i don't have the right to reject the older leases. so it's a variety. i could write a memo to clarify. so i'll do that. >> one more thing, an update on the butterfly space. i think we approved that lease a while ago. i walk by all the time and not seeing activity. >> we've been trying to get them to you, trying to get them in front of you in october, but absolutely, an update. >> any other news business. >> motion to adjourn? >> second. all in favor, adjourn.

>> good morning everyone. the meeting will come to order. this is october 2nd, 2019, regular meeting of the budget and finance committee. i'm sandra lee fewer joined by supervisors catherine stefani and rafael mandelman. our clerk is linda wong. i want to thank sfgov tv.

do you have announcements. >> pleaitems will appear on october 8th board of supervisor agenda. >> thank you, item number one? >> resolution of amended for the java house restaurant and increasing the monthly base rent to 4,000 and no change to the initial term through august 31st, 2023. >> i believe we have mark to present today. >> madam chair, chair members and board members, i'm the assistant deputy director of real estate and development for the port of san francisco. the item before you today regards java house restaurant, a

small restaurant at pier 40 1/2 located next to south beach harbor. the java house restaurant is a long standing port restaurant which has been operated by the family for over 33 years. in 2006, by their daughter. the java house currently operates under a 15 year lease with the port that expires august 31st, 2023. the original lease covers approximately 14,090 square feet. the original lease provides for the port to receive the greater of guaranteed monthly based rent or percentage rent. the current base rent is $3,314. the percentage rent is set at

7.5% of gross sales for food and beverage. for the period ending 12 months, the 12 month period ending may 2019, the java house reported average monthly gross sales over $17,000, which did not result in percentage rent being paid to the board. percentage rate has not been paid to the board for quite some time under the lease. also, pursuant to the current lease, java house was required to make capital improvements of at least $346,000 to the facility. due to personal, family issues and difficulty in raising financing, the java house has not been able to complete the capital improvements currently under the lease. these are the signs of a struggling operation which is having a hard time making ends

meet basically. in the latest phase of ongoing dialogue with the port regarding coming into compliance for capital improvements and overall desire to improve the operational performance of the restaurant, the tenant has approached the board with a proposal to restructure ownership and bring in a new investor. under this proposal, the entity would complete the previously required capital improvements and construct an addition to allow outdoor seating and alcohol sales and to make amendments to the lease which improve the financial metrics to the port and provide the tenant with an initial lease term. to that end, the owners of the java house have engaged in negotiations to sell the original lease to a new entity which the current owners retain 15% ownership stake. the new entity would be called

frankie's java house, llc with the owner being a well known business man associated with the insurance industry. the frankie's proposal seeks to resolve the current issues related to the completion of capital improvements and reposition the restaurant into a viable business enterprise. the proposed amendment would require them to make a capital investment of no less than $737,000 into the facility and includes the previously not completed improvements of $346,000. he is willing to condition the extension of the lease on the successful completion of the capital improvements first and to provide a personal guarantee for the cost of all the construction. upon 100% of construction and completion of capital improvements, which must be completed in one year of

commercement date of the amended lease, frankies has the right to extend the lease term for 10 years. the direct benefits to the port are the base rent increased to $4,000. the increase capital investment from the original $346,000 into the facility to $737,000 into the facility that also includes an expansion which doubles the seating capacity of the restaurant. so now that 737,000 is put toward an improvement that actually grows the business, creates more sales and hence brings more back to the port. the port will receive a 12% of

the proceedings of the sale, which is approximately $63,000. the 12% was negotiated up from 10% originally in the lease. that was negotiated up from 10 to 12. and finally the port will receive $51,000 as a penalty from the original tenent for not completing the tenant improvements in a timely manner on time. the port is 100% in accord with the budget analyst report and supportive of it. if there's nothing else, i have -- i'll be here for questions and i have a representative from the tenant to answer questions also. >> thank you very much. colleagues, any questions or comments, if not, let's hear from the ble please. >> good morning chair fewer and members of the committee. this resolution approved amended and restated lease between the board and a new buyer frankie's

java house, llc for the java house location on pier 40 as the representative from the port stated, this would set rent at $4,000 a month in the first year increasing subsequent years and provide 7.5% rent on gross sales. the new buyer would be required to put in about $737,000 in tenant improvements. if they put them in within the first year, they do have the option to extend the lease by an additional 10 years from 2023 to 2033. we summarized the rent component on table 2 page 4 of the report, it would be about $1.4 million to the port over the 10 years. we want to call out, this is a sold force lease. there was not a competitive process to select the tenant.

