revenue growth. >> yeah. it significantly helped this forecast? these revenues were not assumed in the prior forecast. some of these revenues did exist, and we did have back lands, for example. pier 48, and the impacts of mission rock, all of these, we had some assumptions built in, but the true one is the orton project. >> okay. last question is you mentioned in the base case, your revenue reaches 125 million. if i look at the charts on the high case, what does the revenue reach? >> so let's see...so in between 2021 and 2022 is when we hit the 125 million. by 2022, we're forecasting 128 million, so exceeding the goal,

so it's about a $3 million increase compared to the base case. >> and the final year is 134,733, so 135 million. >> well, i'm expecting you're going to beat that. >> now, it's on record. >> so let's just go on record. >> okay. >> and actually -- >> that's the expectation. >> and i don't want to skip your question about pension. just to clarify, 19% is an average. i just say that for the simplicity of the presentation, but for the financial forecast, we actually use the city's only increases which range anywhere from 20% growth and actually reduces down to 15% growth by the fifth year, so it's not -- it's not an average across. the advantage of using the city's assumption is the

controller's office is really in the weeds on understanding what the pension requirements are going to be, so that's actually an area where we're wholly reliant on the city to come up with these larger solutions, either through labor negotiations, additional charter amendments to address pension needs, otherwise, our only control is around hiring. >> okay. and in terms of your own population base, which we don't really customize this forecast to what our population would be, when you do your analysis, do you see the forecast is less than will average age of the city or higher? >> we actually do that. we get a report from the department of human resources that shows the average age in the workforce, years to eligible retirement, and we are older and closer to retirement than the average city department. >> okay. so the average cost is quite

real. >> people like to work here and stay. >> okay. i field the floor. >> thank you. >> commissioner makras. >> just a couple things on the pension stuff that may be helpful. if the pension is 19, i'd just like to call out the employment benefit in the program is a much larger number, so that's how you should look at pension and benefits. it's wages plus the package, and the package is really set by the city, and i don't believe age has anything to do with it. you don't pay more into the pension fund because of your age. it's all blended out, and it's averaged out by your pay. and my estimate is it's going to stay at the 40% or the thereabouts for a long time. that's just my observation, but there's no real actual number out there, the 40% number.

>> yeah -- no, i understand. >> so i have two questions. on your base case assumptions, on your key assumptions, i'm going to call out two things. item f is your rsi sites, walk me through where you think we're going to bring that much money on the table for something that hasn't been brought to us yet in such a short period of time. >> so the key sites that i looked at and categorized as r.f.i. included pier 23, 19, and 38. a -- 19, 29, and 38. pier 29, i projected out it would be used for event space. for piers 23 and 19, the assumption in the base case was

that both of those would be used for interim rents just for storage, so one of our lower parameter rates at 80% leasing. and by the fifth year, one of those sites, and i happen to just plug in pier 19, we assumed, would actually be vacated from that storage leasing and be prepared for a development site. and pier 38, throughout, we actually assumed light storage, which just generates about $50,000 a year. so it's really piers 19 and 23 where we generate good money in that interim period. and the irony is we actually make more off of those sites in the base case than in the high case, because in the high case we assume we would be able to vacate pier 19 by the fourth year, and we would vacate pier 23 by the fifth year.

so all-in-all, we probably lose up wards of $5 million from those two sites in the window, but the tradeoff is we would be developing a long-term solution for those facilities. >> i understand. i was just wondering how we could hit that target for 2020. it' it's aggressive, but i like being impressed. >> noted. >> under item number 11, you have a large jump in revenue from 2021 to 2022, and then, it jumps up the next year, you know, relatively large. walk me through why you think the rent is going to go up 60 or 70% in that business operation between those two years. >> so the first two years really reflects leasing during

