approval from mohcd to enter into 55 year loans from the developer. repayment of mohcd loans is due annually to the extent there is cash flow from operations available. for 88 broadway, the loan amount is not to exceed $31,209,735, and for 735 davis, the loan is not to said $19,583,557. i'd like to describe the project to you briefly. both sites are currently surface parking lots, located in one large city block on separate land parcels located in the northeast waterfront landmark district. 88 broadway is roughly half of the city block. 88 broadway parcel is owned by the port. 735 davis is a smaller parcel.

it's midblock along davis street. it's on the same block, surrounded by vallejo to the north, broadway to the south, and 735 davis parcel is owned by the city. 88 broadway is 125 units, mixed use and mixed income for families. the project will serve a mix of incomes ranging from 30% a.m.i. to 80% a.m.i. with majority of the households receiving no more than 6 -- earning no more than 60% a.m.i. approximately 4,000 square feet of surface for a child care facility and another 7,000 square feet of open space for residential use. 735 davis is 73 units. it's also mixed use and mixed income. it's for seniors. the project will serve a mix of

incomes, ranging from 40% a.m.i. to 70% a.m.i. with 80% of the project's units serving households that are no more than 60% a.m.i. the property amenities include approximately 1,000 square feet of commercial space, which is anticipated to be a local serving cafe and approximately 2,000 square feet of open space serving for residential use. there will be a publicly open space available in the midblock passage available between the two projects for the public to enjoy. in july of 2018, the board of supervisors approved items related to this project. the items were options to ground lease, bond inducement, and a jurisdictional transfer. additionally, transaction documents were approved by the board of supervisors and port commission in july and august of 2018. since then, the developer has

secured tax exemption bond allocation and low-income bond allocation. the developer has secured a lender for the project and they're working diligently to close on the financing, obtain the building permits in anticipation of breaking ground to start construction in april or may of this year. this is a critical milestone of final approvals after almost three years of design development, land use and environmental traction document approvals -- transaction document approvals during our development period. this will be a welcome addition to the neighborhood and on behalf of the project sponsors and mohcd, we're very pleased to be here today seeking your approval. we're here for questions if you have anything, and i think the b.l.a. has a report. >> chair fewer: thank you very much. any comments, questions?

i believe we have a b.l.a. report on this. >> yes. we reported specifically on the two loans to bridge housing and john stewart company, one for 88 broadway and the other for 735 davis. i also want to point out that these two resolutions are also asking the board of supervisors to approve the general plan, the planning code findings and the mitigation reporting program. we sum vise board actions on this on page 17 of our report. the board has also previously approved the options to lease these two properties to john stewart company bridge housing. so what the board is asking us to approve today is the loan amount for 88 broadway of $31 million out of the $97.2 million budget for this project. of that loan amount, 27.9 million is actual a direct loan to the developer that

would be paid back only if the project generates sufficient net revenues to payback the loan. the balance of $3 million is a bridge loan to cover for an affordable housing program loan and a potential commercial space loan that is not yet received, and we rum size the project sources and uses on page able -- we summarize the project sources and uses aon page 18, table five on the report. and the balance of it, a little more than $1 million would be a bridge loan to cover an affordable housing program loan and a potential commercial space loan if those loans are received. this -- because the project

itself and the financing is consistent with prior board actions, we do recommend approval. >> chair fewer: thank you very much. let's open this up to public comment. are there any members of the public that would like to comment on items eight, nine, ten, or 11? seeing none, public comment is now closed. [gavel]. >> chair fewer: supervisor peskin? >> supervisor peskin: thank you, madam chair. colleagues, as you know, this is one of a series of affordable housing projects in the northeast area of the city, dating back to the days of the loma prieta earthquake. i think this represents the last ones to be developed. battery and broadway was the first, broadway and sansome slated for a police station we ended up getting turned into affordable housing, and this

project, which as the budget analyst stated, the board has approved in concept in the options and what-have-you before us. i wanted to use this as an opportunity to shed light on a couple of public policy issues. i want to start out with a historic pattern and practice, and i did ask the budget analyst to inquire of the mayor's office of housing and community development with regard to the practice or lack there of as required by section 918, subsection b of the charter that loans be brought to the board of supervisors for approval. and i think -- and maybe madam

