the department of emergency management declared this local emergency really to help us prepare better for the city to

coordinate and respond to a potential outbreak. the declaration of a local emergency allows for much faster mobilization of city resources, accelerated emergency planning, streamlined staffing and coordination across the city. it also allows the city to be reimbursed from the state and federal governments. and it raises awareness throughout san francisco about how everyone can prepare in the event that covid-19 appears in our community. also santa clara and san diego counties have taken the same action, similar declarations to bolster their preparedness. i'd like everyone to note that cruise ships visiting the port of san francisco come from domestic location, as well as from canada and mexico. the u.s. coast guard routinely reviews passenger records to document travel history of the vessel, passenger and crews, the coast guard has issued guidance on reporting it passenger symptoms, for passengers or

crew. additionally, the cruise line international association has implemented preventative measures for all cruise lines to limit potential exposure. the federal government has worked to contain the virus and the health department is monitoring hundreds of returning travelers. it's important to remember that the risk of the virus is based on travel history and contacts, not race, ethnicity, or culture. to stay up to date, please go to www.s fdph.org. i'll remind everyone in our city government, we have weathered other types of crisis before and the most important thing is to listen and stay up-to-date, not to panic or worry. but to instead stay informed and there will be more information as the situation evolves and our mayor is on top of coordinating the city and her departments and

working with all that -- we'll be providing resources to us. so please stay up to date and informed and know that you will have good information as it's available, so please keep an eye on www.sfdph.org. and that concludes my executive director's report. >> thank you. is there any public comment on the executive director's report? >> seeing none. >> request -- item 10-b, the port's fiscal year 2021 and 2021-2022. >> so moved. >> second. is there any public comment on the concept item?

seeing none, public comment is closed. all in favor? >> aye. >> resolution 2009 and 2010 have been approved. >> item aa request approval of the port's fiscal year 2020-2022 and 20212022 biennial capital budget. >> torch a, commissioners. i am traity, the port's deputy director for finance and administration. i'm here this afternoon to ask for the commission's approval of the port's capital budget for fiscal years 2020-2021 and 2021-2022. commissioners you had a number of questions for me and my staff two weeks ago. in response, we have provided you with additional information to help with your consideration of this budget request. that information includes a list of all projects that were

submitted for consideration in the five-year c.i.p., a list of currently appropriated capital projects with balances, a more detailed description of the forced ranking process, that staff used to select projects for the c.i.p. and additional information about the waterfront beautification fund. so to address the two final items, just to give you a little more information on how we prioritize projects for inclusion in the five-year capital improvement program. the deputies met as a group to review the projects. and we used a forced ranking process. and so what this was was every single project that we considered, we needed to decide whether that project was number one. when we came to the second project, is that project number one or number two. the third project. number one, number twoer or this

three, so on and we made our way through 49 projects. at the end of the process we came up with a ranked list. we ranked our life safety projects first as a group on its own. and then we reviewed and ranked all of the other projects and considered items such as the projects useful life, whether or not it had to possible to generate revenue, what the return on investment would be, the importance to the port's public trust, whether or not a project could feasibly be delivered and the urgency of that project. finally, just a little bit more information about the southern waterfront beautification fund. when staff reviewed the allocation to the beautification fund, we realized that the original appropriation request did not include a set-aside for the revenue we expect to collect in the southern waterfront over the next two fiscal years.

so, as a result, we revised both the capital budget request and the staff report to assume that there will be an additional allocation of $2.5 million over the next two years, to conform with the port's southern waterfront beautification policy. so those are the highlights of the additional information in and the changes that we made and i am glad to answer questions from the commission. >> thank you. can i have a motion? >> so moved. >> second. >> commission -- >> public comment. >> i'm sorry, is there any public comment on this item? we haven't had any public comment. [laughter] is there any public comment on this item? seeing none. >> i have no further questions, thank you. >> commissioner? >> i have no further questions. thank you for all of the

material that we asked for. >> i have no questions. again thank you. this is feasible. >> sorry. vice president? >> katie, i have got about ten questions here. [laughter] >> i thought i'd shake you up a little bit. i know how shy and you are. i'm good. i have no questions, thanks. >> thank you. >> katie, thank you so much. i want to thank you and your staff. because this is a lot of information. i know it takes a lot to pull it all together. and i really appreciate you adding the additional charts and responses to the items. and i just have a couple of questions. >> okay. >> and that is i'm -- so i guess what i was trying to understand is what was previously funded, if all of that has been completed or what is still

incomplete or what still needs more funding? so we've got a lot of charts. but it's hard to really figure it all out together. and so, i mean, we can do a one-off and you can just, you know, walk me through that later. and then so on -- so what we're funding this year is $84 million? 8877? >> no. >> go ahead. >> yeah. so for both fiscal years, for fiscal year 2020-2020, we're finding $55 million. in fiscal year 021-2022, yes that is -- >> so then the table three, with the proposed 2020-2021 budget,

$54,000,689 and $29,000,589. >> i'm just finding this in the staff report. >> this is table three. it doesn't have a page number. but it's before page 16. and after page 13. so it must be 14. >> so the $84,270,000. no. yeah. the 84278 is -- sorry,

commissioner. so it's off by 3.1. pardon me for a moment.

>> commissioner, the total amount that we are proposing to fund in the next two fiscal years, for all appropriated projects, is $84.278 million. that includes an additional $2.5 million for southern waterfront beautification. >> okay. so the chart on page 14 is the correct one? >> yes. >> okay. and then -- okay. so the attachment 1, where it has prior appropriations. what period is that over?

>> i cannot answer that question. so it's over multiple fiscal years. >> okay. >> so projects can be appropriated -- capital projects are appropriated and they carry over from year-to-year, the money rolls forward. and because of the transition of the financial system in 2017, it has become somewhat challenging for us to look back prior to fiscal year '17. >> okay. so -- so from this chart, these are projects submitted for capital funding. and this could be for like the last ten years? well, i guess from me it will be easier if the prior appropriation were for a period

certain, whether it's the previous year or the last two years. >> right. >> so we can really understand. i think what i was really trying to figure out is how do we do last year? as far as what was appropriated, what was completed, what still needs to be complete or, you know, that was really what i was trying to figure out. so this sheet leaves more questions than answers. [laughter] >> sorry to hear that. so at the beginning of the staff report, we do note the projects that we completed in fiscal year 2018-2019. >> i saw that. i saw completed projects. okay. and then -- but it was the appropriations. so i wasn't sure if these were all the projects from last year, with -- or if they were the projects projects from last year that had

remaining balances? so on page 4 of the staff report, we list six projects that we completeed in fiscal year '18-'19. >> okay. so what list are they on? >> they're just in the text. they're not in a table. >> got it. got it. so there's no dollar amount. there's no cost associated. but these were -- >> those are the projects that we completed. >> thank you. >> the projects that we note on page 8, in table 1, are projects that have been completed over some past potrero. -- past period of time, not necessarily in the past year. we as finance staff need to get a little bit better working with our colleagues in the engineering division to go

through and close out projects, when the projects are completed. unfortunately what happens now is when a project is complete and the funds aren't necessarily pulled out of the project and closed to fund balance. we need to just go through on a regular basis, probably on an annual basis to do that work to close outed funding. so the projects that are listed in table 1 on page 8 have likely been complete for some period of time. >> okay. okay. so i think it's -- for us who are not part of the finance staff, do not deal with this on a daily basis, when we see it two, three times a year. i think it's easier for us to be able to understand it if we can see a history, as well as a projection. but really understanding how we're doing with our projects. so the projects that we're

approving this year, so next year -- when and where will we see how those projects will progress. >> right. >> that's what's missing for me. that's what i was trying to get a picture of. >> okay. >> you know, how are we doing? and are some of these projects that we're trying to fund, were they previously funded or is this new funding? you know, just trying to understand the progression. so i'm -- okay. and then amador street sewer and pavement repair. it was appropriated some time ago. >> yes. >> is that a project influx or in progress? >> yes, it is. and i at some point may defer to my engineering colleagues on this. am score street is has received

multiple multiple over the last five years. in the most recent capital appropriation processes, we were reviewing am score. it became clear that we are still doing due diligence to understand what the total scope of that project needs to be. we've been working with d.p.w. it's a sewer improvement project. and it -- as we were as staff doing -- having a call for projects and then doing analysis on those projects, it became clear that am score street likely will need more money. but we don't know yet how much more. and so we chose for now not to include additional funding in the budget. >> okay. but that $7 million is still set

aside? >> yes, it is. >> we don't know how long it's been there? we don't know -- we don't know when we're going to use it? >> we can analyze how long it's been there. so we can analyze how long and what years that there was appropriations to am score street. the issue has always been the design on am score street. we need to do the sewer differently and the stormwater management differently. but getting an actual project design -- so this is a project that's been stuck in design for some time, getting a good design that the department of public works signs off and would accept am score one day as a city street, is where we've gotten caught off guard. so the design has continued to go on and with different types of solutions. but the money sitting there is similar to it sitting in fund balance, in that whether it sits in a project or sits in unappropriated fund balance, has the same result, more or less.

but i think what might be useful is to have a capital conversation and informational item, where we give you what you're asking for, which is to look at what was appropriated, what projects we funded last year and how they're going. and what projects are still open and into the closed. some of them are new projects, from a year or so ago. and some of them will be much, much older, like pier 35 substructure, where we've been thinking about that for years and waiting on an army corp match. i think we should schedule an informational item to dig into capital. it's a good time to do so. two budget cycles ago you funded a project management office and so we've been taking a lot of efforts internally to deliver capital more efficiently, with the small staff we have. so it's a good time to update you on what -- on the questions you're asking. >> right. that would be wonderful. and then my last question is south beach harbor.

>> yes, ma'am. >> and the $7 million. and just wondering if whatever we're going to spend this money on, would any of this be taken care of in the r.f.p. that's been put out, or with the resiliency? >> no. so south beach harbor has been set up as its own little enterprise within our -- within the port enterprise. so these projects are specific to the harbor and their needs for the marina and you're just about to get an informational report from the director of that marina. for pier 38 and 40r.f.p., that's a separate process to try to bring in private investment and repositioning of those piers. and resiliency is tackling other issues related to the seawall and flood on the line of the embarcadero. so these projects are related to providing an a-plus customer service to all of the recreational boaters, doing

maintenance and repair, dredging on the harbor, operationsself. and we've structured it so the money the harbor earns is the one the harbor spends. and they've -- i keep calling them "they." they're part of our family. we've applied the capital set-aside policies and discipline to make sure the harbor generates enough revenue to take care of itself. >> right. okay. i think that's all my questions. does anybody else have any questions? okay. thank you, katie. i really appreciate this. all in favor? >> aye. >> resolution 2011 has been approved. >> thank you so much, commissioners. >> 12a, informational presentation on the financial and operational performance of south beach harbor.