the time of construction whereas the following three years represent completion of the project, and then, establishment of a solid revenue stream. as far as the jump between the third and fourth years, i think that really is -- since i don't have it broken-down quite as much detail for myself, i would assume it's a partial year in that third year, something to that effect. >> great. thank you. that concludes my questions. >> thank you. commissioner adams? >> megan, you're lucky. i wish you were up first. do the fireworks last, and everybody would still be here. president brandon doesn't like us. >> we're all relaxed now, right? >> couple questions. i want to go back to what doreen and victor were saying. [inaudible] >> yeah. >> okay. [inaudible] >> yeah. >> couple other things. with the tariffs that the president has, i know it's probably not -- i don't know if

it'll affect the port of san francisco, but in the larger ports, we're being affected by soybeans and other things. china has stopped buying soybeans from us, and are going to other countries. are these tariffs, at some point, could they hurt or bottom line? i mean, say the economy goes -- >> possibly. >> maybe it's too early to tell. >> yeah. i think it's a very good question, and auto imports and exports in particular could be affected by tariffs, and we have a lot of auto customers at pier 80, and it is possible it could be affected. >> it's still growth, it just might be modified growth. >> okay. second, you said shoreside power, and that's going to

allow us to have 30 more carnival cruise ships come in, something like that? >> let me explain that a little bit. we're expecting the card would take effect in fiscal year 20-21, it's midyear. we're expecting to have an increase of 30 cruise calls from carnival. once card takes effect, we're actually forecasting a dip, a reduction of 20 cruise calls, so assuming we're still maintaining that carnival business, but for those nonshoreside power clipped ships, we would have to reject 20 calls. this forecast -- so we would have -- the forecast has a nice climb right up front, and then, it drops down as c.a.r.b. takes effect, but thankfully, it

appears as though our customers are going to have shoreside power. >> thank you. >> megan, thank you so much for a detailed report in the lightness of the hour, and the fact that i'm losing commissioners. >> i have just one because i won't be at the february meeting. on the event, the cruise ship events, are we happy with the amount of special events in the cruise ship terminal? do we think metro is on track or are they behind what we think they might be? >> i think they are very happy with it. i actually dropped in a special section in the report just on special events because i knew

that this was an important topic, and i think that basically he feels like we're meeting our, you know, basically capacity at special events, given that we're having to alter events from cruise ships being in. we're very happy. thank you. >> okay. >> great. >> clerk: items 13-b, informational presentation on the port's ten-year capital plan for fiscal year 2019-2020-2028 to 2028 to 2029. [please stand by]

. >> we're targeting our available funds to strategic projects to generate revenue and securing external sources of revenue to keep growing the pie. and we see those successes in many instances here for example with the orton project that's reduced our capital need by $78 million in this project.

similarly, the alcatraz project is bringing in additional money, $34 million of enhancements to that site, so improve its capital value. not going through all of these, but to touch on a few others, through the waterfront land use plan update, we've really gained clarity and flexibility on our management districts. >> we are we also see again

some strategic -- [inaudible] >> we also update cost estimates, so as we get better estimates in developing our capital improvement program, those numbers are reflected here. and most significantly, really, at this time, with the passage of time, like the rest of the city, we escalate costs to reflect the increasing costs of doing work in san francisco. the city's capital planning

committee sets a rate after doing an analysis, and we follow their same rates. so for the past two years, this show reflects escalates of 5.75 and 6%, respectively. on the other side of the equation, we have enhancements, and this category isn't always completely intuitive. the city capital planning committee makes sure that a facility is left in better than its original state. we're making it better than it originally was, it shows up under enhancements. the others here are development projects as well as the conditional seismic which is really a category of potential costs that could occur if change of use or major expansion of a structure on a pier occurred. and similarly here, we've seen a number go from 1.8 billion to

