welcome to the tuesday february 9-there is echo on this. february 9, 2016 meeting of the finance committee of transportation authority. i'm eric mar and to my right is london greed-breed and to my

left is norman yee. the clerk is steve stomose and being broadcast today by [inaudible] and charles kremenak. any announce mentds >> no announcement; breed present. campos, absent. commissioner kim, absent. commissioner mar, present. commissioner yee, present. we have quorum. >> i forgot to say [inaudible] happy year the mungy everyone. please call the next item >> consent calendar items 2 to 3 are considered row teen. staff isn't [inaudible] present if desired. if a member objects the items may be removaled and considered separately. >> thank you. let's open up for public comment. anyone want to talk about the minutes?

seeing none public comment is closed. motion to approve the minutes. >> i have a question. y r >> i wasn't at the last meeting so need to rekoos myself from voting on the minutes. it looks like we don't have a quorum to approve the minutes. we can continue until we achieve a quorum. let's go to item 4 >> item 4, state and federal update >> were we going to item 3? >> that is part the consent calendar. >> okay. >> good morning. my way of introduction if you haven't seen me before i am mark watts and the representative in sacramento. ia notice on the matrix there is a lot of temporary bills here. this is the time of year where bills that fail passage in the house

of origin for one reason for or another are swept away so we recommend a host of bills to be deleted from the matrix because they exceeded the year deadline or vetoed or chapter. you will see next muchckt a whole new slate of legislation but today i have 5 bills. the staff is recommending a support position and what is customarily done if it is okay to proceed is tell the bill number and matrix page it is on in case you want to take a look at it and cover it briefly and move on so if that is acceptable i'll proceed. the first measure is ab 1591, this is one of 3 major transportation finance proposals. this one was introduced in 2016 and it generate 7.3 billion dollars a

year annually, the largest by far of the 3 proposals that are circulating. it does in addition to raises gas tax and diesel fuel tax and registration fees also has significant commitment of cap and trade for transit projects that are eligible for cap and trade revenues. that is on page 18. -of your matrix. the funding is roughly split 50/50. the tax rez new funding between state and local government for dispersement for road repairs and rehabilitation. i'll continue on if you would like to come back for questions or can stop at this point >> you also have it on another page side by side with the governors budget and sbx.1.12 so that is a same bill but side

by side with a couple others? >> correct. the second measure staff is recommended support for is by assembly member chiu on page 18 and this deals with bus safety inspections. established criteria and requires dmv to notify public utilities commission can when a bus companies first register as vehicle that isn't happening yet so this steps in and takes or addresses that gap in notification. then if there is a inspection and not a satisfactory rating the bus is prohibited to be used from that company. the next mexer measure is special session bill, abx 1 is our framing for

special session. number 18 is found on page 25 of the matrix. this bill that mr. linder would return state truck weight fees that are collected and used to offset transportation general obligation bond debt service squu mounts to about a billion dollars a year and this is a proposal to return the truck weight fees back to transportation services where they have been used for years and years. it has a potential impact on the general funds because the general fund has the obligation to make debt service payments so that is the fiscal and policy tension bringing the revenue back. >> commissioner breed, >> why does it-we are talking about abx 1-18 >> correct >> why does it say recommend

support? is there a bond that is still paid? >> that was consistent with where similar bills had been put forth last year >> so they have to find a new source of revenue to pay for bond debt? >> correct. >> thank you for the clarity. >> and on page 34 of your of the matrix is sb 12 by senator hill and this is a little more sweeping overhaul of tour bus safety >> what page again? >> page 34. it establishes a

higher priority for inspection for new bus companies that have a record of ill compliance with prior inspection so it puts the new buses coming into those companies at the top thofe list jujust the fee setting authority to be more in line with the costs i think there is a feeling that fee setting is at a level that is too low so they are taking a attempt at providing more revenue for had inspection program to accommodate the higher priority and that is the suggested support. the next measure is the last measure recommended for support consideration is found on page 35. this is by senator beall, sba 24. there are several ongoing cap and

trade funded programs that funds rail and transit and other programs so this is the low carbon transportation program. it is essentially formula program that distributes cap and trade funding to transit agencies on a basis that already exists in law and used to fund projects that are new efforts at reducing green house gas. an example would be a new line put into service that didn't exist before but for the availability of the money and so that would be a eligible project. there are wrinkles in how that was drafted originally. now that we had one year of experience in the field with transit operators dealing with how the money is distributed, the timing and the other small elements of the program are being addressed in in the measure. it isn't in a final

form but it is the form of [inaudible] support recommendation is being made. one measure that we are looking at has a history from policies that we took last year on page 17, [inaudible] by assembly member gomez. it increases the level of statutory required benefit to disadvantage communities in the green house gas reduction cap and trade program from 10 to 25 percent, setting aside whether that move is something worthy of support at this point intume, the issue for the bay area is in the first round of distribution of founds that have a requirement

for disadvantage communities, there is the feeling in this community is the way the state defined disadvantage communities works to had regions disadvantage so there is a effort led by mtc and others to address that definition and how that all applies, so until that is fixed, the region is typically taken onposed position trying to force a change in how it disadvantage communities is defined, >> mr. watts and wpt to give my two cents that if it helps east la and low income communities of color to opposing something that may be helpful for cleaning the air for low income communities even though it isn't helping us is the principle thing to do and prefer if we not take a opposition but be neutral and work towards defining communities of concern or whatever we call them more carefully so that the bay areas

low income communities are included. >> something like watch express concerns and convey with a letter what we are trying to [inaudible] not a opposition position. okay. with that i draw my presentation on the new bills to a close. i would just give a highlight that the due date for bills to be introduced is theened of the month so we got a little more than 2 weeks remaining and i think probably several hundred bills will be introduced between now and then so will pull out the ones of highest visibility and priority. >> any questions, colleagues? >> thank you. >> so you were going through attachment one afterwards? that is the side by side governors budget ab 91 and sb 1

[inaudible] thank you. >> amber [inaudible] transportation authority. this is quickly we were requested to provide this looking at the 3 proposals moving forward. the assembly and senate and governors proposal. as mark watts said the assimbly proposal is far and away the largest of the 3. that 7 billion, the sbx 11 is lailt over 4 billion and the governors budget is right around 3. page 76. so, the governors

budget and the assembly 1591 are the 2 that does commit funding for transit. sbx 1 is more focused on highway maintenance and local streets and roads, so i think at this point we are definitely more supportive of ab 1591 but any new ruv new for transportation would be something we would love to see, so we are working closely at the state level and mtc and the other congestion man jt agencies to advance these hopefully including transit and including walking and biking and think maybe mark can add more about the political context but we get a sense the closer we get to [inaudible] the bigger lift we get to pass to the 2/3 vote. if i can follow up on commissioner breeds commission

from earlier regarding the bond debt service. it is my understanding this is debt service on a general obligation bond so we ruproved by the public so the the intents is it it paided off by the general fund. this would shift it back and other uses typically do-such as schools the debt comes out of the general fund >> the expectation is the payment of the debt service comes from the general fund and it is my understanding that there are concerns with our state budget and a possible major deficit and i don't understand why a decision like this would be made if there is no clear understanding of where we are going to be at where w the budget as a whole, so i