>> good afternoon, commissioners. my name is joseph monroe. i'm the harbor master of south beach harbor. >> joe, can the pull the mic right up to your mouth. >> i'm here to give you the presentation on the financial performance of south beach harbor. all right. south beach harbor is a full- service marina consisting of 700 disciplines. third largest in the bay. we have a guest dock, the south guest dock. we provide commercial access and also recreational access as well. slips consist of up to 30 -- excuse me. i'm sorry. 30 feet up to 100 feet. back in 1986, the harbor was constructed and managed by the san francisco redevelopment agency. and in 2012, the port of san

francisco assumed operational responsibility. in 2015, the commission approved transfer of assets and operation to the port. in april 2019, the transfer was finalized, when the cal voting documents were approved. some of the partnerships we have down in south beach harbor, south beach yacht club, that's a 500-member, all-volunteer club. they're known for their great races that they put on each year and they're known to draw up to 40 vessels during the summer. and they also provide a nice junior sailing program for the youth. and that really helps get our youth out on the water and hopefully provide us with new recreational boaters in the future. we also do work with the san francisco bay keepers. they specialize in outreach and education on keeping the bay

clean, which is very important. and they also put on an annual parade and a run in which they use harbor facilities. some of our operators that come down to the harbor, commodore, bay cruises and events and also horn blower cruises. we get into south beach harbor pier 40 shed, we have a number of on-shore tenants. some of those are spinnaker sailing and city kayak, boat washington, to name a few. actually have a knew photos i wanted to go over with that. okay. here we go. when the port took over management of the south beach harbor marina and pier 40 shed, the decision was made to have the department take over the tenant leases and management of the property. some of those improvements have been made over the last few years. and t-we updated and re-signed leases with all of the onshore tenants. we added a new alarm system with

cameras inside and out of the shed. we also divided the bay -- i'm sorry, the shed into bays to provide new space for new businesses along with adding new storage lockers for rent. here is a perfect example of some of our public access we have down at the harbor. right here what you see is the south promenade on the shed. there it overlooks the harbor, gives you a nice view and you can see oracle park. in the view. also if you are looking to the left toward the end, you'll see the bay bridge. it definitely provides a nice area for the public to come down and enjoy themselves, also providing benches and things that of that nature. if they want to walk out with their families, they can do that. we look forward to continuing rcbc improvements. some of those include resurfacing and adding

guardrails, so they can -- the public can further go around the back end of the pier 40 shed and enjoy that wonderful view. earlier we were talking about some of those projects that we're working on we have in the cue. one of those is a north guest dock. as you can see here, we need to go ahead and replace this dock. if you were down at the harbor any time over the last year or so, you'll see that the docks are actually not there. this is an old picture. but we hope to add 350-foot dock, while also providing a better commercial landing space for some of those cruise-ins, like the commodore and things like that. and also we plan on adding a kayak dock for public use. this project is estimated at around $3.5 million. here's another one of those important projects right here.

there's the baffle wall. the port maintenance team, the divers will be taking care of this for us. we were looking at the slide, you'll see that we have a lot of those panels that are off-level. so we need to raise and realign those panels and fill in the gaps to make sure that we get no more seepage of silt and build-up coming from the north side into the south side. you know, so once we do that, that will decrease the need to dredge, which is something we're also looking at. this project is estimated at around $300,000. right here one of the most important parts of this presentation is the financial slide that shows the progression from 2012 and 2013, moving all the way up to where we sit currently. since the port of san francisco assumed management of south beach harbor, several steps have been taken to streamline and stabilize the harbor financial

situation. in 2013, we increased the berthing fees by 22%, and we spread that over three years. we also had exodus come in and manage our insurance program. we increased the fees and on wait-lists and our landing fees. most importantly we were able to pay off the balance of a bond debt. since the port took over management of south beach harbor, we've gone from a net negative of a million dollars to a net positive $1.4 million, while also paying off that bond debt, which as you can see earlier in the presentation, it's very important that we put those funds back into the harbor. and provide a nice harbor, for not only the tenants, but the public that comes down to the harbor. so our goal is simple. we want to continue to enhance the harbor while maintaining our status as the top marinas in the bay and make sure that the harbor is providing for our

tenants and the public for years to come. this completes my presentation. and i am open for questions. >> thank you. is there any public comment on this item? seeing none, commissioner gilman? >> thank you for the presentation. and your great work to move it -- the operations forward, so we have positive cash flow going through. i have one question which i hope -- a couple of months ago, maybe six or nine months ago, there was some emails to the commissioners around issues around the restroom situation and the public restrooms at pier 40. i was wondering if that had been resolved? >> yes, ma'am. we are speaking on the restrooms inside the pier 40 shed or carman's? >> i thought it was within pier 40 shed? >> inside the shed we have the v.i.p. heads. and so those are -- you know, we have a code. if we're not using the code, we're using a key.

>> those are adequate for the tenants and they're feeling good about it? >> yes, ma'am. thank you so much for the preparation. congratulations again on moving forward. to a positive cash flow. >> thank you. >> thank you. commissioner woo ho? >> thank you very much. i think i have seen this really great journey since we first took it over and all of the issues and it seems like it's on a steady path. that's great progress. thank you very much. so i just want to correlate. because we just went through the capital plan and there was money that was previously spent on south beach harbor. you're talking about this $3.5 million. and then looking back at the capital plan, you know, we have $3.1 million. and part of it also, as i remember when we inherited this bcdc at the times i recall the estimated capital improvements, they insisted that we undertake was something like $10 million. so i'm just trying to understand how much of the bcdc requirement

have we met and how much of the proposed new improvements, that you mentioned in your deck, are part of the bcdc or are they in addition to the bcdc, to improve the south beach harbor? >> we're going to get you help, joe. [laughter] so i'm going to start it and diane ocean is going to help us with more. so we had -- the redevelopment agency had some unmet bcdc requirements on the break water. and we've been working with joe and with bcdc to change that permit requirements, to yield us better access to the facility. and diane ocean can come up and give an update on how the process is going. long and short, we haven't provided public access on that break water. but we're working with bcdc to change that requirement. come on up. >> that's not part of all of this funding that we're talking about? >> it is not. >> hopefully that $10 million

overhang is not the same as we thought it was? >> i'll have diane give you an update. >> good afternoon. >> my memory is correct, $1 million? >> absolutely correct. >> we are in the midst of a permit amendment request. and it would reduce the -- what we're basically proposing is that we put in more water recreation-related public access benefits, instead of the high cost pier apron public access, that was required under the redevelopment agency's permit. and so we are in the process of getting cost estimates for what would cost, which would be at a much lower cost point than what the original obligation was. and assuming that we can make sure that we have a financing strategy to cover those replacement obligations, our intention is to go forward and to square up our -- >> bcdc at this point sort of

receptive to our proposals? >> yes, they are. >> okay. that would be wonderful. >> thank you. >> and then i guess you can now answer the numbers that seem like different numbers i see here. you have $3.5 million. there's $3.1 million. what we spent already and what we have in the capital plan. so are the numbers all squared away the same, similar? >> so, commissioner, so the numbers that were included in the capital budget, that you just approved, are -- we are planning to appropriate over the next two fiscal years $3.1 million. that's for capital work at sought beach harbor. >> okay. so okay then going forward when we look at this income statement i guess, or financials, right now the capital improvements are not listed under the expenditures, right? these are just operating expenditures.

>> yes, that's correct. with the assumption that the net falls to fund balance and then is appropriated for capital work as necessary. >> before we get so excited that we have all of this extra cash, it's really totally used up? >> yes. [laughter] yes. the deferred maintenance need at the harbor will more than absorb the $1.4 million in net revenue. >> and in principle, i don't know that we've made a firm policy decision, but we are basically saying whatever we generate in net is being reinvested in south beach harbor and not diverted to any other capital projects? that's a policy that we have adopted, correct? >> that's how the port is managing the facility. i don't know if you have affirmatively adopted that policy, as a commission policy level. but that is how we're managing the harbor. and i do believe that when we discussed taking the facility from the redevelopment agency, we discussed the importance of paying down the debt and investing on that revenue and

capital to make sure that the facility continued to just be such a good value to the customers. but when we got the facility, it was getting into -- the life cycle where investment was going to become more critical. so we were very eager to pay down the bonds, so we would have adequate capital to keep the facility up. i don't think you've adopted a formal policy, the net revenue from the harbor supports the capital work at the harbor. that's how we're managing the operation. >> we've always asked periodically to get a sort of update, stand-alone on how south beach harbor operates in terms of -- and i think it's really great to see that we have paid off that loan, because that was sort of a -- sort of a middle stone around our neck when we inherited. it's great to see the negative numbers. we knew that when we inherited it, we were inheriting something negative and to turn it into a positive. my last question is technical.

if we have boats that want to come in that are over 100 feet, where do they dock? where do they go? so like if you have a super yacht come in. >> that's for joe and andre or dominick if he's here. >> yes. so we do have the south guest dock, which can accommodate on a transient or just a special excursion landing. it can accommodate those south -- a accommodate the vessels. for super yachts they have docked at other piers along the waterfront. so pier -- what comes to mind, pier 15, pier 35 north. if there aren't berthing conflicts at some of the cruise terminal facilities we can accommodate larger yachts there. then in the southern waterfront as well, at pier 50 and at the shipyard. >> okay. i don't know whether there's an opportunity for us to continue to attract them?

and i know in certain ports that are popular in the mediterranean, they make a lot of money off the docking fees. >> yes. i don't know if that's an opportunity for us to continue to think about that? >> we've had prelim discussions on it in the southern waterfront. >> the last question in the staff report, you mentioned 90% occupancy on the slips. and there's a wait-list. so what's the 10%? is it because you're waiting for people to -- how does that 10% factor in, the fact that you have a long waiting list? >> correct. we have about 25 transient slips. so we keep those open. and then not to mention we're still -- we have people that -- the slip fees rise, we do have some folks that are exiting the harbor. so we account for that by people that are exiting the harbor and people coming off the wait-list. >> so the 90% is really we are at maximum occupancy? >> yes, ma'am. >> the others are transient

slips. >> we're repricing every year now? >> we have. yes. we've set our c.p.i. and reprice every year. and joe with his team has instituted a fee to be on the wait-list to clean up that wait-list. when we started managing the harbor, there was no cost to be on the wait-list. and kind of no one ever left and the wait-list was very, very long. so with some of the changes in operation, i think the wait-list is smaller and reflects actual interest. and we have slightly more turnover since we've increased the rates to market. >> correct. >> thank you. >> commissioner makras? >> thank you for the presentation. no questions. >> vice president adams? >> joseph monroe, this is the first time i've ever seen you here. is this your first presentation? >> yes, sir. >> you did a great job. >> thank you. >> i noticed my years being a

commissioner, and herb on the -- and everybody on the staff, eyes just move or look at mike martin. just very -- they look that way. and definitely rescue them. i really appreciate the history. i didn't know at one time that redevelopment had owned it. and just the history is quite interesting. in your job as the harbor master, where do you see the port going, especially with the south beach harbor, like commissioner woo ho said like trying to get bigger ships in? is that something you think we can do and make more money? >> yes, sir. i definitely think that. when we do replace that north guest dock, a portion of that dock can be used for those larger vessels. and as far as where i see the harbor and where we're trying to push it, we definitely need to

push it on the more technical side. you know, stepping into the future, just with how we provide service to the customers. so if we can do that, especially with the younger crowd coming up, we want to make it easier for them. we just want them to be able to come out and just enjoy their vessel, you know. and make things easier for them, where there's technically when they're dealing with the office, administratively, things of that nature. >> you mentioned the yacht clubs, the gatekeepers, excursion operators. does this allow like kids from the community or school kids to come down and have access to the port and see these things? >> yes. definitely. so i highlighted the south beach yacht club. you know, every year in the summer, the entire summer they have that youth sailing program. and they get kids out and usually what i do is i'll go over and i'll speak with them

and kind of explain what i do. you know, because not only do we want folks on the water, but we still need folks on the technical side as well, because i know that i have friends and family that some folks that they don't know the operation of a harbor or what a harbor master is. so i try to educate them on that. >> okay. well, thank you. congratulations. >> thank you. >> on your new job. >> joe, thank you so much for this report. this is extremely encouraging. and good to know that the harbor is becoming self-sufficient, not totally. but becoming. so i want to thank you for all that you've done to make that happen. just have one question. that is regarding the boating loan. how much longer do we have that? or do we have to pay that? >> many years. [laughter] i think we have at least 20 years left on that loan. >> oh, really. >> yeah. redevelopment took a 45-year

