>> welcome to our land use committee meeting of may 21, 2018. i'm katy tang, to my right, jane kim, to my left supervisor safai and we're joined by supervisor

peskin. madame clerk, any announcements before us? >> clerk: please make sure to silence all cell phones and electronic devices. speaker cards should be submitted to the clark. items acted upon today will appear on the may 29 board of supervisors agenda unless otherwise stated. >> item number 1 is ordinance amending the planning code to increase the transportation sustainability fee by $5 for projects larger than 99,999 gross feet except in the central south of market area plan. >> supervisor tang: thank you very much. >> supervisor peskin: thank you, madame chair and colleagues, and thank you for the chair for scheduling this item and hearing

it after the unfortunate scheduling snafu at planning, that was heard by the planning commission, though the 90 days had lapsed and you're all in receipt of a letter dated friday, may 18, which indicates the unanimous recommendation for this legislation by the planning commission. as a matter of fact if you watch the planning commission hearing, commissioners representing a range of perspectives on the commission actually pushed back on the discussion around whether or not the $2 fee in the central soma should be higher. but we're overall in agreement that the $2 in the central soma plan was probably still too low. but recommended the tsf legislation that is before you today. the new protections put out by

the planning department based on what is pepping in the pipeline, shows a significant compromise in the desire. in the desire to accommodate concerns by the planning staff, even though their own study showed that a $5 increase was not only feasible, but actually a drop in the bucket. we've taken the projected revenue down from 23 million dollars to $12 million with this compromise, but we know that the numbers don't really give us an accurate prediction of the future, which is of course volatile. what is before us is a policy decision that i think we should have made some time ago before for instance, the sales force tower went up and the building that continues to be at a fever pitch throughout the city. today, we have the opportunity to really plan for the future

and not make that same mistake again. we have the opportunity to create a transportation fee baseline now that can be reevaluated later and from time to time, and i think we should redo the feasibility study from 2015, because i think we'll find there are other tiers that can be explored in this current hot market. and the vacancy and rental assumptions made by planning three years ago are out of date. but most importantly the lack of public outcry reinforces what the planning commission knows and said last thursday, these projects are absolutely feasible. that increase to transportation structure benefits these large commercial projects. and again, we heard this two weeks ago, we have a lot of public support, we did not hear any words of opposition.

nor did the planning commission and a publicly noticed meeting last thursday, and with that, colleagues, i commend this piece of legislation to you and i would like to thank all of the supporters we heard from at the last meeting. and hope that we can send this to the full board with recommendation. >> supervisor tang: thank you, supervisor peskin. colleagues, which other further comments, questions? all right. and do any of the department staff want to say anything? >> the san francisco planning department, i want to reiterate on may 17, the planning commission voted unanimously to support the proposed increase in the tsf, $2 in central soma and $5 elsewhere. that concludes the presentation, i'm here for questions.

>> supervisor tang: thank you for that. at this time, i'll open it up to public comment then for item number 1. >> my demonstration is not only going to give information pertaining to the topic, but also the 30-day rule where agenda is going to take place pertaining to business and tax of the planning code of south market. in order for that tax code to be put into effect, i want to highlight this information should be taken under consideration. for the year, 2017, there is a total of $873,923,572 of uncollected taxes from twitter and nine other high-tech companies. this came out in 2017. the year before that, there was a total of $1,357,216,777 of

uncollected taxes. that's a total of 2,271,171,143,of uncollected taxes. that is proof how the high tech companies are getting preferential treatment and it's putting a bind on all the departments and all the people that are economically disadvantaged and vulnerable and have a combination of mental and physical disabilities in our veterans and homeless people. you're wasting money on shelters when the truth of the matter is, this should be spent on low-income families to stop the homeless problem. safai asks how can you finance the homeless problem? i showed him $2 billion that has been wasted not collected from

twitter and five other high tech companies. now it's nine high tech companies that is taking advantage of these tax breaks. these multibillion dollars companies don't need a break, the people that are economically -- [bell ringing] -- and homeless on the street need a break. >> supervisor tang: thank you very much, next speaker please. >> good afternoon, supervisors, jeremy polak, speaking on my lunch break, thank you for considering this. i would like to echo supervisor peskin's comments. i think in general i urge you to support this, at least as proposed here. it's clear to me that the central soma plan could stomach that $5 increase as well. i commend the planning staff on their work on the fiscal feasibility analysis. i think that's really helpful to have those numbers broken down, but that analysis is only as accurate as the data and assumptions that go into it. and seeing analysis based on $74