1.9 billion, from work completed, the orton reduced our seismic need. updated cost estimates, as well as the passage of time. so you see the seawall cost go down because seawall work will have been completed from the prior two plans to the time we reach this plan, so that leaves us with a $3.5 billion total need. now we turn to looking at the funding sources that we have projected in the continue-year period. we're -- ten-year period. we're forecasting $4.7 billion funding needed. if you look at the blue, you'll see port sources, which go primarily to state of good repair, and in green, we see the external sources, which while significant push goes to enhancement, they also play a significant role in our ability to perform state of good

repair. breaking thousands down further, we see they're made up of port capital as well as the tenant improvements. on the external sources, ten t tenant -- public improvements, and mixed in with grants. putting all of those together, how close do we come to being able to fund that? we anticipate funding 48% of that total need in a ten-year period, and then a portion of that funding, which is really only a potential need, which leaves us with a $1.2 billion need unfunded in this plan, which is primarily a state of good repair needs, and that mostly inspires us to keep striving and keep working those strategies to narrow the gap. so i just want to circle back to those three strategies briefly. as we look at the chart below, this really reflects this

port's commitment at the commission's guidance to keep dedicating funding to capital, and so we see in the gray bars the annual capital budget. generally increasing over time and having bumps as we get one-time sources, so it goes up, not smoothly, but up consistently, and we see the designation to capital, as well, going up, and as we just heard from megan, really thinking about the years past this plan. right now, it looks good, that we will be able to continue this trend in dedicating more to capital and narrowing our gap. we also continue to target available funds to strategic projects. as we move into preparing our next capital budget and capital improvement program, director forbes is pushing us to evaluate our criteria and making sure we're being

strategic about our investment decisions, and we're trying to secure external sources of funding for capital needs. megan already touched on the special use districts and our increased ability to use those to help really expand the pie of sources available for projects, so we've seen new subareas of infrastructure financing districts setup for pier 70, quarter front and mission rock this year. another piece that will hopefully help shape the capital plan has been the embarcadero. as we are able to advance those, we hope to see development projects in some instances that cannee address that need and address state of good repair and bring in new enhancements and new use and life to the waterfront, and that would be reflected in future plans. time for questions.

>> thank you very much. commissioner woo ho. i'm just going to ask, so on the seawall, we've identified what we have from the bond, but we have not identified what the long-term capital need is in total yet on this plan. >> that is true. we talk about the long-term potential up to $5 billion need in the narrative section but have not set that number. >> i think that timing and thinking of that will -- >> we will, it will be good for us to know in the next ten years, because we do need to get a better fix on what that number is.

[please stand by]. >> -- but i can't say how long that $5 billion is going to take, how long, so if we knew the number for the next five years, and the number for the next ten years, it would help to explain because i do think we get asked that question in terms of being able to answer

the question. and what most of the questions are, what sources are you looking at, and obviously we say state and federal, but -- but i think that we know that the port's not going to generate $5 billion. we raise so much visibility about the issue, so now, we get asked about it all the time. so now, we are a victim of our own success. >> we will get more answers for you. in planning out for the space, we will get many more answers for you. we're still in an exploratory phase with the multihazard risk assessment, when we have those results, we'll have much more definition on where we're headed. >> i just want to say on that, we're making progress in terms of trying to show the change from year to year, and that we are making progress and we're hopefully getting more operating surplus, but it's still slow going, but at least the number is -- at least it's not -- except for the seawall side, it's not getting far

worse. >> that's right. >> the seawall is the big kahuna there. thank you. >> thank you. commissioner adams? >> no. >> you're good? >> yeah. >> thank you so much for this presentation. you did a wonderful job. i look forward to the item next month. >> clerk: item 14-a, request adoption of protest and appeal process for personal wireless service facilities, site permits, resolution number 1903. >> good evening, commissioners. chief harbor engineer. i can be very brief. i have a really great slide deck, but the commission reports in front of you, what i'm asking here today is for the commission to adopt a protest and appeal process for personal wireless service facility site permits.

the port uses the substantive provisions of the city's public works code in issuing certain types of encroachment permits, including permits for personal wireless service facility sites, and rights of way under port jurisdiction. article 25 of the city's public works code establishes permit procedures for personal wireless sites including a protest and appeal procedure. the port would like to develop a clear and equivalent process to that use by public works. >> if you could flip forward, rod, to the proposed port procedure just so the commission can look at the chart to aid in questions, thank you. >> yeah. so this is the port process that we have developed -- or it follows the port -- the procedure that is -- has been developed and used by public works. the only differences are in the

red dashed box and the red process boxes where we are going to -- we'd like to substitute the chief harbor engineer for the director of public works as the decision maker on the initial protest, and if the protest is then appealed -- or the decision is appealed, we would like to use the port building code review board instead of the city board of appeals to decide the action. >> okay. could i ask a question? >> we need a motion -- are you done with your presentation in. >> -- your presentation? >> yes. >> okay. can i get a motion? >> so moved. >> second.

