>> please be seated. good evening. welcome to the march 11, 2020 meeting of the san francisco board of appeals. president ann lazarus is the presiding officer joined by vice president darryl honda, commissioner rick swig, tanner and santacana. to my left is deputy city attorney who will provide the board with any needed legal advice. at the control is the process clerk and i'm julie rosenberg, the executive director of the board. we'll be joined by representatives from the city departments that have cases before the board this evening. up front, we have scott sanchez, also representing the planning department and planning

commission. as well as andrew perry, senior planner with the office of the zoning administrator. and up front, we have joseph duffy, senior building inspector. and given the coronavirus, we're taking a few special precautions. we would appreciate if you would -- the public would use every other seat. if you're together and you don't mind sitting next to each other, that's fine. additionally, please use hand sanitizer when you come up to the use the equipment. please don't touch it. he can adjust the microphone as well as the laptop and the projector. if you're sneezing or coughing, please leave the room and make sure you sneeze or cough into your arm. if you feel sick, please go home. physically sick, not related to your case. the guidelines are as follows. the board question that you silence all phones.

please carry on conversations in the hallway. the board's presentation are appellants, respondents, each given seven minutes. three minutes or rebuttal. members of the public who are not affiliated with the party have up to three minutes to address the board. four votes are required to grant an appeal. to assist the board, you're asked but not required to submit a speaker card or business card to board staff. speaker cards are available on the left side of the podium. the board reserves the right to not call an item after 10 p.m. if you have questions about a rehearing, the rules or schedules, speak to staff during the break or visit or call the office. this meeting is broadcast live

on sfgovtv, cable channel 78 and will be rebroadcast an channel 26 at 4:00 p.m. the video is available on our website and be down loaded. we will swear in affirm all those. please note that any member of the public may speak without taking an oath. if you intend to testify tonight and wish to have the board give your testimony evidencery rate, please stand and say i do. so whoever is going to testify, if you could please stand. do you swear or affirm that the testimony you are about to gives the truth? thank you. please be seated. commissioners, we have one housekeeping item. for item 7a through 7d, that is for appeals number 1907, 99, 100 and 101. the 24th street tree removal.

the parties have requested continuance until may 6. since it is on the calendar, we need a motion and vote. >> move to continue. >> i'll motion. >> any public comment on the motion? seeing none, we have a motion from vice president honda to move the appeals to may 6. on that motion, santacana aye. lazarus aye. tanner aye. swig aye. so that motion carries. 5-0. and those appeals are moved. item number 1 is general public comment. this is an opportunity for anyone who would like to speak on a matter within the board's jurisdiction but not on tonight's calendar. anyone for general public comment? okay. so we will move on to item number 2. commissioner comments and questions. no? okay. we'll move to item number 3. commissioners before you for adoption are the minutes of the march 4, 2020 board meeting.

>> any changes, corrections? >> no. motion to approve. >> okay, we have a motion -- any public comment on the motion? okay, we have a motion from commissioner swig to approve, to adopt the minutes from the march 4th meeting. on that motion, santacana aye. honda aye. tanner aye. that motion carries 5-0. we are now moving onto item number 4a and 4b. these are appeal numbers 20-004 and 20-005. gutterman and derosa versus the building of department inspection. subject property is 333 el camino, appealing issuance to peter and michelle carter of 4

floor addition. this is permit number 2018-09-271583. we'll hear -- have you decided, the appellants, who is going first? mr. gutterman, please approach. you have seven minutes. let me know if you need help with the equipment. >> i was going to do the slides -- he mentioned he would run the computer for us. >> on the laptop? go ahead and we'll wipe it down after, before the next user, or do you need assistance? >> that would be great because -- >> okay. >> welcome. >> thank you for your time and consideration of this matter. while this issue is very important, nothing is more important than everybody's health in these unsettling times. so with that, may i wish you good health. hello, my name is scott gutterman, i'm here with my

wife, we share property to the south of the 333 el camino delmar. our appeal presents four challenges. neighborhood opposition, a design that manipulator the building code, encroachment on our privacy and a project that threatens to change the character of the neighborhood by breaking new ground and setting precedent. can we go to slide 2. there is strong neighborhood and community opposition to this project. the number of neighbors are very upset about it. written a letter explaining the project should not be allowed due to the height was misrepresented. the current project is not in compliance with the special conditions permit. even after hearing the arguments, they have no action to the letter referring of opposition, dated august 5, 2019. slide 3. with respect to the opposition,

what is relevant here is what i would call the strike zone. these are the houses most impacted by the project and directly to the south of the project on the east side of 27th avenue and the west side of 26th avenue. there is overwhelming opposition from key stakeholders. one of 18 homes to the south of the project has written a letter of support in the strike zone, while 11 of 18, 61% have written letters of opposition. the one letter of support is from a family in the middle of their own construction project. while the developers are aggressive campaigners, writing multiple letters, they were unable to turn the group of opposers to support their project. slide 4. the developer refuses also that they have support from the two neighbors that are most impacted by the project. the adjacent neighbor to the right and to the left. we would argue those two neighbors are the least impacted and have the most to gain, yet their support is still

conditional. both neighbors are told the developer they would not support an addition extending into the yard. this is wrenched in the -- referenced to the response on august 19. slide 5. the building department conflates dormers. the interpretation by the planning department infers that a design is a two-step process. first, a structure could be built with a sloped roof and then a dormer added. what purpose would the sloped roof serve? certainly not functional or habitable space. therefore, the design is left with no choice but to find a way to convert the slope roof into habitable space, hence the dormer. it simply does not work without it. this manipulates the spirit of the code. nowhere is it inferred in the code that the dormer window can be the basis of creating a sloped roof as it is in this

case. slide 6. slide 7. this is the a vault and three, a definition of dormer, specific window is a gabled extension of attic room through a sloping roof to allow for a window opening into the room. it's not itself the room. next slide. we did a wikipedia search and you the topic of dormer windows. we came up with a number of illustrations. all these are relatively small additions to rooftops. nothing that looks like the developer's project. next slide. we did a visual inspection of our neighborhood and we can't find anything that looks like the developer's project. on slide 8 here, these are -- this is the -- these are two homes on 26th avenue, around the corner from 33 el camino.

slide 9, two homes on scenic avenue, right around the corner from the developer. this is what a dormer window looks like. this highlights that the project dormer is not compatible with the surrounding neighborhood. what the projects calls a dormer is not a window by any conventional or practical application. an additional room, own upward sloping roof. this modern design is pushed to the rear of the building to contort every inch of the design to meet effort of compliance. the structure is hung off the back of the building to borrow space in order to lower the midpoint calculation. this avoids a review by the historic preservation commission. the developer claims that there is significant distance between our home and their home.

the distance is 60 feet. in baseball, the pitcher's mound is 60 feet. i can tell you that the pitcher's mound is not a significant distance from home plate. the developer claims there are large trees that will minimize the impact. while we do have a large tree in the backyard, it does not minimize the impact from our home. these are views from our second and third floor. all these are east-facing lines of sight from our home. you can see from the second floor and third floor, we'll have a direct line of sight to the new project. you can see here the designs uncharacteristically tall and out of scale. it towers above the surrounding area. i should note thinks the arc tech's rendering and it looks out of proportion to the homes to the left and right. furthermore, if you're in our backyard, would you remembyou'r

the peak of the roof. [bell ringing] go the last one, if you would. so, the last point here, this is what the developer is proposing. and this is what we're going to end up with in our neighborhood if we allow this project to go through. every roof line is the same height. it's been there for 97 years. this is what we're going to get. if you don't deny this project. thank you. >> thank you. we'll now hear from mr. derosa. >> good evening, welcome. >> thank you. good evening.

my name is frank derosa, my wife and i live at 126 27th avenue around the corner from 333 el camino. we were before you in 2013 when you ordered a special conditions permit to approve the settlement agreement between us, the guttermans, four other neighbors and the current owners, the existing owners, the same owners of 333 to install a roof deck. they now want to install a 4th story penthouse. the owners admit that the height limit in the settlement agreement and the permit is incorrect. and we believe that the height limit in the current permit drawings is also incorrect.

this is the rear facade of the 2013 settlement agreement. and the special conditions permit. note the circled 35-foot, this says 35-foot height limit. you may want to zoom in on that. it shows an arrow and this line here that is the 35 foot height limit at the existing roof of the current building. the language, the arrow and the black line, are the owners' notations. the language doesn't say approximate or assumed as the owners' brief states, it says 35-foot height limit. no ambiguity and clearly no room for a penthouse above it. the next slide is the owners'

2019 proposed rear facade. it's exhibit a of the brief. this existing roof line, this is their drawing, this existing roof line is in the same location as that 35-foot height line that we just showed you in the first slide. their new height limit that accommodates this new penthouse is six feet higher than the one they showed us -- all of us, in 2013. not six inches, six feet. the owners argue that the height limit was not relevant to the settlement agreement and in any case, it was a private agreement. on the first point, the height limit was absolutely relevant. we argue that the proposed stair penthouse leading to the roof deck was a major structure under the code. and would be above the height limit. so the location of the height

limit mattered. we agree this was a private agreement. we're before you today because they grossly misrepresented the height limit, the central issue in the case. and you relied on that information in ordering the special conditions permit to be issued with the height limit as noted. the owners say they're free to file for future permits. we agree. they have a 30 -- 4300 square foot home with a deep backyard. we didn't say they couldn't do any improvements. but their drawings showed that they couldn't build -- they couldn't build another story above that because the height limit was -- that was shown was at the existing roof line. it would make no sense for us to

spend the time and money to argue over -- to protest a roof deck if we would agree to come back a year or two later -- we would agree they could come back a year or two later and build a full penthouse. that is what the doctrine of reasonable reliance is all about. there was no reason for there to be language to prohibit a fourth story in the agreement because the height limit was at the existing roof line. imagine how people could gain the system if they could present a false set of facts and then come back later and say, just kidding, sorry, these are the true facts. in a quasi judicial proceeding such as the board of appeals, people are accountable for their actions. please don't allow them to take advantage of their material mistakes.