per square foot price when we saw facebook leasing part towers and that is over $100 square foot, is such a dramatic increase, it shows what incredible demand and profitability there are in the large office towers and we know how much transportation and housing impacts those have. and we need to do a better job of capturing that value. that uncertainty in the cost and the assumptions in these analysis is what drives a lot of the problems we have in coming to an agreement on issues like this fee and inclusionary housing fee and i urge you to get more certainty and transparency in the numbers. and i think some way to look at the pro forma of the development projects to get a real idea of what the numbers are would go a long way to building trust in these debates we have. [bell ringing] and i think

projects that receive public subsidies, you should look at the pro forma to make sure we're all on the same page in debating the fees they pay. i urge you to support this as it's written and reconsider this fee along with the jobs housing fee based on the profitability of office space in the current economic climate. thank you. >> clerk: next speaker, please. >> good afternoon, so we wrote you a letter supporting this fee increase and it's very good and i would repeat supervisor peskin's words that's it's really just a drop in the bucket, much more is necessary. but i would like to think about feasibility. when i see, when you have these fees, what you're doing is reducing the price of the land under any of those projects. and lord knows, that landowners, including myself have had great windfall over the last 40 years in the price of land under the

buildings or vacant land. so when you increase the fees, it's not a really big deal as long as the developer has notice and the owner has notice, you should do them in advance, give everybody notice is going to happen, so they negotiate the price of the land, knowing that these fees are going to be in place. and then the fees can be much higher and we can do a better job. because none of those projects are feasible without transit. they need the transit as much all the people who ride it do. you're doing the right thing. >> supervisor tang: any other members of the public who wish to comment on item 1. >> good afternoon, i'm sharon, we're one of the key development sites in central soma. wanted to say we appreciate the board's consideration as well as the planning department analysis on this. we certainly agree that

transportation and infrastructure investment in the neighborhood is very important, which is why the planning process over 16 separate planning commission hearings have created a very comprehensive community benefits package for central soma. $500 million out of the $2 billion anticipated will go toward transportation infrastructure. and we just urge the board to consider that as you move forward into your tsf recommendations as well as the future central soma plans impact fees on your decision today. >> supervisor tang: thank you very much. any other members of the public, please come on up. >> matt field, tmg partners, thank you again for your work. i'm a resident and native and appreciate focusing on transit sustainability and acknowledge

the $5 and $2 in central soma, we appreciate that in respect to project feasibility. and would echo sharon's comments, in the context when you take the greater central soma plan, if you can consider all these fees in context, we would greatly appreciate it, thank you. >> good afternoon, supervisors, mike russo from kill roy corporation. i wanted to give the message we're in support of transportation in the region. would like to respectfully ask you when you consider central soma to consider the total fee package, including the context of this transportation sustainability fee. if you do adopt it. central soma plan as mentioned already has a very robust fee package. it's been many years in the

making and as was also mentioned is generating $500 million for transportation improvements. so we're certainly in agreement that is important funding and would like to keep that context in mind when the central soma plan comes in front of you, thank you very much. >> supervisor tang: any other comments? seeing no other members of the public who wish to comment, i'm going to close public comment for item 1. supervisor kim, i think you want to speak after public comment. >> supervisor kim: yes, thank you, chair tang, i want to thank supervisor peskin for bringing back the transportation sustainable fee for large nonresidential projects. this was a debate when we were -- when supervisor john okay lis reintroduced the iteration of our impact fees and how the large commercial

developers pay into the fee, understanding as we create jobs, there is burden on sfmta and we need to make sure we have a transportation system is able to absorb new workers and residents in our growing city. i just want to say that then i did support a larger increase to our transportation sustainability fee for large nonresidential projects. and support the fee increase outside of the central soma plan area. actually, a few weeks ago, when i talked to supervisor peskin, i asked to hold back the central soma fees as we are currently looking at all the fees as a whole in the central soma plan in late june. however, the planning commission has now heard the central soma plan and has heard the tsf increase and they have recommended the $2 increase for the central soma plan. so understanding that this is now been supported by the planning commission, i'm happy to support this today.