term with cal boating. >> wow! nice. okay. >> andre is whispering behind me, 2036. 15 more years. >> okay. that's not as bad. thank you. i just want to say i think joseph is doing a phenomenal job at south beach harbor. and not only is he the harbor master, he sets up tables and chairs and does whatever needs to be done to make everyone happy. i appreciate your preparation. >> thank you. thank you. >> clerk: item 13 a, request authorization for staff to enter into a 99-year ground lease for parcel e2 at the praised value of $5 million. >> good afternoon, commissioners. rebecca beicini. i direct projects at the port. happy to be providing the follow-up to the february 11th presentation we had two weeks ago. i want to acknowledge some folks in the audience who may help me answer questions. you'll see me eyeball them for

support. christine from the port, mike and annette. also want to acknowledge kelly presser who is here in the audience from brookfield and tim rundy who was the peer review appraiser on this project. i'm happy that tim was able to join us today. i'm going to go through slides that are going to be a little bit familiar to you from two weeks ago. i want to point out, as i'm going through, that the decision or the request we're making of you today really focus on that action item. you'll see that it's the -- we're trying to provide ourselves and the developer the opportunity to transact on a parcel. we're trying to spewed transaction on another parcel. and we really feel this is the best path we have and a limited set of options that are set out in the pier 70 framework transaction document. i'll try to keep coming back to the action item that's before you today, as there's a lot of detail that i know can get -- can blur the vision in terms of

what you're looking at today. here's an overview of the pier 70 site. pier 70 is a three-phase project, well under way. construction started in 2018. the horizontal construction started in 2018. we have highlighted for you the seven phase-one parcels, blue means office, yellow means condo or apartment/residential, red means flex cultural, the big red box is the only building that's under construction. the two parcels we want to speak about today are highlighted in the dark blue, a at the top of the screen, e2 at the bottom of the screen. both of the sites haveup gone quite a lot of design work. e2 is a multi-family residential apartment site. it's about 281 units. 20% of those are about 56 units are affordable to households making 80% of the area median income or below. parcel a is a commercial office building. you might have seen sop arms

about it. it has a unique mass timber construction type, that's sort of renewable and more sustainable construction type. it's about 350,000 square feet. the d.d.a. that governs the entire pier 70 transaction, that we have with brookfield, sets forth the process by which brookfield has the opportunity to exercise options. thank you very much the option -- they have the option of the 19 parcels of the site. they can lease or buy, whether a condo or leased site. including parcel aand e2. the the jointly selected appraisaller from a list approve where had the d.d. a.. we came up with the department of real estate and with brookfield. we jointly select an appraiser.

the d.d.a. then goes -- allows the appraiser to go through the process of drafting. we provide comments back to them, all transparent to one another. we can only communicate, so longs we're on the same email chain or phone call. at the end of the process, the d.d.a. allows the appraiser to set the value. if the value is above the down market thresholds, that's the value generally that we thought each parcel would be worth, if it's above the threshold, brookfield can exercise the option or decline their option. we can take it to market. if it's below that value, then that triggers sort of a decision point for both parties in their sole discretion. that's why we're before the port commission, because in our sole discretion, we can take this action. we only come to you with the hard questions. so we're here now. we have appraisals for both

sites. you can see each site appraised value and its down market threshold. e2 is shown here. it's down market threshold was $11.3 million, parcel a, down market threshold was 12 $8 million, aphrased value $66 million. on an individual basis, we now have a potential down market on one and a very well above market on the other. the total on the write is just for comparison purposes, at approvals we thought the two parcels might be worth $24 million. turns out one appraiser thinks they're worth $71 million. i talked a little bit about what the process is in the d.d.a. but i want to take a moment to talk about what the appraise did. in particular for e2 and for a as well. the instructions state that the appraiser must continue a lease two approaches to value. one of the approaches to value is called the residual value

analysis. and then they can select another. they can select a cost approach or a sales comp approach or another approach that they deem appropriate. they can do more than two as well. the independent appraiser initially came with a $1 million value for e2. we had many, many comments to get it up to are $5 million. ultimately it's important to note that they -- in this analysis, the residual value, which considers the cost and the value of construction, they came up with a negative $13.4 million value, with that approach. they then also looked at the sales comp approach. they ultimately selected three land sales between 2018 and -- that occurred between 2018 and 2019, that were most comparable to the site. using that analysis, they came up with the value of $10 million. so this is a really important bracket exercise that they did. they thought the site is worth somewhere between negative $13.4 million or $10 million. and they create that bracket and

they ultimately decided that taking into factors that are particular to the site, that the value should be about $5 million. i want to point out that the residual value analysis, they're looking at construction costs, they're looking at rental rates, they consider all of the important factors and the reason they didn't respond to our comments, as much as we wanted them to and going from the $1 million initial value to the $5 million, they noted was -- to a couple of things. construction costs they think are going to keep going up. rental rates they don't think are going to go up. the 20% on-site inclusionary units is somewhat higher than some of the comps that they were looking at. also the pier 70 tax it's not -- it's not a huge tax, but it's relatively unique in san francisco. and the other item with the special tax, that just creates a little bit of risk for the developer, they have to pay on a date certain, regardless whether the building is built and occupied. those are the factors they cited in noting how they were looking

at the valuation of both of the approaches. what do we do now? do we considered our paths really, really carefully. the one we are ultimately recommending to you is to transact the parcels together. the reason we came to this is a couple of things. first, i think that we felt that it was really important. these are the first two parcels is pier 70. it's really important to us to get money into this deal. and to start to create that community, that the horizontal construction is creating. i think it's a really important policy outcome for us. the other key thing is that by tieing the two parcels together and moving up that high-valued office parcel, they could have transacted it up to 18 is

months, we moved that all the way up to no more than 180 days. in this case, time is really money for the port. we're accruing about a $1.4 million return on the amount of money that brookfield has spent on the horizontal, the faster we can get money into the deal, the better. it allows us to start bonding. we need to sign to get the c.f.d. bonds. we also available the down market delay on the two parcels. if we're able to tie them together and sign this letter, that would require them check the option within 120 days, then they would not be able to call down market delay in the document. if they call down market delay on the two parcelser the timing of a and e2 is suspended until we have an appraisal above the down market threshold for e2. the one drawback of this is that the e2 land value is lower than the port expected at approvals. we tried to make this pill a little easier to swallow by moving up the a parcel and

ensuring they'll transact on that in the 120 and 180 -- they have to exercise the option at 120 days, close on the parcel in an additional 60 days, up to 180 days total. we considered very seriously the alternative path. and this is a little bit of a, you know, game theory process. we also have the alternative set forth here, which is we can dispute the e2 appraisal. brookfield could do the same. that then sets up a sort of process of arbitrated appraisals, where two additional appraisals are brought ontoward. if they're not closed with one another, we have a appraiser who breaks the tie and can determine the actual value. that could result in one good outcome. and that is that we get a higher value on e2. that would be what we are seeking in doing that dispute.

there are job acts. we don't know whether or not the new appraisal -- how much higher it might come in, or if it comes in higher at all. we think, based on our conversations with our appraisal consultant, who is here today, that it is unlikely to get up to the $12 million value. even if it did, we would lose out on the value we've created by putting the two parcels together, because a would be closing on its normal timeline of potentially up to 18 months. so we would lose out on that value. we might gain something in an e2 value. we might lose something by losing the time benefit that we have in the deal, before today, which is moving a. up. according, it's just a general delay in the project. it would delay the housing units coming online and, of course, we talked about any delays are -- time is money for the port. so we looked at this really seriously. and i'm as much of a betting -- i like to roll the dice like anybody else, the two paths, one

created too much uncertainty. the other one created more of a certain path. where at least we have the opportunity for both of these parcels to head to the finish line together. so this just sums up, the slide sums up a little bit of what i said. the rationale for taking this path, we follow the process in the d.d.a. we worked very hard to try to get the values up. the appraiser, who looked at both parcels, use as very similar approach on both parcels. and then the outcomes rationale is that the deal we've tried to put together, for your consideration, it's gaining us a lot of outcomes we want. two parcels going at once, instead of one and then another one being very uncertain. spieds up the office closing, which is a value to the port of about $6.5 million, relative to how long they can take to close. that's a clear financial benefit for the port. we also ensure that the apartment parcel isn't left behind, if things went through the dispute process and they didn't reach a down market delay

threshold of the $12 million for e2, then the office parcel could potentially go and e2 would lag until the appraisal came up. so overall we thought the alternative path could potentially cost us money and it had some uncertain benefits that really rely on how the appraisal process comes out. here's the request for you today. it's to approve the resolution. the resolution would allow the port to offer brookfield the option to transact on e2, below the down market threshold and provide us the opportunity to deliver the balanced office and residential start to phase 2, phase 1 vertical development. should brookfield choose to exercise the option. if we get that approval today, this is the process that would go forward. we'd offer the option in exchange for speeding up parcel a. we'd linked two options together. if they elect to exercise the option, 120 days from now, we'd enter those contracts within 60

days we'd have to close on those leases. if that 120-day mark comes along and they don't exercise both options, then both parties revert to the existing rights that they have in the documents today. so we would be in likely a dispute scenario. we'd still get to roll the dice then i guess. so that's the presentation i have for you today. happy to answer questions. >> thank you. can i have a motion? >> so moved. >> second. >> is there any public comment on this item? seeing none, public comment is closed. commissioner makras. >> i have a couple of handouts here. if you could pass them down. a couple of handouts for everybody. thank you, president brandon. i am happy to share my views of

the agreement, both in terms of strength and weaknesses. at the time that we are asked to inject our oversight to the development agreement. this is the first opportunity to do so. we are acting in the interest of the public now and in a future, none of us will live to see. we cannot focus on the immediate term or failure to give weight to the long-term represented in our decision today. pier 70 and the development agreement, the san francisco port entered into with brookfield properties, a project that i support. i will honor and oversee implementation of the development agreement from time to time, as required by the agreement. i will not support a 99-year lease at $9 million reasonable value. i will support a 99-year lease at $28.2 million, fee simple value.

i believe $28.2 million is the fair-market value for parcel e2 at pier 70. what is being asked of us today is to approve a per-unit value at $32,000, when comparables are valued at $100,000 per unit. what we are being asked to do today so approve a land transaction at $5 million, where the true value is approximately $28.2 million. i believe a weakness in the agreement was a decision to accept a fully pre-paid grounds lease for parcel e2. i believe a better disposition of the parcel would have been a standard lease with annual rent payments. a rent schedule on a fixed term for 30 years to allow the developer to fully pay off a standard 30-year loan, then implement a market rental value with escalating rents, in

accordance with land value, adjusted from time to time, like every five years or ten years. this would yield the port a more index value, it would create a cash flow for the san francisco port and would yield substantially more money over a 99-year lease. if we were to set a land value at $28.2 million and take a simple 3% annualreturn, we will yield $846,000 annually. over a ten-year period, our income would be $8.4 million. in 99 years, without any rent increase, our lifetime income would exceed $83 million. with some rent increases, it can well exceed $100 million. i do not support taking $5 million, as is suggested by the appraiser, in exchange for foregoing $8.4 million over the

next ten years, or $100 million over the lifetime of this lease. let me share my view in another way. if we were to get $846,000 in annual rent, we can debt surface over $20 million of our capital project each 30 years. so this cash flow can effectively pay for over $60 million in capital projects over the life term of this lease. this is a much better use of parcel e2, at pier 70, than a one-time payment of $5 million. i will share a few facts that support the value of parcel e2 at pier 70 at $28.2 million. i submit for your review 22 sales of entitled projects that have sold in san francisco. these are sales in 2017, 2018, and 2019. i put all of my weight on the