guess why are we doing this? what is this about? it doesn't seem right to me. >> i think the intent behind it was to acknowledge the huge problem and deficit in transportation funding but it is a policy call and it is something that you don't feel comfortable until you have more information you can recommend revising the position. >> it just seems irresponsible so i think that is my concern, the fact it is recommended to be supported but there is no clear way to pay for the debt service and so this was the anticipated revenue for that particular service and why are we changing it without clearly making sure that we have a pipeline to cover it especially with a proposed deficit in the state budget? i just think it is irresponsible from my perspective based on the information i have. >> definitely understand that. >> thank you. i am wondering

if mr. watts can explain the political context of the governor versus fraser versus bell. >> happy to you. a scene setting for you. the legislature started a session on transportation last summer, had full set of hearings in the fall, mr. bell who is one of the cochairs along with jimmy gomez from la of the conference committee established, was able to move his bill, sbx 1 listed on the chart from the transportation committee and is pending hearing in the appropriation special session committee and he is drafting amendments to add significant new funding for transit and go beyond just a state rehabilitation and local road program but supplementing the

cap and trade programs and other programs with new transit funding, so that is due to come up any day. technically he would be able to amend the bill, the special session is one of those techniques the legislature can use for swift action so i expect when we see the language they would conduct a special session and move forwards. the governors bill and mr. frasers bill are on a slightly longer track because mr. frasers bill is introduced in regular session and it is just at the point now where it is clearing the first 30 day quite period and not set for committee hearing until sometime in march. at that point if had leadership gives a go ahead. the governors proposal is a budget trader bill and haven't seen a packet

like this through a budget before, but there is two ways-we are at a fork in the road, it can go quickly, they can hold a budget subcommittee hearing on the entirety of the concept and move ahead, or they could put it into a more of a retune budget process where pieces are heard in different ujbet subcommittees and comes back together after the may revice so it is hard to see how it will go but we are waiting for senators bells maelts if tee if they fulfill what we are hoping for. that help? >> thank you. i see no questions let's open up for public comment. anyone from the public that would like to speak? mr. plantal. >> bob plantal one of several people here to urge you to ovride it the staff recommendation on two bills, ab

1641 and abx 125. staff is recommending watch and think it is highly inappropriate >> can you repeat that? yab 1641 and abx 125 by the same author in orange county, assembly member. they would say it is open season for shuttles to operate in transit bus systems. it may sound okay, but you have to think they are small bus company whether it is santa cruz and scotts valley is a tech hub [inaudible] have special commuter runs into sacramento. smaller transit companies wouldn't have the power or ability as san francisco to negotiate. right now the pilot program san francisco had just ended. there is another program in place that may be modified. i think there ought to be learning provided to

other transit agencies as well as the legislature, lessens learned, issues to be resolved would be writ nl into future legislation about shuttle squz bus stops. i think it better to say opposed now otherwise you give a rel tivly free or blank check to the shuttle companies. gone, think not just of san francisco but the smaller transit systems outside santsa cruz or mother load and foothill. they are not able to withstand the pressure. this is something you ought to be consideration. [inaudible] you have to take into account the negligentful under responsiveness. cpuc isn't someone you want guarding the

safety the passenger. it is under responsive with people with disabilities so watch isn't appropriate, it is opposed. you will hear about the multiplicity of usage of transit stop squz why this should be opposed. >> thank you. next speaker. mrs. [inaudible] >> i am reiterating what bob said. sue von. i will urge you to oppose the positions of watch for ab 1641 and abx 1-25. these would both amend the vehicle code to alloy privatecarias to operate in public bus stops. we know privatecarias [inaudible] and the evidence also indicates the

availability of the tech shuttle buses in particular drives up housing price, eviction and displacement. with the expansion of silicon valley check these can be exacerbated. [inaudible]omeployment numbers by 27, 900 in coming years. what is unknown what the housing plan is but living in san francisco and getting free transportation to silken valley companies is offered as a job perk. if the billerize passed there could potentially-there are other bills discussed about raising generating revenue for public transportation and if those bills are passed there can be a lot of money to expand local and regional public transportation and that is what we need, locum and regional public transportation accelable

to everyone. these two bills give no leverage to disability and low income communities to advocate for their needs. thank you. >> thank you. next speaker. edward mason. the bill transfers public space to private use. you have wide turns from the buses that ubtruckt traffic. engine and air conditioning noise are environmental deg aareidating. you have muni delays. fuel consumption, hamp is waisted because the buses return for another trip so last year i estimate there were 1.2 million gallons of diesel used and half was waisted. the bus loan

safety and we have to board in the street. for the disabled it is a problem because if i am out there with a cane i don't want to board in the street. the bus operates, there is no legislation that prevents the bus from operating without a license. we had sfo [inaudible] for the month operate without a california license plate and dekales in the muni stop. at 24 and church there was a bower bus with no dekales a brand new bus but no dekales. recommend that a regional express system set up for everyone to use it and for efficient use of consumption of fuel. i currently as it is written i recommend that this not be approved. thank you. >> thank you. anyone esthat would like to speak? seeing none public comment is closed.

could we get some response from mr. [inaudible] >> [inaudible] just to give background on the staff recommendation, we understand the policy discussion is happening in other venues within the city and just for clarification the bill wouldn't issue a blanket authorization, it will allow local tooz make that decision that so we felt given the policy discussion going on, local control was something that we can take a watch petition on but it is up to you to amend if you desire. >> it seems like it is going against the california vehicle code, which is pretty clear it seems but anyway-okay. thank you. colleagues we had a couple recommendation from the public speakers. are there motions on any of the items?

the suggestion was that the orange county author alan trav isfrom district 72 [inaudible] abx 125, instead of new recommend watch a recommendation was made to oppose. thoughts, supervisor campos? >> thank you very much. thank you for the presentation. i wanted to just reference my thoughts on ab 1641 and abx 1-25. given sortf what we have gone through in san francisco i am very worried about the state putting this forward. i think this takes local control away and i think that while we have seen with our own program here

is there are many benefits to this and i'm happy that the program is likely to continue here in san francisco, i think that is a good outcome, but there is clearly mitigations that are needed on so many different levels where wl it is congestion in terms of number of stops in a given jurisdiction, whether it is environmental impacts that may occur, to what they actually pay for the use of public stops . too as we see here in san francisco, the potential impact on housing and displacement. i think that i would make a motion to oppose ab 1641 and adx 1-25 in the current form because i do think they take

away local control and i don't see it as opposing shuttles, i think the fact is we are supporting them here, but i think the way this is being done it actually is harmful to local jurisdiction squz think each jurisdiction has to figure out what make sense and think this takes that away. >> second mpt >> any other comments? so, for the full package this is a action item so there is a motion on changing those 2 items, can we have a roll call on that? it is a motion that we take opposed position on ab 1641 and abx 1-25. >> on the motion to oppose those bills, commissioner breed, aye. commissioner compose, aye. commissioner kim, aye. commissioner mar, aye. commissioner yee, aye.

