distances) >> today was the inauguration. we heard congratulations. it's the first african-american woman to be named to the city. with that, thank you for coming today. let's get started. >> for the record this is the july 11, 2018 treasure island development authority board meeting. call to order. [roll call]

we do have a quorum. >> good. next item please. >> item number two, general public comment. this item is to all members to address the treasure island development authority board on matters within the subject matter jurisdiction of the authority board and do not appear on the agenda. in addition to general public comment, public comment will be held each item on the agenda. members of the public may address the board for up to three minutes. prior to making your comments please state your name and the organization you're representing if any for the record. >> are there any public comments? anybody wish to address the board on matters that are not on the agenda? hearing none. next item.

>> report by treasure island director. last month we another successful treasure fest on the fourth of july, we did draw fairly large crowds to the island for the fireworks show in the city. we did engage west park to assist with traffic management as well as sfpd had 16 additional officers on the island to assist with crowd control. despite we did close access to the island except to residents beginning around 7:00 because of the parking areas down by the lawn. we were full at that point. there was one theft that evening. someone had a camera stolen from them and sfpd is continuing to investigate that.

as we discussed last month's board meeting, the mural at the museum was installed earlier this week. they started taking that down on monday. ithey will be putting it back. it's been on exhibit there for nearly 10 years. there's some interest in staging exhibition of these pieces in mexico. this will be the second time that we had lent them for display in mexico and we'll bring you updates if that loan agreement materializes. next stewardship day is next wednesday july 18th. there will be a meet ing at the parking lot and the beach. also i want to welcome, we have

a project intern with us this summer. who's here with us today and working with us through the summer. earlier this week, we met with developer and all of the city agencies that are involved in the infrastructure review to kick off the process for the next subphase on treasure island. tida is developing their schedule. we'll be working producing a design with the expectation of submitting the application around end of the year. consistent with mayor lee's executive director on house in the goal is to approve the application within 90 days. ticd will follow that with their infrastructure plans and maps and the goal will be to improve the final permits and final map

within nine months. the overall schedule is targeting final permits and map around 2019. we'll be bringing you a lot of updates on that in the fall as they move forward with the preparation with the subphase application so we don't hit the board with the entirety of the content in january of next year. on treasure island, the installations continue. we now have rigs installed trains and the compaction is scheduled to start next week. also, last week, ticd advertised

demolition package for the structures between 10th and 13th east of avenue m which is to be decided waste water plant. at&t completed their reroute of long distance cable that cuts across the island to get out of the the way of the technical work. we continue working to relocate commercial tenants to clear the site of the future gas regulator and electrical switch gear locations. the director of public works held a hearing on june 27th approving the treasure island final map for subphase. those documents will be submitted to the clerk of the board of supervisors by next friday for consideration at the july 31st board of supervisors hearing. we're still working with navy to

conclude the fourth land transfer by the end of this month. and working with department of labor on permanent construction easements around the southern end of the job core site that will be necessary for subphase two on treasure island. i sent board members an update that we'll be able to have the autonomous vehicle update. which is item 12 on our agenda today. we'll bring that along with the update to our september board meeting. that concludes my comments. >> comments or questions? hearing none. next item. >> item number four, communications by tida. there were residential advisories, news letters and publications among others. >> comment or questions by directors? hearing none. next item. >> item number five, ongoing

business by board of directors. >> any business. hearing none. >> item number six, consent agenda. approving the minutes of the june 13, 2018 meeting. resolution acknowledging of the office of comptroller and office of the city administrators policy and procedures for travel training and reimbursement. >> may i have a motion. >> second. >> all those in favor say aye. >> aye. >> opposed? any abstentions? ayes have it. >> item number seven, mohcd affordable housing update. >> thank you directors.

