ness and math the current city owned and current city utilized property a one hundred and 80 square feet building built in too phases the first in 1908 and 3 stories on top of 4 stories a fascinating structure we have the opportunity here for a number of potential great things to happen the transit oriented development the market octavia area plan death penalty some years ago about the market crashed which provides entitlement to 4 hundred feet development and a revision this building has reached nearing the end of its i'll have life with significant

capital improvements if we continue to occupy the building in 2012 this give us a sense of the dynamics 43 and a half million dollars we'll speak about the numbers we're talking about today it gives an indicator of the rapid acceleration of the marketplace our objectives are manyfold we heard loud and clear in the hearing not too long ago regarding in property the desire to maximize wherever possible the hours yield we have an overarching goal related to a strategy to find alternatives office locations it is affordable housing issue we've been working or able to blend into this project we're pleased

with we'll get into those details an opportunity to take advantage of the transit ordinary opportunity here at margaret and van ness to create better connections with the van ness station and the proposers recognize that we see great potential. >> it's a chance to maximize the value of this asset we're at the peak of the marketed we feel that and this is the time to sell this proposed if ever a time and as i mentioned we've got a building that is really at a critical juncture with critical money that is invest here or elsewhere this is a long term strategy we're deploying so i want to speak briefly about a way why way to compare that

property with the my name is articulated the fact we'll not building hundred percent affordable units project not in their portfolio or brings the efficiency, however, we've asked users if it was an affordable housing project sole hundred percent what would be that's roughly 2 hundred units in the project that is a high-rise but not to the extend o stent so we want to provide you that comparison what does it project bring to the table before you today. >> what could that alternative the choices the city is making as you can see the costs involved we have debt onion the property we have to acknowledge that we owe $32 million we have to pay

off the note we're in occupancy we'll detail later the departments with the department of public works hard at work staff you saw with the public works is housed at that location this is where we build our facilities that is the duplicate department of public health is located we have to replace that use and there's a development costs hundred percent variable project we need a funding source estimated by the xhaimz at $250,000 a unit that brings you to a total cost of this project we leave van ness and do a hundred percent it is hundred and $42 million graphically it is a method of

comparison we believe we have krachtd the translation that will yield 2 hundred affordable units 6 hundred overall unit in the future developments after we leave van ness this is a method of comparison to the alternative i've tashgd articulated on the last slide and the cost savings in preceding in the fashion we've crafted here we'll get the affordable housing but address those critical issues for the structure for example this is a critical current asset in use we have a lease back loosz also in front of you the template in our attachment we need a designation first before we leave there's a

ancillaryy effort to address that need and in the meantime the department of public health and others will stay ointh until the end of 2018 when the lease is back that's the approximation of the continual project a holder of contingency if we run into issues so we have afforded users or ourselves the time we've structured the lease back we know this building better than anyone else in a way the city maintains the building we insure the conditions for the employees are to our satisfaction and because there is motivation by a buyer who will anticipate demolishing it not to invest we wanted to take that incentive off the table so it brings us here today with

those proposals this follows a lengthy process of prep the project o property to the sale and hiring the brokerage team to binge they're now 4 finalist bidders by our brokerage team and this particular item moved with authorization to do one last round of best and final offers from the finalists as long as they meet the terms and conditions before 9 ordinance before you and we moved with the closing the escrows thereafter reason for this approach is really on the advice of the brokerage team and the concerns we've heard from not only the if not but the participants not

unique to the city and county of san francisco but any public agency and the desire is for certainty and with certainty will coma better deal for the city quite frankly so we're suggesting the structure and remind the committee that is consistent with the approach on octavia boulevard so long as we meet the conditions of sale the pricing issues economic issues and a few other matters so we're following i believe a successful methodology on octavia an actual model trying emulate that to speak about the recommendations if the analyst report we're better served as a

seller in that marketplace by taking the approach of final authority and moving with the finalists i'm available to answer any questions thoughts on that. >> thank you mr. updyke anything else is this is the end the presentation. >> yes. and supervisor mar. >> i wanted to thank you it thank mr. updyke and the budget analyst for their upcoming suggestions i feel suspicious anytime we're giving up to waive a state ordinance at the local level and giving up the boards authorize o authority i want to say my understanding of the legislation before us is

that the real estate office wants to get the best bank for the buck of valuable transit oriented sites connected with the gll site i'll be asking for a better explanation of this complex deal i know also in my framing we have the worst housing affordability crisis and any public parcels to be used for affordable housing or mixed use for the prop k housing balance of 50 percent of affordable housing we should be doing everything possible and coming up before the november ballot is surplus policies for initiate i have questions how that factors in i know that mr. updyke walked