five sales that took place in 2019 for the sole purpose of this evaluation. the prior years are secondary consideration. the five sales are large parcels ranging in unit count from 118 to 418 units. parcel e2 at pier 70 is a 282-unit entitled project. sales of these parcels range from $10 million to $78 million. the per-unit price range is $54,000 to $233,000 per unit, rounded off to the nearest thousand dollars. i believe the best comparable for parcel e2 of these five is pier 70, partial k north, which the port of san francisco told -- sold for $24 million or $95 million per unit. and 14 otis sold for $40 million

or $95,000 per entitled unit. for a point of reference only, i submit for your review 13 sales of entitled projects sold in oakland. that's page 2 of what i handed out. these are sales for 2017, 2018, and 2019. i put my weight on seven sales that took place in 2018 and 2019. the seven parcels are sales of large parcels, ranging in unit count from 130 units to 450 units. the sale of these parcels range from $7 million to $42 million. the per-unit range is $49,000 a unit to $93,000 a unit, again rounded off to the nearest thousand dollars. the comparables on face value demonstrate the appraisal before

us is inferior. who would ever believe an appraisal for a san francisco-approved project was appraised for less than a similar sized project in oakland. in support of my belief for a $28.2 million value, i refer you to the appraisal. that is the second handout that i provided. on page 144 of the appraisal, the appraiser uses a land value at exactly $28.2 million value or $100,000 a unit. their own statement of value in this section of the appraisal supports my conclusion of value for parcel e2 at pier 70 at $28.2 million. i do not believe we are or the public would be best served by accepting an appraisal that is not based on market or comparable values. i would encourage the commission

to reject this appraisal. thank you, madam president. >> okay. rebecca, would you like to respond? >> i think -- thank you for the comments. i've distributed some of the material to some of the folks that are here today to help me out, if they have comments in digesting the information. the one comment i think it's important to make, it was an interesting, have deinteresting calculation of what we might do with the money. the commission might recall that the structure of the deal requires that all of the leases are pre-paid. while brookfield has outstanding developer capital. practicalfield has about $100 million of investment they've put into the site in dodge construction, that -- site in horizontal construction. so every lease until that is paid off, has to be pre-paid, 99-year pre-paid lease. all of the money from the

pre-paid ground lease goes into repay the horizontal construction cost. so that isn't an option unfortunately under the transaction terms, they invested the money in the horizontal order in order to be repaid through the vertical and through subsequent bonds. i think on the valuation, if i could pause for a minute, and we hear other comments, while i confer with some others to look at the comps and see whether or not there's any response that we can provide. >> thank you. commissioner woo ho. >> it's not an easy transaction. i think that commissioner makras has pointed out something in isolation, in terms of his technical analysis and we appreciate that he went to the great extent of his research. i guess when i have reviewed this project and looked at it in terms of holistically, in terms of what we're gaining in terms of tieing the two parcels together, and as i recall from

last time when we talked about it, the difference in value at that time was made up in terms of the timing of the closing of the escrow that the port would make up in terms of from a cash basis. so from a value basis, i'm not in a position to debate with the experts. because i'm not an appraiser myself. and i think that we have obviously have both the port, brookfield and a third party and we would ask the consultants maybe to comment, to help us respond to some of the comments. so i think that, you know, we've worked on this project and i think the concern that i would have is that if we were to not accept this amount in terms of the value, what it does to the transaction and obviously brookfield is here and they could tell us what they would do. and endanger the continued development timeline of this project, which has been something we've worked on for i don't know how many years now. >> long time. >> for a long time. it's a very important project.

it's one of the key projects of the port. along with mission rock in terms of the whole development. so there are some consequences that i think we have to think about holistically. what i think that -- while i'm not going to debate whether $5 million is right or wrong, i think what i did see in the presentation and in the staff report is the fact that the other parcel is coming in higher than what we had anticipated. and helps to offset. so i think that the offset and i think, unless we can see say that the offset is insufficient, that i think that we are economically not worse off in this transaction. though there may be some, you know, we cannot go back and change the terms of the pre-paid leases rebecca has just mentioned. i think we have to look at the transaction holistically. are we going to move this development forward and tieing the two transactions together help us to get back on track. or are we going to now jeopardize what the future is.

i guess i would ask that question. are we jeopardizing the future of the development if we do reject this appraisal? >> i can make some comments. so what we're asking you to do is to allow us to transact the housing or apartment parcel below the strike price. and that strike price was developed really to protect ourselves, because we did not want the developer to move forward with projects, if the market was so bad or downmarket delay, that market wasn't right for development. and that strike price is important to protect the port and make sure we want the developer to transact and the economics are working. so we're not asking for you to approve the appraisal. the appraisal process is set forth in the agreement, the lbda. and we have a third-party appraiser, a certified third-party appraiser, who has done two types of analysis,

residual land value and comps to conclude that the value is $5 million. what we're asking is to be able to transact below that strike price of $11 million. $11.2 million. and we're asking you to do that, because we want to deliver brookfield to deliver housing and office in the first phase. the same appraiser using the two forms of analysis confirmed that the office was $66 million and the strike price is four times less than that, what is the strike price on office, retaining wall? >> -- rebecca? >> i know it's five times the strike price. >> five times the strike price. it's $12.7 million. and so when we were able to negotiate also a reduction in the closing costs, when we look at it on balance with office coming in so high.

we find our way to say we would -- we prefer and recommend strongly a phase that delivers both parcels and that the economics for the port is preserved or preferred here, because it is in the port's interest that we move the project forward and transact. because we are holding and paying an 18% return for the developer's cost for infrastructure and soft costs. so that is why we're asking that you give us authority to transact with brookfield, below the strike price on e2. and as rebecca has described, in addition to preserving the port's economic interests in the project, it preserves a really important policy goal, which is to deliver this apartment, affordable housing, 20% affordability. so we want to get the housing in the ground.

>> do you want the consultants to come in at all? >> i think mr. rundy would like to make a comment, based on his three-minute look. [laughter] that's what you get when you get pull into a commission meeting. >> good afternoon. my name is tim rundy. and my role in this process was not to appraise the property, but to provide review of the appraisal that was completed. this is a complicated assignment. it's not as simple as, you know, just a simple land appraisal. there probably isn't any such thing as a simple land appraisal. it's the hardest thing to get right in the world. and to commissioner makras' point, i started in the same place frankly. it's like you can't have land worth zero, near zero. that just doesn't make sense. but when i dug into it, what i

realized was that we're at a point in the market where -- and i've been appraising san francisco real estate for 30 years, the bay area realty for 30 years. i have never seen a market where all of the fundmentals are so strong and yet a type of project is not financially feasible. but rental housing right now in san francisco is not financially feasible. almost no one is going forward with it. unless they have legacy projects, have other reasons for doing it. it just doesn't pencil out. most of the sites are trading for condominiums. pretty much the only residential projects that are feasible are very, very high-end luxury condos. so, you know, as an appraiser, i put my hat on and go, well, the highest and best use of this property should be a condo site.

well, that may be the case or you hold it until the rental market is better. the problem is we don't have that option here. we're locked into a rental project, number one. number two, we're lock into a rental project with b.m.r. on site. that's more expense than paying the in lieu fee. we have an onerous b.m.r. requirement of 20% of the units at 80% of the a.m.i. now compared to one of the two comps that they had on there, which was 13.5% at a 50% a.m.i., that's almost a $35,000 cost -- i'm sorry, that's about a $10,000 cost to the project. the third or fourth thing is we have the special tax, mentioned as well. well, actually if you do the math on it, it's about a $35,000 hit to the value of the property compared to everything else in the market, that doesn't have

that. taken together the b.m.r. and the special tax requirement knocks about $45,000 off the value. if you start at the $100,000 kind of benchmark, for a market-rate unit, you get down to the $55,000 range pretty quickly. then you knock off the lease holds value that they -- because it's not a fee-owned project. it can't be. and suddenly you get down to this $10 million range or so. now is $5 million the right number? i don't know. is it within the range of reasonableness for this project, given all of the complexity of it, i think it is. i think particularly -- and i'll be honest. i don't like residual approachers. i don't like developer approaches. they're not -- i'm not saying

any of that happened here. i think the appraisers did a confident job and we have a lot of back and forth, productive from all parties involved in this, in trying to figure out what's the right number. but when you come up with a land residual that points to a significant negative value on the land, it says right away we're not going forward with this. the market uses residual approaches all the time. they can't get financing, loan committees won't approve it if it doesn't meet the flesh holds. just circle back for one second to say if any other -- a site

that was not in this particular situation, where it had to be a pre-paid ground lease, had to be rental, had the higher b.m.r. requirement, all of these other factors, you could simply sit and wait. you could say, well, we'll just park on it for a while and wait. or we'll pursue different kinds of entitlements. we don't have that option here. the only option you have, you either go forward with it now or you wait until later. which, you know, in san francisco for 30 years, there's, you know, land values have only gone up, except for one property type. they've actually started to crater a bit for multi-family residential, because the b.h.r. requirements are getting onerous and for all types of real estate, costs are significantly outpacing the escalations in rental rates. rental rates are flattening out. more units are coming online than getting absorbed. vacancy is pushing up, concessions are coming up.

not just in san francisco, but throughout the bay area. because i worked in silicon valley as well. in fact, they had rents go down a little bit, .3% in santa clara county. so what's happening now is you've got a dynamic where it occurred to me the other day, rental housing is not viable or feasible in san francisco, without some sort of a subsidy. that means that if you have to build rental, maybe your land isn't worth anything in terms of a market-value analysis. that seems a little bit hard for me to understand. it seems to be where the market is at. i'm not sure -- if you keep having 6%, 7%, 5% to 7% construction cost increases every year and rents are starting to flatten out or maybe only going up 2% a year and the projects were marginally feasible before, they're not going to be feasible going forward. so it may be -- it's entirely

possible that we may not see a time where market-rate, multi-family housing, on a rental basis, makes financial sense. i'm not saying that's the case for sure. we may have a downturn that may change the dynamics of the construction trades and all that. the disparity between costs and rents. we reached an affordability threshold. a ceiling in terms of how much even -- there's only so many high-paying tech jobs that will pay $3,000 for a studio. >> okay. >> $4,000. >> i think that's adequate. thank you. >> so i just want to end it and i'm going to cede the floor to the next commissioner. i think that was very, very helpful to hear that. i think you have given some background and important background substantive of how we

got to the $5 million. i still stand in terms of believing that i think this project needs to move forward. we need to look at it holistically. we may not be technically totally correct, as you said, very hard to predict the future. it's a question of whether we want to move forward or not. i vote to move forward. >> thank you. commissioner gilman. i absolutely think we need to move this project forward. i think right now i'm aware of hundreds and hundreds of residential units that are permitted and waiting and folks i know in the for-profit development community are not moving forward with residential rental, due to a variety of reasons. one, our requirements to construction costs. i don't see -- at least in the fallacies i -- in the analysis i see. i think it's critical we move forward and capitalize on a

strong, strong office component right now to make that possible. so the questions i had are just more for my own knowledge. i just wanted to check in since i wasn't here when we approved the d.d.a. i wasn't on commission. i'm assuming the phasing is part of the d.d.a., the phasing cannot be changed? >> that's correct. it can only be changed by coming back to the commission. >> okay. so do we anticipate -- when you say mid-term versus near-term, on your slide 3, i'm curious what mid-term means and if we anticipate seeing this as an issue for building number 2? >> very good questions. i put up the slide that you're referring to. the near-term are buildings that are either in construction, building 12 or have approved designs associated with them. and that's e2 and a. we expect building two and d to come next. we have begun design on both of those buildings.

one is a equipment, one is an apartment -- one is a condominium and one is an apartment. and c2b is the longest-term condominium, we don't believe -- we know brookfield is eager to move forward to get the phase complete. i put it in that category. it doesn't have a design associated with it, it's the next term of parcels. >> okay. >> but they're all part of phase 1. >> rebecca asked the question in a different way, apologize. is mid-term that you're back in commission in six months, 12 months, 18 months? i guess my question is, if the market is having such a downturn, are we going to see the same problem with building number 2, no office to anchor it? >> very good question. so i think we anticipate building 2 and d. and c2a to -- 2 and d. to come this year. c2a-- we expect the developer onboard soon.