>> good afternoon board members. thank you so much for making time today to hear about our efforts to address extremely high construction cost environment. those of you who work in or associated with the construction industry or design or building, we are unprecedented territory. this has an impact for our ability to fulfill our mandate. and to create job opportunities. i want to talk about that today. i do have to apologize. i sent an earlier draft of the powerpoint. i have a couple of changes to the draft. it's slide 12 and 13. they are very minor. it's not a big deal. what i'm going to do is walk through a presentation that we gave to a group of industry

professionals, department heads from our department agencies, representatives from labor. we had architects and builders and developers in the room. this was a summit called by the mayor to look at how we address and control the construction cost. i'll walk through that with how all. you can get a sense of the context and the character of the conversation and talk about what we're working on today. i will start the powerpoint. as i mentioned, we had a summit

on the 21st earlier couple of months ago. we're now working on -- we're having a series working groups. we'll talk about other efforts. bit about our production pipeline over the last three years we had very robust pipe line. new and preserved units, north of 6000 units. we have a robust pipeline yet to come. we're really active and moving projects forward. few examples here, senior housing, some projects and very exciting work we're doing. one of the things that came out of an update to the inclusionary requirements we're basing our inclusionary costs on actual cost of construction and gap commitment. we analyzed how much we've been spending. how much do we spend on average on a new affordable housing development. what is our gap. you can see from this -- over

the last three years, we spent about $235,000 a unit. when we look forward what we're looking at is, approaching $400,000 in terms of our gap commitments for units. you can just feel that 6000 units of pipeline shrinking with every additional dollar of gap that we have to put into these projects. at a bay area wide, we're seeing real reductions in new construction in acquisition and rehab for affordable housing. these are light tech projects. one is construction costs, the other hit we've taken is per tax reform, the market for tax credits really diminished. our tax credit pricing has reduced by 15% to 20%. we're not getting much federal support through tax equity and we're seeing construction cost go through the roof. it's really having a dramatic effect on our production. we can show these kinds of gaps

in affordability in hundred of different ways. this is a snapshot of folks who work in our construction and design industry. many of the work that we're trying to produce and continue directly benefits apprentice union apprentice, our own staff, junior architects. you can see here that folks just can't afford to move in this town. that's not a surprise. many of these trades and work areas are employed through the construction industry. we really want to continue and sustain that work. we are very sensitive to the fact that although in some cases san francisco has the wealth in order to pay is really carbon rant sums of money for construction. we're evaluated on a broader scale. there's government accountability offices, perhaps

even more, our tax credit allocation committee and our caps. they look at us as outlier. a recent front line front that insinuated there was nefarious underpinnings to the cost environment. we have to be careful not only in terms of cost control such we can build more housing but also how affordable housing as an industry is portrayed in the state. you can imagine in a republican held congress something calling out, it's a million dollars for affordable housing in san francisco. this is absurd. we're approaching that number. we have an immediate need to control cost so that we can produce more housing. couple of quotes from recent study on cost. this one related to skill labor

shortages. we're seeing -- what we're hearing the construction industry is gray. it's hard to bring new folks into the trade. we had a real constriction of labor. some of that labor force come back. there seems to be limitation on that we're not seeing new folks coming into the industry. that's one of the challenges we're confronting. another issue is just our ow own selfs. one of the things we're addressing through our summit is how can we address those factors those inputs that we have control over. permitting, our regulatory structure and trying to gain some cost efficiencies. we're looking at three major

areas. regulatory relief -- i was just mentioning the permitting process. new building technologies and designs that we can take on to improve cost effectiveness and then hiring and procurement practices. we want to move folks into the construction trade. we don't want to burden contractors with oversight in terms of meetings if those programs are not constructorred successfully. we're working within a regulatory framework. renewed emphasis on efficiency. there's an executive director back in 2013 requiring permitting agencies to work collaboratively together. that sentiments was reinforced around mayor.

looking at our projects. how do we create a coordinating body. there's pending legislation. out of our summit, we have a number of working groups that are ongoing. this is where the new slide comes in. there's a sustainable building requirement working group. we've met once looking at primarily storm water management issues. we'll look at other water reuse and green roofs and solar ready. how can we ensure those very goals and priorities don't add unnecessarily cost to affordable housing. entitlement and permit, we'll have a work group on that. accessibility. talking with our partners a the mayor's office on disability. often times there's

miscoordination between ddi and mld. we'll be looking at workforce. we have an initial meeting coming up this friday and then follow-up on the 26th. then we're looking at design action group as well. what are the cost drivers design and how do we address those? additional efforts, the city is undertaking analysis of can we build a module factor here in san francisco? that is under way. that's a consultant hired for that. we are considering putting caps on gap commitments. here's the amount of money you have, you can make can work. if not, we're in the going to move forward. it's a way to induce rigor on the part of the development community. we're in discussions with our state agency partners, hcd on how we reduce transition reserve