there is a port retail policying that allows for sole source if it's a tenant in good standing and financially reasonable to do so. we summarize that on page 5 of the report. the current tenant couldn't be considered a good tenant in standing, but the assumption if they make the improvements and get the additional 10 years, it will be a benefit to the port, because it's consistent with the port's retail policy, we recommend it. >> let's open this up for public comment? seeing none, closed. i have one question. just for clarification, so it looks as though there are 12 years left on the current lease. this started in 2007, is that correct? >> yeah, it expires in 2023. >> so, they would do

improvements and if they do it within a year, they have the option to actually extend it for another 10 years. >> correct. >> would that extend it not to 2023 -- >> but to 2033. >> at that time when they renegotiate -- have the option to extend it for another 10 years, a re-renegotiating then, another rental fee? >> you mean after the 2033? >> so if in a year, they decide to -- we offer them the 10 year extension and then -- are we then negotiating at another rate for the additional -- >> what happens when they exercise the -- if and when they exercise the option, the base rent would rachet up to

basically 85% of the percentage rent experience for the past three years. so there's a racheting up and that also happens in year -- well, year five of the option. so half way through the option, there's a market -- it's a market to market adjustment. so the lease constantly goes up with the market. >> i think you mentioned, i could be wrong, 15% of ownership will be with the original owners or leasees, is that correct in. >> yes. >> if they extend it for 10 more years after the 2023 date, would 15% of the ownership still be -- would we still see the 15% of ownership is with the existing tenant now? >> that's probably no guarantee, if the person may sell out at some point. it's a partnership ownership. so it's hard to predict what would happen. >> there's no requirement.

>> correct. >> this has been in the family hands for so long. this is the kind of thing that we actually -- this hand-off, of a struggling business, that is an institution in san francisco. i think it has been recognized as very much beloved institution along our waterfront and the family has invested so much into the building of this, the name and also i think some of the great affection that san francisco has for the java house, right? so my question is just about the 15% ownership because it would be really nice if they could continue to be part still of what they originally developed. we are losing so many of these institutions in our neighborhoods and it would be nice to see that the original owners would still have 15% ownership. that's the only reason i ask. >> and i think they -- they have experienced personal family

difficulties, you know, the spirit has gone away a little bit but they still want to hold on and be a part of it. >> kind of nice. thank you very much. no more public comment. no questions or comments from colleagues, i would like to move it with a positive recommendation to the board and we can take that without objection. thank you colleagues. madam clerk. >> resolution approving bond or loan for california municipal authority not to exceed 65 million to refinance outstanding debt and refinance the acquisition construction and improvement located within the city owned and managed by healthright 360. >> and we have michelle from the office of public finance. >> thank you very much. good morning. from the controller's office of public finance. thank you for considering the item today.

and in attendance, representing the healthright 360. he can speak in more detail about the project if there's specific questions about that. just as a reminder for you and the public, the tax and financial act allows the tax exemption on interest of certain types of debts. in this case, proposed financing through the california municipal authority through which san francisco is a participating member. notes and bonds and certificate of depreciation. this resolution is before you because federal tax law requires that the governor body in which the project is locating approve the finances after providing opportunity for a public hearing before bonds can be issued on tax exempt basis. the city and county of san

francisco is not obligated for payment on the bonds. hearing notice was published on september 6th. the public hearing held at the office of public finance on september 16th and no comments from members of the public were heard or received. i'll give you background on the borrower. healthright 360 arose out of a merger between two clinics. they started in the 60s to serve adolescences and young adults and opened in 1967 as the first free medical clinic in the country. they were an innovator to giving healthcare services to those who could least afford it under the guiding principle that healthcare is a right and not a privilege. it was to help homeless and

