the overall premises of the building and the lot come together as one, which we will lease in its entirety after phase two is delivered. those spaces come at additional cost of $225 a space per month. [please stand by for captioning change]

we heard you loud and clear as to identifying surplus space we could create. we have viable options we are continuing to pursue those. heather green and i meet biweekly with the controller staff to help us through that exercise, identify space opportunities and co location out of the hall of justice. that's just one less unit we have to accommodate elsewhere. lastly, there is a concern noted about the tenant improvement budget not being precise at this moment. really because we can't engage in contractual services until we have a fully-executed lease. if you were the landlord you

would want that lease in hand before you started spending time, money and resources on the tenant improvement. we ballparked it on our expertise of delivering similar space in the private sector, so we feel confident we are in the right neighborhood. we don't have a precise number for you, we will continue to deal with that as we move forward. you will see that, i know the budget analyst will do a robust review of that when it comes forward as part of the budget. the second lease is police evidence storage at 777 brannon. so there, the board recently adopted the zoning text amendment which was a prelude to consideration of this lease, that allows the restoration of the current self-storage unit to return to the property upon the termination of the city's lease, if the city doesn't buy the property. that was an important element, so i'm pleased to see we have that planning matter behind us

and approved by the board following planning commission's unanimous recommendation. property is basically a long block away from the hall of justice at brannon and 7th. it's just 30,000 square feet in size, just under that. it is also a full building lease. it's delivered in one chunk, so we aren't phasing this one. the lease commences july 1, it's a 10-year initial term with two five-year options. so you see the consistency of 350 rhodes island, brennan and bryant, being able to return to an entirely different hall of justice site. remember there was a rationale for doing leasing, because we have a long-term vision to bring these units together at 850 bryant in a totally new wonderful resilient building. >> supervisor cohen: i love how you connect those dots. >> thank you, i try. we did secure right of first

option which was important given the amount of money we are proposing to put in the tenant improvements. we did the best we could given conditions under the financing that burdens the property. they couldn't give us a solid right to purchase at a price and date certain. but if they elect to sell the property we have the first option to acquire the property. the numbers $37 a square foot a year, annual increase 3% a year. renewals at 103%, the most recent base rate or 95% of fair market rent, whichever is greater, that's what you are more used to seeing. we provided market evidence to support the lease rate anticipate occupancy between

spring and fall of 2019. this is a pretty robust tenant improvement, so it will take a while for design and delivery, a lot of security concerns. i won't go into a lot of those details given what the property is intended to accomplish but we are looking at a $6 million overall delivery project and again we will keep that number within that justice facility improvement program and you are going to see that later in june. that's all i have for items 1 and 2. >> supervisor cohen: i appreciate that. and i have a couple questions for you. i want to acknowledge this might be one of the last times you come before this committee. another gentleman who dedicated years of his life to the city and county of san francisco and service and will be retiring. i just want to say, thank you, you and i have had good days and bad days, nevertheless we have memories. >> all good memories, chair cohen, all good.

[laughter] >> supervisor cohen: what are the co-location opportunities to bring -- this may work or may not work, but to bring the sheriff's department and police department together in the same building at 945 bryant? >> so at 945 bryant, we don't have a lot of room in terms of co-location, right. they are leaving approximately 20,000 square feet of net rentable space at hall of justice moving into 41,000 square feet but remember the hall of justice on one floor so much more efficient, here we have a three story building, you have a lot of vertical circulation that takes square footage away, while the box is 31,000 square feet, the actual occupied area is significantly smaller. the differential isn't that great. they also have staff increases, both already brought on and anticipated, some of them through recent legislation with this body, so they have more

responsibilities, a little more staff. that all being said we don't have room for some of the larger groups we initially looked at within the police and sheriff's department. we identified sheriff's uses that may be an excellent co-location. not prepared to give the name of the unit, that's the matter in flux with ben's excellent team but i see progress and that will continue to be bird dogged by heather green at capital planning, i assure you. >> supervisor cohen: okay, now we will hear from the budget legislative analyst. good afternoon, i haven't heard from you all day. >> i know. good afternoon. yes, as mr. updike said provisions are consistent with the letters of intent the board of supervisors previously approved. on page 4 of our report, you