the amendment to the item passes. >> now on the full legislative- >> actually i have a recommendation. i have a recommendation that we oppose abx 118. i think as i said before we are-this measure will seek to return the return of truck weight fee tooz the state highway rehabilitation purposes, which would be great if we paid our bill and the source of revenue from this fee is actually used to pay the bond debt and i just don't understand why this would be requested of us if we haven't finished paying the bill in the first place. then again as i said before, we have a proposed budget deficit for the state of california and so here we go adding a additional expense to that and there is no need to do

that, so if that were not the case or the bond debt was paid off that would be a different story but think we should oppose this until the bond debt is paid off with the revenue anticipated to pay it off in the first place. i would like to make a motion to oppose. >> it is seconded. let's take a roll call on the motion by supervisor breed. >> take public comment- >> no. is there public comment? there is none. so, roll call. can we do same house same call? thank you. now on the full recommendations from our legislative staff, can we take everything same house same call? as amended. thank

you. now let me just call us back to the consent calendar. the minutes and internal accounting and investment report. let's open up for public common. anyone from the public that would like taspeak? seeing none public comment is closed. can we have a roll call on the consent calendar? >> you can do same house same call if you like. commissioner breed, >> actually i would like to ubstain >> commissioner campos, aye. commissioner kim, aye. commissioner mar, aye. commissioner yee, aye. the consent calendar is approved. >> mr. stam item 5, and >> update on the california road pilot program. this is a information item.

>> hello my name is michele [inaudible] transportation planner in policy and programming and i'm here to give a update on the california road charge pilot program. i would like to start by going over the legislation that set up the program and discuss how transportation projects are funded that state level and go into the road use charge advisory committee and recommendation frz the pilot program and where we will go next. so, in 2014 at the recommendation of the california state transportation agency the legislature passed a bill that authorized implementation of the pilot program by jen 21, 2017 to test a road u.s. charge to replace

the current gas tax and funding transportation projects in california and established a road use charge technical advisory committee that will provide recommendations on what the program will look like. the gas tax is the it major funding mechanism at the state and federal level. it was set up as a prushy for road use, the idea being the more you drive on the streets the more gas tax you pay because the more gas you punchs. however, the gas tax has been decreasing and in recent years due to improvements in fuel efficiency and increase in hybrid and electric vehicles on the road. so the road use charge was recommended for study as a replacement to this user fee for transportation projects. it would charge a fee per mile

oppose today per gallon as the gas tax is curbtly collected. this is made possible in pard due to a number of technology advancements we have seen in recent years. some may be clar with straba which is tracking mileage people are traveling just via bike or by running. so, in this system fuel efficient vehicles will pay the same fee per mile as older less efficient vehicles. so, the use charge is seen as more equitable due to the fact it charges ever user the same amount for the amount they travel and gets you closer to a true user fee by calculating how much you are driving and charging you based on that. right now what they are studying is how the road use charge would be able to replace the gas tax, but there is a

potential in the fuch frr it to be a additional fee rather than a one to one replacement. this wood also be more similar to the way we charge for aootilities in other sectors mpt so, the road charge technical advisory committee comprised of industry experts and leaders across the state and met for 12 months and in december 2015 pub lished their recommendation report that provided recommendations for design the pilot program and for how it would be evaluated. the [inaudible] discussed items that focus on creating a program that will replace the gas tax and discussed issues of equity as i brought up, privacy and data security and they also charged with doing public outreach so they did a state wide survey and focus groups across the state and a lot was learned from the focus groups.

for example, in general public education about this is very important because there is both a misunderstanding today about how transportation projects are funding and what our gas tax goes to, but also a lot of confusion over what a road use charge is in general. they also discovered a lot about peoples preference and the values they hold behind a user fee. in general people thought paying for what you use is a user fee was deemed fair but fairness had a lot of different meanings for people. some thought efficient vehicles should pay less because that is fair and some thought charging more per mile when you have a drive a long distance to your job is unfair so these are questions that will have to be kept in mind throughout the pilot program and in designing any potential future permanent program. so, in termoffs the

technical advisory committee recommendsation for the pilot program, the first recommendation was that they achieve 5 thousand participants in the pilot program state wide and would like to see a cross section of there slate on california roads today. they are looging for diversity in vehicle type, as well as geography so commercial vehicles, vehicles owned by private individuals and seeing them spread out in the north, central and southern regions of the state. choice and security, the [inaudible] recommended there be a choice in xhrjs and state account managers so for example organ has a program of 3 different account managers one is state run and two of which are commercial. one for example is verizon. so the state would like to replicate a choice and

account managers in the pilot program. they would also like to see a choice in mileage reporting methods. the chart below demonstrates what the different basis for the fee would be from time to distance and the other reporting methods are manual or automated. on one end you may have a time permit where you pay a unlimited amount of driving in terms of miles ova course of a week, month or year where you are not reporting anything about the amount you are actually driving or where you drive so it preserves the privacy concerns citizens have. on the otherened you vaautomates reporting method that includes rough geo graphic data so this is something you may use if you frequently drive to another state and the system would automatically track the distance you are driving and whether you are in california

and should pay california road use fee or if you are on private roads or other exempt geography. in terms of choice and security, there is a number of privacy and data security recommendations including making sure the system has authorization and authint ication. there are strong data secure measures in place and only collect the amount of data they need and the data is destroyed after a certain period of time. the technical advisory committee recommendations for evaluation fall in 8 categories and have a total of 5 ocriteria. the meat the program is determining whether this is a feasible replacement for the gas tax that will bring in revenues in a way that better reflects the

driving happening in california, but also will look at privacy, data security and equity because there may be items not captured in the pilot program but that are important to take into consideration should there be a permanent program put in place such as the difference between paying a fee to the government every time you stop at the pump versus once a month or once a year. so, as i said, these recommendation were released december of 2015 and the pilot program is slated to begin july 1 of this year. it will be a 9 month pilot program with reports out to the ctc and legislature by june 30, 2017 and a recommendation will be folded into the annual report of a road use charge replacing

gas tax. they are actively seeking volunteers for the pilot program and will likely need 15,000 people to sign up to get to the 5 thousand voln unteer goal so the website is rks with ww.california road charge pilot.com and encourage everyone interested for signing up for the pilot program. with that, any questions i'm happy to-- >> commissioner kim >> i just have one question which is how does this impact driver incentives to do hi brds and electric cars if the tax is on the number of miles driven and not the gas? in some ways it seem you may discourage better behavior. >> the recommendation from the technical advisory committee is incent vise the purchase of

fuel efficient vehicles at the time of purchase rather than a ongoing subsidy and some may say the biggest innocentive is they don't have to pay for gas so have lower bills throughout the year and-- >> but isn't there is a concern though that this is in some ways penalizing those that are being more environmental in the driving behavior? >> i think the think to keep in mind is gas tax was not set up as a penalty on drivers purchase large amounts of gas but in10ed to be a proxy fl a road use fee. at the time it was set up made sense because every vehicle was using gas. those vehicles are incuring ware i not putting into the system to maintain it so this is a attempt to return to a fair user fee on all the

