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[♪] >> >> please stand by for closed captioning.please stand by for captioning. >> sfgov, san francisco government television. >> please stand by for closed captioning. >> please stand by for closed captioning.

>> please stand by for closed captioning. >> good morning, the meeting will come to order. this is may 15th, 2019, the regular meeting of the budget

and finance committee. i am sandy fewer, the clerk is the lovely linda wong. i would love to thank sfgov tv for broadcasting this meeting. madam clerk, do you have any announcements? >> yes, please silent cell phones and electronic devices. any copies of files to be submitted to the clerk. the board of supervisors agenda, unless the device stated. >> madam clerk, can you call item number one. >> a lease extension option for the property located at 520 jones street, june 1st through may 31st, 2029 for a total annual base rent of 1 million. >> thank you very much.

we have miss claudia here from the real estate commission. >> thank you. for your consideration is a resolution authorizing a ten year option to extend the term of the lease at 520 jones from june 1st, 2019, to may 31st, 2029. it is used for 75 single resident occupancy rooms, plus about 9 rooms for tenant services at pacific bay inn. the department of homelessness and supportive housing has jurisdiction over the use. tenants include individuals with a history of homelessness and may have a disability related to mental health, aids or h.i.v., an substance abuse. the city gave written notice of their intention to exercise the first option to extend the lease.

unfortunately, the landlord failed to provide notice to the city of the new rent amount within 30 days of the city's notice option as required by the lease. real estate followed up and on april 2nd, actually provided the landlord with the rent amount they believe should be paid based on the formula set forth in the lease, using 51% of the monthly allowance for a zero bedroom rent unit in the city in the most recently published hud governmental index. so there is no real negotiation on the rent price. it's approximately $1 million for the first renewal year. on april 19th, 2019, the parties executed a letter agreement regarding the amount of rent which commenced. the lease expired on april 30th

and we have been on rent holdover for one month, but it's lower than what would be paid under the new extended term based on the government rent index. the city will continue to pay all utilities and services in the annual rent adjustment will be between 2% to 6%, dependent on the c.p.i., which has been averaging around 3%. we agree with the budget and legislative report and recommendation and urge you to move this recommendation first with a positive recommendation. should you have any programming questions, g.g. whitley is here to answer them. thank you. >> thank you very much. colleagues any comments on questions? seeing none. >> good morning chair fewer and members of the committee. this would improve the first of two ten year options to extend

this lease through 2019. it's for 75 supportive housing units. the rent includes by formula in the original lease agreement, based on the formula, the first year of rent will be $1 million as we show on table 2, page 4 of the report. it will go up between 2% to 6% per year. we expect an increase of 3% a year, for a total cost of 2.2 million over the ten year term and we do recommend approval. >> thank you very much. is there any public comment on this item? seeing none, public comment is now closed. i like to make a motion to move this to the board with a positive remitted -- recommend takes. madam clerk, can you call item number 2. >> a resolution on a multihou multihouse -- multifamily

housing revenue notes, on a 30 unit multifamily housing project. >> joan mcnamara. >> good morning, my name is joan and i'm a senior project manager at the mayor office of housing and community development. i'm here to present on item 2, a bond issuance to fund the acquisition and rehabilitation of abel gonzales, an existing 30 unit affordable housing for seniors located at 1045 capp street in the mission district. transactions fundamentals have not changed since september 2018. it's still a conduit financing with no recourse to the general fund. 29 of the project's units will

serve families earning no more than 50% a.m.i. and one unit with a household earning of no more than 80% a.m.i. with income averaging, and this is acceptable. they continue to be in compliance to prevailing wage and l.b.e. requirements. the developer has secured a debt limit allocation amount from sidlac. the financing team has developed the substantially issuance document with the city attorney and outside accounts, and that's what is in your package before you. the financing team is on track to close this transaction by the first week of june. the rehabilitation is expected