will see over the first 10 years of the lease for 945 bryant street, the cost $33 million over the first year 10-year term. for 777 brannon, it would be $16 million over the first ten years. the tenant improvement costs as mr. updike cost about $2.7 million estimated for 945 bryant and about $6 million for 777 brannon street. these costs are actually being paid from the justice facilities improvement program. the board previously appropriated $16 million to this program in '17-'18 and '18-'19. however the capital plan actually calls for an additional $17 million to be appropriated which would total about $33 million for the relocation of departments from the hall of justice. this is something we will be looking at and will be subject to board of supervisors approval. the other question i think you

answered, one we called out in our recommendation is we recommend the board continue to urge the real estate division adult probation to work together to co-locate at 945 bryant street. we estimate about 13,000 square feet in phase 3 of the building. some units we identified that could be co located departments within the hall of justice that have not yet been located, includes sheriff's warrant unit, prisoner legal and police department i.d. unit. we recommend the board continue to urge co-location at 945. we recommend approval of both resolutions. >> supervisor cohen: all right, thank you. i appreciate that. we will accept those suggestions. let's go ahead and go to public comment. any members of the public to comment on items 1 and 2?

seeing none, public comment is closed. i will make a motion to accept the b.l.a.'s suggestions and would like to send these two items with a positive recommendation as a committee report to the full board. >> refer committee reports as amended to the may 22nd meeting of the board of supervisors. >> supervisor cohen: all right. thank you very much. we will do that without objection. all right, thank you. item 3, please. >> resolution authorizing lease of approximately 12,000 square feet at 1305 and 1309 evan street, with 13 parking stalls with raul and denise araza as undivided 50% interest and olsen family trust dated october 16, 2014 for 5-year term commencing upon approval

by the board of supervisors and the mayor with one option to extend for five years monthly rent of $38,070. >> supervisor cohen: all right, thank you. i appreciate that. we have john updike presenting on this, on item 3, the 5-year lease from the department of public health. >> thank you. before i get into this, if i may take a moment of your time to introduce my successor who has joined me today and working with me for the last couple weeks to ensure a seamless transition and transaction andrew panik. >> supervisor cohen: welcome. >> thank you, chair cohen, members of the committee. i have giant footsteps and shoes to fill following john updike but i look forward to working with you in the future. >> supervisor cohen: we look forward to that too. mr. updike, when is your last

day? >> 31st of may last day. >> onto business. seeks authorization of a 5-year lease of 1305, 1309 evan at department of health. they can begin to address that for you. this is primarily for administrative and clinical counseling offices for youth and family services. the lease negotiated here is a fixed rate for the term, for the 5-year term of $36 a square foot per year. it has one 5-year option at 95% fair market rent. as noted in the budget legislative analyst, this was month to month for something just short of forever, over a decade. however, over the past four years we have been working very

closely with d.p.h. staff, a variety of d.p.h. staff on site that's had outstanding month to month leases. all for good reasons outlined in the report and we have now taken that list to just two remaining after this, on month to month. so we have made great progress to get the portfolio in a little more stable condition. given the value of leasehold, appraisals weren't required. although the legislative analyst report recommended a lower rate than the holdover rate that's been paid, my personal opinion i'm not necessarily convinced that would have been the case. maybe, maybe not. given the rate now before you, since the rate recession, the holdover rate was actually a

savings to d.p.h. there might have been an increase at the beginning but i think over the long term we actually may have saved money over this 10-years of occupancy month to month. nonetheless the department of health pledged to accomplish this in a timely manner in the future. my colleagues are here to address any public health questions you may have. >> supervisor cohen: great, thank you. i don't have any questions for the lease but i think the budget legislative analyst has a couple questions. >> yes, supervisor. the summary of the provisions of the lease are on page 14 of our report. rent is $36 a square foot over the initial 5-year term. but as mr. updike said, we did raise an issue this lease had been month to month for 11 years before it was brought forward.