the proposed penthouse is above even the revised height limit. i'm going to ask mr. ron here to explain why the survey points chosen by the owners' architect overstate the height limit by 1.4 feet, which would cause the penthouse drawings to exceed the height limit. >> how much time? >> 1 minute 20 seconds. >> i was asked a surveyor with four years experience here in san francisco, to calculate the natural grade as best i could at the rear building line. at the center line of the lot. what was given to me was a top

graphic survey of the site by mirror consulting incorporateded. what you see underneath, you can't see the grades very well, but that's that survey and what our office did, we put in the boundary, we put a line down the center line. we showed the back of the building and the front of the building. and what we did was a calculation. the only way that i -- know how to come up with natural ground, doing this many times in my 40 years, in a lot like this that has different terraces is to go to the back of the line, the center of the lot and come up with grade. 127.0 based on the survey. to go to the very front of the lot, back of the sidewalk, right at the property line at the back of the walk and i did. 117.6 is the existing grade. [bell ringing]

>> you'll have more time in rebuttal. i'm sorry, your time is up. that was a minute and 20 seconds. >> i have a question for mr. derosa. so your fellow appellant did not mention the settlement agreement. you are not longer asserting that the settlement agreement by itself just up holding this -- justifies upholding this appeal. your argument now is that the plans that were submitted in connection with the agreement to this body were a misrepresentation of fact or now the new ones are a misrepresentation of fact? you're not arguing that the agreement itself is what we should base our decision on, is that correct? >> i think so. i'm not quite sure of the distinction. we had the settlement agreement. we entered into the settlement agreement knowing that the height -- knowing that the

height limit was at the existing roof line. so we reasonably -- >> no, i heard the presentation. what i want to understand, are you asking us to enforce the settlement agreement or not? i'm sorry, the question is for mr. derosa. you are, okay. that's all i needed to know. >> thank you. we'll hear from the permit holders. >> i didn't see that. >> we just found out. >> sorry i did not make this disclosure. i am a party -- partner a

project that has hired this law firm. their appearance before this body will not have an affect on my decision this evening. considering that the name is in the room this evening. >> they didn't tell us in advance just so you know. >> i just saw tom sitting there and realized that. >> thank you.

you're responding to two appeals. you have 14 minutes. >> madame director, they haven't fixed the air-conditioning yet? ready? >> yes. good evening board members. my name is michelle carter and my husband peter and i are the owner of 333 el camino, where we've lived six years. if anyone asked us in 2013 if we would renovate our house again, we would say no way. we now have two little girls and hope to have another child. we have a full and busy household with every bedroom occupied and my husband and i work from home.

we have three sets of parents between us, they love visiting for extended periods of time. we want to have room for them to stay with us. this 624-square foot addition accommodates our growing family needs providing additional bedroom, bathroom and home office. in the past 18 months we've gone to great lengths to communicate with our neighbors. we spoke to all neighbors to inform them of our plan, including appellant gutterman. we also delivered many letters inviting communication conducted at least five meetings and attended another meeting with derosa and architect at the planning department. because we've invited communication and because our project is sensitively designed, we have the support of 20 neighbors as shown on this map, including several across the street. and the neighbors immediately to the east arched west.

as -- and west. as you can see, there is not one neighbor opposing the project on our street. the two next door neighbors are directly affected and they're both supporting the project. please note there are three parties who initially opposed our project during the d.r. process. they were the only three parties willing to talk to us after the hearing and all three are no longer opposing the project. please note they still cite them as part of the opposition. after learning more, peter temple and janet have said they're neutral on the project and the planning association of the richmond have told us they no longer are actively opposing the project. the current project design preserves our small rear yard which is one of the main reasons we fell in love with our house. our children and friend, including many neighborhood children play in the backyard

regularly. although we hope our 20 letters of support so how extensive our outreach has been, we understand this is not a popularity contest and we know although our reasons choosing to renovate are personal and matter deeply to us, they might not matter to us. what is most important here is that our project is 100% code compliant and consistent with the neighborhood character and residential guidelines. we wish there was a way to accomplish the project without impacting anyone. by choosing to live in close proximity to others, we all may see modifications people make to each other's homes. families should be able to modify their home as long as they're code client and ours is. we request that the board deny the appeals and up hold the planning commission's decision as proposed without modification. thank you.

>> good evening, members of the board. tom, attorney for the carters. focusing on the 2013 settlement agreement and its inapplicability to the current project. i want to talk about the drawings as well. the 2013 roof deck settlement was a private agreement entered into by the carters, appellants and two other neighbors. it addressed using a skylight for roof access and keeping the deck railings within 18 inches of the top of the existing top. it did not mention restricting future grants. the carters fully complied with the agreement when they built the roof deck. the settlement had architect drawings attached. we've included that in the brief, as did the special conditions permit approved at that time that confirmed the

work that was the subject of the agreement. the appellants now claim that unsurveyed height approximations on those drawings did something more than far more describe the work to be done at the time. he claim the drawings gave assurance that nothing higher than the roof deck could ever be built and now the carter family should not be able to build anything on the roof. the drawing by law and just as a matter of commonsense cannot be relied upon for that purpose. the specifics of the height limit were not relevant to the 2013 drawings because all elements on the roof deck and access were exempt from the height limit. therefore, no survey was included or required, nor did any of the parties involved ever request one. heights were shown for reference only repeated ily in the -- repeatedly in the drawings there were drawings with approximate. the red line and arrow on the

brief was added by the appellants for purposes of this appeal and attempting to illustrate their claims. this red line was not included in the original settlement drawings. again, the agreement was a private one drafted by mr. derosa's attorney. it was not recorded nor made a condition of any city approvals. this agreement is no different than other such private settlement agreements that this board has determined are not subject to the board's jurisdiction or relevant to its review. as proof it was understood by both sides that an application for a future project such as this was allowed, i refer to you an e-mail from the derosa to the carters on august 22, 2013 while the agreement as finalized. mr. derosa writes -- can you focus in?

i think all of us intend this agreement to apply to this permit proceeding. if five years from now you're a glutton for punishment and want to -- you are not restrained by this agreement and what you proposed. >> hello, i'm the project architect. we designed a project that is sensitive to the neighbors and fits into the neighborhood. it meets with planning code and conforms to the residential guideline. this modest 624-square foot addition is set back 27 feet from the front so it is not visible from across the street and only minimally visible from other points. the design is very low in profile with modest interior ceiling height close to minimum and a roof that slopes to the

rear. the green line shows the existing roof line with the proposed addition above it. the addition is appropriate for the neighborhood. as shown here in yellow, over 30% of the homes within half block of the project site have four stories, or are over 35 feet in height. those over 35 feet are also outlined in blue. one of these is appellant gutterman's home. the next slide shows photos of the block and surrounding buildings from the roof of the carter's house. the neighborhood includes four story homes, penthouses, tall sloped roofs and apartment buildings that creates a multilayered surrounding context. many roofs, including that of derosa, have primary slopes and dormers like our proposed design. as you can see in the image, the closest point to the appellants's homes are located 60 feet as was previously noted and 100 feet from the carters

home. the light, air and privacy will be protected. in response to appellant gutterman's claims about privacy, this carriage house door, the only opening facing the carter home is screened from view by the large tree, shrubs and fence. the south-facing windows of the addition were designed as a clearer story starting 6 feet 4 inches above the finished floor to provide light into the interior of the proposed addition. occupants of the additions will not be able to see the appellants' homes through the windows. the gutterman will perhaps have more privacy with this addition than the open roof deck. the windows of the home are obstructed by a wall of thick trees and shrubs. the view toward the carter home is obstructed, although it was trimmed today. any potential impacts on reduced due to the difference in

elevation between the properties. at the rear, the carters' bottom floor is nearly halfway underground and the back of the home is 10 feet below the elevation of the appellants' homes. because it's situated to the north side, it will not shade the mid block open space. it will not cast a shadow on either appellant. we worked closely with planning staff to confirm that the project is code compliant. the opposition claims our use of a dormer is incorrect. the brief states that the purposes of a dormer as described in the exhibit, according to bulletin number 3 is to increase the occupible floor area. that is exactly the way we have used this code. the appellant is mistaken in thinking that dormers are only to be used in existing spaces. we have several precedents where they have been been included with new forms. the dormer is less than 20% of

the roof area. that particular proportion limits the amount of dormer so the dormer can't be the entire roof. we worked carefully with the planning staff to make sure we calculate the height limit. this is validated on specific queries, including a meeting with scott sanchez and at the carters' home earlier today with scott. appellant derosa cites claims from various consultants with regards to which survey points to use. these are inconsistent and contradictory with one another and inaccurate. ben ron stated a method where he uses a center line of the property. we know that to be inaccurate. the appellants's claim is based on the high level point being in the middle of the yard. the code dictates we use grade points along the side property lines. at the west property line, this photo here on the screen was taken in 2012 before the carters made landscape improvements and

before they excavated the lawn area. the end of the landscape area is level with the brick patio, this represents the prior and current grade. keep in mind as we look at the next image, this photo was taken recently from a slightly different angle. the same landscape area along the fence in the previous photo exists. although the grass and the patio is lower, the original grade still runs along the west property line. begins in the landscape area and continues behind a retaining wall behind the stairs all the way to the rear facade of the house. we know this level grade continues along the west property line because of the presence of the retaining walls. here's a photo from the carters' renovation in 2013. it's taken from standing inside the house looking outtoward the yard. the top staircase is not yet built, but you can see the stairwell, the two retaining walls. at the time of the renovation, the walls were created to hold

back the original soil level we saw in the 2012 photo. yesterday to make the point irrefutable we cut a hole in the siding as depicted in the photo. at the eastern property line, the grade is also level. the point taken in the easterly landscape is proper to generate the basis for the height limit on that side. the average of those two points is then used to figure out what the height limit genesis point should be. in summary, the points we used to calculate the height is appropriate and it does not exceed the allowable building envelope. >> vice president honda: thank you. >> thank you. does that conclude the presentation? you had 40 seconds, that's fine. we'll move on to the planning department.