to be completed in august of 2020. on behalf of the project's sponsor, mission housing development corporation, i would like to thank you for your consideration here today. i look forward to your continued support. i'm joined today by john lovell of mission housing development corporation in case you have any questions for me or mission. >> thank you very much. colleagues, any questions or comments? there is no, i do have one question. my one question is so, how do i get this in my neighborhood? >> how do you get this? >> okay, me too. >> because this is needed in my neighborhood. having posed that question, i think that's a longer conversation that we should follow up with. >> right. >> madam clerk, i would like to move this to the board with a positive recommendation. any members of the public would

like to comment on this issue? seeing none, public comments is now closed. now madam clerk, can you please call item number 3. >> an ordinance about the public works code for a temporary street space occupancy permit on may 11, 2019 to promote small business week. >> and we have dominica donovan. good to see you again. >> chair fewer, supervisors, thank you so much for having me. i am the senior policy analyst and small business commission secretary. last week, san francisco celebrated its 15th annual small business week and for the 13th year, concluded with celebrating shopping and dining in the city's merchant corridors. this has been an effort led by the district merchants and the office of small business, and this is impossible without the continued support of the board

of supervisors for a permit waiver. the fee waiver seemingly nominal has allowed our businesses to showcase their products and services through sidewalk sales, contributing to the economic vitalities of our corridors. last saturday, nearly all districts participated, totaling in $18,284 potentially waved in fees. i have a list of the number of bloc blocks that participated. everybody though this event has passed, the legislation doesn't include a retroactive date for the fee waver for the events this past saturday. i would like to know that it includes district 8 and district 10. the small business commissioner

would like to thank supervisor brown for sponsoring this legislation and public works for their annual partnership, especially director and his team. the office and the commission always appreciates the support through this annual fee waver, as do the merchants association, so i look forward in participating in the event each year. it's thanks to your support that they are able to. >> thank you very much. colleagues any questions or comments? seeing none, let's open this up for public comment. would anyone in the public like to comment on this item? seeing none, public comment is closed. i would like to move this to the board with a positive recommendation. if we can take that without objection. thank you very much. madam clerk, please call item number 4. >> the real property located at 70 oak grove street, amending

the first extended term to may 31, 2019, with an additional 35 year option to extend, for a base rental of 479,000. >> we have claudia here from the real estate division. >> good morning again, for your consideration, as a resolution authorizing basically three things, the exercise of a five year option to extend the term of the lease at 70 oak grove from june 1st, 2019, to may 31st, 2024. it provides a third extension of five years. it revises or basically corrects an administrative error in the lease, which will change the ending date from may 30th to may 31st, 2029. the premises has been leased by the city since 2004 and we exercise the first extension option in 2014.

it's occupied by the san francisco sheriff's department. it includes incarceration programs, the sheriff's work alternative program, the five key charter schools are there and there are some administrative offices. the current rent is $44 a square foot and an appraisal was formed at $53 per square foot. an annual rent for foregoing some tenant improvements, including recarpeting and repainting the premises, which is required every extension under the original lease. the sheriff's department indicated there is no need for repainting and recarpeting at this time. the rent is about 90% of fair market rate for similar space in the city.

there will be no annual escalations in the rent in the five year extended term. the sheriff's department will be responsible for all utilities and services at the site. we agree with the budge and legislative analyst report and recommendation and urge you to move this resolution forward with a positive recommendation. chief deputy paulson and krispen are here if you have any questions. >> thank you, can we have a b.l. a. report. >> they entered in 2004, and it was most recently approved by the board of supervisors in 2014, but before you today is emphasizing a five year option from extending the lease to 2024 at basement at $479,000 per year. this is confirmed as 90% of fair

market value from an independent appraisal. on page 9, table two of our report at 2.4 million. this lease also adds an additional five year option to extend -- let me make sure i'm not confusing my leases here, it add an option to extend the lease through 2029. it's not in the original lease. it would be the option for the board of supervisors' approval. >> thank you very much. any members of the public would like to comment on item number 4? seeing none, public comment is now closed. i like to make a motion to move this to the board with a positive recommendation if we can take that without objection. thank you very much. madam clerk, can you call item number 5. >> item number five, a lease for

