norman y>> all right.

good morning, ladies and gentlemen. my apologies for starting committee late this morning. it is 10:22. i would like to call this meeting to order and welcome you to the budget and finance

committ committee. our friends at sf governor tv, jesse larson and mya hernandez are assisting us. and the clerk of the board is ms. linda wong. >> silence all cell phones and electronic devices. items acted upon today will appear on april 3rdrd. >> thank you. could you call item one. [ agenda item read ] >> all right. thank you. colleagues, this is actually very important contract

particular to the bay district. the construct management team is responsible for coordinating a $2 billion project happening. the bayview has had the awesome responsibili responsibility of shouldering the responsibility of hosting the waste water treatment plant for decades. that actually includes foul odors which has naturally had an adverse health effect on the committee members as well as a significant impact on the quality of life. way what we're talking about is this was created in 1950s and we're dealing with 1950 technology. so we're finally working collectively to improve the situation. and we're working to replace and, most importantly, to modernize the sep. we're going to see a heavy increase in traffic, construction and neighborhood

disruption. before us is a management contract that will go along way towards minimizing the effects of having such a major construction project happening in our backyard. i do hope you will join me in supporting this item. with going to hear from the management people of the plc. i will give you the floor. welcome and good morning. >> thank you. good morning. i'm the director of the program for the san francisco public utilities commission. also with me is ms. johansson for the improvement program. the southeast plant program construction management services contract that is before you today is an essential part of the management coordination of the pucs improvement program. i'm going to give you a little update on that program. do we have the slides up? it's a 20-year program. it's a multi-billion dollar

citywide investment to update our aging infrastructure to provide a system. we're using treatment plant improvements, pipes, stations. integrative green programs. we're work to manage storm water. for those who are not as informed as supervisor cohen, these are levels of service. these were endorsed by our commission in 2012. they really guide our program and our projects and where we're going. relative to the item that's before you today, is the improvements at southeast plant are focused on making the system resilient, compliant, and sustainable while it does its big important job of collecting and treating storm water for the city. to support affordability, we laid the program out in three overlapping phases. and the highest priority

projects were put into phase one. this chart delineates the phase. it's $2.9 billion worth of projects. 70 projects overall. here is an area of southeast treatment plant where those $2 billion worth of work will be taking place. it's located up at 3rd and evans. it's the city's workhorse plant. as the supervisor said, it was built in the '50s but was really using 1940s technology. this is treating 80% of our waste watter in san francisco, working 24/7. there's not a square inch to move around the site. it's surrounded by residences and businesses to the east and cal tr caltrans to the west.

each will have their own contractor and objectives and will be occupying a designated space at the plant. this plant will be operational. it will still have to serve the needs of the city, meeting its permit. needless to say, that's the importance of this project. that's where the management contract comes in. i want to show you a timeline of what those nine contracts look like if we look at a schedule. the red line represent where is we are today. the green bars show the construction durations. very shortly, in this very calendar year, the two biggest contracts will be starting up. we'll have nine contracts going on simultaneously. this next slide shows the locations at the plant that will

be under construction. i want to highlight two of them. this green shows where all the flow enters the plant. it's a pre-treatment job that happens there. solids are removed. things like bricks, two-by-fours, the digester project is shown in blue. we're relocating them to set back by the raised train tracks. those two projects are two of our most significant to improve the situation out in the southeast community to collect and treat air and prevent odors from traveling outside the boundaries of the plant. evans and gerald will be transformed as part of these improvements to pedestrian friendly avenues. i want to show you the new look and feel of the plant. there's been a lot of work done by the supervisor and many people in district 10.

these are a closer look at some of the buildings that will be the perimeter. we work very closely with the art commission to we have an overall campus look and field. at the top is the new indictingers. the right is the pretreatment facility. we have a maintenance building along gerald and, lastly, the head works facility. that incorporates art into the fencing that people will drive by when they're on evans. now that i gave you a little bit of a snapshot of all the work that needs to be coordinated and constructed along with the vision of where we're going, i wanted to ask allan johanssen to briefly summarize the tasks in the contract. alan? >> thank you, karen. good morning, supervisors.