us through the one hundred percent affordability and the cost that that are challenging for a citywide like ours i want to ask where would we wave the city's ordinance for this if you could explain that mr. updyke. >> so in this case we have an active use for a lease back so let's step back into the normal course of finding a surplus and offering that with the plus ordinance that is normally unproved land or vacate vacant and it is straightforward to follow the as much as policy act if not available for onsite then prudent to pursuance to the ordinances the sale if i understand go to affordable

housing in the tersely as articulated in the ordinance the difference we don't have a supplies asset we have age asset that is delipidated that needs future capital investments that's an option another option to seek a respect of that asset elsewhere without that replacement asset and the funds to secure that we can't vacant van ness that's why i maintain that in terms of if we don't have a place to go and not funds to provide that replacement facility which needs to be generated from the sale of the property we don't have a sale we'll remain where we are and pit additional capital into that project with that said we've creatively constructed this translation to facilitate as much affordable

housing as we can possibly yield out of the site and meet our fiscal needs to have a replacement site. >> mr. updyke i'm not following that logic i know the site well, i used to eat there often you're saying it is not surplus property not residential i'm not understanding why not surplus property. >> it is not because we're using it fully utilizing it there is no vacancy in the building 5 stories with retail on the increasing and above 4 levels all city occupancy work hard as we speak that is not a classic asset that is vacant it is an improved active facility without a replacement we can't leave the facility department of public works has to do their work somewhere to

the only logical fund is from the proceeds of the sale to focus the replacement. >> i'm wondering if maybe you or the da can talk about potential exposure to legal risk i know with the lake merit property in oakland there is a da legal opinion from oakland that includes there maybe significant legal liability for that oakland private developer with a mandatory power i'm wondering if i can get answers on the legal litigant ape great question supervisor mar one perhaps we have not been transparent with the board we've actually been following the state surplus act before it became an act our standard process before we offer and

bring to this body a sale of any property we offer it to state and local agencies for either affordable housing, parks use or other public uses so we check that box early on retail to serving van ness we're in compliance with that particular requirement under the surplus property act mr. gibner and john gibner, deputy city attorney just to give earlier mr. updyke was talking about the city surplus property ordinance and by ordinance through this legislation the board of supervisors can determine that this prompt is subject to the restrictions of the city property ordinance the oakland that was made reference supervisor mar involves a

different but similar law that employees e applies to the city that mr. updyke said we've filed with the procedural steps under the property steps ordinance we're evaluating to what extent it statute applies here and if we determine that it does apply here the state surplus property will be sure to follow all the mandates. >> i think i'm following what is happening at oakland's and here could you explain the interpret trooen relationship between the selling of this site dynamic convinced we have to sell it how that intreendz with the gll site and where the various departments about go

into that new site how this fits in. >> certainly as the board unanimously adapted last spring and fall your moving forward in ceqa for a project at 15 hundred mission and van ness for the construction of an office building of approximately 4 hundred and 60 some thousand square feet a one stop permitting center and a co-location of many other expirationy staff functions from human resources to design and engineering of all the public works be located in this public building that's an option we're pursuing that is still in a ceqa process many onyx we are looting

in the in the marketplace so should that go forward and a purchase and sale agreement that needs to be returned to the board later in 2016 post ceqa for ratification that creates a designation location. >> thank you. i know that our time is running short i wanted to ask i see that from the slides hundred percent of affordable housing alternative has there been a 33 percent alternative that is in with our prop k housing balance as approved by voters? that is exactly what is before you today the intent is that this transaction will produce be

onsite 33 affordable so we believe that through the developer commitments we'll sure in the sale agreement and other financing mechanisms that will flow in later to help to buy in high affordability so those are over ages from receipt to the sales of this property where we're beating our metric to have a pro forma be released for the project at mission and van ness and the eventually sale that will happen later this year at 1680 mission we are dictating to go i don't do the affordability f this the clautsdz with the office of economic workforce

development >> thank you. i wanted to say i'm appreciative of the responses i still feel that we need a legal analysis regarding the legal risk of this land sale and also my feelings similar to many from the community that as we face our cities housing crisis we're looking at every opportunity for a hundred percent affordable so i know for transit oriented development not only for those who can afford luxury laura's housing ambassador for everyone that needs to be housed in hundred percent affordable housing developments our city needs i feel uncomfortable about waving our city's policies for surplus property use for affordable housing but i'm appreciative of all the analysis you've done i still think that more analysis