>> you have 14 minutes. >> scott sanchez. the property at 333 el camino is within rh-1 zoning district and the 40-x, that means that the height limit is 40 feet, but under planning code 261, depending on the lot configuration it's reduced down to 35 feet. 35 feet is an odd number. it's halfway between 30 and 40. usually you have 10 feet per story, so it's something that you can, it's possible to have a four story building legally in an rh-1 district meeting the 35-feet height limit, but it's not something we see often. it's something that can be done more readily on an upsloping lot, because under the planning code, 260, height follows grade on upsloping lot. so it may be 35 feet at the front, you're going to go at a

straight line. you'll have more than 30 feet above your curb level when you get to whatever the rear of the building. so it is something that can be done. it's not common. and often requires projects to be contorted. and to the appellants's art they're manipulating the design of the building, i would agree with that. it's a fair observation. this is probably not the room form they preferred, but they're doing it in a manner to comply with the planning code. and we have found repeatedly that the project does comply with the planning code. the project was submitted in 2018, underwent neighborhood notification and between april and may of 2019, there was discretionary review filed and hearing held on may 5, 2019. many of these issues were raised at the hearing and at that hearing the planning commission unanimously denied the d.r. request and approved the project as proposed.

a couple of issues that have been raised here, one in regard to the settlement agreement. maybe i'll address that first. and this board is no stranger to settlement agreements as arguments for precedent. i know certainly the planning commission had an item, it was appealed to this board -- >> in the same neighborhood. >> where the planning commission had basically the only finding for taking d.r. and denying the project as proposed was they relied on a previous settlement agreement. i think this board rightly found they didn't make independent findings with code compliance. we don't enforce the private agreements. the party is not part of those and does not enforce it. there may be other land use reasons for making a decision, but enforcing a private agreement cannot be the sole reason for making a land use

decision. it's been argued that somehow that decision, which did inaccurately show the height limit, that should carry on. we have to look at every permit and ply the planning -- and apply the planning code to that permit. as stated, the original permit from 2013 that proposed a roof deck which is allowable above the height limit, 10-15 feet for penthouses, railings up to four feet above the height limit. you can have a roof deck even higher as long as the railings are open, so the height wasn't really a question as part of that proposal, but that permit which did go through 311 notification, i believe and did not have any d.r.s, but it was appealed to this board and parties came to an agreement removing that roof deck and the board adopted that. i didn't see anything in the board's decision at that time that would prohibit them from

re-filing in the future. there were no specific findings. the board is often accommodating to the parties that appear before it and if an agreement is reached, the board will adopt those revised plans. we look at that on a case-by-case basis. was the board taking the action to facilitate a settlement? so in this case, they had the ability to go back, go to the planning commission, now it's back to the board of appeals. we'll hear what the board, what you think about the permit in maybe half an hour i guess. after i go through the rest of the comments. >> vice president honda: you only have nine and a half minutes left. >> there is rebuttal and public comment. a comment was made about the historic preservation commission. this is not within article 10 or 11 district. there was nothing done here to avoid review. they don't have jurisdiction on this as i understand from staff, because the building and how

it's rated. so there was no process that was avoided by the application. we have found it to be repeatedly compliant with the residential guidelines. it's set back substantially from the front property line. to comply with the code is minimal as can be to comply with the code. you see it having minimal impact on the neighbors. it seems to be related to the view. i mean, this is the property that has appeal this would be the view corridor. i don't know if there is existing view to the bridge, but it's a view corridor to the presidio, but again, views are not protected. in regards to issues raised with the height calculations, under planning code 260, i wish it was as simple as mr. ron alluded. that would be much easier on all of us, but it's not. there is a couple of things that

come into play. first, we don't have an absolute height limit. some jurisdictions no portion of a structure can go over a certain height. that is not what it says in our code. if you have sculpted roof forms it's the average height. if you have a peak roof. any number of roof forms, we don't measure to the top, we measure to the midpoint. so that is why sometimes we will see more creative roof forms here, vault, or butterfly, whatever, trying to maximize as much as they can but have something that complies with the code still. so what they are doing and what they're proposing with this shed roof essentially and taking it to the midpoint, that is correct under the planning code. second, in regards to the concerns raised by dormer, the planning code doesn't define dormer. planning code 260 is where most of the regulations to dormers appear when you do have dormers

and they are above the height limit, they are limited to 20% of the roof area. what they are proposing here as the dormer, the rearmost portion, is actually underneath the height limit, so it's not subject to the 20% limitation, because it's under that plane that is created establishing the height limit. so they're allowed to do what they have proposed. we have reviewed this multiple times and extensively with the zoning administrator and confirmed this is correct. with regard to the bulletin number 3, the purpose of the document is to define limited projects which are approvable without notice. that is what all the standards that are contained therein are the purpose is to say, if you meet those standards you don't need notice. if you don't meet the standards, you may still be code compliant, but you need notice. this project has gone through notification. this is a vertical addition and this is a new floor. no one is trying to say that is not the case. it can be challenging to get

that within a 35-foot district, but what they have here does comply. in the height, we don't take the point at the rear property line, at the elevation of the rear property line and the front property line and average the two. that would be too simple and that's not what the code has us do. they have us take it every single cross section. we're supposed to perfectly follow the topography. but you know, it's far from perfect. people have drop points where they can, but it's definitely not taken from the front to the rear property line. would be great if that was, make life easier. hasn't been that way since we've had height limits. so we have to do our best to find out where the natural grade is. the corrode, where you -- code, where you take grade from, it's

the natural or assumed grade of the property. imagine, you have someone doing a development and as part of that they're doing a patio, maybe excavating out in the back to have a patio. when you come back for the next project, you don't take height where the new excavated area is. you take where it used to be and this makes it all more challenging to deal with. we're trying in this case to have a reasonable application interpretation of the planning code. and i've met with mr. derosa. i've met with the permit holders. i did a site visit this morning. and from all the information that we've gathered, what they are doing here is a reasonable application of the code. and i did observe that they drilled a hole in the property, so they're serious about demonstrating. this they haven't held -- they haven't held anything back. we can see the top of the

retaining wall at that point and that's actually taller than the point they used on the plan. so i mean, we're trying tour best, everyone is trying their best. they didn't even go for the best-case scenario. they could have gone for a higher elevation site. i reviewed it again with the zoning administrator that they could use the higher point there. on the east side property line, it's hard because there has been work, i think, that the patio was excavated out. it doesn't show clearly on that previous permit, but the scope of work wouldn't have necessarily required that. they wouldn't necessarily require a permit for the excavation that occurred. so i tried my best to make an observation on the adjacent property and there is argument that the native grade may be higher than what they're showing here as well, because there is a small wall retaining wall on the adjacent property.

it does drop off the other side to stairs. but we're trying our best with the points here. if anything, it's coming down to inches. and you know, i think that what they're doing is reasonable. and the board may have a differing opinion. we certainly tried our best to come to a conclusion here. and from what we've seen, we think that what they have proposed and what has been approved by the planning commission is reasonable and is code compliant. so with that, i will yield the rest of my time -- >> vice president honda: thanks. i have a question. >> you also used 14 minutes, but it's okay. so i read in the brief that they checked and again having that line of 35 or 40 feet is sometimes difficult. i saw in the brief that the alexander kirby is the planner in charge of that, right? >> i think she had handled it one point in time, but when it

went through the steering process, it was reassigned -- i think she was involved in the early on in a project review. >> vice president honda: the only question i have -- i have two. how much higher could they have gone in bulk and height? >> they're maxed out. from what they're showing on the plans right now, this is basically the biggest they could do in terms of the height. in terms of the rear yard, they have a 30% rear yard requirement. and i don't have all the dimensions in front of me, but they could certainly go further back in a horizontal addition quite a bit compared to what their lot coverage is now. >> that's a pretty unique use of a dormer. does it expand the whole width it looks like by the plan? >> yeah, but -- yeah. they are doing everything -- you can call manipulating, creative. -- >> you're complying with the

code, but is the first time i've seen this application come before me. i thought that was unique. so there is no distance or width span that is set in regards to adding a dormer. >> no, because this all below the height limit, none of the restrictions would apply. the code doesn't define dormer. >> kudos. >> yeah. we did have discussions about this. because some of the limitations in the code, or where the code is, this is allowable. >> vice president honda: thank you. >> so just to confirm, you're comfortable with the height correct? yes. >> commissioner swig: there are two issues, change the height and changing the neighborhood and accelerating a trend that would fulfill the fears of the

appellants. can you address the character of changing the character of the neighborhood? do you feel there is anything there? >> certainly that would be part and parcel that the planning commission considered and how we apply the residential guidelines. and the planning commission found it to be compliant with the guidelines. it's not an element that is out of place in the neighborhood. the setback from the front property line. i would say it's not necessarily designed to be as minimal as possible, i'm sure it's one of their consideration, but to comply with the code it has to be in the shape that it is, which i think is minimal. we don't have an issue with it along those lines. certainly, the board may find otherwise, but it's the department's position this complies with the guidelines. >> commissioner swig: thank you. >> when you say that the dormer is completely -- >> microphone.

>> when you say the dormer is completely under the height limit, is that taking the midpoint of the dormer slope or the peak? >> that's the absolute. so the dormer you'll see slopes and it's sloping like that because that is where the height limit is, so it is -- the dormer goes right up to the height limit. >> thank you. >> i have a question. you described thoroughly the ways the height is measured. can you talk about the staff review process? for the appellants, which i understand their position, hey, these other drawings had dimensions, when you add it up, looks like there is a little bit of room, not a lot. some of the drawings from 2013 don't have dimensions in term of height. was the height at that time relevant to the roof deck, or it's more relative to the top of the roof versus the overall height of the building itself?