runaway adolescences. today it treats people with mental health and substance abuse problems at various centers throughout california, including prison treatment programs and providing drug and alcohol treatment and mental health services for people transitioning back into their communities. like the free clinics, they have served people who are underserved, homeless and those with h.i.v. and aids. they merged in 2012 and have subsequently added additional clinics and programs that serve san francisco to its portfolio, including asian american recovery services, lion martin health services and women's community clinic. so the project, proceeds from the sale of the bonds will be loaned for the following purposes, to refinance all or portions of outstanding debt obligations financed and

refinanced, furnishing of clinics and treatment facilities at hayes street, buena vista west, haight street, coleridge all within the city of san francisco managed and owned by healthright 360, a california public non benefit corporation with residential treatment services in the city and equipping and maintaining such facilities may capitalize interest on the bonds and pay certain expenses incurred with the issuance of the bonds. they would issue the bonds to not exceed $69 million. bond council on the transaction, the bonds do not con constitute

a debt of the city. if there are questions, i'll be happy to answer and the borrower is here as well. >> that was very thorough. thank you. there is no b l.a. required on this. opening up for public comment. any public comment on item number two? seeing none, public comment is closed. colleagues, any questions or comments? seeing none, i would like to move it to the board with a positive recommendation. thank you good to see you. thank you madam clerk. call item number three. >> resolution retroactively approving the contract for electric monitoring program for term of three years from august 1st, 2019, through 2022 with two one year options to approve. >> we have the sheriff's department here. >> good morning supervisors.

i'm here requesting retroactive approval of a contract we have with sentinel. we were here in july and this body approved the program scope and legislation today approves the contract as a whole, not simply the scope. otherwise it is unchanged. but still i'll give program history. electric monitoring program to provide alternatives to incarceration. fee structure was originally based on ability to pay. in february of 2018, the sheriff waived fees for sentenced participants and in february 2018 an apellet court ruling required courts to consider ability to pay and non monetary alternatives when

setting bail or release conditions. this resulted in a significant increase in the number of people who came on to and into electric monitoring as ordered by the courts. monthly participation increased from about 100 before the ruling to roughly about 400 per month now. and as i said, we were here in july, this body approved the program scope for the contract to begin august 1st and we're here today simply to approve the contract as a whole, which we should have done back then. i have two other slides that -- before you that show the growth and monthly participation that resulted from the appellate court ruling. fees went up, we struggled with this for the budget last year but have budgeted for it in the current year. the mayor's office, mayor's

budget office was generous in their funding of this, thank you. and finally this last slide before you, just shows the increase in releases on alternatives. back in september, late september 2016 we had total justice involved population of about 2150 of which 1350 were in jail and about 800 were out on some sort of alternative. in september 2019, the total number of justice involved people is up to over 2700, the jail population has gone down by about 75, but the individuals out of custody on pretrial release or sentenced to alternatives has gone up. that means that our -- the percentage of people on alternatives has increased from 37 to 53% which is higher than you'll find in other counties in the bay area.

>> thank you. yes? supervisor stefani. >> thank you chair fewer and thank you for the presentation. can you talk about the success rates of electric monitoring? have you noticed anything -- obviously we know why the number of people on electric monitoring have gone up, but i'm just wondering if there's been problems and if you could briefly touch on the success rates? >> well, there's been quite a bit of -- there have been news reports about some of issues that have come up, but overall, for people who are put on some form of pre-trial release, over 90% show up to court. i think overall the program has been successful. continues to be successful. >> and what happens -- i know it says something about the

sheriff's department staff will respond and enforce compliance of the program's rules. if -- in that 10% situation, what happens then? >> then we have a warrant services group and the warrant services group responds as needed. >> okay. >> to people who are not responding in the way they should. >> thank you. >> any other comments or questions. bla please? >> yes, the proposed resolution retroactively approves the program as stated -- excuse me. as was stated, the board did previously approve the terms and conditions of the program but not the contract itself. it is below the charter threshold for board approval but the california penal code does