budget analyst, you can regale me with the facts. i think that historically, those loans in contravention of the charter have not been brought to the board of supervisors. what i wanted from miss hartley was a recitation of how many of these projects were not brought properly before the board of supervisors for loan approvals through the chair. >> through the chair, supervisor peskin. we don't have those exact numbers. i believe the response was there has been a -- the practice over the last many years has been to approve these loans through the citywide

affordable housing loan committee, but they have not been brought forward to the board. i don't have any data on how many those are. i know that the city attorney recently determined that those loans should be coming to the board and the future loans will be presented to the board. >> supervisor peskin: and through the chair, to deputy city attorney jon givner, the history of loans from m.o.h. without board of supervisors approval and is, indeed, that is what section 9.118 of the charter requires? >> mr. givner: yes. yes, the -- these loans should be coming to the board if they're ten years or $10 million, and as miss campbell said, we have recently looked back as past loans of mohcd,

that 9.118 requires them to come to the board. >> supervisor peskin: thank you for rendering that advice, even if it's a fru decades late -- few decades late, but i would still like to know how many loans were authorized without approval of the legislative branch as required under the charter, so i do want that. the second policy issue -- and by the way -- >> chair fewer: actually, i think it would be helpful for the mayor's office of housing to respond to that question. >> i don't know the exact number of loans that have not come to the board for approval. all of our new construction projects do come through the

board for approval. the board has seen all of our new construction process -- projects and have approved those. however as the supervisor has pointed out, mohcd loans have not come to the board, and we have reviewed our procedures for approving these loans with the city attorney's office and the budget analyst's office and have been talking and discussing with board members about this potential legislation. >> chair fewer: why haven't they been brought before the board? if we hear from the city attorney the guidelines on loan that should be brought before the board, why were they not brought before the board? >> so as the budget and legislative analyst have

referenced to, we have brought them to our citywide loan committee, and it's through further clarification from the city attorney's office that we should be bringing them to the board of supervisors office. i'll defer to the city attorney to add any information to that question. >> supervisor peskin: and if i may, madam chair, i agree that in some form or fashion, the board sees some aspects of these projects. it's actually the second public policy piece that i would like to bring up relative to why it is important that these agreements -- these loan agreements come to the board, and i'll -- i'm happy to elucidate on that after we get

guidance from the mayor's council and deputy city attorney. >> we have been looking at practices of the mayor's office of housing and community development for the last 30 to 35 years. it's been long practice for mohcd to have their loans approved through the loan committee, and we are looking into, you know, the overall practice. it's been a mixture, a history in terms of mohcd approvals. i would just add that in the beginning of the affordable housing funding, many of the loans were funded through federal state sources, and mohcd was acting through those sources, and you know, there's been authorizations by the board when we received funding

from federal, state sources. over time rkts the city of san francisco has containingentake lead in funding affordable housing directly, and we're looking into the practices of mohcd and how things should be approved. >> supervisor peskin: and counselor, through the chair, miss chan says legislation was being contemplated and apparently shared with members of this board. what does that legislation contemplate because i will say for the record we will delegate or 9.118 authority to no one. >> i think miss chan referenced that kate hartley had talked to supervisors about drafting legislation and mohcd is currently drafting legislation

to that effect. >> supervisor peskin: to delegate the 9.118 authority? >> certain aspects, yes. i would say there is a proposal that has been shared with the supervisors about how all of mohcd's loans and granted are well over -- are over ten years, and the purpose of that is to ensure affordability for the longest possible time period and to the extent that, you know, the effective 9.118, there's two thresholds, ten years or -- ten years or $10 million. so i think to the effect that, you know -- >> supervisor peskin: there's actually another provision in 9.118 which is whether or not it makes any revenue. >> well, i think that's in section a if there's revenue of over $1 million. in terms of expenditures, if it's over 10 million or 10 years, it does need to come to