there was, rent goes up by 50% or 150% of the final rate 2007, stated that rate. we don't have the calculations but seem it's was a pretty hefty rent increase at that time that could have been avoided if there had been an opportunity to enter into a longer term race. the rent is going up additional 30% over the current rate. our recommendation is simply as mr. updike said the department of public health may only have two remaining month-to-month leases. there were a number in 2014 that had been resolved but this director requested department of public health to report back, they have 21 leases during the budget review, otherwise we recommend approval. >> supervisor cohen: thank you very much. i'm sorry, you guys, denise and raul? no? >> good afternoon, dave,

department of public health. >> supervisor cohen: got it, got it. >> [inaudible] >> supervisor cohen: state that louder in the mic. >> i'm with the department of public health, children youth family, i'm assistant director -- [off mic] >> supervisor cohen: perfectly great. thank you. i don't have any specific questions at this time. i will go to public comment. i see none of my colleagues have questions. public comment is open. all right, seeing none, public comment is closed. let's, i'll accept the b.l.a.'s suggestion and approve and send with positive recommendation. >> i don't believe this recommendation requires an amendment to the legislation. >> supervisor cohen: is that right? okay, thank you for the correction, mr. clerk. we will send to the full board with a positive recommendation and we can take that without objection. thank you.

thank you, mr. updike. please call item 5. >> item 5, hearing to examine the true cost of mayor farrell's proposal and requesting mayor's office of civic innovation, department of technology and budget of legislative analyst's report. >> supervisor cohen: all right, thank you very much. good to see you. >> ladies and gentlemen, thank you for attending this hearing. i called it today so we could begin to drill down into the true cost of a major undertaking providing universal broadband to shine a light on what to me has been a process that's been moving forward without much public attention and quite frankly without much transparency, the city has a poor track record when it comes to delivering big infrastructure projects on cost and on time, i will simply point to the central subway project. i feel it's our responsibility

as budget committee members to ensure there's transparency, accountability, as well as fiscal responsibility in all of our financial undertakings. that's why it's prudent for us to openly discuss the financial undertakings of this particular proposed program. there's a few things i want to layout before we get into the presentation to help frame the conversation. first, what is the current plan for fiber? who are the actors? and who will be in charge moving forward? for what reason was this particular technology chosen? of course, how much is it going to cost the city. i'm also curious to know what the cost to the rate payers will be and most importantly, overall, the build out. what is that cost going to be. so today we have got a really great lineup presenting. we will hear from the department of technology,

budget legislative analyst. sf city and d.p.w. i'm not sure if sf city is still here. if be could call the representative, she has a plane to catch. let's start there. and don't worry, don't go too far, linda, i definitely want to hear from you. please come on up. >> i really appreciate that. good afternoon, everyone, my name is jennifer stojkovic. we have been in existence since 2012 and work diligently to represent engage and convene the broader tech community and to motivate our members to play a meaningful role in the social fabric of our city. our member companies both large and small all do business in san francisco and employ tens of thousands of individuals, many of which are san francisco residents. i'm here to express concerns on behalf of our collective membership around the citywide

fiber network. while well intentioned we believe this concept needs further vetting. prior to financing such a major undertaken, there ought to be a comprehensive dialogue among the top spending priorities. in june and november our ballots will include two duelling commercial rent tax increases for housing and child care and a 0.5% gross receipts increase for homelessness. further transportation network companies will also see another gross receipts increase though it's unclear where the revenue will go. the benefits include housing, homelessness, universal child care and transportation. which begs the question, what are the city's top priorities. and is a multibillion dollar effort to build a municipality owned fiber network the best expenditure of tax payers at this time.

in the midst of extreme housing shortage we think not. our membership regularly communicates their priorities to us, as their trade organization and representative. the concerns of our members mirror those of the broader public. homelessness, housing and transportation. our concern is such a tremendous public expenditure as a government-owned fiber network will take an inordinate amount of time, funding and will most likely embed a technology that will soon become antiquated. that said, we enthusiastically support bringing high-speed internet to all of san francisco. 5g technology is the future of connectivity and something all san franciscans can benefit from and it could be delivered more quickly and less cost to the tax payers. we just need to look to our neighbors to the south in los angeles, and sacramento, san

jose. who capitalize for the public private partnerships bringing 5g to their communities to the tune of hundreds of millions for general fund purposes. they were negotiated in good faith and financial resources and include up front lease agreements to enact small cell technology working collaboratively to maintain the neighborhood character. in return 5g will connect all corners of the city. we could be a smart city of the future. and 5g technology through a public private partnership would be built by established internet providers with the resources and equipment to get such a network established. these same providers are also better equipped to handle not just installation but customer service, infrastructure

maintenance, data management, security and much more. i'm here today to advocate we engage industry and partners with expertise in their field to quickly implement a better and faster citywide network in partnership with the private sector. let's move ahead with cutting edge technology instead of municipal owned system i fear will be slower, going to take more time to implement and will need updating much sooner, so soon so that san franciscans can start benefiting as soon as possible. >> supervisor cohen: okay. >> most importantly we agree on city priorities and will ensure tax payer dollars are spent efficiently and with tangible out comes. there's no question we need to be on the forefront of closing the divide. we do sincerely commend the city's efforts to bridge this divide.