the portion of the equipment room at 1 market street, at an annual -- sorry at an initial annual rent of 185 thousand or the monthly base rent of 15 thousand, with 3% annual adjustments there after. >> thank you very much. we have claudia from the real estate division. >> good morning again. the city currently owns and operates 2800 megahertz communication systems. the first is an emergency radio system used by police, fire, and other emergency management agencies for first responders in the field to communicate with each other and dispatch centers. the second system is used by public works and public agencies for their daily operations. the department of emergency

management and the department of technology are currently upgrading and replacing the current system and are combining them into one system. the new system consists of ten radio communication sites and primary dispatch site designed to provide radio coverage throughout the city and san mateo county, especially during an emergency event. these are sites that the city has telecommunications, equipment, and towers on for years. real estate has brought a few of them before the board and they have all been approved. one market plaza is one of the original sites and one of the ten communication radio sites needed for coverage of the city. they will replace equipment and batteries, and antennas and microwave dishes. the resolution for your consideration authorizes a 2nd amendment to the original lease between the city and now owner, landlord, p.p.f. paramount one

owner. it extends the lease until may 31st, 2020, extending the lease through 2030. the lease has been on hold since 2013 when the former director of property offered a letter of intent to extend the lease under certain terms. the management company changed and negotiations continued. in 2015, sfmta added equipment to the site. shortly after the board approved the 800 megahertz project. with all the new equipment and additional square feet, the two parties negotiated aholdover rent and rent that will have basically continued and would have lapped -- lapsed in 2020.

that's why there is a question to extend the lease to may 2020. the parties agreed to a holdover rent, they agreed to a 3% annual adjustment which would continue through the new term. starting in june 2019, the rent will increase 3%. both the former director of property and the current director of property says the lease is at let's than $45 per square foot, which means no appraisal is required. telecommunication leases are not usually rented on a square foot basis, but a used space, saying they look at the number of towers, antennas or microwave

dishes. they look at how much equipment you have, where exactly on the building is the equipment, on the side or on the roof. all of those considerations are taken into account when determining a rent for a telecommunications lease rather than an office lease, which goes by square foot. i will also note that the city has over 20 antennas on the roof and 2 radio rooms. in conversations with a broker, i was told that there are no similar leases in the city because no one has that much equipment on top of a roof in downtown or on a building such as one market plaza. other city leases on private property, that we have on private property buildings and one at 564 market street, which is at $41 per square foot. if i had to calculate it out, we

would be be at $26 per square foot. we're below fair market value. the department is still responsible for their own ewe utilities. we urge you to approve with a positive recommendation. mr. christopher chamberlain is here if you have any programming questions. >> thank you very much, can we get a b.l.a. report please. is this to approve the lease for one year, through may 2020, and then two five year extensions to may 2030. the city has been at this location since 1997. in 2015, the m.t.a. was added to this lease. originally it was just other telecommunicati telecommunication equipment and the rent went up at that time

and the discussions we had with real estate over the negotiations of this lease, it's true that it looks different than how leases are described in the admin code, in terms of requiring appraisals for fair market value. it's a little bit difficult to evaluate the cost of the lease based on square footage, because this is only 700-square foot. there are also coasts on how they stretch their leases for the antenna and other equipment. they did have cbrb go out and find comparable rent. we did receive the report from c.b.r.e. and we consider this to be a reasonable rent for the first year of the lease. there's a 3% per year increase in the rent over the term. it would be about 2.4 million

over the 11 years and we recommend approval. >> thank you very much. colleagues any questions or comments? >> i do have one question, so it's not about the use of this because i think we made the case that we need to use this rooftop space to put a whole bunch of stuff on it. but, this is in violation of the administrative code that says the approval of a term of -- because it's been a holover for so long, my question is this is a holdover of more than one year, which is in the administrative code, but this is a holdover of many, many years. what exactly is the criteria for a contract like this to be held over? >> so, i'm not going to throw the former director under the bus, but i took over this lease last summer when the former director left.