the board. so in terms of these agreements that we enter into, they're all over the ten-year time limit. >> supervisor peskin: 57 years is longer than ten. that is a true fact. >> mr. givner: can i jump in? i would just suggest that the supervisors talk directly with mohcd about their legislative proposal. i don't think we're in a position to present it. but our office probably isn't the right off. >> supervisor peskin: i don't disagree with you and i would respectfully request that mohcd talk to me. i am not going to delegate 9.118 authority to any government. it's not going to happen, at least not with my vote. >> chair fewer: supervisor

stefani? >> supervisor stefani: yes, thank you, chair fewer. yes. i just wanted to follow up through the chair with miss chan. when you say you're drafting legislation, i'm just curious to the need for legislation if it's pretty clear in the charter what you need to do. i'm kind of perplexed on what that legislation would look like if it's clear in the charter? so i haven't seen any legislation yet, but when you're talking about drafting legislation, i hesitate to pass laws that we don't need if it's very clear in the charter you have to come before this board. >> thank you for that comment. we have been -- our office has been speaking, and the director has been speaking to the board members about potentially for some dedicated authority. i'm happy to follow up with all of your offices and speak to you about the specific proposals. if there isn't specifically a need for the policy changes, we can have a discussion about that, but we would like to discuss this with you

individually. >> chair fewer: okay. i just also want to say that -- thank you, supervisor peskin, for bringing this to our attention. i also have not been approached by mohcd, nor have my colleagues. we are the budget committee, so i would like to know what supervisors have you been speaking to? >> i believe our director has met with a number of the supervisors, and i can follow up on which offices we'll discussed this with. >> chair fewer: i am the chair right now, and we have not discussed this with us right now. if you could give us the name of the supervisors that she has met with, and also, i think supervisor peskin has an asked for a request of the exact number of loans, and i think

that is a very fair question to ask, actually, in light of this because it is actually in violation of our charter amendment, which is a little shocking here. so i think what i would like to do is make a motion to continue this -- oh, supervisor mandelman, so sorry, my apologies. >> supervisor mandelman: yeah. this is clearly a conversation i am arriving to late and just curious about some of the parameters. so loans -- the loans before us today are limited obligations of the city, so they're not potentially threatening the general fund. would -- but there is this long history of making loans without coming to this board. does that include, to your knowledge, making loans that impacted the general fund or would have been secured by the general fund? you may not know, but i would

imagine you would have come to the board. [inaudible] >> supervisor mandelman: yeah. okay. >> we can get back to you on that question, yeah. i don't know the answer to that. >> supervisor mandelman: okay. thank you. >> thank you. >> chair fewer: so do you think you'd be able to get that information on the number of lobes f loans for supervisor peskin? >> we can most certainly look into it, just keeping in mind it is 35 years worth of loans, so we'll hopefully be afforded t the patience to go back and look at that, but hopefully, the city's records are good enough that we can go back and find that number. >> supervisor fewer: thank you so much. so i'd like to continue this item. >> if i may, question for you about the matters in front of you specifically related to 88 broadway and 735 davis. is it possible to separate the

conversation that we're having related to the process from the matters specifically in front of this committee on the project? >> chair fewer: in light of the conversation we have been having right now, i don't think so. so i would like to make a motion to continue this item -- >> supervisor peskin: madam chair, i'm not a member of this committee. i did want to get to the second area of public policy because like i said, i want to have this project built. it is part of a legacy of building affordable housing in the northeast area of the city where there's very little land to do it, but i do want to get to the issue of the difference between a grant and a loan. i do want to have a very transparent, open conversation about loans that are forgiven in whole or in part, which we

all know, although we never really talk about it, is a common practice of m.o.h. and the city and county of san francisco. so i would like to -- i don't know if this is a question for the budget analyst, but in many of these instances, we characterize these things as loans, knowing that they will never be paid back. so then, maybe why don't we just call it what it is and say that it's a grant and get rid of the fiction of it being a loan? and then, i'll get to my specifics about this one, which is there's a sea difference between when we do that with a nonprofit like the tenderloin neighborhood development clinic or c.c.d.c. than when we do it with the john stewart company, which is a for-profit company. so if we're giving a loan to a for-profit corporation, shouldn't we call it a loan and