require approval. it would be for three years with a maximum amount of 3.4 million. there are two, one year extensions subject to board approval if they exceed the $3.4 million maximum. we recommend approval. >> i'm sorry. thank you very much. supervisor mandelman. >> thank you chair fewer. this is a little outside the scope of the contract, but i'm curious if the sheriff's department has thoughts on what accounts for this pretty significant increase in the estimated job population without alternatives to incarceration. you don't have to answer that. it's not related to the contract. >> i think actually if i were the one answering -- asking the question, it would be why is the justice involved population going up so much. i think the fact that

alternatives to incarceration have gone up speaks to the city's commitment to alternatives to incarceration. but the increase in the total justice involved population? i'd speak to any number of issues but i would be -- my expertise is finance. i'm not sure i would want to venture into that area. >> i didn't totally expect you to answer that. but it is a marked increase. thank you. >> certainly. >> i think that there are many questions that i have about this and just about the program in general and why are there some people who can be released without it and why courts are requiring it and what is behind that and have we done analysis or advocacy for those who don't need to be electronically

monitored who are employed, have families, stable. i think it's a larger question and the question that supervisor mandelman had, i don't think you have the answers to that today. but it think it calls for a larger and deeper discussion about the demographics of the people released and the ones not released and for what offenses and the outcomes, too. anyway, today i know you are in charge of finance, open up for public comment. any members of the public like to comment on item 3? seeing none, it is closed. i will move to the board with a positive recommendation and take without objection. thank you. good to see you again. madam clerk, item 4. >> resolution authorizing the execution and acceptance of the first amendment to a lease buy between lexington lion of san francisco and the city for the

real property at 350 rhode island street north facilitating the provision of rent credit to the city in consideration of waiver of real estate afforded to the city under the lease. >> thank you very much. i'm going to make a motion to continue the item but before i do that, i would like to open for public comment. any members of the public want to comment on item 4? seeing none, it is closed. i would like to make a motion to move -- this item to the next meeting next week. thank you madam clerk. thank you. madam clerk, call item 5. >> resolution approving easement agreement between pacific gas & electric company for the exchange of easement areas at airports west of bay shore for the replacement of a natural gas

pipeline. >> so we have deanna with us today. i'm sorry, my notes say kathy wagner. please. >> the airport is requesting approval of the quick claim agreement with pg&e over the airports west of bayshore property. the original easement was conveyed in 1953, it includes a natural gas line, in accordance with u.s. department of transportation departments concerning pipeline integrity. it's necessary to bring the facility into compliance with the federal mandate. a 3700 foot section of gas pipeline will be replaced installing alignment. i'm happy to answer any questions. >> thank you.

there's no bla required on this. open for public comment. any members of the public want to comment? seeing none, it's closed. i would like to make a motion to move to the board with a positive recommendation. thank you madam clerk. item 6. >> item 6, resolution approving a 2011 lease agreement between the city and el al israel airlines limited, effective the following day of the first month and expire june 30, 2021. exclusive use space and joint use space and rent and landing fees. >> thank you very much. >> the airport is requesting your approval of a new lease with el al israel airlines as a significanttory to the 2011 lease agreement for approximately 1 year nine months. through june 30, 2021. this agreement is the mechanism

that allows airlines to provide flight operations and rent terminal space at the airport and has a common set of lease provisions such as rent and fees and terminal space and provides legal framework to make an annual service payment to the city. the airport projects 1.1 million in exclusive space rent over the term of the lease and 889,000 in joint use rent which is determined annually by formula. i'm happy to answer questions. >> thank you very much. can we get a report please? >> yes, the proposed resolution approves adding el al israel airlines to the agreement at the airport, this is the agreement that all airlines sign on to that are operating at the airport, they started operating under permit of may this year. this lease agreement sets the

terms for rent and for landing fees and as you see in table 2, page 15 of the report, rent over the remaining term of the lease agreement through 2021 is $1.1 million in addition to allow paying landing fees to the airport. there will be the total lease agreement for all airlines does expire in 2021 and a new document coming forward to the board. >> any members of the public? seeing none, it is closed. any questions or comments supervisors? >> only to say if my grandma were alive, she would be excited about this item and i want to move forward. >> we can take that without objection. thank you very much. madam clerk any other items? >> no other items. >> this meeting is adjourned. >> thank you. ♪