requirements. we are constantly engaged with our city departments in terms of improving entitlements efficiency. that's part of what we do do. next steps we'll complete those working groups. we're preparing a series of recommendations for now mayor breed and we hope to work with our new mayor on implementing this recommendation to address cost issues in san francisco. with that, i welcome your comments, questions or suggestions. thank you so much. >> thank you very much for that report. very important topic for us. i think that what i like to do is to get any public comment first and we'll open up it up to the board. >> good afternoon commissioners. i'm sherry woods with treasure

island. i want to thank dan for in presentation for the mayor's office of housing. on the cost side it's daunting. here we are going to have potential pads ready for development and not funding available for them. i really appreciate all of the efforts that all make on spotlighting this issue. we could be faced where the private developer building their housing and there's all of our parcels are left empty because we don't have the money to build. this couldn't be more important conversation. i thank you for really all of the spotlighting you've done on it. there's just one thing i wanted to mention about the revenue side. that is i've never heard a conversation that the board level about naming rights for the island. i know that it's not necessary a desirable way to go in terms of funding housing more desirable

would be to have regular income stream. for treasure island, i believe we're in a unique position to look at naming rights. i wanted to put that out there as something to consider for the future in terms of revenue generator that can be for the affordable housing production. thank you. >> any other comments from the public? we'll open it up to the board. ms. lai. >> director lai: thank you for the presentation. we keep coming back to this. i had a question about the current priorities in making decisions on how mohcd give up funding. do you prioritize projects based on the amount of funding they're asking for? meaning do you -- are you more likely to fund projects that are requesting the least amount of gap financing? >> no.

we don't. we don't prioritize on that basis. we manage extensive pipeline number of our funding sources have particular uses that they require. in some cases, if it's a permit support of housing or geography those would fit in those categories. there can be -- one of the things that really affects our gap commitment, our commitment is the competitiveness that a project has for state funding. certain projects might be better position to receive state funding and lower gap commitment. we're unable to only move those projects forward when other neighborhoods or areas are clamoring for affordable housing. unfortunately we're not able to prioritize purely on the level of funding needed, rather seeking to address array of

needs across income levels. our funding it's not structured in that way. >> director lai: that makes sense to me. a project is able to leverage other funding sources. you're right. you had mentioned this idea maybe capping the gap financing. how would suppose scenario projects be able to make up for the left overgap? >> exactly. san francisco, i worked in other cities across the region. we're a little bit different in that. we're true gap lenders. we come at the very end right before construction starts. we fill that gap between funds that are leveraged from other sources and the cost of construction. lot of cities don't have the same kind of level resources

that we do. up front, they say, okay, here's the money we have. me may only do one or two deals a year or a deal every two years. having that limitation can inspire some creativity on the part of developers. absent that limitation, the development community, although really strong partne partner, tn limit their risk liability by anticipating a larger gap commitment from us prior to closing. i think the intention to start to signal to the larger market, developers, contractors. mohcd we can only go so far. we need to find other resources from other places.

i think look at the technologies that are behind construction and how do we maximize efficiency so we bringing products to completion more rapidly and efficiently. it's really a way for us to signal to the market that we can only go so far. i think we would see new ideas and if you initiatives come out of that. okay. we'll have faith someone will come up with a brilliant idea then. your last point, segway into the conversation about the consultant who's studying the module lar. my understanding the amount of space that's needed for a factory. we were talking about a really large amount of land. is that even possible at this point with san francisco? do we have options?