>> supervisor cohen: thank you very much for your words. at this time i want to go ahead and we will call up the director of the department of technology who will then set the stage from a policy perspective about what we are undertaking here. thank you, jennifer, i appreciate it. so let's see. we have linda. jorrell, chief technology officer for city and county of san francisco as well as director of the department of technology. thank you, linda, it's good to see you again. i'm looking forward to your presentation. >> thank you, supervisors and i would like to also thank the project team that is here with me today, we are happy to be here to answer your questions. i would like to give you an overview of the whole project and be able to answer your questions as we move through to the end here.

just to move forward, what is the problem we are trying to solve. there's many aspects of the problem we need to solve, primarily closing the digital divide, 15% of public school students lack internet access. a third of african american and latino students lack access. 25% of households making $25,000 or less lack access and over 50,000 residents have sluggish dial up speeds. so you have to say why is this important and what is the impact? in our world today this is an essential utility and technology. medicine, if you are a kaiser client, you will be able to get, and i can get care over video. and it's also about work. how do you apply for a job if you don't have internet access

and look at all the jobs are online. that's where this world is moving toward and we will talk about what the value and benefit of high-speed internet access is. so another problem we are trying to address with this project is cost. we have limited choice of provider. we do have in the city a rich ecosystem of providers but not across the entire city, they don't provide access to all cities and residents. commercial providers really don't have any incentive to close the digital divide, this is why we have the problem today and there are various levels of speed. all of this really contributes to a situation where our residents do not have access to high-speed internet.

so what is the opportunity.? i would like to suggest the opportunity is really the problem of today which is closing the digital divide as well as closing the problem of the future. how do we prepare the city for the future that is coming and it requires internet speeds. it's about speed and capacity, we do have lots of providers but they have various speeds in the city. it's about digital city services. providing so much more to the community with digital services, whether that's transportation, housing, we already have housing, internet services how would you look up your affordable housing and know if you were now on the list for affordable housing if you don't have internet access? emergency services are moving more and more to these end points and devices which we

will talk about and certainly utilities. telemedicine and education as we have talked about really is the heart of closing the digital divide. it will provide wifi to an extent. it has its limitations but it will be serving as a way to connect, devices in your home, retail, construction and all of those devices will need the back haul services of a very robust fiber infrastructure. we also need to look forward to new business services and opportunities as we have mentioned the technology is transforming, the digital landscape and i just came back from a conference where u.p.s. talked about how they have

transformed their business with the internet of things and it is a remarkable story of savings, resiliency, redundancy, reliability and resiliency that i think we need in the city and will be coming if we have the infrastructure to support it. so what are the policy goals for the fiber sf project? first deliver fiber to the premise. close the digital divide. one gig speed as a baseline service to all residents. create an open access network of choice and i will talk about how the technology works and how we are able to support multiples of providers and give that choice to our residents. provide free discounted internet access for low income residents. guaranty net neutrality and we can talk about the importance of that, ensure data privacy

and network security and deliver quality of service and transparency, so these are the policy goals the project team is working towards the goal as we move forward in this effort. [please stand by for captioner switch...] .

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speak to that. >>speaker: perhaps it is controller's office can. how are we going to pay for this? are you part of the conversation ben in any way? are we paying through revenue's tax or general fund, you heard estimated price tag is $1.9 billion. >>speaker: we have been thinking through different models about how to pay for this. a lot of exercises the city is going through. fundamentally here you have a large infrastructure component typically the city would seek authorization to borrow for to stretch over the life of the asset and then there is another component of the cost that is likely to be ongoing annual operating expense, where we couldn't borrow money and would want to have a pay as you go source available. >.as linda has noted, there is a

number of unknowns that are intended to become clear through the procurement process. >>speaker: is that the $44 million operating costs. >>speaker: yes, $44 million operating cost will become clearer as the process prosodass based on estimated work. the other is what is buildout cost going to be like. that is nottiest the result o na hard build, and that is a significant financial unknown regarding what we are looking at. using the numbers from today there is lots of different ways to think about how to pay for