vehicles using the roads. >> i understand that, i'm just not sure if i agree with that policy. i guess we want people to pay for the road usage that they use but i also think that the gas tax is to penalize certain types of behavior and it is there to fix inefficient in the market and one of those isdants on gas and oil so a tax can be both. there to correct inefficient and there to actually draw back peoples useage of roads, so i understand both premise, just not sure i would land on the side of road useage versus penalizing the inefficient in the market. >> [inaudible] i really appreciate your line of questioning. i think it is a complex topic because most see it as a simple fee and view it as a way to how we pay for

roads and think it covers are road smains i it doesn't. it is useful to think of the charge covering 3 purposes, one is the infrastructure itself as a way to pave as you go for the roads and maintenance of roads and bridges and hiways, the second is how do we want intoo encourage people from a environmental standpoint to travel. the environmental policy is actually what is driving in london to create a low carbon zone. they have gone beyond the congestion charge to modify the policy to focus on low carbon emission. the third area is congestion policy. again, a charge or fee can reflect all 3 of these thingsism how we wish to pay for instructure, environmental policy and profile of vehicle fleet mix we want to encourage our discourage as well as the

congestion on the roads when we want to encourage people to travel and not travel, give a hov unt for high occupancy veekz and carpool. one the questions that does continue is for example whether we give low emission and electric vehicles access to the carpool lanes in california because the carpool laneerize starting to get full and degrade perform ons thf lanes mpt there you have the collision of environmental policy with mobility policy. i think this is a very important area where a fee can be interpreted and used for multiple purposes. >> i amope toon the conversation and being convinced, just on first [inaudible] i dont know if i agree moving towards that taxation but open to-i know this is a informational item but just want to get those thoughts out there. >> i was going thank michele for the slides. i get the

picture with the sink holes and [inaudible] but slide number 6 talking about equity as a driving reason for this charge and really reducing the number of vehicles on the road or vehicle mile traveled. i also wanted to say that my guess is people that can afford a electric vehicle and at times hybrid have a higher income than people that still drive the gas guzzler jz hopefully incentvise the purchase of vehicles still can be done but this makes sense to me. i had to wrap my head around it by looking at the slide of the gas taxes losing value and how this makes sense. i'm curious how it technology will work as the pilot program moves forwards and i appreciative of mr. [inaudible] for putting this forward, but i think it makes a

lot of sense for the future of improving the roads and streets in the state of california. any other comments, colleagues? thank you for the update. mr. stamose next item >> public comment on item 5 >> any public comment on item 5? seeing none, public comment is closed. thank you so much for the presentation >> item 6, introduction of new items. this is information itedm. >> there is no comments. anyone from the public like to speak? public comment closed >> item 7. general public comment. >> good morning. [inaudible]

having love and passion in [inaudible] establishing [inaudible] good manners wisdom and trust. [inaudible] in making contribution [inaudible] on improvement and virtue of growth [inaudible] but for the concern of universal wellbeing of all [inaudible] and giving help to the needy so we can [inaudible] back to whatever security of [inaudible] that you know. >> thank you. anyone else that would like to speak? public

comment is closed. is there any other business? >> item 8, adjournment. >> thank you. meeting >> thank you. meeting adjourned. thank you everyone.

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>> [gavel] all right good afternoon everyone. welcome to our special rules committee meeting of february 16, 2016. i am katy tang chair of the committee. to my left i have supervisor malia cohen and to eric mar and joined by aaron peskin today. our clerk is derek evans and i would like to thank our sfgtv staff. with that clerk do you have any announcements? >> thank you madam chair. please silence all cell phones and electronic devices. completed speaker cards and files somebody submitted to the clerk. >> thank you and i know both items on the special committee is related but we will call them separately so please item 1 please. >> item 1 is a initiative oar from the mayor for the proposed initiative ordinance submitted

are by the mayor for the voters for june 7, 2016 for election entitled ordinance mending the planning code to maximize inclusionary or affordable housing and economic feasibility studies. >> we have staff here. >> we will have this presentation and if you get the powerpoint on the screen thank you. i want to be very clear the clear of this initiative ordinance is establish a pathway to maximize the amount of affordable housing that the city can require of developers. the current requirements are too low. not only are they too low but they're a one size fits all rules and acts if a luxury tower downtown has the same economics as a project in another neighborhood. the economics are different and the rules need to

be different the mayor directed staff to bring working groups to bring stakeholders together for these requirements and it's underpinned by a feasibility study by a independent consultant as all have done and in recent memory every time the board introduced a new fee or the inclusionary requirements it's done with a feasibility study and looking how much it could be increased and feasibility and killing the golden goose. this is the third initiative in a serious of policy measures relating to maximizing of affordability that the mayor has put in front of voters with some of the other supervisors responding to what he knows to be the voters number one concern which is affordability. proposition k

in 2014 made it the policy of the city to build or rehabilitate 30,000 units by 2020, have of which would be affordable to low, moderate and middle income san franciscan and proposition k clarified and the strengthened policies using public land for affordable housing. this 2016 directive would turn from public to private development projects understanding that we need both halves of the coin to get it right and turn to private development projects and seeking to maximize the contribution from the private developers to the housing stock and make sure the city has a factual basis to accomplish that. >> before you move on i believe supervisor peskin has a question or comment? >> thank you madam chair. i want put this in some legislative and historical context as well as some

political context starting -- first of all i welcome mr. bridges comments they think there is a widespread sentiment that the current inclusionary rate at 12% is too low for the current market conditions and i welcome that, and i think that is what precipitated the introduction of a charter amendment on december 15 of 2015 by supervisor kim and myself which i believe lead to the january 19 introduction of this measure as well as another measure that we will discuss as the next item on the agenda, but i actually wanted to harken back to a decade and a half ago when the city actually did not have an inclusionary law. it had an inclusionary policy that was used in some instances and not used in other instances, and my then colleague on the board of

supervisors mark leno introduced the first inclusionary law i will at section 3 17 of the planning code if my memory serves and it was quite contentious. as a matter of fact there were people in the development industry who while they didn't oppose it indicated that if -- as a matter of fact senator leno and i were having this conversation a few days ago if it was 1/10 of 1% north of 5% it would kill new development starts. we actually without a feasibility study picked 10% which was the guideline that planning had been working with and life went on just fine. by the time i left office at the beginning of 2009 that number had grown to 15%. after i left office in a deal that i'm not interesting -- or important to revisit, but in exchange for

creating a housing trust fund there was a charter amendment that put the inclusionary -- dropped it from 15 to 12% and stuck it in the charter. i don't want to second guess that but once it went into the charter the conversation in the legislative branch, in the planning department, in the community, in the development industry about changing that number became impossible without a vote. now, let me go to the political context. i just ran a somewhat charged race for supervisor, and i can tell you at least in the northeast corny of san francisco that everybody knows that 12% is much too low. yes, the cost per square foot of building today is astronomically high and the sale prices are high and i do not begrudge developers making money. i am delighted they hire union labor in many instances and it