>> unfortunately, i haven't been directly engaged with the consultant. we do have options. i don't have any direct expertise in this. there is a new facility that gotten started. what i understand, they're already sort of booked. it seems like there's an emerging thirst, desire market, demand for this. which might make san francisco factor more viable than it might otherwise be. >> director lai: would you happen to know what the timing for the consultants evaluation would be? >> i think they were just got through the procurement process. it's just under way. real answer is no. i know there are lots of folks interested in this.

i would imagine over the next few months we'll start to get results back from that analysis. >> ms. richardson. >> director richardson: the timing for the presentation, i can tell you, i've been going around town. the san francisco board of directors promoting housing. i made it clear to them that i would appreciate they could be helping with funding. that's the bottom line. i have a series questions with regards to the construction cost. this is stunning. i'm looking at your contribution. even the average is 627k. that is astronomical. help me out here in the projects that are ready for production

now, construction you listed the project one, two and three. what are the differentiation. the average project for three is almost a million dollars per unit. what kind of housing is this? can you give me profile why all the abbreviations. >> sure. we hope that project will be outlier. i'm concerned it may not be as costs continue to increase. we're seeing 5% to 10% escalation per year. part of that higher cost is a matter of time. time has passed, cost increased. that particular project, it was a very high land value. it was a project. there was political pressure to buy a particular parcel. there's a land value input in that number. but it's also expensive

construction type. it's more expensive than type five over one. it's more expensive type. it's just pretty expensive. particulars to that project make it more expensive than typical. we're often time trying to take advantage of parcels that are -- the market out there for land acquisition is so intense that we maybe working on parcels that are not fantastic or perfect for housing development. >> director richardson: gap funding is almost 394k. that is extremely high. how many units -- >> 80 units.

81 units. >> director richardson: that is stunning. for project two, how many? >> i don't have all the project information. i think those are really listed to give a sum. >> director richardson: it's very important. we're going to produce the next amount of housing unit every year. which is nothing compare -- i spent some time reading mohcd, your 2018-2019 consolidated plan. extremely sum of money there.

how are you going to spend it in a year when you have 81 unites here. >> we can have a conversation about the revenue side. we'll engaging with board of supervisors and the mayor and certainly looking at new revenue measures to help support it. there's that component of it. >> director richardson: it's a must to have. even with the revenue projections you will still be talking about them to us. you'll have a serious shortfall here. the other question is, i haven't been able to find out even how all the projects and the pine

line. our project here, we are trying to get it out of silos. it's a must. we have to march to your department. we must get this project out. i was hoping since you come here today, you can bring some goodies. what is it going to take to get our project from this silo? that's what i'm interested in. >> new revenue. more money. >> director richardson: you're not getting any from of the federal government? there was no leadership at the state level. san francisco then. i get that clearly and i'm sure we are going to try to address

that. thank you very much. lastly on the regulator -- the average entitlement in the city for a small project it takes an average of five years. i'm hearing from all the agencies that are involved. people say sometimes you have to get permitting from the fire department. is this really mohcd, all of you supposed to be expediting the project? what are the issues the entitlement project. is it on the planning commission side? could you tell us what area we should be looking at?

>> that's a great question. we've made some real progress on the entitlement and planning side. very strong working relationship with the planning department. they have assigned housing coordinators. any issues come up we have somebody to contact. we hope to have similar people in all of the permitting agencies. additionally with state legislation, sb35, which provides expedited permitting for affordable housing. it requires clean up language. we should be able to avoid discretionary approvals that trigger ceqa level requirement. it shaves significant time off our entitlements. some really positive movement i think on the entitlement piece. >> director richardson: san francisco has to wait.

there's no way we don't have the land and we're not the only one competing for it. we have to be precep receptive. we're not going to be able build everything here. we don't have the land for that. if san francisco is serious realizing the state-of-the-art technology, we'll reduce the cost. they would have to be acceptable to waive that requirement that everything has to be produced in san francisco, especially in modular. that will be what we'll convey to you. it may not be your department to do that. we will also let the supervisors and mayor and everyone to move swiftly so they can work and resolve the issues. >> i could not agree more.