>> personally, i think plans should be accurate regardless of the scope. it should have been accurate. it does not -- now we know it was not accurate. but in terms of how that inaccuracy impacted the project, it was still code compliant because what they had there -- i mean they had a lower height limit. if anything it was more restrictive than the actual -- it was an error not in favor of the property owner. but it was the roof deck and the penthouse would have been code compliant because those are allowed above the height limit. >> commissioner tanner: because this permit is subject to review of height limits, that's one of the major questions being asked, how does staff review and verify the height of the buildings? is there software? do you believe that what the permit-holder is applying for is

accurate? honor system? can you describe that. >> so these plans, as every plan we deal with, they're submitted by a licensed professional. so we rely on a licensed professional to submit accurate materials and to have the ultimate construction be accurate. i mean, it will follow those plans. and that will be enforced by the department building inspection to ensure there is plan compliance. in this case, we had additional information in the form of the survey which was not done. it would have been great if it was done back in 2013. i think a lot more questions would be answered more clearly at this point. but we're basing it on this information. it's standard when it comes down -- sometimes you know, it's so clear it's not up to the height limit, a survey may not be necessary. but in this case, they are going right up to the height limit to the survey is necessary to determine the accuracy. and i appreciate the appellants have very thoroughly reviewed

this and have argued these issues and we tried to be responsive to that. like i met with mr. derosa and met with the zoning administrator, subsequent to all these meetings and site visits and we still believe it's accurate. >> commissioner tanner: the plans would be the information used in the staff review? >> yeah, in short. >> thank you. we'll now hear from the department of building inspection. >> good evening, commissioners. the permit, it's the application, it's a site permit. vertical addition, fourth floor, bedroom, office space. the proposal, construct a one story addition. september 2018, issued on the 3rd of january, 2020. appealed on the 9th of january. and ultimately suspended. so about 15 months for the

approval. it went through building plan checks so far and d.p.w., puc for some fees and we obviously will be seeing the i'm available for questions, but i didn't see anything else there for d.b.i. issues. >> any public comment on the item? public comment? okay. if you can come forward -- this is for 333 el camino? >> yes. >> vice president honda: is there anyone else speaking for public comment? >> you could move forward that would be great or line up against the wall. you can sit in the seat right there. >> my name is chad. my wife and two kids live at 215

el camino. we're here in full support of peter and michele for two main reasons. one is peter and michele are exemplary neighbors. they open their home every year to the entire neighborhood. not just select neighbors, but the entire neighborhood fort annual christmas party. they organize christmas caroling, they do halloween parties. they're a real positive impact on the community and the neighborhood. there was a lot of talk about the look and the feel and the physical changes that could possibly come from the project, but i want to talk a little bit about the emotional changes. if they left the neighborhood, it would be a detriment to all of us. they're the nicest neighbors. completely welcoming. i don't know anyone who would open their home to the entire neighborhood the way they've done. it is a huge difference. my wife and children are constantly over at their house.

i've seen the impact they've had. i don't think you can find better neighbors. the second reason, again, having two kid in the neighborhood, richmond is one of the few neighborhoods we have left in san francisco that is affordable and a family neighborhood. we're losing them quickly. for us to have areas where we can grow and have a large family is dwindling. if you don't allow this to happen and go forward, frankly, we may not have places we can go in the future. my family may have to move out of san francisco as well. i own a business here in san francisco. it's here in the city. union square. i have 27 employees. so if i have to move out of the city, that business comes with me. spend a lot of time in this building, city tax collector on the first floor, the franchise tax board which you may be familiar with, i've learned a lot over the last four years, i contribute a lot. i like the feel.

i would like to see the city help families stay in the city that want to be. >> vice president honda: thank you. next speaker, please. hi, good evening. >> i love the energy. >> great. i have my card. i know it may need to be sanitized. there you are. i live nearby at 81 25th avenue. i'm in full support of the carters. michele and peter, they open their home for community events. they have helped organize a neighborhood block party. they welcomed new neighbors to the neighborhood. the neighborhood many times now. but that is because they really are a part of it and they're very thoughtful and conscientious neighbors. we also in our home have a partial fourth floor where we have a home office and the

addition is minimally visible from the street. so i find that it's still in the spirit of the neighborhood that they worked really hard to make sure that it is minimally impactful to neighbors. and they want to keep their family in san francisco. they care about san francisco. and i know -- we want to keep families in san francisco. so i feel like it's in the spirit of the neighborhood. they're wonderful neighbors. and it's a privilege to come and speak in support tonight. thank you so much. >> vice president honda: thank you. next speaker, please. >> good evening. tough act to follow. my name is justinian and i'm standing in for one of the carters' neighbors to give her presentation. i'm going to read from a letter she presented. dear, san francisco board of appeals, i live two doors down from the carters with my husband

and two young children. i was hoping to speak at the hearing in support of the project, but will be out of town. i'm a native san franciscan. i grew up in the richmond district not far from where i live. my brother and i were friends with all the kids on the block. we used to ride our bikes where my kids play with the carter children. i loved growing up in san francisco. with the other families in our neighborhood. and i want my kids do the same. the carters and one other family have moved to our block since we moved to our home in 2009, for which we're thankful. our kids are playing out in front of the house with neighborhood kids just like i did when i was young. we support homeowners to accommodate their families, this strengthens the character and diversity of the neighborhood while we benefit. our neighborhood is made up for

multifamily buildings and single-family housing. this is well within the range of what we see around us. we want more families to stay in san francisco. we want more kids playing in our neighborhood and local park. i can also say personally, as a good froevend the carters -- friend of the carters, i have a young family and won't business and seeing neighborhood conversations like this inspire me to stay here and keep those things here. i appreciate your time and thank you very much. >> vice president honda: thank you. next speaker, please. good evening, welcome. >> hi, thank you. i'd like to just plus one that letter, because it was very strong. i don't have a letter to read. my name is loretta. i'm a homeowner at 136 27th avenue. we are just around the corner from the carters. i've known the carters now for about three years. our children go to school

together. they're wonderful parents within our school community, but more importantly, my husband and i have been in san francisco many years. both of us were born in san francisco and we plan to raise our families here in san francisco. we struggled with finding a neighborhood that we wanted to move into. and wanted to purchase a home, but spent many years looking. we currently reside in the presidio. in about 2017, we finally found a home on 27th avenue and purchased that home. we're also under construction right now remodelling our home so we will be moving in closer to the end of the year. we're in absolute support of this request to remodel and first and foremost for me, i'm quite black and white. my point of view is very much, is it or is it not within code? and when michele and peter presented their project is within code, i felt good

supporting the details and supporting this court hearing. the other piece i wanted to highlight is that within our own home, we do also have a partial fourth floor in our home which is again around the corner. so it doesn't feel like what they are requesting is out of character for the neighborhood. so, we are also in support of this project. thank you. >> vice president honda: thank you. >> any other public comment on this item? okay, we'll move on to rebuttal. we'll hear from mr. gutterman first. you have three minutes. >> let's see, how do i go back to where we were?

okay. let's see. we like it. we have two of them, of our own. we like good neighbors. we consider ourselves to be good neighbors. i don't think this discussion is really about that. the topic of dormer keeps coming up again and again in the code. it's very specific. it's a dormer window. it's not a dormer. it must be a window. i also think that when you get up here and present something, you should be reliant on the facts. there are no trees that shield this project from our living area. there just aren't. it's not a defensible comment. the other thing is this design

walks a razor's edge. it sits on the back of the building. you can see the project hangs off the building. they can't get the slope roof calculation to work unless they borrow a couple of feet off the back of the building. so the concept they're being thoughtful about 27-foot setback is disingenuous. the only way the project works is to start the building and push it off the edge. i don't think it's not true this is not subject to historical commission. two further points. this roof has been here for 97 years. i'm sure somebody has wanted to put a building on top and it hasn't happened. and this is what we're going to get. we're going to have a bunch of

families who live in four story buildings. and you can walk around our neighborhood until you're blue in the face, you will not find anything like this design. not even close. thank you for your time. >> vice president honda: thank you. >> thank you. mr. derosa? >> can i get his extra time? >> vice president honda: no. thank you. >> thank you. commissioner sani commissioner, what we're asking the board is hold the owners to the specifications special permit we relied on. this is different than 610 el camino. 610, the facts didn't change. the height limit didn't change. the setbacks didn't change. nothing changed from 2011 to 2019. here the central issue -- the central fact of the height limit

changed not by a small amount, but six feet. and that is relevant despite what the attorney says, that is relevant. this is an e-mail that i sent to michele and peter carter -- >> overhead, please. >> -- back in 2013 about our argument. i said i'm sure you feel confident in your case, but i would caution you to have mark read the general code and interpretations. we did not file the appeal simply to be obstructionists. a penthouse stairwell is a major structure. our argument was it did need to comply with the height -- with the height limit. and we may have won that argument, we may have lost that argument, but that was our argument. and it must have had some strength because the carters settled, right? so that height limit was

relevant and we relied on it. regarding my e-mail about building -- agreeing to build more. i said that because they showed us -- they showed us the height limit -- and by the way, this is their drawing, their dotted line, there is no red line here. this is their drawing, their language, 35-foot height limit, it doesn't say assumed, it says 35-foot height limit. that's what they showed us. i said, whatever you want to build, go ahead. knowing they couldn't go up. again, why would we' agree to a roof deck if we thought they could come back later and build an entire penthouse? finally -- [bell ringing] >> 30 seconds.

>> okay, i want to correct a couple of misstatements. all of the neighbors still oppose this project. and most -- i think all of the neighbors that signed on still oppose the project. as does par architect representing parr met with the owners. he sent them an e-mail saying -- they say they -- he no longer opposes. the project. [bell ringing] he said that the letter in opposition still stands. >> thank you. >> commissioner tanner: i have a question. i understand from the drawings that you guys provided from 2013 that you assumed the height limit and represented the height limit is 35 feet. you do the math, you argue about math. if in fact the building was not at 35 feet and this addition brings it to 35 feet, what is the opposition? the limit itself is met by the

addition. what is the issue with the 35 feet? >> they showed us a 35-foot height limit in 2013 that was 6 feet lower than what they're showing now. >> commissioner tanner: i understand the discrepancy, but my point is 35 feet is 35 feet. we can argue how to measure it, where to draw the lines. i can understand different ways of looking at the same thing, but if they're meeting 35 feet, which is what they're meeting with this, i don't see what the issue is? is your argument that the height limit should be lower? >> our argument is they should live with the height limit that they showed us in 2013 which was six feet lower, which would not have allowed for a penthouse

and, therefore, was not expressly prohibited in the settlement agreement because it was impossible to build one. >> commissioner tanner: thank you. >> we'll now hear from the permit holders. you have six minutes. i'd like to talk about how the project is designed to fit within the residential guidelines and why the residential design team approved the project. here is a succinct conclusion written by the design team themselves. they say in light of the d.r. request this project was re-reviewed by the residential design advisory team and confirmed that it complies with the guidelines. specifically, they say, since the proposed addition is set back 27 feet from the wall and

does not extend past the existing rear wall, the addition complies with the guidelines related to scale at the street and scale at the rear yard. two, they say, the impacts on light from this modest enlargement on either mid block open space or street from there addition were not deemed to be exceptional or extraordinary since the addition is on a existing footprint of the building. i just want to point out, the design does not hang off the rear of the building. it sits on the existing footprint of the building itself. the project is designed to comply with the code requirements. it affects neighbors in a minimal way. it enables the carter family to grow without moving. the appellants claim they don't want the addition because it sets a height precedent for the neighborhood. we've demonstrated these claims are not true. thank you.