provides a modicum of affordable housing but i believe, and i believe -- many of our colleagues share the sentiment that we can and should do better. this is not a new crisis. this crisis has been going on for a number of years. the fact that we have not as a city been acting more quickly is troublesome to me. the fact that a feasibility study could have, should have done last year, the year before, the year before that where we could have captured many more units. now, we are in the process of moving forward with the charter amendment in june rather than in november in order to capture more projects moving forward so that we can actually have a higher level of affordability for working class san franciscan for the individuals who build these projects, for teachers,

for firefighters, for everyday people in this town which is by anybody's estimation at a crisis. that i think is what supervisor kim and i have been attempting to do. i am delighted to have a conversation about fiscal feasibility but now let me deal with the last political reality and i want to be very clear, honest and transparent about this. it is my profound hope that because of the way the charter amendment is designed which takes it out of the charter and allows us collectively as a government to legislate going forward, which is our goal. take those numbers up when building prices go down, and sale prices stay high to bring those numbers down when we're in a recession it should be a dynamic law, but i would hope that on or before march 1 and i had this conversation

personally with the mayor that the two items before us today will be removed from the ballot. the mayor will remove his. the four members of the board who signed on to the next item that is not been us but called in a few minutes will remove theirs and we will collectively find the sweet spot, figure out grandfathering, get this thing out of the charter and should have never went in 2012 and doing the work incumbent upon us and to build units that nobody can afford but units that are expensive that some folks that work in the town can afford. >> thank you supervisor peskin for the lengthy conversations and if we can go on to the presentation. >> supervisor it sounds like we're on the same page but before moving back to the presentation it maybe the first time that the inclusionary was

introduced. there wasn't a feasibility study and raised to 15 i am sure there has been -- and we will give you a list in the presentation about eight times since there there have been feasibility studies so i think i said "in recent memory" and depends on your definition of "recent" and we agree that 12 is too low but we have serious concerns about figuring out what the right number is. it's clearly above 12 and some projects it's probably 25 but we don't think it's 25 for most or all projects. we will be getting into that conversation. if i could have the next slide so as you recall -- >> [inaudible] >> there we are. i am just summarizing the proposed initiative ordinance and what it says is briefly it's fairly simple. the controller and the planning department within six months of the passage of the ordinance should lead a study looking at the feasibility of changes to the inclusionary

requirements. that study should be repeated every 24 months. supervisor peskin that's the sort of response to your well taken point that the economy goes up and down and our requirements need to figure out a way to go up and down with the economy. again in response to that sort of two rigid existing requirements they don't do that now. they just stay where they are no matter where the economy it is. the initiative ordinance would say they're justed if they're too low for afford for private developers and in effect leaving housing on the table or too high and killing projects and not getting the affordability and that way directs that the planning department would bring to the planning commission legislation for the inclusionary based on this analysis and the commission has the normal process would refer to the board of supervisors. it continues to

say that adjustments should address all three ways of providing inclusionary housing, on site, off site and in lou fees and this is different from the current inclusionary rules. it should cover a range income levels. we nbl san francisco we should be providing affordable housing for people making 55% of median income and defined as low income housing and up to 150% of income and two teachers salaries and one child. those households need to be served by inclusionary at the 120-1 50 ami level and lastly the feasible idstudy mand mandated on this -- sorry the changes for the inclusionary are based on the study and the nexus and not the

same as a feasibility study and all other relevant data so what i will pass this on to my colleague leslie who will hopefully describe a little more about what we see as a feasible idstudy doing and how it can help set the policy correctly. >> good afternoon supervisors. so we just like to take a few minutes to walk through some of the critical questions that the study should answer and the first one on people's minds what are is the sweet spot for affordable housing and without making it not feasible and we don't know yet. we suspect it's higher for today's rates for most sites and projects but we did preliminary analysis of the new proposed inclusionary rates and i will share them in the next item on the agenda and the analysis suggests the rates are

not feasible for all types of development so the economic feasibility studies will dig deeper and getting an important policy change like this right. it would define the concept of feasibility and the economic conditions that a developer would or not choose to build housing and in numerical terms and test the different housing proposals and rule out the ones that numbers fell below the feasibility study threshold. another important question is whether there is a better alternative to the one size fit approach that we currently take. we apply the same rate to all projects regarding of neighborhood or project and luxury high rises are subject to the same rates compared to other neighborhood and these buildings should shoulder the burden of more affordable housing and feasibility but the maximum

rate are dealer killers for many of the smaller neighborhood projects with smaller margins so we should seriously move beyond the single rate system. otherwise we will have luxury projects providing less than fair share of affordable housing or modest projects never built because the burden is too great and neither wi are we maximizing affordable housing creation so this study will enable us to take the nuisanced approach even further to figure out how to tailor a policy for housing needs. we could study how to best expand the program with different enemies such for teachers and firefighters and in a way not to privilege one over another. many developers meet this by two options. they designate options on site that

are affordable or pay in lieu fees. each of the options has a different rate and currently under today's policylet two rates are cal braitded so one option is not essentially cheaper or more expensive for a developer to choose and we get a combination of units and in lieu fees which is ideal and this housing can meet the needs of different kinds of families. the proposed initiative requires that we do a feasibility study at least every 24 months and ensures that we and the successors can consider the housing requirements if conditions change over time so by contrast what happens if we don't have the flexibility? well, this is exactly the situation that we're in now. our inclusionary rates were at low levels when the housing market was weak and the board hasn't been able to change them as conditions change. the other side of the coin is the new

rate that we set right now hopefully with the feasibility study could work well to maximize affordable housing in today's market but less than optimal during a future downturn so that's why we want to mandate this study happens every two years and keep a constant eye on the market and maximize this. the study will allow us not to have the pitfall of setting the affordable housing requirements too high. we know when a developer considers to move forward with a project they look at the revenues with the proposed cost and the rate of return to buy the land and construct the project. if the rate of return is too low funding sources won't lend money and the builder can't build the project. this translates into lower rate of

return and lower returns relative to the project's costs. ideally developers could get the this back by and pay less for land and balancing out the reduced revenue and reduced cost. however, this is only a possibility if the developer has not already bought the land and even then they have to convince the owner to sell at a low price which is challenging because many of the remaining opportunities sites in san francisco have revenue generating uses on them already. if i'm a landowner with a profitable parking lot or a refail store i will only consider selling to a developer if they offer enough money to forgo the revenue stream into the future and the less money the developer can offer to pay for the land the less likely they're willing to find a seller so this is the back of envelope

example to illustrate how a landowner may e the offer. it's say it's a 10,000 square foot parcel and retail or commercial business. based on the revenue stream that parcel could generate as retail commercial under today's rent we believe it's worth about $8 million. in a neighborhood with 75-foot height limit and fit 60 units on that land and if you do the division if the land cost is $8 million and $130,000 per unit and in the ball bark what developers believe they can pay today but if the land drops below $8 million it's irrational for the landowner to sell. now it's possible that land prices could drop somewhat before running into this situation on some potential housing parcels, but again it's about finding

the sweet spot which is what we need the feasibility study in order to do. so how does it work from a technical perspective? we need to include a lot of research about the inputs that a developer considers when evaluating the feasibility things like costs and rental and condo prices and today's numbers and historical numbers and used how conditions might change into the future, understand land dynamics fully and look at prices just to ascertain how sticky they are and pin pointing the value of housing opportunity sites, parking lots, storage, retail sites under the current uses. as i described earlier it would operationalize the concept of development feasibility and test different proposals to see whether they meet this metric and for the promising proposals

it would test them under varying conditions. based on our experience working with economic consultants on other projects we believe it could take as short as two, three months to do it correctly once the consultant is hired and i will turn it back over to ken rich to conclude. >> so i wanted to quickly -- we're almost done here -- talk about some precedents we believe are relevant. the planning code does in section 410 require the controller to report how much impact requirements affect affordability. we're not sure how much it's been followed but we're trying to connect the second part of it and once it's done and essentially done more often than every five years it should translate into the planning department upon the advice of the controller and other experts proposing changes to the inclusionary ordinance.