we will have an overall conversation on all of the fees as the central soma plan moves forward to the full board through june and the beginning of july. i'm certainly happy to continue this conversation, but i think given the strong recommendation from the planning commission, i'm ready to support this today. >> supervisor tang: thank you. supervisor safai? >> supervisor safai: i just had a couple of questions for maybe staff? you can come back up. can you just reiterate, i know supervisor peskin was telling us, but how does this generate inside central soma and outside. >> the $2 is about $12 million. let me get that. >> supervisor safai: either one of you is fine, maybe ms. jones from sfmta. >> yeah, the $2 increase in

central soma and the $5 elsewhere would generate under our estimates $11.4 million. >> supervisor safai: how much inside of central soma? >> 8.2. >> and then 3 outside of central soma. >> supervisor safai: is that attached to the actual feasibility. i know the last time the feasibility said it did not compute for central soma. >> the department analysis was that it did not compute, however the planning commission is feeling strong, it probably could. >> supervisor safai: what was some of the reasoning behind that? >> they didn't hear anybody via e-mail, via public testimony -- >> supervisor safai: there was no financial analysis, it was based on the response from the community? >> yeah. >> supervisor safai: is there a component in here that talks about redoing the feasibility. >> supervisor peskin: the answer

is yes and i spoke to that in my remarks and planning is intending to do that in the coming year. but i also wanted to hark back to something i said a couple of weeks ago, which is that in our other incarnation as the san francisco county transportation authority and saying this remembering that the sales tax tanked and that we have the collective responsibility as part of the transportation task force, 2045 endeavor to find $100 million a year. and as i was clear in the last meeting, this $10-12 million would actually come out of whatever instrument we bring forward, hopefully in november, in order to do our collective part. i also wanted to say that -- >> supervisor safai: i had another -- >> supervisor peskin: sure i just want to add one thing. there are six major sites in the

central soma. you have representatives from half of them here today who have stated what they've stated for the record. but i have to say this. which is every single one of these six property owners and developers or companies under contract to buy property, are extremely sophisticated. each and every one of them pay lobbyists and consultants to read our agendas, week in and week out. this tsf is not a secret. in fact, it was written about publicly, you didn't need a lobbyist or someone who reads the board agenda or legislation introduced, it was the subject of a hearing at this committee. it was the subject of a planning commission hearing. and i do want to state, because i'm mildly annoyed by it, that

were it not for an unsolicited e-mail communication from a city official who was actually defying what the planning commission, the oversight body appointed four members by the mayor and three members by the president of the board of supervisors, acted upon last thursday, had that e-mail not gone out on friday, they would not be here. but i am certain that their lobbyists and consultants knew this legislation is pending. so this is a mildly manufactured thing and i had to get that off my chest because the individual who did that knows i'm less than pleased about it. >> supervisor safai: so back to my question, through the chair, it was about the feasibility. and i appreciate that, supervisor, i'm not trying to mine myself that. what i want to -- minimize that.

can we put into the legislation that we have a process for the review? >> supervisor peskin: we do. you can see mr. sanchez is nodding his head. we have that, we are the board of supervisors, we take anything up, simple answer i'm not comfortable inserting that. >> supervisor safai: not for central soma, for the transportation sustainability fee so we can see how this plays out. i'm fine with what you're proposing today, but what i mean is have the opportunity to look at the fee itself and what impact it has on nonresidential overall, so we can have a report back and see how the impact is. >> supervisor tang: if i can jump in, and correct me if i'm wrong, department staff, but the controller's office is supposed to do analysis of the impact fees every five year and the next time they would do it is next year. this feeds into my comments from

the last committee meeting, but i would have liked us to be considering increases to any fees, whether in central soma or elsewhere after the analysis or future analysis would have been done. that would have been my preference. i also shared for about $12 million, you know, it's a small amount, for a lot of the pains they're going through, but i also understand the responsibility that supervisor peskin has and feels with his role as the t.a. and the chair there. in any case -- ok -- those are my thoughts. but to answer your question, the controller office will have analysis on the impact fees next year. >> supervisor safai: on the tsf? >> supervisor tang: these are impact fees in general. maybe the staff can answer that.