>> thank you. >> just real quick, mr. derosa and guttermans are entitled to their opinion of what they thought they were agreeing to, or how they interpreted the agreement at the time. the carters have their own interpretation. they had their own reasonable reliance. they have other e-mails where mr. derosa said you could seek a fourth story addition, but the point is, under the law, that is why we have a written agreement and this goes to why there is a written agreement, so that later in time you're not arguing over what people thought when they entered the agreement. so they have a writing. it didn't prevent a future project, nor did the special conditions permit. so thank you. >> thank you. we'll now hear from the planning department.

>> thank you. scott sanchez. planning department. i'll touch on three points. first, commissioner honda had asked how much was left in the rear yard? so now it's a 30% requirement, it used to be 25%. they have about 51 feet from the plans from the main building to the rear property line. 100 foot lot, so it's about 20 feet they could extend to the rear and still be code compliant. of course, we'd have a say about that with residential guidelines, but both of the adjacent building extend further out, so certainly there is room that would be design-compliant for a horizontal addition. >> vice president honda: and vertical? >> and vertical up to the height. the second issue, one of the appellants had stated that they believed they had gone through review by the preservation

commission. i looked up the permit, they did not. it was over-the-counter permit. it was about two month long process. it looks like it was approved by planning in and out the same day, although there may have been back and forth about the materials, but there was no review by the historic preservation. i know people can get confused by the different departments, but it did not go through a hearing in front of the historic preservation commission which is a separate board like the planning commission. i wanted to clarify that point. lastly, the issue here, in 2013, the plans where they had shown a 35-foot height limit, that was inaccurate. i think what happened with those plans, they didn't comply with the code because they didn't acknowledge or note that under the planning code you can follow grade on upsloping lot. so what they took the 35 feet they show on the plans appears to be 35 feet above their zero

dataum which is the curve at the top of the property. so they're calling this red line 35 feet. it would be hard to see on here. but the zero datum is way down here, it's at the front of the curb line. it's where height is measured from and the first 10 feet from the buildable envelope is taken from that point, but beyond that, it follows planning code 260. >> so what you're saying is be careful what you put in writing? >> always. >> even though they thought they were right they were misrepresenting the truth their detriment? >> yes. and that is all i have. >> commissioner tanner: i have a question. just to clarify this special

conditions permit. >> was amicable to that -- applicable to that project and might not -- >> the board may find today it was really your intent to forever limit the building to that height, but that wasn't your decision at that time. what your decision was to facilitate an agreement by the parties, which we encourage you to do. you like to do rather than having them start over again with new permits, but that doesn't always forever restrict the property. they have the ability to come back and they've done so. now you have the ability to make a final decision on it again. >> thank you. >> thank you. anything further from d.b.i.? commissioners, this matter is submitted. >> i think the -- we always

go -- we always liked, at least i always liked to ask the planning commission, does this fit into legal guidelines and i heard with surety that it fits within legal guidelines. i am always concerned -- and i've made decisions and made recommendations in the past, does it -- is it detrimental to the character of the neighborhood? that's why i was very clear to ask planning -- what you -- you're not planning director, you're just imitation. >> deputy d.a. >> does it change the character of the neighborhood? in his opinion, it doesn't. with those two key points which is legal and it fits in the height limit and isn't detrimental to the character of the neighborhood, and i grew up in the neighborhood about two-and-a-half blocks away, so

i'm still near and dear to me. i have no problem with this project. so -- >> vice president honda: so for me, commissioners, really what is before us is a code compliant project. and to me, one, it's nice to retain families in the neighborhood as too with commissioner swig, i grew up on the 100 block of 24th avenue, so i loved playing there and my son. were they creative in getting that additional space? they were. and it's not manipulating. you're either code-compliant or you're not. in this particular case, they are. and i'm old. i heard this in 2013 when it came before us. and here we are in 2019. right? >> 20. >> 20, oh, yeah. i'm really old [laughter]. not to take away from the

appellants. i understand that construction is intrusive at best. to be honest, but really what is before us is this code-compliant and secondly this board generally, as we heard earlier, we're not here to enforce private agreements. we will look at them and consider what the merit and what they're based on, but that's not what is before this body this evening. >> any other comments? a motion? >> vice president honda: i'll make a motion to deny the appeal that it was properly issued. on the grounds it was properly issued. >> we have a motion from vice president honda to deny the appeals on the basis that the permit was properly issued. santacana aye. lazarus aye. tanner aye. swig aye. that motion carries 5-0. the appeals are denied. thank you.

>> we are now moving onto item number 5. we did have an overflow room. if you're in the overflow room, you can head over. i'm not sure if anyone is in there. that was room 400. so item number 5 is appeal number 19-123. malcolm yeung versus zoning administrator. subject property, 838 grant avenue. appealing the issuance to mall couple yeung of the letter of determination. determination that the nonconforming restaurant use on the 5th and 6th floors has not been discontinued or abandoned pursuant to planning code section 183a. the determination is based on the fact that a building permit was submitted within the three-year discontinuance period to renovate the restaurant space. additional permits were issued for additional work. all of these permits are still active.

this is record number 2019-014303. note, the board voted 4-0-1, to continue the matter to february 19, 2020. with further direction to d.b.i. and the planning department that no permits associated, the permit can be delayed because of the continuance. the february 19 was cancelled due to lack of quorum. we have vice president -- >> vice president honda: i wish to disclose again that i'm a partner a project that has hired the law firm. their appearance before this body will not have an affect on my decision. >> and president lazarus, did you have the opportunity to review the materials for the hearing that took place on january 29? >> i did and i would like to ask we take a very short break. >> okay, we're going to

>> welcome back to the march 4, 2020, meeting of the san francisco board of appeals. we are now on item no. 8. this is appeal no. 20-003, debra chatman versus the department of building inspection and planning department approval. subject property, 765mangels avenue, appealing the issuance on december 23, 2019 to david joseph and marianne asher of an the ration permit, demolition of existing concrete block retaining wall and associated footing, break them into rubble on-site, rubble to fill a new wall system not to exceed four feet in height, additional work is to install a solid fence, required by planning above gabion wall not to exceed ten feet. we will hear from the appellant

first. ruhr coming up first? are you coming up first. can you raise your right hand? do you swear or affirm the testimony you are about to give will be the truth and whole truth so help you god? thank you. he we will hear from appellant first. >> good evening and welcome. thank you for being patient with us. >> of course. >> this is a threshold matter. i had plans i was hoping to submit. >> we had a survey map, i believe >> how many copies do you have? >> i have plenty to go around.

>> good evening, commissioners. i'm here on behalf of the appear land, debra chatman. this appeal is about safety, property protection and protocol. permit holders characterized as a troublemaker who has spent too much time fighting with her neighbors. the fact is it's taken years of pushing, negotiating and legal process to convince the permit holders to do the right thing, what they should have done all along. appellant's primary concern is safety, not only for her property but neighboring properties. and as for the permit holders, this is a situation of their own

creation. they chose to take shortcuts by undertaking a project without permits or ad quality engineering -- adequate engineering, and now they are trying to take shortcuts again. appellant's family lived at 775mangels avenue since the early 1970s. some fun photos for you here on the overhead. this is not appellant. for many years, the backyards on the avenue were mostly open to one another as you can see from the photos here. the yards open onto one another. the subject property, 765, is adjacent to an uphill from 775. since permit holders purchased 765 in the early 1990s they have had a long history of unpermitted projects with corresponding notice of

violation. this time around 2007, they embarked on a large backyard renovation project as owner buildings that included multiple retaining walls, installation of hard scape and changing the grade of their yard. permit holders changed the topography in ways that no one really knows and changed the water flow in ways that no one really knows. they constructed two retaining walls partially on appellant's property without the benefit of surveys, permits, engineering or drainage. here's the photo of the wall in between the two properties. permit holders were cited by d.b.i. for construction without permits in 2007 as a result of a complaint made by another neighbor. in 2013 for constructing an encroaching retaining wall among other notices of violation. the subject permit is to demolish the existing deficient concrete block retaining wall and build a gabion wall.

here's an example of a gabion wall. they are wire cages filled with heavy stones and their integrity comes from the waiting and distribution of the fill. using construction rubble is an unusual application because the rubble is not uniform, and purchased fill would be. the weight is indeterminant because it's being created for this purpose on-site. permit holders selected this option because they don't want to pay for the removal of the existing wall that they constructed and this is the cheapest method to avoid it. they don't want to haul the demolished wall off the property. the subject permit authorizes work on appellant's property without a permit to do so. so permit holders argue that appellant granted access to her property through a settlement agreement. that doesn't give d.b.i. the

authority to issue a permit on her property without her authorization. nor will this permit accomplish its stated goal of abating on the subject property and not to mention the companion n.o.v. on 775mangess. two permits are needed to abate n.o.v.s. i would like to introduce permit expert pat buscovich to complain this further. >> i was retained formerly. i'm here as a matter of a citizen. i'm not being confiscated but i didn't want to do it during public and get yelled at. so this is an 8-inch thick 11 inches across property line. the wall is on the neighbor's property. when you do construction on a structure that straddles a property line or part of it is on this property and parton this, you do one drawing, get

two permit applications and you get this from joe. you get two permit applications. you submit the drawing, you circle the portion on this lot and say this work is being done under this lot and on that same drawing you say under separate permit here and then you do a matching permit application that does the opposite. you submit both of them at the same time. they are interlocking so you have a permit for both. that's not what's happening here. you got a permit to do work. and it's referencing the complaint but the complaint is because you straddled the property line. so this is a mess doing it this way. >> appellant is not trying to prevent permit holders from removing and replacing their retaining wall. she would like the current deficient wall off her property but it's important for the appellant and other neighbors that the wall be soundly engineered and constructed and that the process itself not cause harm. permit holders are proposing to

break up the wall on-site. this raises safety concerns about the the debris, dust in general and in particular, silica dust. i would like to introduce mr. paul, a structural engineer and has reviewed the plans for the property and can speak more about the deficiencies of the wall. in the meantime i will tell you the wall itself has some deficiencies, in particular that the rubble has not been calculated in terms of the weight, so there are deficient calculations with regard to the engineering and the gabions are not low enough in the soil per the plans. so there's a discrepancy between what is being built and the manufacturer's plans for how these are meant to be installed.