and then c2b towards the end of the year. your point is well taken. we may have a similar problem with building 2. we expect some sort of creative solution with brookfield. we don't know yet what we don't know until we do the appraisal. anything to add? >> i think -- i just want to address. it's looking like why did we agree to pre-paid leases. and i think we use the concept with mission walk and this project. it was an innovation that we used. and that was to help us and, of course, depends on where the market is in the cycle. but that was to help us, as i recall, conceptually, to give the port greater value, so that we could -- we could offset against the developer's capital and return. >> yes. >> i think we should not forget that concept. now say, oh my goodness, if we haven't used that, we could use

the normal lease value. at the time it appeared that that was a way for us to offset being able to pay back the developer's return faster. so that was some economic value to the port. >> gotcha. >> am i correct? >> absolutely. do not forget that concept. that's the reason we did about it. i think we started with mission rock? >> absolutely true. there's a lot of -- we're talking about the challenges of transacting and sort of difficulties in the deal. but there's actually a lot of value and benefits in the deal you approved. one is that we can be having this conversation to transact an apartment in this economy, when no one else can do so. so we're able because this project is on public land to look at the office, plus the apartment and make a decision to go forward with both. and the c.f.d. taxes that we're concerned about holding back value, those taxes are critical for us to repay infrastructure and provide sea level rise

protection. so if we look at the deal on balance, and furthermore port staff is incentivized more than any party to transact quickly. because we want to see the projects move forward. so we can repay the developer investment. so there are many things about this transaction while we're struggling with this phase today, that are incredibly innovative and we're able to be in the marketplace when other private sector, similarly situated parties are just not able to do so. so absolutely the pre-paid concept was to maximize the port's ability to pay back the developer quickly, to get out of the 18% return. and there are multiple sources of revenue to the port from this transaction. rent but also the taxes as well. so i did appreciate your comment in remembering why we chose pre-paid leases. >> so do you anticipate a

similar problem when we come back with building 2 and building d, building dwill be -- the valuation will be out of whack and much higher, because condominiums are what people can build and the rental housing is going to be lower? >> we're looking at that right now. and i -- i don't want to get too far ahead of myself. we're definitely anticipating this. and bringing this deal to you, we're looking down down the roat the next couple of parcels and trying to be forward-thinking. >> is there an affordability requirement on building 2? >> yes. all of the rental at pier 70 has a 20% inclusion. >> average a. m.i. of 80? >> i really appreciate the remarks from our third-party appraiser. thank you for laying the ground work of what sort of the market is in. i have a lot of friends in the for-profit real estate market. and no one is moving forward on their transactions, due to the climate. most people are sitting on their

entitled properties right now. so i am very supportive of us moving this forward. >> thank you. vice president adams. >> first of all, i want to thank commissioner makras for his presentation. i told president brandon, my whole issue was it was a lack of conversation prior to coming to the public. i had an issue with that. and and i was very frustrated with that. sometimes we jump a couple of stems -- steps ahead. as commissioners we have an obligation to the public and sometimes we get ahead of ourselves. when we held this thing over, you know, i listened to the $28 million and we had this conversation and stuff. i met with mike last friday and we talked and we waked through this issue. i was very frustrated. i told mike, that's not a lot of

money. we talked about it. and he just -- he was just very honest about it. where it's at right now for the value. and i think maybe in some worlds, i can appreciate what commissioner makras said, we can get $28 million. in this situation, we're not going to. i think we have to make the best out of it. it's just -- kind of how it is right now, right. it's kind of like how the world is now with the coronavirus, right. a lot of things just happening now in the economy. a lot of things. that's kind of how it is. i'm going to support it. because i looked -- i think last week commissioner woo ho really dug down into it and i was really starting to understand it. i think it's both pieces together. and when you look at the big picture and plus i'm for affordable housing. so i'm in favor of supporting this. and i want to appreciate the guy that came up and laid out a couple of other things that i kind of got a clear vision of

it. and just as a port, this is our job and our business as commissioners, right. but it is what it is. so i don't know if at some point it will get better. but i'm going to support this. >> thank you. rebecca, thank you very much for this presentation. and i know a lot of work has gone into this. and i know there are a lot of questions. and i just want to say how happy i am that we have commissioners that ask questions. that, you know, really want to know what it is we're doing and why we're doing it. so i really want to thank you for the work that you've put into this. and looking at this and everyone has said, it's a complicated project. it's a complicated deal. i think that we are extremely lucky that the office environment is doing so well. >> yes. >> and that we have that little hedge. you know, as tim said, when you think about it, you know, how

does that much land have a value of a million dollars. how is that even possible. and the fact that we were able to get up to $5 million, i think that's wonderful. now if i thought we could get anywhere past the $11 million, i might say let's hold this over. [laughter] but i think at this point it's been gone over with a fine toothed comb and this is where we are. and if we want to move forward, then we need to do something now. but what i do want to say is with the mid-term phase, the next phase, i think you guys should bring it to us sooner rather than later. because if it's a discussion, like we've had over this one, it's going to take time to find a resolution. it can't be we're losing money by not moving forward. so i'm just saying be prepared for the next round to come to us sooner rather than later. whenever the appraisal is done and whenever we need to start negotiating. but i, too, right now will support this moving forward. and so with that, i'm going to

ask for the vote. all in favor? >> aye. >> any opposed? >> no. >> the resolution has passed with four and one no. >> item 13 b, request approval of port-related transaction documents for the california barrel company llc. mixed-use project located on the former potrero power station site bounded by 23rd illinois and 22nd streets and san francisco bay. including port of san francisco shoreline and adjacent lands referred to as portions of sea wall at 349, pier 72 and 23rd street, including 1, consent development agreement between the city and the c.b.c., two, approval of lease with c.b.c. to use port lands for public parks and open space and publicly accessible ways, including an option to impress public trust easement on privately owned shoreline land and a portion of 23rd street leading to the hor

line. three, delegation of a authority executive directer to enter into one or more memoranda of understands with various city agencies, including the san francisco public utilities commission, the san francisco public works department and the department of public work inspection relating to each agency's role and responsibility perform and four, adoption of environmental findings, including a mitigation, monitoring and reporting program and a statement of overriding consideration pursuant to the california environmental quality act. >> good afternoon, commissioners. david with real estate and development. i'm joined here today by the potrero power station team enrique, aaron and tina. and also joined by city staff and port staff, including john from economic and workforce development, mike martin. and i just want to show my appreciation for eileen, carol and sam who have been extremely helpful in pulling this together.

i was in front of the commission at the last commission meeting two weeks ago. i'm going to try to keep the meeting -- the presentation brief. but just wanted to give you an introduction to the project. the port's role in the project, the location and the plan. and then the actions that you'll be taking today. so pier -- the potrero power station is located south of the pier 70 project. that you just were considering. it's in a 29-acre site. mixed-use development and many aspects, very similar to the pier 70 special-use district project. within the 29-acre project site, there are several different owners. the blue, which is the primary portion of the site, is owned by california barrel corporation. part of the potrero power station team, the purple which includes 23rd street and the areas along the shoreline are the port projects, which are subject to this approval today. and then there's some other

areas, including the red area, which is -- will be essentially craig lane, which is alley way that splits the property both between potrero power station and port land, also a part of the approval today. as discussed last week, the land-use project is a mixed-use project. the yellow is the residential with approximately 2,600 units. the blue is the commercial office, life science and lab space, approximately 1.5 million square feet. the hatched area is either hotel or residential at about 240,000 square feet. and there's about 100,000 square feet of ground floor retail spread throughout the building. and approximately five acres of parks illustrated in green, including those on if the port property. the potrero team at the last

commission meeting covered all of the community and port benefits. obviously housing is a big one on the site. there are several community facilities planned. there are the parks and the extension of the blue greenway, transit, childcare, and, of course, jobs. the approvals today include a consent to the development agreement, along with the city and the developer. approval of the lease, which comes with an option to impress the public trust on the area outlined in yellow, which is both a portion of 23rd street and additional shoreline parks. delegation to the executive director to enter into an m.o.u. with other city agencies regarding permitting. and then, adoption of the environmental findings consistent with the seqa. that concludes my presentation. myself and the project team are available for any questions. thank you. >> thank you.

-- there is public comment on this item. cynthia gomez. >> hello. my remarks are brief. research analyst with local 2. we are the hotel and hospitality and workers' union. and we are in support of this mixed-use project. commonly known as potrero power takes station. hotel use is contemplated at this project. and a very creative use of some of the building use of the power station. with the project sponsor, regarding the jobs of this eventual hotel, specifically a guarantee for a fair and neutral process for the eventual hotel workers, if they wish to be represented by a union. griefs -- agreements such as these create for those in the

hospitality industry to fight for respect and dignity on the job, affordable health care benefits, a -- we ask that you grant all the necessary approvals for the project. thank you. >> thank you. keith goldstein. >> good afternoon, commissioners. i'm the chair of the the eastern neighborhoods c.a.c. i'm a potrero booster board member and also president of the potrero merchants' association for the last 230 years. [laughter] lived on potrero hill for 45 years. and a couple of weeks ago i sat on a planning commission, where they listened to this project. there are about 50 community members that spoke in support of this project. it really was quite inspirational. there was nearly a voice in descent. it's not something i have seen

before. this is because of the remarkable community outreach that the developers have undertaken. i often walk around the neighborhood and see that the developers chatting with any member of our community. they'd have these office hours in our local hubs and coffee shops where anybody could come and chat and talk about their concerns and they listened to them. and we don't just have what we typically expect a project at the waterfront, the green space, the bay trail. tremendous affordable housing. 2600 units. 30% affordable is fantastic. it's what we all ask of everybody, in our neighborhood. but they're actually coming through, you know, with so many of them low -- low level of income. the preservation of building a, the wonderful building. i've been a contractor in the city for over 40 years.

i know -- i didn't expect them to preserve that building actually. because it's tremendously expensive to do that. the homeless prenatal program. you know, coming up with ideas like this. two childcare centers, a 25,000 square foot ymca there. this is a tremendous project for our waterfront, for our community, and for the whole city. and i hope you feel the same way. thank you very much. >> thank you. is there any other public comment on this item? >> hello, commissioners. thank you for taking the time. i'm a dog patch resident. i live three blocks from the project site. i've been in dog patch for 18 plus years. and keith and i have served on the eastern neighborhood c.a.c. together. so good to see you keith. we are both in support of this project. i don't want to go over all of the details, because keith has

done a great job of saying them. the community around the project actually really supports this, not only for ourselves but for the south, the neighborhoods to the south, as we look toward developing more of the waterfront as a whole. >> please introduce yourself. >> bruce. thank you. >> thank you. >> thank you again. >> is there any other public comment on this item? seeing none, public comment is closed. >> a motion, right? >> we have one. >> oh, okay. can i have a motion? >> a motion. >> second. >> commissioner woo ho? >> well, thank you. i think we had a very planning commission -- very impressive presentation. i don't have that many questions going forward. i have seen the site previously.