>> is there any public comment on this item? no? okay. >> okay. so you have to take me back to help me understand exactly what personal wireless service facilities means. does this mean, you know, a company wants to put something in separate. we're not talking about the at&ts or verizons or whatever. >> this is actually the verizons or the at&ts. >> oh, it is. >> yeah. so in the 4-g cellular network that we have, it's typically pretty good size installations. the reason why we're in front of you now is there are a couple of permits that we're dealing with that closed some holes in the carrier's network.

you can see in the boxes -- in the photos on the right show the difference between what the antenna looks like and the pole without the antenna. >> okay. >> and i have a -- let's see -- >> all right. and then, my only other question, looking at future technology, when 5-g comes, is it going to be hardware wise similar or is it going to be something different? >> this is going to be -- my understanding is that 5-g will utilize many devices like this. it's going to be a lot of smaller devices and not big antennas, so it's good for the port to own a process so we can hear process and appeals kind of contained within the port jurisdiction. >> okay. no more questions. >> commissioner adams? >> i'm fine. >> thank you for the presentation, the very brief

presentation. so why would there be an appeal? >> well, the -- say you're in an apartment or you're living in your house, and this is a -- an antenna that's stuck, and it actually blocks your view. you should be able to protest that installation. the federal communications act or there's a communications act limits what you can appeal or what you can protest. they don't allow local jurisdictions to hear protests on radio frequency health effects. they've already set those guidelines, but if it's blocking your view or -- basically, it's blocking your view, i believe. >> have we had any? >> no, we have not. >> okay. >> but with the advent of 5-g, i feel like this can come up.

>> okay. all in favor? [voting] >> resolution 1908 have been approved. >> item 14-b, new business. [please stand by] . >> clerk: and item 16 is adjournment. >> i make a motion that we adjourn in the memory of mike denman and florestine johnson. >> so moved. >> that was the motion?

>> second. >> oh, second, sorry. all in favor [voting] >> we are adjourned.

>> good afternoon everyone. this meet willing come to order. welcome to the january 14, 2019 regular meeting of the land use and transportation committee. my name is supervisor ahsha safai chair of the committee. to my right is supervisor aaron peskin and matt haney. today is our clerk. our clerk is erica major. i like to thank from sfgov tv. madam any announcements? >> clerk: please silence all cell phones and electronic devices. items acted upon today will appear on the january 29 board of supervisors agenda. >> supervisor safai: please call item number one athleticism three today.

>> clerk: revise map one to include 1650s1660, 1670 and 1680 mission street in the c3g area and making promote -- appropriate finding. item two is revise map one of the octavia area plan to change designation of 1650, 1670 and 80 mission street from np3 and c3g area plan. item number three is ordinance amending planning code to resume 1650, 1660, and 1670 mission street from their current designation and c3g and affirming appropriate funding. >> supervisor safai: unless there's initial comments, call up mr. aaron starr from the plan

planning department to speak on item one and two. >> good afternoon. manager of legislative affairs for the planning department. there are three items before you today. the first two change the general plan and the second one changes the zoning map. this is a package of ordinances intended to rezone the properties from 1650 to 1680 from their existing zoning which is nct3 and through cg3 which is downtown general. the general plan amendments are being done so that the zoning maps will be consistent with the general plan. they were spurred by the department of real estate ordinance which proposed to rezone the subject properties. the planning commission heard these three item on their october 25th hearing and voted unanimously to recommend approval. i'm here for any questions you may have them.