>> my name is mr. paul. i'm a licensed structural engineer in california. i googled the permit application and the plan as approved in the building department. and i find a number of deficiencies in the design. because when you design it, you can test to satisfy criteria like stability. >> thank you, sir. your time is up. you'll have time under rebuttal. >> available for questions. >> okay. thank you. >> thank you. we will now hear from the permit holder's attorney. >> good evening and welcome. >> good evening. my name is jim, i'm here on behalf of the permit holders david and marianne asher. i won't go into the eight-year history between these neighbors,

neither of whom actually reside at the properties but i'll give you the three reasons why the appeal has to be denied. first of all, the parties have been here and done this. if we were in a court of law the appeal would be thrown out under collateral estoppel because this was done earlier. this board heard it and unanimously denied the appeal and lifted the suspension of the permit. so nothing has changed with the building cold or with d.b.i. this is still a law that is not going to exceed four feet. so nothing has changed. we unanimously won five years ago. nothing has changed of my same decision should happen. what we've heard, though is some concerns about this wall that are really unfounded. spite wall, no. this is actually the best thing in these days and times where

everyone is concerned about the climate when you're actually reusing materials and not taking them to the dump and adding to the landfill. so my client is throwing in the towel in terms of civil litigation and agreed to settle the case, take the existing wall down, at his cost, which, by the way, one piece of history, what was there before, and i think i saw it in the appellant's brief, was an n.o.v. that said take it on the original construction. the original construction were cinderblocks on top of each other, not engineered, not even put together. so he took that down at his own cost and put this wall in the same place. it encroaches from one inch at one point to 11 inches at another. it's not 11 inches the whole way. it's a minor encroachment. but to get the lawsuit settled, he said fine, i'll take it down.

the agreement i provided so-so you have a history of why we are here, and really the issues at this point aren't right. we are in the wrong venue. if you look at the settlement agreement, my client had a specific time to get a permit, a permit of his choosing, wall of his choosing, and from that point he's got 90 days to pick a contractor to get structural and drainage dealt with. we are not at that point yet. so for these issues to come up now and say you need to cancel the permit, that's not what ms. chapman agreed to in court. that's not what my clients agreed to in court. so i don't know if that makes sense or not, but the point is we are not at that stage. my engineer has responded to mr. paul's concerns about some of the issues. but the other issues really are for my client in the next 90 days to find his contractor. he's not going to be an owner/builder. that's in the settlement

agreement. he's going to hire a licensed general contractor. he's going to have an engineer do what an engineer needs to do. and again, all of this is not required for a wall four feet or under. that's what this is. he is doing this to try to buy peace. so those are the reasons this appeal should be denied. the answer isn't to kick out the appeal. the answer is to let this process go forward. >> i have a question. so in the settlement was the encroachment agreed upon between both property owners? >> because he said 11 inches. >> in terms of the settlement he, we did not dispute that. in terms of the settlement agreement you'll see my clients agreed to move the wall back at

least one incheon to their property, which the plans actually call for two-inches, and when it's done, they are going to hire a surveyor to resurvey it to make sure and give everyone peace of mind that this new wall is not encroaching. >> so at which point this was negotiated in this, and that's why the board in 2015 evidently i was here, that is it took five years to turn into reality? >> yes. >> okay. thank you. >> and of course the obvious question, maybe you just answered it, but i didn't hear it clearly. what comes first, the chicken or the egg. it seems the survey should come before the damage is done. i mean, why risk encroachment in the first place? >> well, the agreement that we went through was -- i understand your point, and i guess maybe i could take that to my client. but the agreement was we build the wall then resurvey it.

we have the old survey. we know where the line is. >> that's what they agreed on. >> what we agreed upon. >> and if he does it wrong, we'll be back in court. we'll be back in court. >> can i ask you -- >> use common sense. >> do you interpret the release in the settlement agreement to bar their decision to appeal this permit? >> yes. >> and can you point me in the release? i was reading it, and i was trying to understand sort of which aspect would cover a challenge in a venue or forum like this. >> it's not expressly stated. what i will say is when we negotiated the terms were very clear that my clients could build any wall that they wanted if they could get a permit. and they got a permit. so the challenge to the permit surprised me. but here we are. i could take it to court and fight it there, but that's going to be more money for my client.

>> it does say any claim whatsoever of any kind in any forum. >> the obvious outcome is that could be we didn't have the meeting of the minds and we don't have a settlement agreement, and i don't think any party wants that. >> thank you. >> this has been going on eight years. thank you. >> college money. >> thank you. we will now hear from the planning department. no? nothing? we'll hear from the department of building inspection. >> joe duffy, d.b.i. this address has been pretty familiar to a lot of us at the office. we've been dealing with it for quite a while. i think i may have done a deposition on this just late last year and a few other staff as well. and the permit itself seems to be fine with what it is accomplishing. i do agree with mr. buscovich.

typically we just had one, i think we had 99 sandra main. do you remember? >> yes. >> so traveling property lines, we do one set of plans and do two permit applications. so maybe they can address it as a second rebuttal. but there might be something for 775 mangles required to say remove the wall. but that probably is something. but the problem you run into is 775 going to hold that up so 765 can comply? so we don't know. there's been so much animosity between these people, and -- >> and they both live in different places. can you imagine if they lived next door to each other? it would be like the kl ampets and the -- >> is that policy or building code? >> it's because some of the work is on the other side of the

property. you would want to document it. >> is that your policy or is it required that there be two building permits? >> any work. you are not going to find that specific language for this specific case, but the understanding is that all work shall take place in any work on a property or a lot shall take place inside that lot under that address. so technically here we have from one inches here to 11 inches that's on the other side, so some of the work is on 775. but it should have been -- this should have been talked about in the settlement i would imagine. i don't know if it got missed or whatever. it should have been something that both sides probably realized needed to happen. 765 went ahead and got its permit. and maybe there's something needed for 775. what i'm trying to say is i don't see anything wrong with this permit. may they just need to get the other one for 775. >> thank you. are you done? >> yes.

>> you've got a question? >> be my guest. >> we've talked about this before which is happened when someone tries to take out a permit for building on your property and you don't know about it, right? i believe when we had that case, your answer was essentially that's a civil matter. we try not to knowingly issue permits for work on someone else's property, but at the end of the day if somebody shows up at your house and trys to do something to it, that's a civil matter, that's not your job. so why is this any different? we have a settlement agreement that entitles them to do the construction. we have a building permit that is properly issued. the complaint about why didn't you get some other permit seems to be a separate question that isn't really before us. >> i think there might be a different case from the way i'm looking at it. we can look at it three different ways here. typically if there's something

adjoining or something going across the a property line you typically get two permits for it. i hope i haven't misrepresented that in previous cases. i think the ownership of the permit is a different thing. the property owner for 765 would maybe get the permission of 775 to obtain the permit on their behalf. that's the ownership of the permit and permission for one neighbor to get -- i couldn't on my neighbor's property, i'd need their permission and a letter saying i have the right to obtain that permission. >> would the settlement not be permission from the neighbor to obtain that permit? so if the permit holders come in and have this settlement and say okay, we need that other parallel permit, there's the agreement from that neighbor saying we can get it. they went and did the civil thing, got it sorted out, have the agreement in writing that

everyone said this is how we want to go forward and d.b.i. can say great. >> it needed, the settlement should have said get two permits. >> that seems to be a technicality >> yes, it is. >> if two permits are required it's two permits for the same work so this is permission to go forward and so construct this work, do it in a certain time period. they have authorized access to property to do it. i mean, i would see it seems to be the permission that one would need to get that permit for another property. >> mr. buscovich is bringing up that some of the wall is on a different property. >> my question would be you just said the permit holder would need the neighboring property's permission to get the permit on that property, correct? >> 765 has taken a permit out on 775 >> my question is is not this settlement agreement that permission? >> i don't know. i'm not a lawyer. >> how would d.b.i. get the

permission? what would that look like? >> just a letter saying -- >> so the settlement, signed from the -- yeah. >> it could be. but there is no permanent place yet for 775. >> that's the problem. >> it's a court order, we have to recognize court orders from what i believe. i've had a few of those before. if a judge said this is what you do, that's what we have to do. i think that's what happened on -- >> so what about materials? it says building any wall of any kind that you want, but what about materials? what about the reuse of broken-up cinder block for the convenience that it was already there? is that appropriate, advisable or permissible? >> well, it was approved by our

engineers. >> okay. >> i mean it was reviewed by a structural engineer. i see that on the writing. so i assume it was. the drawings would have reflected that that it was suitable, unless they missed it. but i assume it got reviewed correctly. and reusing of the materials would seem to me to be fine. that's what people do now days. i'm not an engineer -- i'm not a lawyer -- i'm not an engineer, but i assume that got reviewed at b.d.i. they can still come back after this and file that complaint with their department that they don't think it's structurally sound. we can look at that again and take appropriate action if the permit was up held, for example. and what i'm afraid will happen here, and i think you are as well is the stumbling block of the permit for the other property, saying how did that stop the work going ahead on that one. there's nothing wrong with this permit the way it is. i just don't think, we shouldn't be here another eight years

trying to figure out why 775 won't give permission to 765 to take the inches away which would be ridiculous. >> i think we'll have that discussion later because there's no question associated with my comment. just to be clear, mr. duffy, your opinion is that in an ideal world there would also be a second permit but there is nothing wrong with this permit? >> correct. right. >> thank you. >> thank you. >> thank you. is there any public comment on this item? we will move onto rebuttal. permit holders are arguing that appellant waived the right to settlement agreement. the settlement agreement doesn't say that. you won't see that stated anywhere in there. that's not an accident. this is an eventty that was

considered -- eventuality that was considered at the time. it was not the understanding we had in terms of what this means. i think the agreement means what it says in terms of the design and what is going on with this wall. it's distinctly deliberate and appellant did not waive her right to seek oversight of this board. the proposed plans are squarely within this board's purview. we also argue -- the permit holders have argued they are paying for this wall and appellant waived rights to complain about it because she is not paying for it. but she has provided alternative plans which is what you have before you, those engineering plans are an alternative proposal that have been provided to permit holders many times over the course of the last five years since the last time we were here.

the permit was goper five -- was improper five years and still is now. they don't want to give involved with the civil matter, and that has been is he solved. here we have a permit application, item number 22, building extend beyond property lines, the box is checked no. that's not what's going on here. there will definitely be work occurring across the property line. it's not indicated on the plans. it's not indicated how they are going to remove the existing wall. i would also state that -- or ask that if board is inclined to approve the permit, we ask the board will include conditions that will protect neighbors from the process such as dust and debris containment and soil testing requirements. i will turn it over to mr. paul for any last thoughts on the wall itself. >> so continuing my previous

comment that work in concrete will not displace between the pieces. so that is industrial-grade crusher for defining a size, so they can get maximum weight requirements for the wall to slide, prevent it from sliding. and normally from an engineering standpoint, the wall is at least 12-inch below finish afraid. on the other side, removing the existing footing, which is like an 18-inch below and then they didn't say what kind they will have to fill in the space. >> i have a question for counsel. so if you have these plans, why were these not in the brief in your package? if they had these plans for years?