so we actually did look over and see your site, which is right next door. we were actually looking at the orton development rehabilitation. so they're all together. so it was impressive to see and it would be wonderful to see how the whole neighborhood will come together and it does seem like it is coming together and a lot of collaboration and planning together. i guess just based on the previous conversation and given this project is really not within our purview and ask out of curiosity, in terms of the fact a lot of residential housing coming up and the affordability has been mentioned, 30%, whether there's any concerns, looking similar to what we just went through with the discussion of whether this can move forward, because of the situation with multi-family housing development and the market right now. >> commissioners, john low with the office of economic development. yes, we've tried to adjust the

uncertainty of the market conditions in a number of ways. one is there's a 30-year term, which is clearly a long period of time for one of those development agreements. secondly, it's about -- the program is balanced, the residential and commercial. so with over 1.5 million square feet of office and/or life science in the entitlement, as well as up to 2600 residential units, with the inclusion of the pg&e property, we feel there's there's room to be flexible and selling to market conditions. we've actually placed a mechanism in this agreement, that ensures if the market is only there, for building and office for a time, that there's still a b.m.r. requirement that accrues and owed at certain points to the city, with that office development. so, yes, given almost certain uncertainty, if you will, and the future, we tried to bake in

certain kind of basic parameters in terms of city benefits and b.m.r. in a market that is exists, as it does now, at least for housing an life science. i don't know if you want to add any more? >> no. well, i think it sounds like you're taking a flexibility approach and we're obviously not here to examine all of the numbers. we're just talking about slivers of port property. given the heated discussion we just had earlier, just concerned about how this project is addressing the same issue. that's all. >> understood. >> okay. thank you. >> thank you. commissioner gilman. >> thank you. the presentation was wonderful last time and great to see you back here for an action item. and i support it. >> thank you. commissioner makras? >> no questions. i'll be supporting it. >> vice president adams. >> commissioner woo ho said you heard about the debate heated debate. this is a prepreliminary of

what's happening tonight in south carolina at the presidential debate. no, i'm good. i support it. >> thank you. david, thank you for the presentation. i don't think much has changed since the last presentation. but i just want to say how excited i am about this project. and the fact that it has almost a billion dollars in community benefits. i think that's phenomenal. so i, too, will support this. >> yes. >> all in favor? >> aye. >> any opposed? resolution 2012 has been approved. >> item number, new business. >> new business. we will be scheduling an informational to go over the capital budget of last year and our achievements, as well as open projects for discussion. is there any other new business? >> is there any other new business? any public comment on new business? >> motion to adjourn, madam president? >> all in favor? >> aye. >> we are adjourned.

>> claim at change is real and we need to -- climate change is real. environ stewardship plays to change the fuel source from carbon based to re.

anothe--ry newable power. >> the city is responsible for developing and procuring electricity that is delivered by pacific gas & electric to end users. >> i go to the market to try to find appropriate energy product to buy and usually that is renewable so we can ensure that is in the grid and supplied to consumers. >> the contracting workerrin ant they provide keep the lights on in san francisco. >> i started on the team almost four years ago and transitioned in 2017. we are a new team working together with across functional role.

>> every contract her team is involved in executing helps san francisco reduce its climate impact by reducing greenhouse gases remitted. >> what i am most proud of is the long-term energy contracts to get new renewables in california. >> before she was doing this, we probably executed a cunpel contracts a year. it is a huge expansion in our operations and aaron is in the middle. she is centrally involved in entering more than $650 million worth of power contracts, much of that is renewable energy. the lasting impact of her contributions is helping us develop a modern utility power purchasing division. that is why i nominated her for this award. >> this award was surprising. i feeling grateful to be

recognized. a lot of people do good work and it is nice to have my accomplishments valued and recognized in the environmental stewardship realm. >> a lasting legacy is creating a modern process to help new employees that come here understand how we do business. we couldn't have done it without her. >> i am a utility specialist on the power supply team and the power enterprise.

>> this is a huge catalyst for change. >> it will be over 530,000 gross square feet plus two levels of basement. >> now the departments are across so many locations it is hard for them to work together and collaborate and hard for the customers to figure out the different locations and hours of operation. >> one of the main drivers is a one stopper mitt center for -- permit center. >> special events. we are a one stop shop for those three things. >> this has many different uses throughout if years. >> in 1940s it was coca-cola and the flagship as part of the construction project we are retaining the clock tower. the permit center is little working closely with the digital services team on how can we

modernize and move away from the paper we use right now to move to a more digital world. >> the digital services team was created in 2017. it is 2.5 years. our job is to make it possible to get things done with the city online. >> one of the reasons permitting is so difficult in this city and county is really about the scale. we have 58 different department in the city and 18 of them involve permitting. >> we are expecting the residents to understand how the departments are structured to navigate through the permitting processes. it is difficult and we have heard that from many people we interviewed. our goal is you don't have to know the department. you are dealing with the city. >> now if you are trying to get construction or special events permit you might go to 13 locations to get the permit. here we are taking 13 locations

into one floor of one location which is a huge improvement for the customer and staff trying to work together to make it easy to comply with the rules. >> there are more than 300 permitting processes in the city. there is a huge to do list that we are possessing digital. the first project is allowing people to apply online for the a.d.u. it is an accessory dwelling unit, away for people to add extra living space to their home, to convert a garage or add something to the back of the house. it is a very complicated permit. you have to speak to different departments to get it approved. we are trying to consolidate to one easy to due process. some of the next ones are windows and roofing. those are high volume permits. they are simple to issue. another one is restaurant

permitting. while the overall volume is lower it is long and complicated business process. people struggle to open restaurants because the permitting process is hard to navigate. >> the city is going to roll out a digital curing system one that is being tested. >> when people arrive they canshay what they are here to. it helps them workout which cue they neat to be in. if they rant to run anker rapid she can do that. we say you are next in line make sure you are back ready for your appointment. >> we want it all-in-one location across the many departments involved. it is clear where customers go to play. >> on june 5, 2019 the ceremony was held to celebrate the placement of the last beam on top of the structures. six months later construction is

complete. >> we will be moving next summer. >> the flu building -- the new building will be building. it was designed with light in mind. employees will appreciate these amenities. >> solar panels on the roof, electric vehicle chargers in the basement levels, benefiting from gray watery use and secured bicycle parking for 300 bicycles. when you are on the higher floors of thing yo of the buildt catch the tip of the golden gate bridge on a clear day and good view of soma. >> it is so exciting for the team. it is a fiscal manifestation what we are trying to do. it is allowing the different departments to come together to issue permits to the residents. we hope people can digitally

come to one website for permits. we are trying to make it digital so when they come into the center they have a high-quality interaction with experts to guide then rather than filling iin forms. they will have good conversations with our staff.. >> i just feel like this is what i was born to do when i was a little kid i would make up performances and daydream

it was always performing and doing something i feel if i can't do that than i can't be e me. >> i just get excited and my nickname is x usher my mom calls me i stuck out like a sore thumb for sure hey everybody i'm susan kitten on the keys from there, i working in vintage clothing and chris in the 30's and fosz and aesthetic. >> i think part of the what i did i could have put on my poa he focus on a lot of different

musical eras. >> shirley temple is created as ahsha safai the nation with happens and light heartenness shirley temple my biggest influence i love david boo and el john and may i west coast their flamboyant and show people (singing) can't be unhappy as a dr. murase and it is so fun it is a joyful instrument i learned more about music by playing the piano it was interesting the way i was brought up the youth taught me about music he picked up the a correspond that was so hard my first performing experience

happened as 3-year-old an age i did executive services and also thanks to the lord and sank in youth groups people will be powering grave over their turk i'll be playing better and better back la i worked as places where men make more money than me i was in bands i was treated as other the next thing i know i'm in grants performing for a huge protection with a few of my friends berry elect and new berry elect and can be ray was then and we kept getting invited back you are shows got better we made it to paris in 2005 a famous arc we ended up getting a months

residencey other than an island and he came to our show and started writing a script based on our troop of 6 american burr elect performs in france we were woman of all this angels and shapes and sizes and it was very exciting to be part of the a few lettering elect scene at the time he here he was bay area born and breed braces and with glossaries all of a sudden walking 9 red carpet in i walgreens pedestrian care. >> land for best director that was backpack in 2010 the french love this music i come back here and because of film was not

released in the united states nobody gave a rats ass let's say the music and berry elect and performing doesn't pay very much i definitely feel into a huge depression especially, when it ended i didn't feel kemgd to france anymore he definitely didn't feel connected to the scene i almost feel like i have to beg for tips i hey i'm from the bay area and an artist you don't make a living it changed my represent tar to appeal and the folks that are coming into the wars these days people are not listening they love the idea of having a live musician but don't really nurture it like having a potted plant if you don't warrant it it

dizzy sort of feel like a potted plant (laughter) i'm going to give san francisco one more year i've been here since 1981 born and raised in the bay area i know that is not for me i'll keep on trying and if the struggle becomes too hard i'll have to move on i don't know where that will be but i love here so so much i used to dab he will in substances i don't do that i'm sober and part of the being is an and sober and happy to be able to play music and perform and express myself if i make. >> few people happy of all ages i've gone my job so i have so stay is an i feel like the piano and music in general with my voice together i

feel really powerful and strong >> we're ready to begin. today is wednesday february 19, 2020. this is regular meeting of the building inspection committee. please turn off our electronic devices. first item on the agenda is roll call. [roll call]

we have a quorum. next item is item 2, president's announcement. >> president mccarthy: good morning everybody. welcome everybody to the b.i.c. meeting of february 2019. congratulations to director who participated in other safety outreach program graduation january 20th. another 48 residents grafted from a five-day training course. this brings our total number of seismic safety ambassador to 4000 since the program began in 2015. we're better prepared to recover quickly. special thanks to all the d.b.i. employees who volunteered for the chinatown fair. they talked with community members about our housing information service, emergency preparedness and distributed 300 first aid kits and 15 of our emergency backpacks.

several chinese new year events in chinatown throughout the city, chief among them was the annual chinese new year parade. many thanks for representing the department. finally, d.b.i. employees committee reviewed and selected this year, senior building inspector, joe duffy as employee for 2019. inspector duffy has been recognized for his outstanding dedication to people of san francisco. mr. duffy is not here as of yet. is he coming? he could not make it today. we're going to probably give it to him this month. we recognize him next month.

mr. duffy thank you and congratulations. it's a great selection. board of appeals mr. duffy represents the d.b.i. commission and the staff and whole d.b.i. as a whole and the research he does and he's really understanding of complex pross s here. we will be here next month. mr. commissioner lee did you want to add anything? that concludes my president's announcement. thank you. >> thank you. is there any public comment on the president's announcement? seeing none, item 3, general public comment. the b.i.c. will take public comment ton matters within the commission's jurisdiction that are not part of the agenda.

seeing none, no public comment. our next item is item 4, election of the b.i.c. president and vice president. we have the nomination last month and we supposed to be doing the vote today. >> president mccarthy: if there's any questions, i open this to the commissioners, if not i call the question. >> i respect the time and the knowledge of the two nominees. i did want to reflect on commissioner walker's comment at our january meeting about the importance of having a balance between the mayoral appointees and board of supervisors president appointees. especially in an era where people are concerned about balance and transparency in government. i think making sure that there is a balance within the

leadership position in our commission it's important. i hope that gets reflected in the many different leadership positions that we have available as a commission. i wanted to have that updated. >> president mccarthy: thank you. >> commissioner lee: i like to echo that. we're here in the spirit of unity for this commission and having a very productive and fruitful year. i think it would be a miss the opportunity to not mention those comments that commissioner walker had stated at our first meeting. in addition to just kind of highlighting the importance of that balance in addition to the importance of balance of the agenda equity that we tray to achieve as a city to ensure that we have leadership that is proportionate. as new commissioners will be learning what we do in-depth as a commission. i think it's important for this coming year when we look at those officer positions.