say it's not forgivable? those are my thoughts. >> so if i may address the first part of the question, i think it's a good one, and we can policy wonk out on this for quite a bit. in short, you'll probably notice over time when we do look back over those 35 years that the method of sending out the funds has changed over time. we probably made more grants in the past and now we make more loans and we do that because we're trying to maximize the amount of noncity funds that are coming to the project. and since 1987, this has been the predominant source of funds for housing. instead of the cdbg and housing programs that were created around that time and were

funding a lot of our public housing, those programs have shrunk considerably. we're relying on equity that's coming to the project developer through the local housing tax credit program. so we have adjusted the times with respect to what other sources of funds go into the projects and there are significant financial considerations if the city's funds are put into the project as a grant rather than a loan. so we -- we do that actually to protect the project in order to bring in more money and it helps us adjust also to the rising costs that we -- that we have. and that is independent of whether the sponsor is a nonprofit or a for-profit established corporation. to receive a m.o.h. housing tax

credit, you must be an established -- >> supervisor peskin: and that would be bridge's case. >> 88 broadway, yes. >> supervisor peskin: i guess as more instruments come before this committee, assuming we don't delegate our 9.118 authority, i think it would be interested in knowing how many of these were forgiven over time. i think that would be a nice data set for us and the public to have as we create more transparency as it relates to our building and delivery of affordable housing. >> that is also information that we could provide, keeping in mind it will take quite sometime to establish that portfolio. if you take a look back on who's paying on loans, it's almost exclusively the sections that have large section eight contracts going back 30 years.

on those projects, we do see some repayment and we put that back into the next new project on a typical tax credit deal. so the last 30 years -- 25 years, let's say, a little bit less, though -- a lot less, though. >> supervisor peskin: on 4% deals as opposed to 9% deals. >> on most of those because it's dependent on cash flows. >> supervisor peskin: got it. with regards to commercial space, does the loan treat that differently because the commercial space is lucrative. if you have a 4,000 square feet restaurant space, does the loan treat that differently? >> we do look at commercial space differently, and we have -- correct me if i am wrong, in the last two years, have created a special space policy on how to develop smeshl

space, keeping in mind, in some locations where we build, we have no market. and then in other communities there is more commercial value, and you might have a tenant who is paying rent that could support commercial debt. our focus with respect to commercial lending is reducing the city's contribution to the project, so that would mean we have slightly different policies with respect to the terms on the commercial loan. because they've taken more risk, they can negotiate to take a higher percentage of the residual receipts on the loan. we don't have that many, i would say, in our portfolio that actually we do expect to generate revenue. we are often in the opposition situation where we are putting in a tremendous amount of money

to support a really valuable community service use that cannot pay much rent at all. >> supervisor peskin: understood. thank you for that explanation. and couple -- i guess, questions, and then, i'll yield the floor. what is the standard developer percentage in a project like this? >> that's such a complicated question, so for give me if i take the question in a broad direction. the standard is about 4% or a little bit more depending on the size of the project and cash fee. there might be different amounts paid out in a project, and if you remember before i was talking about the tax credits and how we rely on the tax credits to generate equity for the projects.

so we structure our deals in order to maximize the amount of revenue that we receive. having a high fee of a specific type can actually be beneficial to the city and to the project by generating equity. so two other kinds of fees that you might have besides a cash fee, you might see what's called a general parter equity contribution, g.p. equity. it is essentially a paper transaction in order to generate sort of the 35% of that value can come in as equity. and then, you can also -- counsel over the years has had opinions whether that's acceptable to themselves on the investor side.