>> it did not occur to me that perhaps until later on the board might want to see the alternative proposal that we have been pushing that we sent five years trying to get. >> the second question is who handled the settlement? did your firm handle the settlement? >> yes, we did. >> and so are you not happy with what you accomplished? >> no, i don't think that's an accurate statement. i think what we accomplished and what we were able to resolve was a significant -- i mean. >> because generally, usually when you go and spend that much money and time, that when you have a settlement you don't see another venue like this if it's been successfully created. >> i would point out there was more than one issue in this litigation. this wasn't just about 11 inches, it was about a lot of other things. >> the last question is in your brief, you state that the one owner lives in hawaii. did your client live at the property? >> she does not. >> where does she live?

>> new york >> so we have. nice. hawaii and new york. this is wonderful, with all these paid experts. college money. >> what's the dust concern? >> that they are going to be breaking up concrete to create the rubble to fill the cages >> but there won't be anyone there? >> there are occupants. i believe at both properties at the moment. the concern about damage to her fruit trees and garden as well. >> and the alternative design, that's your complaint is you are worried about structural, which i think we have discussed at length, you are worried about -- you don't like the design, and you are worried about dust, is that right? >> that's in general protection of the property. there are concerns about how this work is going to be done, given that breaking up the concrete in this particular way is a little bit more invasive, doing it on-site than it would otherwise be for cages where you normally just put rocks into the

cages. >> do you dispute the design they have come up with is compliant with the building and planning code? >> yes. we would not be here otherwise. >> so what part of the building code does it violate? >> i believe it's stated in our brief, and i believe mr. paul can attest to better. we took issue with some of the engineering calculations and what was submitted in that regard. >> i don't think that's in the brief, actually. >> he has a -- >> if you would like to hear from our -- >> from an engineering standpoint -- >> there's no question pending. >> the design process -- >> it's okay. i think you have a part in the brief here. i did have a question, ms. raphael, if you did have a settlement, and you did have this design for five years, why was that not expressly stated in the settlement as the design that would be used for the wall.

>> i would love that. we were not able to come to an agreement for the design of the wall. the parties were eager to settle, and we did as much as we could in the settlement while preserving our rights to have oversight of the process down the road, and that's why we are here. >> so you guys decided you would fight about it later? >> we were hoping we wouldn't have to fight and we would come to an agreement. we were hoping the design that was provided previously would become more attractive given there isn't -- >> if that's what you wanted that should have been part of the settlement agreement. >> or don't settle. >> it should state this is the wall we have both agreed on. you sat at a table with attorneys on both sides charging i don't know how much per hour and you agreed on something and now you are going to come and tell me that well, we really wanted the wall but you are their attorney that you didn't fight for the wall? >> our number one priority was to remove the encroachments and stop the bleeding because --

>> the encroachment is still there. >> insurance coverage funding their lawsuit, our clients didn't. they were fighting the war of attrition and we did our best to fight that as long as we could and hold on as long as we could and continue the good fight. >> the question. >> you understand this is black letter law. we are not a court. the courts don't rewrite settlement agreements. we don't renegotiate it for you. we don't save you from the things you left on the table. there's a general relief in the agreement. and the agreement says the compliance with the code will be determined by d.b.i., not by you. the compliance with the code of both building and planning and that all drainage requirements, all of that is vested with the city and county of san francisco, not with you. >> we are here testing that. it's up to you all, to you commissioners, and we respect your opinion with regard to that issue. we are here because we don't believe that's right, but we

understand that we have agreed to your determination is the determination we have agreed to so that's why we are here. it sounds like you all have your opinions, so that's that. >> that's not our opinion, it's what you supplied to us. you literally told us what you want to get done and now you are trying to undo what you did. >> well actually it wasn't attached to the appellant's brief. >> no, it was in the permit holder's brief. >> i disagree if that's what was specified within the settlement agreement. the interpretation of the agreement is a matter for a different forum. >> i can see where there is no design specified in the settlement agreement but that leaves the question open, which is why i think we are here, because it wasn't decided. >> that's not our job. >> and then was it -- permit holder seems to be very sure that it was agreed upon that

encroachment was okay. and that the one growing to 11 inches was something that was agreed upon in the settlement agreement. i'm going to ask him to read where that -- why he's so sure about that when he comes up again. why should he not be so sure that an encroachment is okay. and why shouldn't this wall be allowed to encroach on your client's property. according to the settlement agreement, not in your opinion, according to the settlement agreement. can you read that in the settlement agreement? >> without pointing to a specific portion in the agreement, i can tell you there was no agreement as to maintaining that encroachment. but certainly i don't think either party would say there was an agreement to maintain the wall in its condition. the agreement was to remove the

encroachment. there's another encroachment that was agreed would be maintained but that's a separate component, a separate building structure than this wall we are talking about tonight. >> okay. so we are getting into dangerous territory because i hear commissioner santacana's words echoing in my ears which is we are not here to rewrite a settlement agreement. but would this wall, according to settlement agreement, which is a wall of any design as long as it's approved by the city and county, would this wall be okay if it did not encroach in any way, shape or form, subject to a survey? >> i'm sorry, could you repeat the question? >> would this wall be okay? you've already agreed the wall can be built. you agreed the wall can be any

design. that's clear. the issue seems to be an encroachment issue. if this wall, if this wall did not encroach subject to a survey, then where is your issue? >> i think it's more than just the encroachment. the design of the wall was always at issue. that was actually the subject of the previous lawsuit was that it didn't have adequate drainage, it didn't have adequate engineering. the encroachment was part of that, but the structure and design of the wall was a critical issue in the litigation. it was subject. >> we are getting into the weeds here. >> yeah, we are getting into the weeds. we end up -- let me fast forward a little bit. with regard to the drainage, the engineering, the et cetera, et cetera, the gentleman over there, mr. duffy, i would like to introduce you to him. i'm being sarcastic. his very professional organization would make sure a

wall that would not fall down, that would not create drainage problems, et cetera, would not happen. so what we are down to, and clearly the settlement agreement for me that your clients already agreed to a wall that is subject to the cosmetics of the permit holder. the issue seems to be encroachment. and so i'm trying to -- >> commissioner swig, the wall is going to be moved back on to the permit holder's property so there's not an encroachment issue. the issue is she is disagreeing with the design. >> i'm hearing that the wall -- so there is no encroachment. so there's no discussion on that. >> the issue in terms of the encroachment is the fact that the encroachment has to be removed and they have to access and do work on the appellant's property. and that's part of why mr.

buscovich testified about the requirement there be a permit applied to and approved on both properties the same way we have companion n.o. v.s. she is liable for the encroachment and she would like to have that removed. >> i'm hearing two completely different things. we just had a discussion with regard to if a wall is being built, and it encroaches, it needs two separate permits. >> if it's being removed. the same is true is if it's being removed. >> the demolition side. i got it. okay. i take some time but i get there ultimately. >> i want to address mr. paul's issues. and i hope the attorney for the permit holder may have some answers to it. the issues are that the two-inches are not properly detailed on the plans.

is that correct? that's issue one? you have six issues here. the first one is that two inches is not listed. that's not a question? >> no, that's not a question. >> okay. so that's solved. there's an issue about a fence. is that an issue? >> yes >> so you don't want it to be chain link? >> that has been changed >> you are worried it's supposed to be 12 inches below grade and you are not see that clearly on the plans. >> yes. >> okay. >> and also the drainage of course is an issue that would allow the water to come in >> it seems like there was a suggestion the drainage had been addressed and researched but we can add that drainage. and you are worried there's not compaction sufficient because the fill is unknown stability. and also that you obviously don't want the rubble idea and that no calculations were available for your view.

you want cal vacations made available for your view -- calculations made available for your view? >> in 2015, the designer sent a calculation. >> in the 2015 calculations? >> yes. >> thank you. >> we will now hear from mr. trepa. >> thank you. i think at this time i'll just take any questions. i think, and i hope that cleared up the confusion. because i was hearing the same thing. the new wall will not encroach at all. it will be placed at least one inch back on my client's property. >> i thought they wanted two-inches or something. >> the plans say two inches, yes. >> now i'm wondering, what if, according to your view, which i think is my view of this

settlement agreement, what if d.b.i. had blatantly misapplied the building code and issued a permit for a wall that was unquestionably not in compliance with the building code? is it your view that the relief that the appellant could get in that situation is they have to go to court? >> well, as this process goes on, they can go back to d.b.i. and say they are not following the permit or there are other issues that have come up that d.b.i. can't handle or they go back to court >> my hypothetical is the permit they applied for is different from this -- that you applied for is different. it's some permit that is blatantly in violation of the building code and somebody at d.b.i. approves it. so now we have a permit that everybody agrees should not have been issued. in that situation is it your opinion that the appellant would have the right to appeal that permit or instead that they would have to go to court to

deal with it? >> i think they would have to go to court to deal with it. >> thank you. >> can i ask really quickly on the engineering issues, which to me, i'm not an engineer, but they seem to be the only substantive issues in my opinion. would your clients architect or designer be able to provide calculations for the design, if that was requested, to the -- >> that's part of the settlement agreement. >> that they would provide those? >> it's not provided that they'll provide calculations, but in the settlement agreement in the next 90 days, once this permit issue is dealt with, my client has to hire a contractor, hire an engineer. and i know if i don't provide that, we'll be back in court. >> it seems like the calculation, how much weight needs to happen, some of that stuff needs to be worked out and that will happen under those term. so you feel confident that will happen in the future? >> absolutely. >> you have more time if you

want to add to. >> that's okay. >> we got to invite you back because we got people that use 28 minutes. >> okay. we will hear from mr. duffy. >> joe duffy, d.b.i., i did see on exhibit d on the permit holder's brief that there's an engineer that did address some issues regarding the wall. and i read that letter. so some of the issues that got brought up, i just want to -- i'm not sure in the 90 days if we need another permit if there's an engineer going to provide more details or something that is going to require. we would assume that -- i'm assuming the permit got reviewed, was designed per code, reviewed by our engineers as i said earlier, and meets code. if there's more additions or stuff that's needs done, that's going to trigger revisions.