>> supervisor safai: i was referring to the idea of this new fee that is going be added to nonresidential. and then having the opportunity to come back and look at the feasibility and what impact that has on incentivizing or disincentivizing. i think it's going to be a positive report based on the passionate feelings of the planning commission. >> supervisor tang: why don't we turn it over to ms. jones? >> yes, sfmta planning director, sarah jones. there is a review of all city-wide fees every five years, but the board of supervisors also included analysis on a three-year cycle of economic feasibility. >> supervisor safai: is that currently in this ordinance or is that company wide policy?

>> yes, we've incorporated into our budget supporting the planning department in conducting that feasibility study. >> supervisor safai: if we pass this today, how much time will pass before we have understanding of the fiscal impact and feasibility of this, three years? >> no. for this upcoming year, the study is going to be undertaken in the next few months. >> supervisor safai: so a year from now, this will be studied? >> within the upcoming year. >> supervisor safai: got it. ok. that sounds good. thank you, madame chair. >> supervisor tang: ok, so hearing that, i could have gone both ways, right? i would have again preferred that regardless if it was a controller analysis of the city-wide impact fees or the tsf feasibility analysis coming up in the upcoming year, i would have loved the increase to be associated with those studies, but you know, i will defer to

our district supervisor where much of the impact is, as well as the planning commission that supported it. so it is what it is today. supervisor safai, still comments? >> supervisor safai: one more through the chair to supervisor peskin, when i heard the comments, i think we talked about this for a second, the idea that there is $500 million in fees that are being generated by central soma. there is a lot of conversation about transportation and overall fees. we're going to be taking that up in the next two months. so the idea of taking this and putting it into the consideration of that and potentially having that -- >> supervisor peskin: why don't we have ms. jones attempt to address that who will be more articulate than i ever will be. >> this is just scratching the surface of the issue, but there is a distinction between what the fees that come off of

development projects pay related specifically to an area plan, or to a community benefit district, and what we are able to spend our transportation sustainability fees on. the money that is levied onto development projects in the context of an area plan, some of it goes to that invisible stuff that nobody really wants to think about or pay for. but most of it does go to something that is clearly tied to and supporting a development project like a complete streets project right there. or you know, transit. or transportation infrastructure that is within the area and enhancing the area and the development projects overall. in contrast, transportation sustainability fee is a funding source that helps us put money into the transportation system

in ways that improves it in sort of a more invisible basic kind of way, so for example, you can use transportation sustainability fee to pay for a new engine for a bus that extends the life of that bus, deals with state of good repair, that kind of thing. so it's not a directly comparable funding source that you can just swap out indiscriminately. so there is a certain value to mta of tsf that doesn't come from the projects. which are also very important improvements as well. >> supervisor safai: i get that. that makes sense. thank you for the explains. through the chair, i would say that in the context of all the fees considered in this larger package coming up at central soma, there is a point by which we cannot go past, otherwise

some of the projects become unsustainable. so i it's important to consider that in the larger context since we're to the end of the road on that debate. we want to consider this fee as part of the larger package that is coming in front of us, but thank you for the distinction, one seems to be more local to the area and one can have impact on the area, but impact in other areas of the city as well. i appreciate that distinction. thank you, madame dam char x. >> supervisor kim: we are currently working with our key site developers and other soma developers and the community on developing a cohesive plan with all of the fees. it's not to discourage what is happening today, but i feel very confident that when we make a final vote, it will be a comprehensive look at everything

together. i feel comfortable supporting the $2 fee and it will be known to everyone that transportation is important. we're not try to prevent development in central soma. we want ta thank to happen. -- we want that to happen. i do feel comfortable moving forward with this today. it's not that we get another bite at the apple, but again, the whole plan is coming before the land use committee on june 25th. >> supervisor tang: thank you. appreciate your comments. with that, colleagues, do we want to have a motion? any further debate? >> supervisor kim: i'll move for recommendation to the full board. >> supervisor tang: we'll do that without objection. any other items today? >> clerk: there is no further

business. >> supervisor tang: thank you, we are adjourned. >> good aefrnl, afternoon. >> good afternoon, ladies and gentlemen, sfgovtv. another wonderful agenda set out ahead of us. talking about our favorite subject on thursdays we like to talk about, budget and finance. mr. clerk, could you please call item 4, or attendance and all that stuff? >> quickly, this is, please silence all electronic devices, complete speaker cards and any