right now, counsel is quite comfortable with that approach, so we're seeing relatively large g.p. equity contributions on our deals, so the numbers look a little bit better athan the aggregate. a third kind of fee is a developing fee that would be earned over time out of the cash flow of the first 15 years of the project. if the project has a section eight contract that is throwing or money that may be advantageous for the city to agree to a deferred fee, as well. but it is capped per our policy on the cash side. but sometimes when you see our budgets, our fee might look large principlely because either of the general equity or the deferred fee. >> supervisor peskin: and then last question, followed by one

last comment. when do you guys expect to start construction and when do you expect to finish? miss character kirk patrikirk w the answer. >> if we receive your approval today, which is an important milestone in meeting our finances closing and construction start schedule, we'll start in april 15, april 30. we're continued today, i'm concerned that we won't be able to build this important affordable housing and we'll risk losing the other financing that we've gotten? i know -- sorry to take this moment -- >> chair fewer: excuse me, miss kirk patrick. can you please repeat that and can you speak loudly into the microphone. >> okay. can you hear me? >> chair fewer: a little louder, please. >> so if we receive your approval today, we will be able

to continue with financing and start construction april 15 or april 30. if we don't receive your approval today, i'm concerned that we will lose that deadline that we have with all of our other financing partners, and we will have to reconstitute the project. >> supervisor peskin: i thank you for that. i take you at your word. i really appreciate the chair's sentiment that we might want to slow down so we can get the information that we want, but i also think that we have the unlimited power of inquiry, and that you will produce that information any way, and i'm happy to call a hearing so that we can have that public policy information. i really just wanted to use this as an opportunity to start bringing those issues outlet. the other thing i want to say for the record, and this is really to your department or office and to your executive

director, which is two years ago, i went to then-mayor ed lee and wanted to temporarily use this site as a navigation center, very much like happened at 1515 south vanness in supervisor ronen's district, and the mayor was receptive to that issue. he actually said that he had to convince my neighbors and constituents that it was a good idea and indeed had a community meeting on broadway a couple blocks from the site with over 200 people and bless the good liberal people of district three, across communities from the northeast waterfront to chinatown, people were very excited about that. public works was -- actually made a presentation of what it would look like. and ultimately,' the mayor's office of housing convinced the

mayor that this was going to be a project that started in september of 2018, and i said that will never happen. it probably won't be until the spring or summer of 2019, which guess what? would appear to be the case, and i could have had that nav gas statinav -- navigation center 1.5 or two years. the navigation center was never meant to get in the way of public housing. not due to lack of effort on your part or the board's unwillingness to approve things sent to the committee today. with that, i really thank the committee members for their indulgence. >> chair fewer: thank you. supervisor mandelman. >> supervisor mandelman: thank you, chair fewer. sorry. i do have questions, and not to

belabor this item. one comment in hearing the description of developer fee and the various funding sources, i -- i am -- it -- it occurred to me that we have done with affordable housing development kind of what we've done with health care in this country where we make it as complicated as trouble and lacking in transparency, and we sort of had single pair at one -- payer at one point in this country, and we gave it up. and now we have these extraordinarily complicated processes that require thinking about how -- you know, what can get into basis and, you know, which funding sources can get layered and how do we maximize this amount or minimize this amount without any regard to the actual goal -- well, with some regard to getting the housing built in an incredibly sort of complicated and

nontransparent way, but it is the fault of the federal government, and actually republicans in the federal government. that rant aside, i'm wondering if you can come -- if you can come back up and explain those particular financial transactions again, just really, really briefly. where is the money coming from, where is it going? who's on the hook for what? there is a private lender here. the private lender is transferring the money to the city. the city is transferring that money back out? no, then come back up here and explain it. >> sure. i can talk about this project. it also applies generally, so if you want to hear from the housing director, that's fine, too. the mohcd loan is a compilation of funding that we have from the affordable housing trust fund, inclusionary fees and other mohcd directed money that is used to subsidize the

construction of new affordable housing, so that many will be -- money will be used for construction purposes. >> supervisor mandelman: city funding is going in in excess of $10 million not backed by -- okay. got it. >> and the project you mentioned is roughly $10 million, and there are other funding from the city, so that does include the income from the housing investor, which is bank of america. we do have some construction financing in addition to mohcd's funding that is provided in this case by bank of america. >> supervisor mandelman: so there are loans that are getting made by the city and secur loans getting secured by the city, but that's only on the tax side. >> the loans are funded through the housing trust fund and