>> when i look at an old neon sign that's working or not working, i feel the family business that was in there. >> since 2009, citywide, sf shines, has supported businesses and sites like the ones that receive new neon signs. >> you know, sf shines is doing

an amazing job to bring back the lighting and the neon glow of san francisco. >> sf shines is such an amazing program, and i can't think of another program in another city that gives matching gunned funds to store owners, mom and pop owners, and if they've got a neon sign, they've really got a great way to advertise their business. >> this is a continuation of the sf shines program. >> focusing other neon signs is relatively new to us. of the seven neon signs, we've invested about $145,000. >> a good quality sign costs more, but it lasts infinitily longer. as opposed to lasting five

years, a good neon sign will last 15 to 20 years. >> in san francisco, the majority of neon signs are for mom-and-pop businesses. in order to be able to restore these signs, i think it gives back to your community. >> part of the project has to do with prioritizing certain signs in the neighborhood based on their aesthetics, based on their current signs, and base on the history. in the time that we've been here, we've seen a number of signs restored just on eddy street. >> there are a number of signs in the tenderloin and many more that are waiting or wanting to be restored. i have worked with randall and al, and we've mapped out every single one of them and rated them as to how much work they would need to get restored. that information is passed onto sf shines, and they are going

to rank it. so if they have x budget for a year, they can say all right, we're going to pick these five, and they're putting together clusters, so they build on top of what's already there. >> a cluster of neon signs is sort of, i guess, like a cluster of grapes. when you see them on a corner or on a block, it lights up the neighborhood and creates an ambient glow. if you havy got two of three of them, you've created an atmosphere that's almost like a movie set. >> some of the hotel, we've already invested in to get those neon signs for people to enjoy at night include the elk hotel, jefferson hotel, the verona, not to mention some we've done in chinatown, as well as the city's portal neighborhood. >> we got the fund to restore it. it took five months, and the

biggest challenge was it was completely infested with pigeons. once we got it clean, it came out beautiful. >> neon signs are often equated with film noir, and the noir genre as seen through the hollywood lens basically depicted despair and concentration. >> you would go downtown and see the most recent humphrey bogart film filled with neon in the background. and you'd see that on market street, and as market street got seedier and seedier and fewer people continued to go down, that was what happened to all the neon strips of light. >> the film nori might start

with the light filled with neon signs, and end with a scene with a single neon sign blinking and missing a few letters. >> one of my favorite scenes, orson welles is chasing ririt rita hayworth with neon signs in the background. >> i think what the office of economic and workforce development is very excited with is that we'll be able to see more neon signs in a concentrated way lit up at night for visitors and most especially residents. the first coin laundry, the elm hotel, the western hotel are ones that we want to focus on

in the year ahead. >> neon signs are so iconic to certain neighborhoods like the hara, like the nightcap. we want to save as many historic and legacy neon signs in san francisco, and so do they. we bring the expertise, and they bring the means to actually get the job done. >> people in tenderloin get really excited as they see the signs relit. as you're driving through the tenderloin or the city, it pretty much tells you something exciting is happening here. >> knee an was created to make the night more friendly and advertise businesses. it's a great way of supporting and helping local businesses. >> there's so many ways to improve public safety. the standard way is having more eyes on the street, but there's other culturally significant ways to do that, and one those ways is lighting up the streets. but what better way and special way to do that is by having

old, historic neon signs lighting up our streets at night and casting away our shadows. >> when i see things coming back to life, it's like remembering how things were. it's remembering the hotel or the market that went to work seven days a week to raise their money or to provide a service, and it just -- it just -- it just