alan johansson. for our program construction management. as karen outlined, we have a large volume of projects. to a staff we needed to bring in a program to coordinate this work and assist with reporting. some of the most important aspects of the support we'll be getting from the program have to do with safety management. with all the jobs and all the workforce that will be required to make this happen, we want to make sure that everybody comes to work and gets home in a safe condition. beyond that, we brought in, as part of this program, we're bringing in community outreach people so we can communicate our progress and status with the residents around the plant. additionally, we'll be bringing in environmental monitors to make sure we stick with our

regulati regulati regulati regulati regulation requirements. a little on the background of the procurement. november of 2017, it was proposed. we have parsons, the successful proposal. we went to the commission in february, and they granted an approval to award to parsons. parsons had the highest score. we had a cmd participation requirement of 20%. they met it with 50%. so as mentioned previously, the management services provided are going to be coordination, working with waste water enterprise, outreach, environmental, and safety. what we're requesting from the

board is: we're asking for the sfp to enter into an agreement with parsons water and infrastructure for specialized construction management services to supplement sfp's staff at the southeast plant program construction management services. thank you. >> great. thank you. is there any more to the presentation? that's it? all right. thank you. do you have any questions for staff? all right. we're going to keep moving. and we'll hear from the budget legislative analyst office. >> good morning. yes, on page four of our report, the cost of this contract is $35 million over a ten-year period. we considered the cost to be reasonable within the 2 billion dollar budget for the southeast reconstruction. it's for eight years, through 2028, even though the

construction is planned to be completed prior to that time. puc has expressed to us the need to have contingency, in case there are delays in the project. there's one ching in the report. the contract we reviewed did not specify the dollar amount of the community benefits that would be provided by parsons under the contract. era provided a revised contract that did confirm the benefits would be $1 million. so we withdraw that recommendation, and we do recommend the resolution be approved. >> great. thank you very much. all right. ladies and gentlemen, it's time for public comment. if you would like to speak on item one, please come up to the podium. keep in mind you will have two minutes to speak. you will hear a soft chime, indicating 30 seconds to remaining on your two minutes of allotted time. seeing none, public comment is closed. colleagues, is there a motion for this item. >> fewer? >> yes.

i make a motion to move this to the board with a positive recommendation. >> thank you. we'll take that without objection. thank you. item two, please. >> clerk: item no. 2. [ agenda item read ] >> all right. this is a nice feel-good piece. this is a resolution to accept the snowflake lights that the city used along market street during christmastime. very easy. okay. we have a speaker that wants to speak on this? no? okay. we don't have anything to talk about. >> these are great lights. >> let's see. colleagues? discussion? none public, discussion item no. 2? none? thank you. i motion to have this approved

as a committee report with a positive recommendation. we'll take that without objection. please, call items three through seven together. >> yes. [ agenda item read ]

>> thank you. these five items are competitively bid concession lease agreements in the international terminal. each lease is for a seven-year term with two one-year options to extend. i want to welcome kathy weigner back to present on these items. >> good morning. thank you. kathy weigner with the san francisco airport. as mentioned in the reading of the items, the five items before you, seek your approval for three new stan leases and three new retail concession leases in the international terminal with two spaces for pacific gateway

concessions and one space each for hgsfo retailers konoka and nds group. all five leases are the result of competitive requests for proposal process and will pay either the greater of their stated minimum annual guarantees or a tiered annual rent. the total is $4.5 million based on the minimal guarantee amounts. although, it's worth noting that it's believed to pay on the higher formula based on traffic and sales. the rent commencement date for each of the leases is either the earlier of construction of the tenant improvements or 120 days after tenant occupation of the lease space. the budget analysts has reviewed

all five leases and recommends approval. i will be happy to answer any specific questions. >> thank you. i appreciate. we spoke before committee. i got my questions answered. do you have any questions? >> no. you? okay. excellent. excellent. budget legislative analyst, let's hear what your thoughts are. >> as said, these are five leases selected through a competitive process. they would be for terms of seven years with two one-year options to extend up to nine years. the tenants would pay the greater of the minimum annual guarantee rent, which ranges, as you see on page eight of our report, up to $1.5 million per tenant. the minimum for all five in the first year would be $4.5 million

over a seven-year term, $35.8 million paid to the airport. if they were to pay the percentage of gross revenues, the rents would be higher than that to the airport. the airport, as said, expects to receive the maximum and we recommend approval. >> appreciate that recommendation. thank you. okay. let's go to the public comment on items three through seven. any member of the public who would like to comment on these items, you will have two minutes to do so. seeing none, public comment is closed. i recommend to send to the full board. looks like i can take that without objection. thank you very much. please call item eight. >> clerk: item eight. [ agenda item read ]

>> thank you very much. supervisor yee is the sponsor. i don't see him today, but we'll hear presentations from the office of economic and workforce development as well as jeremy shaw from the planning department. why don't you get started. >> good morning. thank you. thank you to the chair and commissioners. if we could have the presentation, thank you. so jeremy shaw from the planning department, joined by emily lisk at owd. for over three years, the planning department, oewd -- oh, things, supervisor. >> ladies and gentlemen, i want to welcome my colleague supervisor yee. we're going to welcome him and get situated. looks like he's still got his good looks, but i don't know about his youth, supervisor. i see that limp. still good-looking, though, sir.