other sources like that, and they are secured by a deed of trust on the property, so the term is 55 years. it can be extended if the affordability continued to be extended by this board or any other actions. ideally, in perpetuity is our goal as an agency. >> supervisor mandelman: okay. i can't imagine why this board wouldn't want to know -- >> yeah, i think your concerns are -- >> supervisor mandelman: and i'm really curious about how it got -- i mean, was it in the area of redevelopment that these loans were being made by the redevelopment agency or it -- somehow seems peculiar that we're -- nope, not that either. at any rate, thank you. >> chair fewer: okay. supervisors, any other

comments? okay. i think there's been two requests here. one is the exact number of loans, and i hear you can get us that information in a timely manner. would two weeks be enough time? [inaudible] >> chair fewer: excuse me. speak into the microphone? >> no, i don't think so. i think we'd need at least 30 days. >> chair fewer: and then secondly, the name of the supervisors that the mayor's office of housing has actually spoken to about conceding some of the this power -- some of this power that the board has. we can get the names of the supervisors. so two items that we are requesting today, and that is the exact number of loans and then also the names of the supervisors that the director of the mayor's office of

housing has actually spoken to about this, and then, i believe my colleague, supervisor peskin would be holding a hearing. in light of miss kirk patrick, that you had mentioned that this is a timely matter, and this could postpone. so we hear this quite often, and occasionally, it is not accurate, but i am going to take your word today that it is accurate information. i have no reason to think that it wouldn't be, and so i'm willing to move this -- make a motion to move this out of committee and separate as you requested the polishcy issues d other things from the funding school so you can get these things built. there are people that need homes. so having said that, i would like to make a motion to move items eight, nine, ten, and 11

to the board with a positive recommendation. >> clerk: excuse me, madam chair, there was a previous motion made by you to continue those items. could you please get rid of those items? >> chair fewer: yes. i'm getting rid of that. the new motion, can i take that without objection? thank you. that passes. [gavel]. >> chair fewer: madam clerk, can you please call item number 12. [agenda item read]. >> clerk: would you like for me to also read 13? >> chair fewer: yes, item 13,

too, please. [agenda item read]. >> chair fewer: thank you very much. we have mara blitzer from the mayor's office of housing and community development to speak on both items. >> thank you. so i'm back. >> chair fewer: welcome back. >> items 12 and 13 are resolutions that authorize mohcd to apply under the city for welcome back loans, for noncompetitive funds and competitive funds. the state of california created the program specifically for persons with serious mental

illness that are homeless, chronically homeless or potentially homeless. as part of the application, mohcd requires that the county submit a resolution from the local governing body that authorizes the county to apply the funds. mohcd will be applying as an alternative county designee. upon award, we will return to you with a request to expend the funds and we will also return to you again with respect to a specific project to which we would make a loan, too, since we are effectively a pass-through agency and the loan itself will be from mohcd. we are requesting two grammatical corrections to the resolutions. on page two, line four, the

state has asked us to add the words his or in front of the word her designee. and on page two, line 15, to strike out the word is at the end of that line item. we ask the committee to accept these amendments and forward the item to the full board on tuesday. >> chair fewer: thank you very much, miss blitzer. so there is not a b.l.a. on this, but let's open this up for public comment. are there any members of the public that would like to comment on items 12 or 13? seeing one public comment speaker, you have two minutes, sir. >> great. i'm not sure if it was a public comment moment for item 11 before you hit the gavel, but in any ways, regardless, i think it's all kind of tide together. i was curious, how was a determination made to circumvent the formal procedure and also did the decision impact the extension of federal dollars in grants loans or overall volume. >> chair fewer: thank you very

much. any other members of the public like to speak? seeing none, public comment is now closed. there is not a b.l.a. report on this. i believe those two changes to the amendments are not substantive, so i'd like to make a recommendation to bring this with a positive recommendation to the full board as amended. thank you very much. [gavel]. >> chair fewer: okay. now madam clerk, can you please call item number 14. [agenda item read]. >> chair fewer: thank you very much. i believe we have angel cordez from the office of economic and workforce development. >> good morning, supervisors. my name is angel cordos, and i