>> one of the biggest cost issues is time and inflation. as we move on, is there sort of working group that's looking where we can cut time, where we can stop red tape that's unnecessary? is it inevitable a we end up at 393 gap? is there something going on that we can actually make a change? >> yes. we do not believe it's inevitable. i think you're right in focusing on the things that we can address. how can we improve that. director richardson your question is expert nantes. there's a working group looking at this. there are a number of efforts

that are addressing this. i mentioned the advancement we've been making on the entitlement side. this is your planning side on the permitting side getting through dpw and mod and mayor's office on disability. we are tackling that issue head-on. lot of our conversations are on how do we improve that process. how can we take advantage of the mayoral director that focus on the major projects and move that same infrastructure to support our site specific work our infill work as well. we want to see housing coordinators at all the permitting agencies. we're part of the city family. we're like a consumer in this question. we're not a permitting agency. we're also trying to move projects through the process and

see those challenges firsthand. i will say there seems like stated and shared belief that is an area of focus. not just among staff but also of leadership. i'm cautiously optimistic we'll see improvements on that front. >> today we have a new mayor. we had mayor for few months. does that delay things? is there an opportunity to get running with the new mayor and start making change? >> i believe so. i don't think we've seen a delay. i think having mayor breed on board, i believe she will embrace this as one of her core pillar. it was reflected in her

inaugural address today. to be successful, it will require mayoral leadership. we'll receive that from mayor breed. >> housing money is spent on leasing. there's been a historical battle between building and leasing. is that continuing? for my two cents, just seems like building our own so we can have control forever, i guess. it's a better choice but there's a considerable amount of money to put into leasing because of short term quickness. is that another way to look at more funding for building? >> it's a battle. it's a balancing act.

our office is exclusively looks at permanent acquisition and preservation or new production. our efforts all around creating that permanent affordable housing. for the master lease program that's run out of sshh, there's a balance. they would voice those advantages. i think i don't see them as complimentary. >> secretary dunlop: all our problems are long term. we are facing problems that have been there for decades. thank you very much.

>> you're adding the base, purchase per unit is $207,000 just for the purchase of the land. on treasure island, this is not the situation we have in line. on a dollar per square foot. this is the outlier.

what size units is the average here? >> it can very -- >> if you have an average cost per unit, what is the average size per unit? >> i would have to follow up with you on that. we do permanent affordable housing which is studio type units. it could be 350 square feet. family projects often have 30% three bedrooms. you're looking at the 1100 square foot units. i don't have a portfolio average unit size. we do have a range. some of our family sites because of site configurations will have more studios. it depends on the site. i can follow up with you on that. i don't have a average per square foot per unit.

>> director lai: that's important. if you're saying per unit which could be studio or three bedroom it's a large site. i would be curious to find out what the dollar per square foot cost for construction. i know that in the private sector. costs are up. to acquire lots cost lot of money. i would really be curious if you can come back to us with a number as to what that is. we're looking at modular housing to bring down the cost per square foot. once i know that number, i would like to know why that number is that way and what efficiencies can be done in the process to bring that number down? >> i would say that on a per

square foot basis, our projects pursue multiple public benefits. they are about affordable housing but also about job creation and other benefits. those can have an effective increase in costs. there's a larger regulatory framework builders have to work within. we don't have the same kind of amenities or finishes some of the higher end condos have. on per square foot basis, i don't believe we're so at odds what the larger construction industry is. i'm sure one of the colleagues were here, they would say, many of the same things that i'm saying in terms of the squeeze about lack of labor, increasing material costs and really rising costs. definitely come back with more specifics. really what i want to convey here is for the trends of this

and areas of focus to come back to those trends >> director lai: i do want to follow up on what you just said. for affordable housing units, do they have a different level of finish? >> we would not have luxury unit. we have durable long lasting finish. we wouldn't have a high-rise condo level. we don't have granite countertops. there can be certain higher end of the market. >> director lai: these numbers are for the affordable? >> those are affordable projects. >> director lai: wow, all right. >> there affordable in terms of cost to occupy them. >> director lai: okay. thank you.

>> director giusti: that was pretty much my question how does this compare to market rate and building cost. have you looked at any opportunities for things like maybe labor rates if it's a low income project to get more apareapprentices and job trainid use it to the advantage maybe lowering the cost of labor. which i know is significant when you build it. >> it really is. yes and no. all of our projects are subject to wage requirement. almost without exclusions. for all intensive purposes we're subject to state or federal wage laws. there's a wage floor below which we don't go. we definitely are interested in and advocate for getting new folks into the trades.

we work closely with the city build division and office of economic and workforce development. they are trying to upcoming working group, how do we make that program even better. one of the challenges that they have is they don't pay stipens for folks. for certain low income population it's hard to take ten weeks and not get any pay for that. we want to increase the pool of candidates that we have to really get at that. that's likely not going to bring down our cost that much. it is a clear public good to pursue. the question -- i think for our conversation is really focused on how do we make building process more efficient so you reduce the amount of labor.