documents should be submitted to the clerk. any items acted on will be on the june 5th agenda unless otherwise stated. resolution approving a lease approximately 41,000 -- >> item 4. motion ordering submitted to the voters and elections to be held on november 6, 2018, and ordinance amending the business and tax regulation code to add a new gross receipt tax category for transportation network companies, services and private transit vehicle services. >> all right. thank you, so this ordinance would impose a gross receipts tax on transportation network companies, services and private transit vehicle services. largely includes companies like uber, lyft and chariot. i just wanted to let you know that we are not debating the merits of the legislation today

but instead, accepting some amendments for a cleaner hearing in july. all right. so, also want to acknowledge that supervisor peskin is the chair, excuse me, sponsor of the legislation. is staff here? i don't know if there's a member of peskin's staff that will present on the amendment. all right. well, the amendments that are going to be presented are going to expand the program to include any future autonomous vehicle passenger services. is there a presentation? she's walking -- who is making the presentation? we are going to move on, we'll

come back to item 4. 1 and 2 together. come on, you are late. let's go. item 4. don't be sorry, just -- >> all right. thank you, chair cohen. supervisor peskin, thank you for scheduling the item. i know you have a ton at budget and finance. essentially, this is supervisor peskin has put forward legislation intended for the november ballot to essentially create a new tax category for one of the emerging businesses, business models, industries, in san francisco that it has certainly had a ton of impact on our city and deserves to have its own separate category as we have other emerging industries come into play in san francisco, i know the city is doing a thoughtful job of trying to plan for that, you know, whether it's

recreational cannabis use or whether or not it's the new private transportation industry. so, what this does, essentially mimics the existing gross receipts tax structure that we have and is quite modest, i think, in terms of its top tier, which would increase the commercial gross receipts to .975%. and i want to thank the controllers office and the tax collector's office for working so closely with us since the very beginning on this. that has been, it's been an exercise as we have tried to figure out how to generate more revenue for the city and its growing needs. many of you heard supervisor peskin when he introduced the legislation talk about the process of the task force 2045, a six-month process, included all the city departments, included stakeholders from

across the city as we tried to identify $100 million annually towards the local contribution, toward the overall $22 billion need over the next 27 years. this is a general tax, it is not something that is intended necessarily to be dedicated towards transportation, given the fact that there are so many competing needs in the city. so, that's ultimately revenue that this body would be tasked with figuring out how to prioritize in our city's general fund. what else can i tell you about the tax? today, unfortunately, because supervisor peskin is not here to ask himself, i would ask that your offices should have given you proposed amendments that we have worked with the city attorney's office on to add a category, or go ahead. >> do you have the language? >> yes. sorry, i apologize, you should have gotten a copy for staff. >> thank you. thank you.

>> so in addition to the two definitions for those passenger services, vehicle services that would currently be included in this tax, which is transportation network companies, as well as private transportation vehicles on a fixed route, the city attorney's office has given us very good advice that we should plan for the future, you know, at that point in time when the state will allow autonomous vehicles to start charging for their passenger services, that is what is before you today to essentially make sure we capture them in this new category. it's not a regulatory measure, not something that's intended to regulate or create rules or for how t.n.c. or private transportation vehicles operate on our city streets. it's really intended to recapture that value of a booming industry that should be paying its fair share towards the city's growing needs. thank you. >> thank you very much. to the controller, are you prepared to discuss this or do

you want to save it for july? all right. >> we can save it for july. >> as i said, we are going to keep the legislation as clean as possible so we are going to take public comment and then take action on the amendments and then we will hear the item and debate the item in july. all right. so, let's go ahead and open up for public comment. if anyone would like to comment on item 4, please come on up. and again, this is about a gross receipt tax on the transportation. >> randy shaw, director of tenderloin housing clinic. about a month ago i heard of the attempt to repeal the mid market tax credit, read in the newspaper and texted aaron peskin, you are into local control, how come you did not talk to mid market or tenderloin before introducing this. it seems very inconsistent. not even a meeting the supervisors convened with

stakeholders. he would not appreciate if i went into north beach and came up to proposal without consulting. great, i'm at a coastal commission meeting and sit down with you and work on it. never heard a word, did not know this was going on until i heard from another source yesterday. why are we doing this? it doesn't make any sense. there's been no process. it's been pointed out the mid market tenderloin tax credit ends in a year anyway. so, why do this? and i know, i wish aaron were here so he could explain this. i've heard various theories, but none make any sense. i think he spends too much time at cafe tria he needs more time on mid market. any of the supervisors or anyone who work here take bart or see market, we have not achieved mission accomplished. work needs to be done in mid