serve as director for the san francisco small business development center. our program is funded in part by the small business administration, and we are hosted by the office of economic and workforce development. we help aspiring and existing entrepreneurs start and expand businesses in san francisco by providing no cost consulting and business training. since the program launch in 2015, we've is theed over 1,800 unique compliants and trained over 690 individual participants. we've created over 1,000 jobs and sustained over 600 jobs. finally, thanks to our services, our businesses have increased their sales by over 120 million and accessed more

than $50 million in capital. in 2018, the state of california allocated funding for the technical assistance expansion program. we applied and were awarded $203,917.50 thanks to a consult of client oriented services and economic impact. the purpose of these funds is to both deepen and widen our services. the funds will allow us to invest more time in clients which has been historically challenging given our resources. it will also enable us to reach a greater number of businesses, increase the number of participants, and broaden the sstss we offer. we'll be able to include on-line training, which includes viewing existing workshops, finally, building an

on-line library of prerecorded training sessions for future viewing. we're excited about the opportunities this funding will allow us and for this reason, i request your support for the accept and expend grant of the small business technical assistance expansion program. thank you for your time and consideration, and i am happy to answer any questions. >> chair fewer: thank you very much, mr. cordoz. colleagues, any questions or comments for mr. cordoz? there is not a b.l.a. report. let's open it up to public comment. is there any member of the public that would like to comment on that? seeing none, public comment is closed [gavel]. >> chair fewer: thank you, mr. cordoz, for a very good presentation of what this matter is about. i would like to move this to

the full board with a positive recommendation. [gavel]. >> chair fewer: madam clerk, can you please call item 15. [agenda item read]. >> chair fewer: thank you very much. we have jeremy spitz here from the department of public works. >> hello, supervisors. my name is jeremy spitz, from the department of public works. the original contract was from 1996 to october 2016. as the contract was coming to a close, public works put in an r.f.p. for a new contract, and j.c. decaux was the only respondent. decaux' design was approved by

the specific design review committee and arts commission, but we received some negative feedback from the members of the public, board of supervisors and historic preservation commission. there was some concern about the utilitiarian design. the winner of the competition was selected in may 2018 and since then, the design firm has been working with j.c. decaux into make the design a reality. the good news is we have now received all necessary

approvals. the contract is nearly complete, and we are on track to introduce it in march. i'm also joined by our deputy director for finance and administration, julia dawson, if you have any questions. >> chair fewer: thank you very much. there is no b.l.a. report on this. let's open it up for public comment. are there any members of the public that would like to speak on this item? >> i was just curious how many kiosks are guarantees under the contract. >> chair fewer: thank you very much. any other members of the public like to speak? seeing none, public comment is now closed. [gavel]. >> chair fewer: colleagues, any comments or questions for mr. spitz? oh, supervisor peskin. >> supervisor peskin: thank you, madam chair. i think i'm the author of this past resolution and the past

several extension resolutions. and i want to acknowledge that what mr. spitz says is correct. i was one of the supervisors that expressed concern about the aspects of the design and what have you, and i was pleased to see the competition. i was not around in 1996. this is far below what other cities receive what are really advertising contracts. these are not -- yes, there are some toilets involved, but the money that j.c. decaux makes is made off of the advertising kiosks. which, quite frankly, i've never really liked in the public realm. they add to street clutter, and

as we've been extending this knew for the three years that -- now for the three years that i've been back in office. i think the first extension has been november or december 2015. as barack obama said about same sex marriage, my thinking as evolved. and the whole way we are now actually using these facilities -- i'm talking about the toilets, not the advertising, is that we have moved -- thank you to former supervisor kim and her then-staff, sunny angulo, to a model of staffing them, the pit stop model, and i'm not sure we really need these auto mated toilets and all of the advertising. so i just wanted to kind of throw that out to the committee. i totally acknowledge that a whole lot of people have done a remarkable amount of work in good faith to bring this