my understanding of why there were so many difficulties is that one that the party we were negotiating with changed and then they changed again because the management company changed, so rather than recreating the wheel, he wanted to keep the wheel the same with several different parties. i think our policy, there is no formal written policy, that holdover rents at times, and the earlier one, i forget which one i just did, can be advantage -- advantageous to us. fair market rent is so much, holdover rent can be 200% more, can be lower than the fair market rent. that is advantageous to the city and actually gives us an edge in negotiations with the landlord. so, we want to keep a holdover

rent as long as we can, and they want us to get to a new fair market rent, which is higher. it's certainly not real estate's policy to have a holdover go this long. if at all, it would be used during negotiations, if we can't come to an negotiated extension or renewal lease. it's a useful tool to use to get the landlord to come to the table. so, i think is why the administrative code gives approval for one year, because that would seem to be ample time. >> yes, holdover rents are month to month, and not to get into semantics, but it can go on the it's lower than 15,000 or whatever it is per months, and it can't go over ten years, but i agree, we shouldn't have allowed this to go on as long as it did. our policy is maybe a few months

at a time. certainly we want to be in leases and we usually want to be in leases that are more than a year at a time. >> how many holdover leases do you have now? >> i do not know. >> is it possible to find that number or any other ones in violation of the administrative code? >> i can fine both those items. >> should i continue this item until the next meeting so you can bring forth that information or do you think that you will be able to e-mail our offices, everyone in this committee about two things, one is how many holdover leases you currently have and how many do you have in violation of the administrative code. >> i can certainly give you those numbers to the second, although i know it seems like anything that's a month to month, that it goes over a year would be in violation. i don't know if that's necessarily the city attorney's position, so i can't comment on that, but i certainly can get you those two numbers before next week and i wouldn't want

this particular lease to bare the brunt of being continued because of my failure to not know those numbers. >> okay, thank you. i'm going to request that you actually e-mail from your office that there are three offices with that information, and let's open this up for public comment. are there any members of the public that like to comment on this item. seeing none, public comment is now closed. i would like to move this to the board with a positive recommendation. can we take that without objection? thank you very much. >> there are no further items. >> thank you very much. this meeting is adjourned. [♪] .

>> working for the city and county of san francisco will immerse you in a vibrate and dynamic city on sfroert of the art and social change we've been on the edge after all we're at the meeting of land and sea world-class style it is the burn of blew jeans where the rock holds court over the harbor the city's information technology xoflz work on the rulers project for free wifi and developing projects and insuring

patient state of at san francisco general hospital our it professionals make guilty or innocent available and support the house/senate regional wear-out system your our employees joy excessive salaries but working for the city and county of san francisco give us employees the unities to contribute their ideas and energy and commitment to shape the city's future but for considering a career with the city and county of san francisco >> this neighborhood was livedco for approximately 22 years. >> yeah, like 21 years. >> 21 years in this neighborhood. >> in the same house. >> we moved into this neighborhood six months after we got married, actually. just about our whole entire married life has been here in

excel. >> the owner came to the house and we wanted to sell the house and we were like, what? we were scared at first. what are we going to do? where are we going to move into? the kids' school? our jobs? >> my name is maria. i'm a preschool teacher for the san francisco unified school district. >> my name is ronnie and i work in san francisco and i'm a driver from a local electrical company. >> we went through meta first and meta helped us to apply and be ready to get the down payment assistant loan program. that's the program that we used to secure the purchase of our home. it took us a year to get our credit ready to get ready to

apply for the loan. >> the whole year we had to wait and wait through the process and then when we got the notice, it's like, we were like thinking that. >> when we found out that we were settling down and we were going to get approved and we were going to go forward, it was just a really -- we felt like we could breathe. we have four kids and so to find a place even just to rent for a family of six. and two dogs. >> we were going to actually pay more for rent and to own a house. >> it feels good now to have to move. it feels for our children to stay in the neighborhood that they have grown in. they grew up here and they were born here. they know this neighborhood. they don't know anything outside san francisco. >> we really have it. >> we'd love to say thank you to the mayor's office. they opened a door that we thought was not possible to be

opened for us. they allowed us to continue to live here. we're raising our family in san francisco and just to be able to continue to be here is the great lesson.