that part hasn't been done. we feel that is very important and secondly as i promised you -- let me see if i can read it from the notes quickly. i got it and precedents and on the screen and going back to the early parts of the inclusionary housing ordinance and the rincon and market octavia plan and the plans at market and special use district, eastern neighborhoods and was long with financial analysis, the transit center district around trans bay and the transportation sustainability fee and under development and you will see this in front of you in around a year or less the central soma area plan which has an extensive feasibility study associated with this. next slide. so to conclude we

pretty much said these things. we feel that the current requirements are too low and we feel increasing the extractions particularly inclusionary housing is the most financially costly of all without a feasibility study is risky to do and i want to repeat we feel strongly that the requirements are one size fits all want that's not good for the city at this point and we need a more nuisanced is the of requirements and not possible without a feasibility study and with that we will end the presentation and we're available for questions. >> thank you for your presentation. supervisor peskin. >> thank you madam chair. i guess to mr. rich and this is not in anyway meant to be combative, but given the incredible spike in housing prices and incredible amount of new construction that's happened in this cycle why hasn't there

been effort by your department or the housing office to conduct the feasibility study. we don't need a ballot initiative to do it. we can hire someone to do the study. why didn't we do it last year or the year before? i don't know. i wasn't here. >> thank you supervisor for the question. it was increasingly clear that we need to turn to the private side. i characterized the total picture of affordability of the programs and the private side. last year you know the mayor was engaged in passing a historically housing bond for $310 million. only done once in past history. failed before that. there were efforts by the departments sitting here with me focused on that. as soon as that passed in november of last year we

immediately -- the mayor had us immediately turn to -- okay. what about the private side and the mayor wanted to raise the inclusionary requirements and called a working group together and we engage an economic consultant. that was done and took a few weeks. as you know these don't happen overnight. we got that going fairly quickly and it's moving and the intention was to aim for november 2016 ballot understanding we did have to change the charter. we didn't believe we could get the feasibility study required and all the stakeholders around the table in time for the june ballot cut off which was four, five months before the election, so that's what has been going on. in fact when -- when supervisor kim's charter amendment and follow up initiative ordinance came out we

actually side tracked very briefly our consultants who were on board at that time with the study to specifically look at that proposal because we knew we had to look at the economics of that and we did that. in the next item we can talk briefly about those findings. now that is done we're turning back to the feasibility study but even before that side track not done in time for june and now certainly won't be but by november it can be done. >> and through the chair while i welcome this widespread belief or fact that the inclusionary percentage can go up i am nervous about this and let's talk about what 25% means because in reality the proposal set forth in the charter amendment until the board acts is move the 12% at 55% of ami

back to the 15% where it was, and then add a working person's layer up to 120% of ami, and additional 10% of that. that's how we get to the 25%. look i have been in the real estate business since the 1980's and gotten lots of appraisals and they like feasibility studies are an art, not a science, and they're different appraisers to get the answers you want. you can cook a feasibility study. i'm nervous that there is this predetermination that in many instances -- or i don't know your name -- most is the word you used. most instances that 25% is at 15 and 10% that we discussed is going to be overly burdensome. when we see as recently as last week relative

to the project in the mission street on bryant 40%. what we see at mission and m and sea lot [inaudible] and seeing across the board so i am nervous that there is already a predetermination. i want to say for the record i have met with -- maybe not every but most of the market rate housing developers one-on-one, and when you meet with them one-on-one they will generally tell you if we were given this instruction in 2012 we would be building at 25% now. you stick them in a room and as far as 99% of them are males they won't do that. they won't say that in the fraternity meeting but when meeting one-on-one "hey, this comes out of the land cost. we can do it, so how can we trust

in you not doing the feasibility study in 13, 14, 15 and it's not cooked and you haven't come to a predetermination that 25% is too high? >> supervisor i think there are two things there to respond to. first of all i am glad you brought up projects like 5m and the giants. i want to be make it clear that the projects that hit the high numbers, 30, 40%, in every single instance bar none they received dramatic city subsidy and 5m got and the giants are getting. in the form of cash 5m got cash from the city and the linkage fee reinvested in the project. we thought it was predid you not policy but it's clear they couldn't come without the city subsidy and one ability folsom is another one out there.

>> >> and every time we have the means and the ability to find the subsidy and a project affordable we do it because it's a great policy rather than putting the cash somewhere and spending it later. we want to do with a project in front of us. i don't think there are projects out of the high teens or 20 when there is 80-20 financing deal available on their own steam. your second point how can you make sure we don't cook a feasibility study. anything can be cooked. i would say appraisals are more black boxy than the study and we expect you to scrutinize everything that the controller and everyone does and there is a time that the board has to go through it. you raised the transportation sustainability fee based on the feasibility study -- not you supervisor but before you came on the board.

i assume that it was accurate and therefore acted on that so we 1r-9 obligation to help you scrutinize any study you got. >> i actually voted on it. >> that's true, yes. >> thank you. before we go to a question from supervisor cohen i want to acknowledge supervisor kim that joined us today and to build on that and i am glad there were discusses on giants and the 5m project because in other neighborhoods in the city where we won't see large projects like that i think -- my concern it could go to item 1 or two really, but you mention there are some points where there are projects where whether there is a percentage too high or what not won't be able to move forward and can you talk about the analysis behind that and what i guess the unit size would look like for projects that potentially not move forward under a certain

percentage? again because i am more concerned about the smaller size projects. >> so as a hunch we are also more concerned about the smaller size projects and i will say in general everything is expensive in san francisco right now but in general our small and medium projects that occur out of the core of the city are significantly cheaper even though they're still expensive. i don't want anyone to think that anything is cheap but if you look at projects out on ocean avenue or in other parts of the city and what they're marketing the rent for while it's expensive it's market dedly cheaper in this part of the city and because the rents are cheaper it makes them reasonerable not to afford the inclusionary because they don't have the huge revenue and also you can't build very high out

there the projects can't get the amortization with the units and it's our hunch it will be confirmed or denied that those projects are most vulnerable to that. >> and do you have an idea of what you mean with medium and small size? >> 50 to 100 units. as supervisor peskin it is it's an art and not a science. i don't know where the cut off would occur but probably less than 100 units out in the outer neighborhoods. >> thank you. supervisor cohen. >> thank you. i appreciate the spirited discussion. i have a question for you. what are other cities doing? are they doing feasibility studies for affordable housing? >> thank you. i can speak to this one. it's fairly ubiquitous for other cities to do thesed is its. los angeles, seattle, bc, vancouver.