contract forward. unfortunately, nobody knows what's in the contract because the department doesn't have to tell us until the contract's been negotiated and introduced. i cannot imagine that it could be remotely lucrative enough to justify the 20 years in which san francisco got hosed. but i just wanted to throw that out there. i'm getting more and more dubious by the day, and i'm glad this is my resolution. >> chair fewer: i'm glad because i have a lot of questions about this resolution. mr. spitz, so sorry. it does raise a lot of issues that we keep extending these contracts over and over. this is the sixth amendment to extend this. so i am hearing that there's some new amazing terms that are

being negotiated for the new contract, and quite frankly, i don't have any details about this amazing new contract that i am not pass this out -- this next extension without new information. and i think it's frustrating to be passing a sixth amendment to this. every time as reported by mission local that we extend this, that this company actually makes profits between 4 -- 3 and $4 million every time we do an extension. so i'm just wondering why do we keep passing extensions without new or better rates, and why

doesn't the city just operate their own toilets? >> so thank you, chair fewer for the question and thank you, chair peskin for sponsoring this. i don't know why we operate our own toilets. i do know we have some of our own toilets, the pit stop toilets. as far as this, i was not around in 1998 when the original contract was introduced -- 1996, when the original contract was introduced. i was eight at that time. so i would say we have been working in good faith with j.c. decaux and the community to try and negotiate a new contract. really, all the delays and the source of the delays and the source of these extensions has been going through the process of getting a new design for the toilets. so when we started in 2016, j.c. decaux was the sole -- like, sole -- was the sole respondent to the r.f.p., and they came in with a design of their own, and we would have

been pretty much ready to go and we wouldn't have had to do any extensions at that point. we changed the design at the request of some members of the board of supervisors and the -- i forget which commission, the historic preservation commission, and we ran that design contest. all of that took a while, so that was the source of one of our extensions. and then, most recently, we had trouble getting scheduled at the various review committees that needed to review the new design, so that was the source of the second extension. so going forward, we're pretty much ready to bring the new contract to you, and you will have the opportunity to review it when it's introduced next month. >> chair fewer: okay. so i'm not comfortable passing this out of committee at a sixth amendment when i don't have any information about the terms of the new contract at all. i'd like to make a motion to

move this to continue this item to the call of the chair. can i take that without objection? supervisor mandelman? [inaudible] >> chair fewer: supervisor peskin. >> supervisor peskin: so just before you vote -- i'm fine with that. i just wanted to ask a couple of questions, and i did meet with mr. spitz before this meeting. i was under the impression -- maybe miss dawson knows the answer to this. i was of the opinion that during the extensions, j.c. decaux had agreed to pay us at a higher ratet for the advertising. but mr. spitz assured me today that that was not the case and we're getting the same rate deal we've gotten for the last

22, 23 years. >> supervisors, julia dawson, department of public works. i think we thought this agreement would be before you long before now, so we did not attempt to renegotiate the current terms because we are focused on getting the new agreement done, and of course it hasn't turned out exactly the way we thought it would, but i would say making additional revenue from this agreement is contingent on shifting from paper advertising to digital, which is something that has already happened in all of the other city advertising agreements, and i fully hear what you're saying about not loving advertising, but the reality of most advertising agreements that public -- that cities do -- new york, chicago, is that they have all gone digital, and that does generate additional revenue. so without being able to convert to digital, it would have been a more challenging conversation. but i do hear what you're

saying, and i think we probably would have considered that, had we known we'd still be here amending this agreement. we're really not expecting to be in this situation. >> supervisor peskin: and relative to the public commenter's question, how many public toilets? >> 25. >> supervisor peskin: 25 toilets for our 50 square miles. and in the current contract, we get how much money a year? >> it varies, depending on how much money decaux makes. it's 7% of their gross, and it has been anywhere from about 750,000 to 800,000. it has gone down in the last couple of years because decaux has been losing money to other advertisers in the area, like clear channel, who have digital on both the m.t.a. kiosks and the news