as long as that's in our thought process, i think it's worth stating. >> president mccarthy: thank you. can we call the question please. >> there was a motion the january meeting to elect president angus mccarthy as president and sam moss as vice president. that was a motion needed to second. >> those were the nominees and motion to elect or appoint. >> i'll make a motion to those two positions. >> i'll second. >> there is a motion and a second. i will have to do a roll call vote on this motion. actually, is there any public comment on the motion first? seeing none, i will do the roll

call vote. [roll call] that motion carries unanimously. congratulations to both of you. >> president mccarthy: thank you for your confidence in your votes. next item. >> next item is 5 item, commissioners questions and matters 5a, inquiry to staff. at this time commissioners may make inquiries to staff regarding various documents, policies, practices and procedures which are of interest to the commission. >> commissioner jacobo: so, as we've all been keeping up with the unfortunate news of what our city is going through currently with some of the fbi indictments, i think it is worth asking to agendize some kind of

report for our viewers and city and county of san francisco to understand what d.b.i. knows off these indictments. i think that it's important to try to be as transparent as we can. we're making a good effort to do that. i also like to see in that what we're trying to try to mitigate some of these potential accusations or bring clarity to. these are thoughts that i had and incidente i wanted to put oe commission. i like to see it agendize for future meeting. >> president mccarthy: i obviously would like to hitchhike off that statement by the commissioner. i also probably like to add maybe the director could give us -- or staff can give us training, what our policy and procedures are and even how that compares to other cities and how they handle this.

i learned that to get best practices is usually from other city. maybe some suggestions on outreach to the city to see what they do as part of that. obviously, i echo the concerns that we read about in the newspapers. as i tell my fellow commissioners, we've been doing this long enough to know that usually it's always best to let things kind of take its course. let everybody do their jobs and when all the necessary information is in and it's factually, we can bring it front and we can have a comprehensive hearing on what the next steps are. i'm very cognizant and weary of rank and file being tarnished and reputations being tarnished by people with no any names in articles who have opinions.

i'm always very defensive of that. i want to just stress to the staff that as a commission, i know i haven't had a chance to talk to individually, we are here to support the staff in this difficult time. when things appear in the article that are not backed up or can't be proved, we understand that this is more hearsay and keep on doing their job and keep your head up high. my humble opinion, you're one of the finest departments in the city. you do lot of hard work and hard decisions that have to be made. it's not an easy job to do. you more than likely to have bad news to give to people than good news. lot of people get offended by that. i wanted to stress that fact. we want to stress to the commission, it's important that everything is done correctly and by the law. i'm very cognizant not to say too much at this point.

any other commissioners want do weigh in, more than welcome. we will close the comment on it. >> commissoner moss: i agree, well said. i want to bring back special budget meeting, if this isn't the right place to do it. we started having discussion about additional staffing and the d.b.i. staff just, there's a monumental amount of work. i'm wondering what is that the form as far as like a review of the staffing? where it is, where it needs to be. we are currently enjoying quite a building boom. i know that we scaled back when the world fell apart in 2008. i want to make sure our staff isn't -- i want to make sure they have the resources they need. i'm wondering if, perhaps, an audit is the right word. if staffing is adequate and what

it needs to be. i don't know we would do anything now but certainly i want to start talking about it now instead of right when the budget is discussed. >> president mccarthy: i second that. you brought up the point about that. i noticed that chief building inspector in the housing, there's three or four positions open right now that needs to be filled. i have a question why those positions are not being filled. we had a very -- there was a lot of clerks needed. housing inspectors are equally needed. is it because there is nobody from human resources that have applied for it, is there a list not up to date? i want to know why they are not

filled. >> i wanted to echo some of the statements that were already made and also to encourage staff full participation with any investigation regarding ongoing investigation. i know we've said we will discuss this, i have lot of questions about the database and issues with the database and are we going to find a new database, keep working with the old database. i know this isn't mentioned before, this is an ongoing and this commission has addressed. i want to echo my interest in having that conversation sooner rather than later.

finally, i'm hoping that we can get updates on what is happening with airline c.o.b.s regarding the cola. the last meeting there was a little bit of wait and see. i'm hoping that can be part of the report that we get kind of play by play so we know if there will be a cola, just kind of keep that on our minds. >> next item is 5b, future meetings and agendas. at this time, the commission may discuss and take action to set the date of special meetings and determine those items that can be placed on the agenda and other future meetings of the building inspection committee. did not write down the date. i believe it's the third wednesday in march. is there any public comment on items 5a or 5b?

seeing none, we'll move on to item 6. discussion and possible action regarding proposed ordinance repealing ordinance numbers 38-17 and 19. by amending the administrative code update the hotel conversion ordinance refining definition, conversion and low income house hold, revising procedures for permits to convert to residential units in addition to other requirements. >> good morning commissioners. i'm joined by our housing inspection services. going off court order of prevent ordinances that amended the hotel ordinance.

the court agreed with the plaintiff and voided the entire ordinance. what this ordinance does, it reinstate portions of those ordinances b3817 and 10219 that were not actually challenged by the plaintiff. it's just sort of reinstating stuff that was not challenged. thank you. maybe it will be helpful if you can summarize in detail what is

in here. besides just asking general questions. >> sure. the general things that are happening is that we are updating fines to make them more in line with the current climate, i guess. enhancing reporting requirements for the hotels for their annual reports. then giving administrative subpoena power. we cleaned up some the language of the ordinance. there were some subsections that were referenced that didn't exist. we took out some things like that.

>> can you help me understand the seven-day rental piece? >> this does not -- the seven-day is not dealt with in in part. that was dealt with in another ordinance. the city stipulating only enforce seven day minimum for residential guest rooms. pending litigation which is now finalized, now there's also the amortization period. right now we're enforcing for residential guest seven-day minimum. >> the original ordinance in 2017 was one of the first

updates in many years. it's updated some of the fines and procedures for record-keeping and some of the other requirements in addition to formally changing -- providing the definition for the first time. it allowed rentals seven days or more. that ordinance in 2017 changed to requiring a transient less than 32 days, that was change to less than 30 days would have been tourist transient use. we are repealing both of those. ordinance will change it to 30 days which tacks on the ordinance that changed it up to 32 days. we're going back to the original ordinance which allows seven day rentals or more.

i don't think it moved forward yet, an ordinance that will go back to 30-day change. but it allows much longer period to reach compliance for it to change hotel practices. this ordinance if you want to separate it out, would happen in 2017. where is lot of updates and addition of definition. the definition of the primary subject of the litigation. this ordinance repeat 2017 ordinance, readopt everything that will be litigated out. >> i'm a little confused. the document w -- the document s

seven day. >> 2017 ordinance is what provided a new definition that removed the seven day definition by repealing 2017 ordinance we go back to the way it was written prior to 2017, which is seven days. >> commissioner alexander-tut: t hank you for that. is the question about the rental documentation and the enforcement of comparable units -- comparable rent, is that before us today? >> that is part of the 2017 ordinance that will be readopted. aletoday is to look into whether

you want to adopt 2017 ordinance as it was presented in 2017 but just without the change in tourist transient use. it's all the clean up provisions that we adopted in 2017. there are a few minor clerical edits that were not present in the 2017 ordinance. they are described in the legislative digest. the last paragraph of the amendments to current law. these are solely to update section headings. make sure we reference certain headings, we leave out subsections. so we'll add subsection references.

>> commissioner alexander-tut: h as any of the community organizations stakeholder groups had a chance to look at this? >> i think it went through the process of the board. >> president mccarthy: this goes from here back to committee right? >> this is set for first reading at board of supervisors. it's sent to the rules committee. that's where the rules made the amendments. >> president mccarthy: okay. commissioners to your point, it's going to go to prime time which is the board of supervisors and then it will be introduced after 30 days. if it's voted on -- it has been vetted. any further questions?

thank you. >> is there public comment on this item? >> good morning president mccarthy and commissioners, ron patterson. our firm represents the san francisco s.r.o. hotel coalition and hotel owners. may have known as immigrant families in the city. this ordinance comes from litigation. been going on for a while. getting the 2017 and 2019 proposed ordinances. these ordinances were enacted. we filed suit and we won in court. the judge ordered those ordinances to be repealed. the ordinance before you today, both repeals those two ordinances but it also make new amendments to the s.r.o. ordinance.

that does not comply with the court order. it's also simply wrong. it forces us to object to the ordinance repealing the things that we were fighting against. because we have a problem with some of the other new things that are being stuck into the s.r.o. ordinance. the confusion about what is in this ordinance is well warranted, given the odd procedural mechanism being used here. the ordinance is also unlawful for other reasons. the question about what is in this ordinance is good one. there's very significant things here not mentioned. this is a legislative digest referring to eliminating seasonal tourist rentals in vacant and residential units which has been longstanding. there's a 25% seasonal search and rental.

important part of the business model. under this proposed ordinance, if there's any violation of the h.c.o., those hotels lose that right to seasonal rentals. they lose the right to apply to conversion. this is a definition of substantial property rights without due process. even if there were an in-house hearing on the loss of this. property, such as the director's hearing or other procedure or d.b.i. reviews its own decision, that does not constitute due process. including under the city of oakland, fairly recent case. i note the planning commission should be reviewing this and i don't believe that has been scheduled because it affects planning's processing of conversion applications. i would humbly suggest the right way to go about this is to separate out the repeal of the

2017 and 2019 ordinances as ordered by the court. accomplish that and then start over and look at any new changes that the city might want to make to the h.c.o. until then, it's premature. it conflicts with the court's or and it's illegal. i will briefly note that we had filed an appeal of the ceqa determination. that was rescinded by the planning department. >> president mccarthy: thank you mr. patterson. >> any additional public comment? seeing none, is there a motion on this item? >> i reached out to some of the community organizations that are

close to the community groups that organize with the s.r.o. tenants. they did not know about this. i feel like i need little more time. would it be appropriate or fair to table this to the next meeting? >> certainly something you can suggest. i would note that the amendments were all adopted in 2017. nothing has changed substancively from what was proposed by those organizations when we adopted it in 2017. >> mr. patterson, the question is, is this ready to go back out again? it could be back here again next year if this doesn't succeed in the court. i'm on the fence myself.

have we given this enough terminology mr. patterson, unusual way of doing this legislation. the planning commission should weigh in on this. >> there are no changes to the planning code. the planning commission would not rehear this. the original amendments were made in 2017. again, those have not changed. it's a substantial community presentation to do the 2017 changes, which was passed in 2017. the provision here is that the repeal, because there's several clause if this were to go forward and enacted by the board of supervisors, the repeal would take place immediately. if it were challenged in court for the legal reasons, presented by mr. patterson, the repeal

means our code reverts prior to 2017 without these housekeeping changes. that's if we go forward. if we were to continue, the city would continue not to enforce any of those provisions. it would delay the city's ability to repeal the ordinance as directed by the court. the basis for this ordinance was to repeal the ordinances in the entirety and readopt the provisions that were not subject litigation prior. >> president mccarthy: thank you for that robb. that helps. if we choose not to vote on this today, is this going forward? whether you get a vote or approval -- >> if you choose not to recommend or choose to recommend or just move and push it forward, it would go to the

board. if you choose to continue it, it would have to stay with b.i.c. before it moved forward to the board of supervisors. it would delay our ability to reply to the court's order. >> president mccarthy: i'm just trying to measure here. what level would you like -- i will be respectful, to see that this is correct. what you like? our options will be one and is to make a motion to have this back to the b.i.c. next month. which would give an opportunity for whatever commissioners are if you request more information to be brought back to that meeting. or if you request more people to come talk to this. for example stakeholders and on.