>> supervisor safai: any questions from committee members? >> supervisor peskin: for real estate but not more planning. >> supervisor safai: item number three. >> good afternoon chair safai i'm director of real estate. i'm here in connection with the planning department to ask for your consideration and approval of the rezoning of these parcels to the c3g designation. as hinted at by mr. starr this rezoning was part of the sale of two buildings. the 1660 and 1680 properties which were used to help fund the 49 south van ness project.

>> supervisor peskin: welcome to new member haney. i want to thank you and your staff john gavin for meeting with me earlier and these are not questions about the rezoning but questions around the purchase and sale agreement and the appraisal i wanted to determine for the record and hopefully with some evidence for the record that the highest best use in the appraisal was for c3g or office if you will and that was set forth in the purchase and sale agreement. >> thank you for meeting with us earlier supervisor. it was our pleasure to speak with you this morning and to your question, based upon your inquiry, we did go back and look at both the purchasing sale agreement and the appraisal.

we believe there are evidence in both of those documents that support your assumption and your assertion. i would first going to the appraisal report, the report was done by -- they indicated they used the comparable sale approach. if i may quote from that report. it says in quote, in the sales comparison approach, the value of the subject is estimated by comparison with recent sales of similar office buildings in the subject market area. most appropriate unit of comparison for office property is priced per square foot basis of building area. the appraisal went on to use nine comparable sales. all sale were office.

most those sales had c3 zoning. the price had a range $600 per square foot which was reflective of an always use. the appraisal was subject to review appraisal pigeon clifforn clifford who supported the use and the comp. we return to the purchasing and sale agreement. first the franchise price that was included in the purchase and sale agreement is reflective of the appraisal. secondly in section 5.8 of the purchase and sale agreement, subsection b i quote, the staff of the real estate division will cooperate in good faith with

buyers. by this cooperation paragraph, it's clear that it was contemplated bethe party that would be rezoning and because of timing, the city wanted to enclose this transaction use those proceeds for the 49 south van ness project with the rezoning to lag behind. >> supervisor peskin: thank you through the claire for those responses. obviously when a property is owned by the city zone p and so far as we know longer own them, which seems appropriate those of us were members of the board at the time of that sale was cognizant of the purchasing sale agreement. i appreciate there was an appraisal and office comps were

use and independent review of that appraisal and have no further questions. i'm subject to public comment, happy to forward these items to the full board with recommendation as a committee report. >> supervisor safai: thank you supervisor. unless there's any other questions any members. let's open it up for public comment. each speaker will have two minutes. please state your name for the record. >> sue hester. this is the first hearing on the new board. you have proposed to send out something to the board tomorrow without full understanding what you are doing. in the packet for the third piece of legislation, it's my letter to the planning

commission when they did this. it details the issues. basically, we had a precedent that was set in 2002. it was changed by an appeal of a zoning administrator's determination by the board of appeals to 1.3 million square feet of preexisting office space. what that meant was a gift that they developer dent have to pay for the conversion of the merchandise marked, two offices, housing fees, and child care fees. you're going to do the same thing today if you do this without thinking. i ask for the staff from the planning department to pull it

up. my letter stated august 29, 2018. i was involved in both this case when it was originally approved at the planning department. i was involved in the merchandise mark. we had a big battle in the city to institute housing fees, transit fees and child care fees. didn't come out of the -- >> supervisor safai: can you give the speaker an additional minute please? >> i have a press release that i used in merchandise mark.

when the merchandise mark didn't do this drill. it allowed the buildings to be called preexisting office space. they lost $25 million to litigation fees. there is no records for these buildings in the record. everyone will go to the building department and say, same to same, preexisting office to office. they don't know if the building department, city offices are not preexisting offices. in the permit it says office. i think it's reasonable to slow down on number three, push the general plan amendment through. let's stop the zoning until you have the facts what are the legal uses of the buildings. i can't figure out what it is

because planning department -- the files are obliterated. they basically -- [indiscernible] i can't pull up the history. you should pull it up for all of the buildings. it went to city offices. 1660 was built city offices. 1680 was legal industrial. it was an m zoning. it was not legal office. you're cheating the city out of funds. child care, housing and muny. thank you. >> supervisor safai: don't go