good looking. that's what's important. folks, i want to introduce you to supervisor yee. >> colleagues, today we're reviewing the resolution accepting the findings contained in the fiscal feasibility report for the proposed housing project at the balboa site. since 2014 when ed lee announced the public lands for housing program, the balboa site has been the focus of much hope as well as concerns in our community. some view it as a critical opportunity to utilize public land to help address the city's housing crisis and others are concerned that the impacts a large-scale housing project would have on our district. we're now at a critical junction. we have had years of community

discussions and input, created a detail set of development principles and parameters. and we've seen the preliminary designs from the developers. during this time, i am proud to say that even though proposition k requires 33% of the housing in such developments to be made permanently affordable to low and moderate income households, i was able to push with the community this project to 50% affordability. i would like to thank the members of the reservoir c.a.c., mission housing, development corporation of pacific union development company and habitat for humanity for getting us to this point. as part of the project review process, the city hired a third

party consultant to provide the board of supervisors for the consideration of have itting this feasibility of the issue. this is a necessary step before we can do an even deeper analysis of the project through project entitlement process. the board's fiscal feasibility findings do not permit the board of supervisors to approve any transactions or grant any entitlements to developers. the project still has to undergo environmental review and will be subject to public hearings before we make any decisions. there is an ongoing community process happening through the balboa c.a.c.

i am responsible for insuring the questions are addressed and the city college is well represented and protected. approval of this resolution today will allow us to go deeper into the analysis of the impacts of this project and set the stage for those negotiations that would result in a project that would represent the needs of various community stakeholders. i would like to ask if any of my colleagues have any opening remark before i turn it over? okay. would you like to continue? sorry about disrupting your speech there. >> it was perfect timing. thank you, supervisor. >> so, as the supervisor mentioned, we've been working with the community over three years on the reservoir project but, as the supervisor

mentioned, we have a way to go. under chapter 29 of the administrative code, before the project can begin that process under seqa, the plan for undertaking and implementing the project is fiscally feasible and responsible. so the resolution before you today would do three things. it would find that project to be fiscally feasible as defined by administrative code chapter 29. the second thing, it would authorize the planning department to begin environmental review, which i think collides technical studies around parking, greenhouse gases, et cetera, and it is not a project approval of any kind. project approvals cannot be granted until the environmental review process is complete. passing this resolution would simply be authorizing the planning department on receipt of the application to begin

technical analysis and environmental review process. just a quick clarification, the site we're discussing today is the 17-acre sfpc site. just to clarify again, it is the lower basin of the reservoir area. the housing and open space was actually discussed in the balboa area plan from 2009. this effort to initiate housing and open space site began in 2014, as the supervisor mentioned, with mayor lee's housing program, which designated the reservoir as a key opportunity site. in early 2015, we began with two workshops, several presentations, and meetings with over a dozen organizations. the c.a.c. was coordinating,

planning transportation with the college as well and continues to meet with neighborhood groups outside the c.a.c. between 2016 and 2017, the process engaged the community is a number of unprecedented ways. over the course of 16 meetings that the c.a.c. mentioned, advised on the rfp guiding parameters. the public was allowed to comment on the finalist proposals, and the selection committee for the rfp included those from the city and city college. as mentioned, the partnership between avalon way and bridge housing and includes mission housing, habitat for humanity, and development company, representatives from the development team are hear with us in the audience today. finally, last november, the

commission authorized an agreement between the city and this development team. since then, we have been working with them to refine their initial proposal and take it through the city's pre-development process. the resolution before you includes two supporting documents. the first is the development overview i'm going to go over. the second will be explained in further detail. the development overview describes the project in in broad strokes. the project adheres to those principles and parameters created with the c.a.c., yet many design details remain to be worked out. the design team will continue to work through the environmental review process. so the broad strokes include approximately 1,100 housing units. although, we anticipate that a range of units will be analyzed in the environmental review

process. 18% of the housing units will be affordable to low-income households. 15% afford able to moderate information and 17% affordable to a combination of low, moderate, and middle. that's a total of 50% of permanent affordable housing. of that 50%, the first 33 will be paid for by the project. the remaining 17% will require public financing, which emily will explain in a moment. we're working closely with city college to make housing affordable to the college community. the project includes at least four acres of open space and one large park between one and a half and two acres. we are also very focused on providing the access and parking that the city college community needs to support their enrollment goals. we have been very clear from the beginning that the project must have a parking solution that serves the people who need to

drive to city college. the shared parking garage, which, in essence, means different parking spaces can serve types. residents could park in the evenings where city college students could park in the day time. initial proposal is to have 500 spaces. we're committed to finding the right number. ultimately, those solutions will be informed by the team's ongoing data collection, as we speak. continued collaboration with city college and the environmental review process previously discussed. also, parallel through work the city college has done, they've identified other locations for parking and will continue to work with the city on solutions that include walking, biking, transit. the reservoir development itself will involve a robust plan to ensure best practice green