of this complex project is critical i'll wait for the budget analyst report and the public testimony as well thank you. >> okay. thank you very much mr. rose, can we go to your report please. >> yes. mr. chairman, and members of the committee let me simplify your report we're recommending approval of the sale of thirty jean e van ness in fact, all the exemptions of the ava policy matter for the board of supervisors we believe that everything that he's brought to you is in the best interests of the city except the relinquish time to approve the final deal if you had the authority to approve the final deal you could weigh in on the exact number of affordable units

in this prospective i can weigh in on the exact price the city gets and the proceeds specifically on page 24 of our report to amend the recommendation to require subsequent authorization to sell thirty van ness including the respondent developer, the sales price the city's mr. updyke mentioned the lease back we totally agree the departments need to stay there shouldn't the board of supervisors look at the provisions of those lease back provisions how much rent the city will be paying you'll have that opportunity if you accept our recommendations mr. updyke is stating he's going to immediately report back to the board of supervisors once the financial sale supervisors that

is a done deal he's reporting bogging back to you but at this point you have no authority we feel strongly our recommendation is responsible and that is you should maintain our final authority to approve this sale. >> supervisor tang. >> thank you. i appreciate the budget analyst report and for pointing out what with w he stated in terms of the board notice having further ability to take any further action i want to clarify whether there is another path i don't know if mr. updyke perhaps a compromise to move forward final final action taken with this transaction. >> thank you, supervisor we would certainly be willing to accelerate the transparency of the final transaction once and

have a final round with the finalists and secure the attachment to the purchase and sale agreement you could amend the legislation to require the immediate delivery of that information and that would give the board an opportunity if there were a grave concern over the terms and conditions i want to make the property to produce something consistent but should you have concerns there will be a due diligence period that follows the execution of the sale agreement and the final that's an opportunity to intervene as mr. rose would say a done deal a real estate deal is a closed transaction i'll certainly be willing to afford

the board the opportunity to weigh in and be creative. >> so i know you have a rough timeline here just consideration the board will look at the objective can you shed light on that given the recess. >> sure we didn't frankly expect to have a situation where we can execute and this is in my ordinance to really end all of this once the clock concludes for up the effectiveness period so that signature date is late august and that leaves the entirety of september for due diligence and closings period; right when we are in session every week. >> mr. chairman. >> mr. rose members of the board i understand what mr. updyke has said nothing changes the, in

fact due diligence yes one or more members of the board can raise questions but not a vote by the board of supervisors on the final deal that remains the same it takes a majority of board to change the deal from the board of supervisors disregard with the castle in any way by the way i agree with mr. updyke i have the highest respect he's bringing a good deal we would say if you brought a good deal obviously we would recommend approval we're all for this but mr. updyke has proposed is not addressed

creating not just this floor of requirements but something more robust then just the ability to intervention and stop a process i'd like to have an opportunity to discuss how that wording would be so we don't run into complications of types of legislation to unduo do the prior legislation and be honest about the opportunity for the

boards input so if you would allow us to the opportunity to take a stab at what that might look like. >> sure it sounds like you're open to have that again that meaningful input into that process potentially in september. >> we are i want to reiterate it's not an issue of me not wanting direction from the board of supervisors i'm taking my cousin from my good friends and colleagues that are representing us their job to maximize this transaction to the best interest of the city their concern from those interested in buying the property is that a city can change it's mind and there's going to go full forward and give us the best possible deal that's the only provision i'll ask we can survive a process

that has a check g back in with you that is not preferred i think that will be a little bit less than what we can get for you. >> supervisor mar. >> i know the challenges of continuing to bring that back bra the board that is our job to look at carefully at the implication not only the goals and outlooks of that but the goals of affordable housing and using every single opportunity opportunity for surplus proposed to be used for the city i know you're looking at contributing to the housing unit but i have a question about you how to build into this ordinance that affordability mandates we have assuming that will happen if you have any ideas i still want to know more about the potential legal risks and how we insure

that affordability is part of this ordinance as well. >> supervisor mar the challenge with respect to certainty given the fund sources includes two prospective saddles that will not occur before the end of 2015 and 2016 the proceeds from van ness and others that will be difficult to mandate certainty when we don't have the sales yet so i have the same struggle how close to certain we can get on this yield of 33 percent affordability so i'm not sure we're hundred percent certain on that and the other thing i'll add of we have the funding source locked in this is a redevelopment subject to market