oakland is looking into one to implement a inclusionary housing policy and the bay area of bay area governments recommends it all cities changing their programs and in fact we're not aware of any cities that have mandatory inclusionary housing that is not backed up by a feasibility study -- >> i will interject here. what cities did you study or find the answer to this question? what cities did you survey that you call to find out if they did the study or not? >> so this is based on staff's expertise, our research, what we know is out there. we could do a systematic survey as part of a study but we haven't gone through the 50 largest cities sis matically but one other example is in new york city they have a proposed inclusionary policy being considered and

underpinned by a feasibility study. what it actually found in kind of the weak and moderate market areas of new york city the proposed inclusionary housing requirement would have killed any development and any investment so they have have taken inclusionary housing out of those neighborhoods. i don't think we're suggesting that would happen here but it's an example of the city being really responsive to a feasibility study. >> okay. thank you. >> supervisor mar. >> thank you. i wanted to thank supervisor peskin for giving the historical and political context on the debate on the two competing initiatives but i have a question off the top. i acknowledge like supervisor peskin our city is wide out of balance for low income to middle income people to survive and stay in the city. that's why creative efforts like the kim-peskin initiative is

being moved forward, but i guess my question is why do we need a ballot initiative from the mayor's office to do more studies? and why is this even necessary to put as a ballot measure? >> great question. >> i think as you're aware we're starting down that road anyway. i think the mayor felt in order to make sure -- frankly as he saw proposals coming up not based on the feasibility study he felt it was important for the voters to make that connection that there not only be a feasibility study but the staff propose changes to the ordinance on a regular basis on that board, so it's important. it's one thing to do a feasibility study but we need to get it in front of changes to the proposed measure and we're seeing changes of the measure not with the luses lus --

inclusionary and the mayor cosponsored with some members of the board and let the voters weigh in and agree if they're willing do and how do you get this and now turning to the private sector we're seeing in order to really get at inclusionary housing and affordability you need to understand the economics and he felt like that rose to the level of a policy statement from the voters. >> i think supervisor peskin's question earlier why didn't you do the feasibility studies earlier? we could easily do them legislatively can't we? >> i think i answered that when the supervisor peskin asked. we are engaged with the bond that took incredible work. nobody thought we could pass it. we passed it and as soon as that was over we turned to the private side and starting with

the feasibility study so i don't think that's fair. we did it as soon as the opportunity came up. >> thank you. supervisor kim. >> thank you. just to actually ask again supervisor mar and peskin's question and with the ballot and we didn't have previously incredible amount of money coming to the budget and the voters authorized a housing bojd and we didn't have one previously and $106 million and now that the bond has passed why not start the study today without going to the voters? >> again the best way to answer it it's in the spirit and follows -- two things again. it follows from the two policy statements from the voters and supervisor kim i think you were a cosponsor of and established

priorities by the voters. we believe this rises to the level of an important priority and we should make sure we're maximizing affordable housing and creating inclusionary ordinance that serves a large range much income and will -- of income and increase the affordable housing and not decrease it. it sounds like to us as important as the previous prop k's and it's on the ballot and it happens and has to happen. >> okay. i agree. not everything that we put on ballot and many can be done via the board of supervisors by ordinance and the proposition k's can be done in the legislative process but we set goals. in the first case we establish we wanted to hit 33% production of affordable housing, 50% with middle income housing and we wanted to hear from voters that that was a goal that san francisco should be working towards, and the second

place -- and the second prop k it was an ordinance to prioritize surplus properties for the production of affordable housing for formerly homeless to middle income households and because that ordinance hadn't been truly been followed for the previous 13 years as originally authored by supervisor chris daly it amend sense to go to the voters and we need a mandate because the city didn't follow the previous versions of the ordinance and we thought going to the voters would give it more teeth but my understanding we always did feasibility studies and the percentages are feasible for developers and i think all of us in the room want to see maximum housing production and affordability production of the housing production that we have, so i still question whether this needs to go to the ballot. i would encourage our city

departments to begin that fiscal feasibility today because i would like to see the numbers and as we go on to the next item and talk about what the numbers could look like and think getting rid of a ceiling in the charter that i think we all agree upon. we want to zoo what the -- we want to see what the numbers are and maximize the housing production so my question or thought remains the same. this isn't necessary for the ballot that we can go forward with this today. >> thank you. supervisor peskin. >> thank you madam chair. further to supervisor kim's comment and maybe this is just one supervisor's view of the world, but there's certain things that one must go to the electorate in order to achieve. if we want to float a bond, if we want to raise a tax, if we want to change one word in the charter. all of that as a

matter of law must go before the electorate. the fundamental issue before us, and i think there's agreement on this is we err'd or -- the world changed and we shouldn't have put the inclusionary rates in the charter. the charter amendment that supervisor kim and myself and cosponsored by a number of other members of the board put on the ballot is really aimed at one thing which is taking it out of the charter and allowing us all, the executive branch and the legislative branch to do our jobs and pursuant to fiscal feasibility studies. i am delighted to hear about the notion of tiered parts of the city that would have different inclusionary rates. we should have been doing it years ago but this is the only way we it have that mature sophisticated

policy conversation if it comes out of the charter, so i quite frankly am -- let's be frank with the public which is the measure that we are discussing right now which you admits not necessary, and the measure that we're about to discuss which i admit was in response to your measure, the administration's measure, is also arguably not necessary so hopefully between now and the end of this month we will remove both measures from the ballot and work on the ordinance that will succeed the passage of the charter amendment, so we can raise nose those numbers. i find with feasibility now or in the future whether 24, 36 month basis. i would like an

inclusionary law if someone smarter than me can figure it out that would self adjust and the cost of construction or housing went up or down and spit out an inclusionary or in lieu percentage. i don't know we will ever figure out how to do that. that's rocket science but i think we should cut to the chase and negotiate this in public and why don't we get rid of both unnecessary ballot initiative and work on the successor ordinance. >> i thinks that sounds like a plan. >> i think our hearing is over then. >> thank you for the comments supervisor peskin and i will state the obvious and we have common goals here to adjust what the affordability rate is in the city and i am hopeful after this hearing there is more discussion and hopefully a positive result to this so are there other questions or comments on item 1 colleagues? okay. so at this time i will open up item 1 to

public comment. i have a couple of cards. some don't state whether you want to come up for item 1 or two but first let me state those that stated which one. [calling speaker names] come on up. >> good afternoon supervisors and thanks for the opportunity to speak and from the outset i am tim colen on behalf of the 300 members of the housing coalition and our members actually were intimate involved in the city's inclusionary ordinance in 2002 and it has been our policy ever since we should support an inclusionary rate that gives the most affordable housing and that's never changed . obviously we're concerned about where this is going now. in our