we vote not to approve. >> if you move without recommendation it goes forward. if you move with amendments it would go forward. if you move to continue it, it would stay here or you can move to approve. >> president mccarthy: just that last point about the court. we got a clock on this or is there a time frame? >> we are not enforcing the 2017 ordinance for stipulation and through action and compliance with the court and the decision prior to the court's decision. we elected not to enforce those provisions. we do need to report back to the court on our repeal of the code. >> president mccarthy: the question is, if we wanted to delay a month, what would it really mean? would it derail something? >> it would delay our ability to repeal ordinance as directed by

the court. >> is there any penalties attached to that? >> no, i will be hard pressed to know the answer to that. i think we're getting into, especially from the questions raised here, legal advice that we would to give in a closed session. >> commissioner lee: you mentioned this was heard at the rules committee? is that what you said? >> yes. the item was heard at the rules committee, i believe in second or third week of january. >> commissioner lee: how was the participation level from that public? did anybody come up and say anything about this? >> i believe mr. patterson on behalf of the s.r.o. coalition

attended. there was public comment. i'm not sure. again, just to repeat the brief history of this, these are rather big updates, housekeeping procedural updates that were made in 2017. the action by the court in essentially, what courts decision was, ceqa was not performed properly because of the change to tourist transient rental. that ordinance itself and everything inside including these housekeeping provisions, must be repealed. our action is to repeal the entire ordinance and readopt the provisions that were not subject to the litigation prior. they are not in direct

non-compliance with issues. >> president mccarthy: any further questions? >> is it possible we can go to full session real quick? >> president mccarthy: we have to schedule that. >> i feel that there's a lot of questions and we're going back and forth. i would say it's worth continuing until next month to get some additional questions from the sponsor or from community groups to have a chance to be able to get that through and articulate any concerns they may have. >> second. >> there's a motion to continue this item to our march meeting. was it second?

i'll do a roll call vote on that motion. [roll call] that motion carries unanimously. next item is item 7, discussion and possible action regarding proposed ordinance amending the planning code to existing dwelling units constructed without required permits and extending the waiver through december 21, 2024 in addition to other requirements. >> good morning commissioners. john murray again. this ordinance just extends a

sun set fee waiver for the unit legalization. there's a lot of illegal units throughout the city. this fee waiver was put in place to encourage folks to come forward and use our existing legalization path to go ahead and get those units up to code and sort of on the books. it had a five-year sun set date. that came up on january 1st. we are just extending it out another five years. there's going to be some reporting requirements added as well. similar to what happened with the a.d.u. program. we'll do total amount of money waived through this and number of projects, number of units legalized, sort of breakdown of

single family versus multifamily homes. trying to figure out who's taking advantage of this program and fee waivers. somebody owns multiple properties, how long they lived or how long they owned the property and whether or not the applicant as applied for a building permit at a another residential property in the last 10 years. to get a sense who's using the program and how effective it is, all that kind of good stuff. the department is supportive of. the total d.b.i. fees waived on the order of $660,000. we have seen, since the program, unit legalization program started, we've seen about 300 units legalized. something 1000 folks coming in

to do a screening form and apply for permits. about 500 permits issued. pretty successful. there's nowhere near the order of how many illegal units we suspect are out there. i'll be happy to answer any questions. >> commissoner moss: i'm curious with the department's outreach efforts around the program. just in terms of like you said, you think there's thousands more that have come forward. i'm sure most people who have a unit are afraid of the permitting process. it's certainly a real fear, even for me. that's my job, i'm afraid of it. i guess i'm wondering what if anything the department is doing to encourage people to come forward and perhaps assuage

fears. i assume you help them through the process, right? >> yes. part of the broader unit legalization program, there's screening process that's baked in. what that allows folks to do is come in and talk to our technical services division and see what it will take to legalize the units. lot of the units can be very expensive to get up to current building code. biggest issue we see is ceiling heights. people have them in the garage. what this allows for people to come in and say, this is my situation. what is going to take? it's sort of no questions asked. they can walk away. once they got to point they're filling out a screening form, they are locked in. they have to legalize or get a c.u. to remove the unit.

we have been doing outreach since the program began through sort of usual things next door, twitter. tom has done lot of these workshops. >> for outreach, we attend even myself, we attend those outreach programs. then we do advertisements to the radio and tv and advertise in the newspaper. also, i encourage them to come in. they fill out the screening form without their open.

we tray to encourage them. some people don't want to pay tax. also, i encourage them, once they come in, in the old days you can remove the unit, now you cannot remove the unit. you need to fix it. if you need to remove the unit, you need to go through the permit hearing. that's what we try to encourage them. we are trying to tell them come in. this legalization, besides the building department need the fee.

a.d.u. is only waived in the inspection. any other questions? >> commissioner lee: you're saying this is only building department waiving the fee? >> that leads me to my question about the amount of the fee that is waived. could tell us on average how much per project will they be saving? >> we're pulling those numbers together. it's about $5000 back in the envelope. that's planning and d.b.i. it's specific fees. it's not a blanket. >> maybe you can use that amount as part of your outreach effort to let people know they can save $5000 if they do this.

>> good morning commissioners. daisy quan, legislative aid. i'm happy to wait for public comment. that's fine too. thanks for considering the fee waiver suspension for the unit legalization program. this came out of couple of constituents who were planning to do the legalization at the end of the year and realizing that weren't eligible for the fee. we thought it was good policy to continue the fee waivers for the next five years. as we addressed the affordability crises, not only look at the number of units you about also the condition and the quality and the affordment of these units and that applies to our preservation work and ensuring that the units we have are safe and desirable. what you all do as a commission. our constituents include single

family homeowners with u.d.u.s. some homeowners keep each unit vacant due to the risk. this is undesirable position for everybody involved. we heard from both constituentties this desire to come out of the shadows. we know all options need to be on the table. we are working to build more housing including 100% affordable housing, educator housing. supervisor mar is working on incentive program for new a.d.u. construction. at the least, these fee waivers for the legalization program ought to continue. it's just one additional preservation tool for us to product our relatively affordable housing stock. we did talk about with d.b.i. staff some tinkering on the reporting requirements to make it easier for the department and we're happy to look at any sort of amendments to make that reporting easier.

>> any public comment on this item? is there a motion? >> i move to approve. >> second. >> motion and second. commissioner tam. there's a motion and second to approve this item. i will do a roll call vote. [roll call] motion carries unanimously. next item is item 8. director's report, 8a, update on d.b.i.'s finances.

>> good morning commissioner i'm deputy director for department of building inspection. before you is the january 2020 monthly finance report. it includes revenue and expenditures from july 2019 through january 2020. i'll just do couple of highlights. on the revenue side, revenues remain strong. we've actually collected $46.3 million this year compare to about $45.9 million last year. just 1% increase. that's due to two revenues that we talk about lot, plan review and building permits. we're both projecting to actually collect more than budgeted on the expenditure side. this year, we're at

$38.5 million or 9% more than last budget year and that's just a reflection how much our budget grew over one year because of salaries but also because of services out of the department and lot of expenses in our work orders particularly for our 49 south van ness project. overall, permit activity remains the same about 22,000 permits. we are seeing valuation is lower. 24% decrease from last time this year. because building permits and plan review revenue fees are based on valle valuation. january we assumed we'll be lower because last month, we had talked about how we really had a lot in december because of the code change. we collected $4 million in one

month. maybe january may have ticked off little bit. overall, we're still doing well. our revenue still remains pretty strong. i'm happy to answer any questions. >> president mccarthy: thank you deputy director. >> next item is 8b, update on proposed or recently enacted state or local legislation. >> hello again. john murray. legislative affairs. >> president mccarthy: this is the john murray hearing. [laughter] >> so. you heard the previous two items on hotel conversion and legalization. last week you heard about successful business interest compliance deadline ordinance. other two outstanding items right now, the ordinance proposing buildings required to meet energy standards if with natural gas. mayor signed a legislation last

month and it took effect this week. that's probably last you'll be hearing of that for now. then the plumbing code cross-connection control, this has to do with backflow preventers for like soda machines. the ordinance was approved by the board of supervisors and awaiting the mayor signature. as soon as that happens, that will go into effect. that's it for me. >> president mccarthy: thank you. >> next touch is 8b, update on code enforcement. >> good morning. i'm director of the apartment building information. compare to last month, the major projects slightly increased by .224%. any other questions? >> sorry about that, that was 8c. director just gave updates on major projects. now we're on 8d, update on code enforcement. >> good morning commissioners.

january 2020 numbers, building inspections performed 5411, complaints received, 491. complaints with first notice of violation sent 69, complaints received, 298 abated complaint with notice of violation, 62. house and inspection performed 839. complaints received, 323, complaint response 24 to 72 hours. complaints notice of violation issued 140, abated complaints 265. number of cases sent to director's hearing was 53. routine inspection 95. code enforcement number of case

sent directly to hearing is 62. number of cases under advisement 30, number of cases abated, 164. code enforcement inspections performed 279. any questions? >> president mccarthy: to my new commissioners, do you understand all that? it was one thing back in the days where we had huge backlogs this were sitting there. the deputy director was very involved back then. it's very important that this report keeps us up to speed on that volume.

thank you. that's why we get this report even though it's pretty much on target every month. our way of keeping check and balances. >> any public comment on the director's report items 8a through d? seeing none, item 9, review and approval of the minutes of the regular meeting of january 15, 2020. >> president mccarthy: anybody have any comments? >> i move to accept the minutes. >> second. >> there's a motion and second to approve the minutes. any public comment on the minutes? seeing none, all commissioners in favor? >> aye. >> any opposed? minutes are approved. next item is 10, adjournment. motion to adjourn? >> i move. >> second. we are now adjourned. everybody in favor.

adjourned 10:58 a.m. >> a way of life in san francisco. when the next major quake hits, the city hopes a new law requiring seismic upgrades to five story buildings will help keep more residents safe and sound. tell me a little about the soft story program. what is it?

>> it's a program the mayor signed into law about a year and a half ago and the whole idea behind it was to help homeowners strengthen buildings so that they would not collapse. >> did you the soft story program apply to all buildings or building that were built in a certain time frame? >> it only applies to buildings built in the time frame of 1978 and earlier. it's aimed at wood framed buildings that are three or more stories and five or more units. but the openings at the garage level and the street level aren't supported in many buildings. and without the support during a major earthquake, they are expected to pancake and flatten ~. many of the buildings in this program are under rent control so it's to everybody's advantage to do the work and make sure they protect their

investment and their tenant. >> notices have gone out to more than 6,000 owners of potentially at-risk properties but fewer than one-third have responded and thousands might miss an important deadline in september to tell the city what they plan to do. let's talk worst case scenario. what happens in a collapse? >> buildings have the tendency of rolling over. the first soft story walls lean over and the building collapse. in an earthquake the building is a total loss. >> can you describe what kind of strengthening is involved in the retrofit? >> one of the basic concepts, you want to think of this building kind of like rubber band and the upper three floor are very rigid box and the garage is a very flexible element. in an earthquake the garage will have a tendency to rollover. you have to rubber band analogy that the first floor is a very tough but flexible rubber band such that you never drive force he to the upper floors.

where all your damage goes into controlled element like plywood or steel frame. >> so, here we are actually inside of a soft story building. can we talk a little about what kinds of repairs property owners might expect? >> it's a very simple process. we deliberately tried to keep it that way. so, what's involved is plywood, which when you install it and make a wall as we have done here already, then you cover it with this gypsum material. this adds some flexibility so that during the earthquake you'll get movement but not collapse. and that gets strengthened even more when we go over to the steel frame to support the upper floor. >> so, potentially the wood and the steel -- it sounds like a

fairly straightforward process takes your odds of collapse from one in 4 to one in 30? >> that's exactly right. that's why we're hoping that people will move quickly and make this happen. >> great. let's take a look. so, let's talk steel frames. tell me what we have going on here. >> well, we have a steel frame here. there are two of these and they go up to the lower floor and there is a beam that go across, basically a box that is much stiffer and stronger. ~ goes so that during the earthquake the upper floor will not collapse down on this story. it can be done in about two weeks' time. voila, you're done. easy. >> for more information on how to get your building earthquake ready,y,y,y,y,y,y,y,y,y,y,y,y,y,