market. and if you think it's gentrified since twitter came, walk down there and get a reality check. and it's a bad idea. and do whatever you can to quellch it. >> thank you, we are not going to be doing too much today, just the amendment, i look forward to seeing you in july for more conversation. >> good afternoon, supervisors. emily loper. council represents over 300 employers across the nine county bay area and we are concerned about the potential impacts of this proposal. we know that the public overwhelmingly believed that t.n.c. and other private transportation are an integral part in the transportation system. 74% of residents region-wide believe that uber and lyft are an important part of the transportation system and also know that despite rising regional congestion, that these

services are, the public believes these services are making it easier for them to get around, because it's improving their mobility options and you know, making it easier to connect to and from transit. so, we are concerned it's punitively targeting three company, there are a few more, and without achieving a public policy goal, because the revenue is not designated for transportation improvements, so, we believe that instead of targeting the business community, we should be talking about sound public policy solutions to really reduce road congestion and enhance public transit in the city. so, thanks very much. >> thank you very much. any other members of the public? >> good afternoon, supervisors. speaking on behalf of the san francisco chamber of commerce. conversion from the payroll tax to the gross receipts tax is far from complete. there is still a half percent payroll tax remaining next year. we shouldn't lose sight of the

goal from 2012 to stop taxing jobs. t.n.c. tax on top of the commercial rent taxes on the june ballot and other measures result in burdensome tax policies that may make it harder to complete the tax reforms that everyone agreed to in 2012. the chamber is open to working together with supervisor peskin and our partners to achieve the goals this ballot measure would be seeking. thank you. >> thank you. >> seeing no other member in line for public comment, closed. thank you. colleagues, i would like to make a motion to accept the amendments and continue to the call of the chair. and we'll take that without objection. thank you. mr. clerk, items 1 and 2 together, please. >> clerk: item number one, a resolution approving a lease of approximately 41,000 square feet, entire three floors of 945

bryant street for the adult probation office with bridgeton 945 bryant fee llc, for 20 years, to be occupied in phases for a period of august 1, 2018, through july 31, 2038, base rate not -- item 2, resolution lease of approximately 27,000 square feet, consisting three floors of 777 brannan street for the police department with lcl global, 777 brannan street, for ten years, with 25-year options for a period of july 1, 2018, initial monthly rent not to exceed $83,724.83.

>> thank you. mr. updike, good to see you. >> good afternoon, chair cohen, members of the committee. so, the first two items we'll discuss today about the leases that come forth from letters of intent that were previously approved by the board in november of 2017. these along with the already executed and fully approved lease of 350 rhode island facilitate the administrative exit of the hall of justice, resources and available space allow. item 1, 945 bryant street, 71,744 square foot building, less than a block from the hall of justice. the property's program for use by adult probation. the lease before you today is consistent with the previously approved letter of intent. take possession in phase, the first two floors in august of

2018, the third floor in the spring of 2019. $64 per square foot per year, appraisal confirmed by a separate review appraisal as required under the code, fair market lease rate at $66 a square foot in october of 2017. remind the committee it's may 2018. we held the rate during the lease negotiation, a number of issues to work through and the legislative process as well. in this market that's pretty extraordinary. furthermore, note the rent commencement, the date we start paying rent, is 90 days after the lease commencement date. so, equivalent to three months of free rent, which drops the net effective rate in year 1 to $48 a square foot, or 27 less than the rate determined in october. fairly good deal i think is my point. 20-year lease with annual

increases of 3%, but at the ten-year mark we have what's called a market to market moment. and so at that point, the rate will reset to a new appraised fair market rent and that rate could be higher or it could be lower than the rate paid at the time. you are used to seeing leases with a certain term, renewal option, and usually no less than the prior rate. given the term of 20 years, we wanted the opportunity to check in, there could be a market upset and we would want to be able to take advantage of that at year ten. at year ten recalibrates and moves forward another 3% a year to year 20. we expect the tenant improvements, $2.7 million, build-out, information technology, connectivity, and moving costs, fnne. the property does come with 33 parking spaces, simply part of 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