and individual property owners are available to answer questions regarding the program or the agreed-upon rehabilitation plans that we put into place for each of them. also representatives of the recorder's office are

present today to answer any questions regarding the property tax valuations. thank you. >> mr. chairman, i know that there is a budget analyst report and then of course we'll comment. >> mr. rose -- supervisor avalos. >> just a question. supervisor wiener discussed how there's compared to la and oakland and san diego there are many fewer mills act projects and building structures. what's the main difference between why we have such a huge outliar in terms of these different cities. >> i can respond to that. san francisco, until we passed legislation i guess was it the year before last in 2012, san francisco's process for getting

mills act contracts made it so incredibly difficult, unpredictable, convoluted, expensive for home owners to go through that process that people just really didn't even bother to do it and there were challenges particularly in the assessor's office that was really the bottleneck. around 10 or 12 years ago then-supervisor peskin took a run in trying to resolve some of those bottlenecks and unfortunately it didn't work out. when we were able to move that legislation two years ago we actually worked very closely with mr. peskin, he was extremely helpful and we worked together and we were able to move that item forward so we now have a much better process with the planning department, with the assessor's office, and so it's now actually feasible for these small home owners to be able to move a contractor.

in the past because it was so difficult and expensive and lengthy a process, it was only the larger major projects that really htd wherewithal to be able to do that so that's why when we worked with sf heritage and others on the legislation that was one of the goals to try to expand access and it looks like it's happening because we actually have contracts that are moving through the process. >> are there any differences between what types of properties are subject to mills act in la compared to san francisco? predominately, what, single homes? >> no, it's the same types of projects but la and san diego, for example, just had really simple straightforward processes. we had a really awful process which we now improved which is why we're seeing some contracts going through but maybe mr. fry can elaborate. >> committee members, tim fry,

preservation coordinator for the planning department. as supervisor wiener mentioned, our process was very confusing, very expensive and there were no realtime frames or commitments from the city to property owners on when a mills act application would be heard before the full board. so with supervisor wiener's support along with san francisco architectural heritage we were able to streamline which was primarily an internal issue. so we have a clear path moving through the city attorney's office and getting it before the board for review. supervisor avalos, just a comment about the variety of properties that are eligible for the mills act, it's a voluntary program pretty much any building that is either designated at the local, state or federal level is eligible. that includes large office complexes downtown to very modest buildings within our

outer neighborhoods. as supervisor wiener mentioned that process was very convoluted and made it difficult for property owners and specifically residential property owners to address. our goal has been to reach out along with the recorder's office to reach out is to these residential neighborhoods where there isn't a lot of technical knowledge so they can access the mills act as a way to offset preservation costs. we're hoping to go into areas like the dog patch, other neighborhoods in the mission that are interested in land mark designation and hopefully getting some of them to take advantage of the program as well. >> so the problems that we're

seeing, that i've seen so far in san francisco, have been single family homes or multi family residential buildings. are there any office buildings, one or two that are part of the mills act designation? >> to my knowledge there's one office building where cary and company resides, it's an old fire station on bush street. the largest complex that is in the program is 690 market, which is the ritz carlton residence. >> so in places like la and san diego is it heavily predominated by homes as well versus office space? >> i would say it's a wide mix. for san diego in particular it's the main driver of their landmark designation program so most property owners will land mark their property and then apply for a mills act contract. they don't have a more proactive designation

program like san francisco does, but i would hazard that it is a wide variety. the unique thing about us is they are not, mills act program contracts are not a standard procedure for us. i meanwhile we have had the program for 20 years we sort of have to start everything over again every year to remember where we left off. in cities like la it's a consent item on the board's calendar and it's a matter of process that they get these through. we hope in working more closely with the city attorney and the assessor's office that we can streamline the procedure for you to approve them in the future. >> okay, if no other questions, mr. rose can we go to your report, please. >> yes, mr. chairman, supervisor avalos, and supervisor wiener, beginning on page 1 of our report, 68 pier

street as shown in table 7, again that's on page 11, the first year annual property tax to be paid by the city by the property owners would be $9,029 which is $9,528,. if the proposed hiftd store cal property contract is not authorized, the estimated property tax reduction received by the city would be approximately $95,210 over the 10 year period of the proposed mills act contract. on page 12 regarding item 2, 563-567 waller street as shown in table 8, the first year annual property tax to be paid by the city would be $16,394, which is 25 percent less than

the $22,000 otherwise paid to the city. estimated reduction of property taxes to be paid to the city would be $65,000 over the proposed 10 year contract and on page 13 regarding item 3, file 141104 at 621 waller street, as shown in table 9 the first year annual property tax paid to the city by the property owner would be 60.1 percent less than the 24,706 in annual property taxes that would otherwise be paid to the city if the proposed historical property contract is not authorized. as supervisor wiener indicated, there is a

rehabilitation program and an on-going maintenance program required by each property owner to undertake. on page 14 of our report we note that since 2002 the board of supervisors has approved 17 mills act contracts, all of which are on-going. that's shown in table 10 on page 15 of our report. if the board does approve the 3 pending mills act contracts the total estimated annual property tax reductions will increase by $30,893. on page 16 of our report we state that we consider, as you know, this is discretionary on the part of the board of supervisors. we consider approval of the proposed resolution, files 141102, 141102 and 141104 to be policy matters for the board of supervisors and i would be happy to respond to any questions. >> thank you, mr. rose.