>> director giusti: i would imagine there's not the benefit as if you were doing market rate housing. when you're edone with the project, if it cost how million dollars a unit to build it, what's the equity you have the minute it's done and ready to go? there's no opportunity to leverage that equity. >> there's no upside for our projects. we do work in an investment infrastructure. all of our projects take advantage -- all our new project construction projects take advantage low income housing tax credits. there's a tax credit investor who buys these credits and provides a source of equity for the project. there can be ways over the term of the regulatory period which is 55 to 99 years, that we can refinance and capture some of that equity for renovations later on. there's nothing in the

absorption period. all of our revenue are kind of fixed right at the start. >> thank you. i like to make some comments as well. thank you very much for that report. i do know that the mayor's office of housing is looking for diligently to try to find ways to reduce the cost to help all of us. we do know that it's absolutely unsustainable, politically, nationally in terms of having housing which cost a million dollars a unit. subsidy dollars is $400,000 a unit. it's just unsustainable. when we look specifically at treasure island. our goal for treasure island is 2000 units of units. $400,000 a unit, that's the cost, it's not the cost to

construct, $400,000 is the gap that has to be plugged in order for that project to go ahead. we're talking about $800 million. is that right? >> sounds right. >> president tsen: and hundred million dollar-- $800 million. we have to get in the safe. we'll have more money for those subsidies to continue to build affordable housing in the middle of an incredible housing crisis. i think that that is a political reality. all of us, mayor's office of housing, treasure island development authority, we go goo

look at ways to do all the things you suggested. includes lowering the construction cost as much as we can by looking at innovative methods. it includes trying to streamline the permitting process. it includes trying to simplify the design and building code. all of the various ways which have been identified. as a city, there's many social values that we hold. we would like to do all of them. by doing all of it in our housing production, it also increases the price of that unit. i think there's something discussion that needs to go on as to how do we get affordable

housing but also how do we match other requirements that are required by the city. i would make a plug for treasure island, though at the mayor's office of housing and city. it's a limited part of subsidy dollars that is spread throughout the city. it's not just for treasure island. reason why treasure island should be very high on that list is that the land is not a factor. the land cost is not a factor. which would bring that dollar amount lower. because of that, instead of projects which are seeking land to build and paying for that land, i think it's an example how cost. we have land here at treasure island which is devote,

dedicated to affordable housing. the subsidy required to do affordable housing on treasure island should be less than other projects and therefore should get priority. it is actually a supply for all san francisco. even though it's located in treasure island, it's affordable housing supply for all of san francisco. the other thing that i like to note is that, the construction costs are at a point which i've never seen in the development history. construction costs being this high. lot that is because we can't get skilled labor and skilled contractors. the unions really have to step up. they have to step up to create more apprenticeships so that we can get more workers trained, skilled so they can become part of the labor force.

i end with that. >> thank you for your time. >> president tsen: next item. >> resolution authorizing the treasure island director to approve the recommendation of the treasure island art steering committee and authorizes san francisco art commission to into an agreement for design of yerba buena island artwork proposal. >> when we received the initial proposals for yerba buena park one of those proposals focused more on the trails and staircases on ybi which was one of the opportunities identified. the conversation with the steering committee have been to ask that artist to refine and further develop a proposal. that we're proposing to move forward.

>> good afternoon commissioners. nice to see you again. thank you bob for that introduction. bob said, his proposal for yerba buena island had many ideas. it seem like it could be better aligned with another arts master plan project opportunity the yerba buena island trails and open space. in his statement, he has a particular going back to his childhood. he writes he never forgot the woods where he once played and the trees he once climbed. not surprisingly, his proposal is to work with trees to create

either wood passages or wood passage steps at various locations on the island. for the wood passage steps, he says he could work with quite possibly with the douglas birds that was salvage from demolition on the island or wok with eucalyptus branches. thank you kate. she's pulling up the images. letes see it. let's see it. there should be an image. [please stand by]