away if you would be willing to stand for another moment. the chair will indulge me. >> supervisor peskin: i apologize for my ignorance. are you saying pursuant to the voter approved initiative of 1986 proposition m that because these were government offices -- explain the argument. >> before there was proposition m, voters huged the board of supervisors and didn't allow the downtown plan to be adopted until the board of supervisors adopted housing fee, the transit fee and a child care fee. this happened in '85 before the downtown plan was passed. it was hijacked by the people in the city. the board adopted fees that

preceded prop m. prop m is different. but the fees is further from that. the fee have been the bas basisr the city since. it was blood on the floor for couple of years. slow down number three, which is zoning. get the information. >> supervisor peskin: i heard that. i'm happy for more information. if these were built prior to 1985 when those fees were adopted, we can look up and see

when they were constructed, they would have been exempt from said fees at that time. >> no, they were not office. because they were not preexisting office. they have been converted to office use. that is a way we get conversions of industrial to office in districts six and district nine. not district three. >> supervisor peskin: weren't these office uses by the government? >> the whole thing around merchandise mark is city offices are not offices. they are public use. just because the city get a office anywhere it wants to, doesn't convert the space to legal office. legal office is separate. that has been a zoning administrator's determination.

so the city offices do not make an office -- do not make a space an office. so the city can take over hundred thousand square feet and not have to pay fees >> supervisor peskin: this is interesting. i would like to -- ms. hester, we entered into a good faith contractual commitment with a purchaser of that property which i earlier referenced. i would like to give the planning department -- i would like to hear what the planning department response is. >> supervisor safai: we're still on public comment. we can come back to that.

my other members wish to comment? seeing none, public comment is closed. mr. starr, supervisor peskin has some questions for you on this. >> supervisor peskin: you heard the question. >> thank you for noting i'm not the zoning administrator. there are two issues. i think -- we discussed this at the planning commission hearing. ms. hester was there. only disagreement we had was the city -- the zoning administrator determined that these are considered office per prop m. for them to change it to general office, they need to do a change

of use application. whatever fees are subject to that change of use will be triggered at that time. >> supervisor peskin: they are still subject to the various fees that ms. hester brought to our attention? >> correct. >> supervisor peskin: ms. hester disagrees with that >> that's point of disagreement. i was just texting the zoning administrator. he confirmed that the old and new zoning, they confirmed that yes, they are subject to change of use fees from going from public facility to general office use. >> supervisor peskin: in item three amendment to the planning code sane the zoning map, does not in and you have itself change the use. they would have to file a building permit which would trigger the change of use and trigger the fees? >> you're correct. >> supervisor peskin: ms. hester would you like to respond to that?

>> this determination by the zoning administrator is not in your packet. it never came back and the planning commission. i have no idea what this is. i don't have a lot of confidence in the building department or that level. the planning department when projects are not rooted them. if a developer looks at a place and puts a tenant in and converts it to office and doesn't -- building department is not going to look at anything other than, oh, there used to be city offices here. the building department is not going really grounded preexisting offices as offices. prop m does not apply to the city. the city can do anything it

wants without a prop m application. that's the way it was written. preexisting office is a big deal on 1650 which i know -- >> supervisor peskin: that was helpful. thank you ms. hester. i certainly will be the first to admit that it is entirely possible somebody could come to that change of use, relative to this property to the department of building inspection, they might not properly route it to the planning department. it could issue and any fees that are due and payable, might not be paid. i understand that concern. there may be, i'm now looking through the clair chair deputy y attorney, to deal with the subject ordinance to make it clear any and all fees are due

and payable when a change of use is filed. should that issue and without the fees being paid, there will be an ordinance that clearly shows that the fees are due and payable. what do you think about that? i have alternatives. >> i'll respond one at a time. i think either way, -- i think that your suggestion is doable. tomorrow rather than than today. it would be a statement that effectively -- any change of use, the property owner and project sponsor will be required to pay the feeings required by the code. sound like you're suggesting maybe those fees are not paid that the zoning changes made in