>> mr. rose, there's a rehab program for each of the buildings and is there any measure to make sure that the programs are actually taking place? is it just on faith? do we know actually that work is being performed? >> mr. chairman, supervisor wiener, supervisor avalos, there are reporting requirements and actually the department of planning has stated we have in our report that although they will be reporting later on in the year in terms of enforcement it's up to the departments involved to do the enforcement. i know of no follow-up in terms that that comes back to the board of supervisors, but i think that there are procedures in place to enforce the requirements of both the rehabilitation and the on-going maintenance. again,

we have not, we are not involved in that so it's up to the departments to enforce that. >> can we get a response from departments? >> committee members, tim fry again. the department -- first of all because all the properties are landmarked the work outline i still requires a permit from central permit bureau, so that is one way that we track that the work is occurring according to the plan. the second is, as mr. rose mentioned, there are reporting requirements within the mills act legislation. one is that the department conduct a site visit every 5 years that's a recent amendment to the program. the 5 year mark hasn't come up yet but we intend to do that in the next two years, is to visit each of the sites. the second is an annual affidavit that we will be sending out and we will be sending that out in the next few weeks that the property

owner signs, it does two things. one is it clarifies they are on track for the scopes of work they have committed to in the plan and the secondd is we collect some additional information for the assessor-recorder's office about any changes in use or numbers of units for the property. that's information we are happy to share with the board, we certainly share it with the historic preservation commission. >> the affidavits, are they verified? >> they are required to be notarized. those happen on an annual basis. the 5 year site visits are mebt to confirm the work outlined in the affidavits. >> the affidavits are note trietzd -- notarized but in terms of the review as to whether the affidavit is accurate that's done at the 5 year mark? >> we would confirm it, if they said we are going to put on a new roof in 2016 there

would have to be a building per mitd and a certificate of appropriateness to go along with that and we would certainly go back and make sure the permit was pulled and finalized. >> anybody wish to comment on items 1 through 3? seeing none, public comment is closed. supervisor wiener, supervisor avalos. >> i actually had other questions perhaps about the mills act in other places. it seems like -- i have had several mills act contracts come before me serving on budget and finance committee over the past six years. i recall one that was very strange in that there was a developer seeking mills act designation to be able to maintain the facade of a building but gut the entire inside and build, you know,

well above it and you would have a building that was actually going to be, you know, have some kind of historical facade but everything else is going to be brand new. this has been happened. that was an egregious thing that had gone on but what i've seen is that a lot of the building that we have are in parts of san francisco that are generally, you know, doing well economically .d i wonder if other places around california where we do have mills act properties that there are neighborhoods that are run down, negtded, neighborhoods that could use this kind of tax break that will enable thepbl to really restore enmass many buildings in the neighborhood. i used to live on carol avenue in los angeles in the echo park area and there was like a whole block of beautiful old victorians that i imagine have

such a designation. and i know that in the 70's a lot of these buildings were actually really run down and one of them was used for the michael jackson thriller video. but what we're seeing for these properties and the devost park area, it's a part of san francisco that's doing really well economically. these buildings, the pictures i see of them, the neighborhoods are in great shape and the uniform way the buildings appear in this little section. other mills act buildings i've seen are in places actually seem well maintained as well so it looks like these buildings are finding a way to cut costs on maintenance. i understand that, you know, the property tax enables them to, these buildings do need an added level of maintenance but i think the property owners might

be able to afford to do the maintenance and the tax break, how necessary it is, is really giving a benefit for that property owner more than the neighborhood itself. so i'm just kind of on the fence about wanting to move forward or i wanted to verify that we're actually making sure that work is being done and we're not giving a tax break without it so i feel pretty satisfied that that work is being done by the planning department and the reporting requirements so what i could do is, there's only two of us, we could move this forward without recommendation i think it will be fine to the full board and i could be fine with it at the full board too but i want to draw out that distinction. i often don't think these people who might have a lot of wealth and might even own other buildings might need a tax break, even though i understand it takes money to maintain

these older buildings. >> motion by supervisor avalos to move this forward without recommendation and we can take that without objection. >> thank you. >> madam clerk, do we have any other business in frupbltd of us? >> no, mr. chair. >> thanks, everyone, we are adjourned. (meeting adjourned). .