experience it's unprecedented that a change is made to the inclusionary rate without feasibility analysis and i think it's essential that somehow changes of this magnitude that can have such profound impact on the housing market have to be grounded in real world data, and our position has been we have to follow this and follow the data. it will tell us where to go and the second thing is i think it's what would really alarm us and would be unfortunate is a policy that hammered which we expect it will smaller scale, lower cost construction outside of the urban core. if we can't get something that keeps the incentives for that to continue to be produced but greatly accelerate it there's not much hope for us in terms of ever getting our hands on the affordability crisis, so i think be cautious. be humble. do

the analysis and follow where the numbers go and thanks. >> thank you. next speaker please. if i called your name please line up towards the windows. >> good afternoon supervisors. my name is mark mcdonald. i'm a principal with dm development a local development firm. i am here today to support the mayor's proposal to request a feasibility analysis for implementing new affordable housing requirements. affording more affordable housing is paramount to our city in terms of keeping it diverse, thriving and competitive and i am pleased to say every residential project we built includes these units on site but the requirements to double the requirements to 25% is untenable especially for smaller and medium boutique projects which we specialize in building. based on current

costs and rents it will be challenging if not impossible to build housing with the 25% requirement without up zoning or subsidies and significant surtail market rate housing production and stifle the new units that the ordinance is intended to create so instead of rush this to ballot it's imperative to conduct a proper feasibility study and create affordable housing to responsible levels without shutting down the production of all levels and devastating the industries and the construction trades and it's imperative we have responsible grandfathering provisions for projects that filed applications and made significant financial want haves to move forward under the original rules. thank you for your time and i hope you seriously consider the concerns and a thoughtful study and

discussion as a city we could build more affordable housing, not less. thank you. >> thank you very much. i'm going to call a couple more cards. [calling speaker names] >> hello. my name is kerry miller and a independent reeps broker in the city and been here for four years and came from chicago initially so i am initially encouraged. sounds like people are working things out. that's great. it would save us a lot of time. i understand there's a large need for bmr and inclusionary housing. there isn't a lot of discussion what happens for middle class san franciscan and make more than average middle class citizen in a city but the reality is they're renting until they buy somewhere else and

they're buying a vacation home before buying in the city and market rate is what there is available to take care of the folks and like most places and not a lot of concern for these folks in the meetings but that's what the small time developer is doing and important to keep in mind intended consequences versus unintended consequences and the things that everything that goes to a ballot initiative will find the right solution and not necessarily born out over time. i think prop 47 had good intentions behind it and now there is broken blases and bikes get up and walk away all over the city. it's important to keep in mind if you pass a blanket number, 25% across the board, there will be lots vacant indefinitely and i don't think that's what the city needs. the crisis doesn't need more impediment to development.

that's all. thank you. >> thank you very much. next speaker please. >> hello. i am [inaudible] a local market rate developer. first i would like to thank everyone for being involved in the legislation. we are really supportive of any way to increase affordable housing within the city. however, we are concerned about the impact of the new legislation on existing projects. as an example we submitted a 44 unit project for planning almost two years ago and under the existing structure and if the rules were to change the project would be significantly impacted and at risk. we therefore would appreciate and support some feasibility analysis for the projects to make sure it does what it's set out to do. thank you. >> i am carlos wallace. dear supervisors i appreciate your time today and the candid

comments back and forth from both sides of the room and supervisor peskin you outlined a solution that we're looking for and a solution of common sense and as a personal note i care about the housing in the city. i lived here for 20 years and we have projects in the pipeline that would be negatively affected without a solution but i have kids growing up in the city and i worry about their ability to buy housing when they grow up. they're 13 years old now and if they're not high income earners i don't know where they will be and have trouble buying housing when they grow up and it's a problem we need to tackle together but i think it's important to set a rule, make it clear, and be cautious when it's changed and right now you're talking about a big change that potentially can

ice thousands of in the city now or the future so if you're changing the rule it has to be cautious because the markets will react and we could find ourselves ten years from now with little production. some projects may work at 25% but many may not so the feasibility study proposed whether via the mayor's proposal or some compromised ordinance that comes into place at the same time as the charter amendment is extremely important to move cautiously i think is very important for people in your position. as a sign of respect to the city the residents and everybody that wants to solve the affordability crisis in the city. thank you. >> thank you. next speaker please. >> thank you supervisors. my name is joe and with avalon bay communities. we're the developer and owner of about 3,000 units in san francisco

and currently building 300 more in the dog patch. i live in san francisco and earlier in my career i respond spent eight years building affordable housing with a non-profit and i know how difficult and critical it is that we're building new affordable housing . inclusionary housing is a key tool in the tool box to do this and it's critical to maximize the effectiveness of this tool. i am actually very eager to be joining with you and with city staff to be working on ways to maximize this most effectively. i don't believe it can be done arbitrarily or by decree. it's a great way to get the highest percentage but the only way to get the projects paying that percentage is with a formula and careful look at feasibility. the mayor's housing working group is working on this. i think there is tons of potential and an opportunity for san francisco to be a leader in this area, and supervisor peskin mentioned the rocket science of coming up with a formula that

is automatically. i don't think it's impossible and i think you know we can -- we have a lot of smart people in this room and other rooms in the building. i think we can come up with a formula that adjusts automatically with the conditions and it's the only way to ensure that the public gets as much it deserves from this policy while not leaving anything on the table. as one final note i am a market rate housing developer. i will provide a little anecdotal evidence. we control a piece of land in san francisco and would like to use it and add to the city stock and affordable housing. at 12% we may be able to make it work under the market conditions. with 25% we can't make that investment. i can't get people to invest in the project. thank you very much for the time. >> thank you very much. next speaker please. >> good afternoon rules

committee. we're saving nickels, saving dimes, working until the sun don't shine. since we left our affordable housing behind we're city blue bayou but we're coming back some day when we got more pay, and we're blue bayou, where the folks are fine and we make some dimes and the city shines with their fishing boats, with their lobster float if you could only see that we want affordability housing. everybody plays with housing rules sometimes. there's no exception to the rules. i ain't lying. it maybe factual, maybe cruel. make it

happen, won't you? thanks. >> thank you very much. next speaker please. >> supervisors, recently we lost a housing advocate in dr. espinola jackson and she she would make a statement and affordable to who. i have been involved with this issue of affordable housing for the last 35 years. maybe before -- one individual on the right side was doing some sort of housing but the rest of you were not there, and i studied all the devious [inaudible] richard

blum and jon stewart company and witness to what i say. this city has sold out affordable housing meaning you cheated on those people that made this city our neighborhoods and favor the developers. now, i represent the first people [inaudible] who have been in this area for 13,000 years. all this land was stolen so here we have the thrives deciding how to make best of the land making millions of dollars. now, who challenged the academy of arts university who took so many rental units away? why are they giving all the developers the public housing that the department of defense paid for 100 times

over? so that this middle class families and people that we really want to stay here in san francisco and indigenous -- and i can say that -- (off mic). >> thank you very much. next speaker please and before that i will call up the cards where they didn't indicate whether they're speaking on item 1 or two. [calling speaker names] >> hi. my name is sonia and i want to take issues with peskin's claim earlier that life went on fine after the first inclusionary fees were instituted. life is not fine. we're in a horrible housing crisis. things are fine for housing associations and