this ordinance would be rescinded. i don't think that's something we can do. >> supervisor peskin: i was not suggesting that. i was suggesting a written instrument that would make it clear that in the event change of use issued and the fees weren't paid that the intent of the city was to collect them and that sue hester or somebody can bring to our attention that her fears were realized and that the property owner still owes the city. >> yes. >> supervisor peskin: we don't like crafting words on the fly. colleagues, i think we have couple of choices. one is to continue item three for a week in this committee. the other is to send it out as a committee report and have language that we would introduce as an amendment tomorrow. i think either one of those is

fine. mr. starr, if we can get a letter or electronic centr elecm the zoning administrator. if you can draft language like this for introduction tomorrow, i will be comfortable in sending all three items out as committee reports today. >> i think that makes the most sense. >> supervisor peskin: for the record, ms. hester has a storied history making sure that the city is properly paid in many planning instances and we owe her debt of gratitude for millions of dollars that we have collected. want to thank her for bringing this to our attention and hope that language should be enough surety to make sure that is indeed what we all intend and will happen and with that, i will make a motion to send all

three items, items one and two with recommendation. item three as committee report without recommendation subject to the amendment that he will prepare by tomorrow. >> supervisor safai: can we do that without objection? >> clerk: item four is ordinance to change zoning code for nonretail sale and service uses in the c3r zoning district. >> supervisor safai: supervisor peskin. i will hand it over to you since this is your legislation. >> supervisor peskin: thank you chair safai. this has been heard in committee for a number of times and i know that you are familiar with it. for our new members edification, i will talk little bit about the fact that this is the product of

a couple of years of informational presentations and collaboration between the planning department, my office and the always of economic and workforce development. really entered around trying to preserve our destination retail zone in san francisco and union scare, commonly referred to as the c3r zoning district. which has been under pressure from the amazon effect and particularly as it relates to the push to convert upper floors historically have been retailed to office. last monday this committee adopted an amendment that seeks to actually achieve a compromise for applications to convert office space on the third floor buildings which was the source of concern, contention from property owners in the c3r

zoning district. the complie compromise is a poly choice that really prioritizes retail and permitted uses while allowing limited conversions when the physical characteristics of the site are not conducive to retail. just by way of background, we do duplicated the file. this one has a $4 conversion fee that's supported by a study that's referenced in the legislation. we had a duplicate file that has a $6 conversion fee which requires rereferral to plan napping is not before yo -- to . by unanimous vote we imposed interim zoning controls pending the approval of this legislation and what's before us, lift internal codes at the board put in place by.a year. i want to thank all the parties

involved for reaching this compromise and hope that subject to public comment and any statements that mr. starr has made repeatedly is welcome to make again that we can move this to the full board with a positive recommendation. >> supervisor safai: supervisor peskin, can you remind us why you chose the third floor? >> supervisor peskin: a lot of this actually -- mr. starr, you might want to jump in -- lot of this really came -- there were slew proposals to convert upper stories in the union square c3r zoning district to office ranging from properties macy's own and macy's men@ç store, properties on 200 block sutter street. at that time, the department really expressed concern about doing that and we looked at the

building topologies. the first incarnation of this actually said no conversions of the third floor. we made them impossible. my office really listened to the union square business improvement district and others as well as retail brokers and really sought to have some flexibility in the limited physical circumstances that were the subject of last week's amendment. i will defer to mr. starr if you want to add anything to this long-running conversation. >> you covered well. the staff report was initially to prohibit floors. the commission felt that we needed more flexibility on the third floor given the nature of retail and the dealty of leeing spacespace -- leasing spaces ou.

>> i understand they felt what was the difference between third and fourth or fifth floor. why did they not like it being capped at the third floor. >> my understanding, retail -- people generally don't want to go up elevators or escalators to go shopping. third floor is difficult to rent to retail operators because of disconnection from the street. we're very concerned about preserving union square as a destination shopping centre. we don't want it to be degraded either. we don't want the buildings to be vacant. >> supervisor peskin: they did survey and found a relatively healthy occupancy rate. i think that kind of went into the