building and design. it includes a child care center and community room for use by local organizations beyond the reservoir site. and, finally, the project will require, as a number of requirements, including the prevailing wage, instituting an apprenticeship program and a utilization plan and non-discrimination and affirmative action programs. now, emily lisk will continue with the supporting document. >> good morning, chair cohen and supervisors fewer and stefani. i'm emily lisk. i'm going to walk through the feasibility report prepared to look at whether the balboa project is feasible. i want to say your packet

contains a typo correction and clarification based on community feedback we received, but those do not change the results of the report. so, broadly, the report finds this project will have a positive fiscal impact. the amount of new tax revenues it will bring to the city will be greater than the amount it would cost the city to service the project. more specifically, the project is estimated to bring in about $4 million to the general fund. primarily through property taxes, but it will also include transfer tax, sales tax, parking tax and revenue. on top of this. it will bring in another million dollars in dedicated property taxes. sales tax revenues that go to the sfta. it will generate $1.6 billion for the augmentation fund and the san francisco unified school district. by comparison, the city's

estimated annual cost of serving the project with road maintenance, police, and fire service is estimated at $1.5 million. so a key number in this report is the net revenue the project will generate each year. that's calculated by taking $4 million, subtracting out the annual city services costs and then subtracking -- subtracting out libraries, children services. the result is $1.7 million in revenue each year. that's in addition to the other designated revenues and the other education funds. the balboa reservoir project will owe $20 million in impact fees. that's the total for the balboa park fee, the child care fee, and the transportation sustainability fee. although, a portion of these fees may be credited if the project provides in kind

community benefits. it will generate $4 million in school fees and $3 million in tax collected during the construction period. it will create a substantial number of construction jobs, each job year is one year of full-time employment for one construction worker. there will be fewer permanent jobs once construction is complete because this development will be all housing and no commercial space. however, there will be about 40 permanent jobs in areas like maintenance, property management, child care services, and parking operations. in addition, the sfpc will receive revenue from the sale of the property to the development team, which will go to benefit sfpc rate payers. sfpc will also benefit from the opportunity to serve as the power provider. there's also another major cost associated with the project, which is a subsidy to make sure it reaches affordable housing.

the first will be funded with revenue from renting and selling the project's market race housing. however, in order to bring the total to 50%. some public funding will be required. that's because the project will not be able to fund the additional 17% while also meeting the sfpc's legal requirement to maximize the value of this assets. if the project ends up having 1,100 homes, the additional 17% will be 87 additional affordable homes. and the team's initial estimate is it will require a public subsidy of $26 million, it's a total, not annually, although, we'll need to do more vetting and analysis around the final numbers. we've identified a number of potential sources for the subsidy, including state administered sources such as the affordable housing and

sustainable communities program, the gross receipts tax is passed by san francisco voters in june, the state and possible local housing bonds proposed for this november, and the net new unrestricted revenues that the balboa will resonate for the city. which of these sources will be best utilized, we'll update you on that when we come back. if the board finds this project to be fiscally feasible, the application can be submitted next month. this will allow the environmental review process to get started, which would get the ball rolling on the technical studies, including parking and transportation. while this is under way, the city c.a.c., community and city college, will continue to provide feedback and the design team will continue accordingly and will also begin developing

the agreement this year. in 2019, we'll complete the environmental review process, including draft, public comment. we'll be ready to go to the planning commission and back to the board of supervisors for final approval. so circling back to the resolution that's before you today, as you know, the budget and legislative analyst report listed affordable housing considerations to take into account as we move into the initial stage of this project. the standard practices for development agreements and we'll certainly adhere to them for the balboa reservoir as the other projects.

phasing plans ensure that the public benefits, including but not limited to affordable housing are consistent with market rate development so they can't back load the affordable housing. it's a standard practice to build a model of the cash flows. it's recommended that we use this exercise to ensure that the sfpc receives fair market value for the lands and that things are delivered as quickly as possible and that the marketplace flow in a way that maximizes the affordable housing. these are all things we would typically include in a model like this one, we fully intend to do so for the balboa reservoir. affordable housing needs to remain affordable. having the mayor's office of community development taking

ownership of the land. the proposed idea that the balboa reservoir housing communities could potentially be provided in an existing building directly adjacent to the balboa reservoir, which was recently built by one of the team members, avalon bay. we think that this is an intriguing idea to explore when we begin negotiations because it could be an opportunity to get affordable housing sooner since we wouldn't need to wait for the new buildings to be built. we would only give credit to those converted from market rate to permanently affordable. the designation of any such off-site affordable housing should not cause the number of on-site housing units to be reduced below 1,100. we're in agreement. it suggested we use a specific calculation methodology for how these units would be countered toward the