i don't know why you didn't -- why everything wouldn't have been on the drawing and why we don't need more stuff. because that would have been part of the work. so i'm just putting it out there. it sounds like if there's no other comments, it's going to be a different permit. we don't know that, but i'm surprised to hear that -- i get the 90 days to get the contractor. i don't get the 90 days to add more details when we have a permit already that is for the work. and i assume it meets code. sorry to be confusing you. >> that's very helpful. >> does this feel more like a site permit? >> it shouldn't be >> it shouldn't be, but it feels like a site permit because the details are not available for the permit. and my question to you on top of that, does this feel like a site permit, is that -- can you give

us comfort, and can you give the appellant comfort that the issues related to drainage and the sturdy nature of the wall and all the things that have been brought up here tonight will be investigated and made compliant in the process of completing this permit? >> commissioner swig, five years of settlement, do you think anything is going to make them happy? >> no. but i'm asking -- my point is. are you going to look at all this stuff, you know? i mean this seems to me this is what d.b.i. does. d.b.i. is going to look at the plans that are created by the contractor, they are going to make sure that the drainage is right. they are going to make sure that the structure is built correctly and it's not going to fall down and go boom, and that all the other things that might go wrong

will be addressed as part of signing off on the final plan. >> the building coda allows for that -- code allows for that. if pees people file a complaint with d.b.i. or -- if these people file a complaint with d.b.i. and the engineer says you have made a lot of mistakes, we are going to have to address that. we would allow that. and it's a pity it's being brought up now. but i would assume -- when i get up here and tell you about a permit that's been issued, it's been reviewed by our structural engineer for code compliance. i have to say that permit is code compliant unless someone says it's not and they want to go back to d.b.i., they can do that. there weren't plans in the agreement which is unfortunate. i did answer a question there, can i say the permit is issued correctly?

based on the information i have, yes. i haven't seen the plans but i want to clarify that. >> when you have a wall like this, and i've seen these walls forever and ever, it's really not -- other than maybe the imbalance of the stones inside the cage, it's the integrity of the cage and how the cage is affixed to the ground is what it's all about, because isn't the inside of the cage for the most part cosmetic? and wouldn't the cage be such structured steel and engineered so it would keep anything that was put inside it inside as long as what was inside that wasn't susceptible to deterioration by the elements? >> yep. if you put water in a paper bag, it's not going to last. you imagine that the way it is. you see them around. they work pretty well. i like the walls actually.

but if there's drainage to come later on, i'm not sure how that's going to be done. i wish that had been part of the permit. >> thank you. >> thank you. commissioners, this matter is submitted. >> can i ask one question, based on what mr. duffy just said in regards to future engineering or future drainage or future things, is that conceived? is that beyond your knowledge because you are not an engineer? what are you thinking? >> i'm not an engineer. i would submit that i believe that it is structurally sound and engineered. i don't believe that i won't have push-back from ms. chapman on these issues. i think within the next 90 days, i will have to address those issues because of the dynamic. >> okay. great. thank you. >> my recommendation would be

that we accept the appeal and condition the permit to address that it should reflect both 765 and 775 as the building department has recommended. if that's going to cause an issue, then i would just deny the permit. i mean deny the appeal. >> i think mr. duffy was suggesting there needs to be two permits, not one permit with two addresses. >> if that's what you want, commissioner honda, it just had to be a separate permit. >> and i do not support the appeal. i think this permit was properly issued. >> i do too. >> so if there's got to be this unfortunate parallel permit, i would submit this settlement is authorization to do that. i don't know the building requirements, so they got to figure that out. but this permit was properly issued. how they are going to get the second permit, we might see them again. >> i agree. >> and it's not clear to me that they have to get a second permit. my point early was they can show

up and demolish this wall, which is exactly what the settlement agreement demands that they do. and you know, if ms. chapman wants to take them to court over that, she can. but i see no reason why some other permit will ever be required based on the settlement agreement. >> so deny the appeal that the permit was properly issued. that's my motion. >> okay. we have a motion from vice president honda to deny the appeal on the basis that the permit was properly issued. on that motion -- [roll call vote] so that motion carries 4-0. and we do have one last item. >> oh, we do. >> i plan this because i know everyone wants to go. this was by design. okay. >> increase it by 20%. >> everything goes up. this is the adoption of the

board's budget for fiscal years 21 and 22. the board is on a two-year budget cycle of city departments must submit two-year budget proposals by february 21, which we've done. however we do need the board to adopt the budget. our budget, nothing much has changed. nothing has changed, basically 96% of of our revenue comes from sun charges put on permits. 4% comes from filing fees. and those have not changed for ten years. 2010. moving onto page 4, the expenditure budget is very similar to what it was last year. almost two-thirds as with many departments almost two-thirds of the expenditure budget covers salary and fringe benefit expenses and 26% goes to services provided by other departments such as our wonderful city attorney, and

actually he always comes in under budget. so it's not as much as we project. >> good job. >> i thought i would go work for the government. >> and a portion also goes to sf gov tv, so if you are watching, you guys do a great job. a smaller portion of our budget covers specialized services like interpreters or neighborhood notification. we have to provide notice of the hearing to every, generally, usually, all residents within 150 feet of the subject property. so that's -- >> really? >> every hearing? >> most hearings. yeah. so that's how the neighbors, they get postcards, and then they show up. so yeah. it's a requirement under the law. and then moving onto page five,

our projected appeal volume is 14% below the 10-year average. >> you guys are so lucky. see those spikes? that's how long i've been here. >> those represent a lot of late nights. >> exactly. >> thank you for your service. >> so it does flash away depending on legislation and enforcement. in terms of our revenue, our -- our projected revenue is at a deficit. and it seems quite high but don't let that alarm you because last year our projected deficit was $177,000 and it turned out it was only $57,000. so these numbers do fluctuate. don't be alarmed. >> can i ask about that? and maybe this is more about page -- oh, the same thing. the variance is projected at $293,000? right? >> that's the projection.

$266,000. you are looking at page 8? >> i went back to page 6. >> sorry, page 6. let me see. so that's the revenue projection, yes. a deficit in the revenue. >> okay. and then page 8 is just taking it all together. >> right, page 8 looks at the projections, revenue and expenditures. >> and so who is going to raise our filing fees? >> well, as i said, the bulk of our revenue comes from -- we can discuss that, raising filing fees. i'm not sure if the climate, if the city would encourage that, because it discourages members of the public from filing appeals. there is a provision that allows for low-income and indigent

individuals to phyla peels. >> and they are only 4% of the budget. >> correct. so every year what happens is the controller's office does a calculation. they analyze all our statistics, and they determine whether or not a surcharge increase is warranted. and so that's what will happen in april after we get all the information from all the departments that issued permits and how much money they are bringing in and the volume of appeals. and they figure out how much a surcharge should be. and before your time, commissioner santacana and after i started actually, they significantly lowered surcharge rates for d.b.i. and planning department matters. >> talking about increasing commissioners so they weren't just a small fee so that members of the public could participate, because they say that commissioners now have to financially be okay to be able

to serve and participate. imagine if they gave us real pay what our budget would look like. >> yeah. so that calculation, the surcharge analysis will be done in april. they were lowered significantly. the purpose of that was to rebalance, because we still have a significant amount in our reserve. it's $897,000 in our reserve. and that will go down, because we do have large payments, a large payment to make for our appeal management system which shouldn't get reflected in fiscal year '19. it will be reflected in fiscal year '20. it will go down some, but that is goal because the purpose of the surcharge is cost recovery. we don't want to overcharge the public. but we want our services covered. and of course we want to offer, because time fluctuate. if there's a recession in the future. >> i might as well repeat

myself. i think i started this campaign a can you remember years ago that i think the wisdom of -- this a couple of years ago. >> is your mic on? >> now it is. the wisdom of reducing the surcharges was questionable. it didn't anticipate what it sets up this department or any business, and this is a business, is that if there is a downturn and suddenly even though we have a surplus, a downturn creates significant negative cash flow, and then suddenly we are going, uh-oh, what are we going to do now, whereas if there's the wisdom of sustaining, not -- i never advocated growing the fees but sustaining the fees as they were, and that is a buffer when the downturn comes, and that prevents the need at the exactly the worst time to raise fees. because we are in a downturn,

that's when folks really can't afford an increase in fees. so i respectfully disagree with what the city did a couple years ago by declining -- reducing our fees. and i certainly would suggest that we look at this in a more business-like fashion and anticipate that there might be a downturn in the future and not set ourselves up for failure. >> thank you. >> probably not going to happen. >> you're on the record. >> are there any other questions? >> i gesture want to commend you on -- i just want to commend you on a excellent job >> thank you. >> i've had the benefit of two fabulous individuals as my director. i'm very impressed how every week is orderly, all our cases are distributed evenly. we don't, you know, you let

us -- you give us a warning for everything. and so your budget into looking at it is -- >> thank you so much. and i just want to say i love working for the board and i love all the commissioners, and our success is attributed a lot to the staff in the office who do a great job making sure -- >> those staff guys? really? >> aelectric is particularly, he's -- alec is great at making sure the postcards go out >> what happened to our intern? >> he wasn't feeling well. he'll be in next week if he is feeling better. we have coronavirus, so he is staying home. he was planning on being here tonight. i will tell him. he'll be back. >> ari, where are you? >> is there any public comment on this item? >> meeting adjourned >> no we have to approve the budget. [laughter] >> a motion to approve the budget while noting my comments

of concerning. >> okay. thank you. we have a motion from commissioner swig to adopt the budget with a notation regarding his concern. on that motion -- [roll call vote] >> aye and i adopt commissioner swig's concerns as my own as well. [roll call vote] >> okay. thank you. >> okay. thank you. >> we are done. >> it's corona time. [end of meeting]

>> good evening and welcome back to the march 11, 2020 meeting of the san francisco board of appeals. we are now on item number 6, this is appeal number 20-007, levy and dallendorfer versus the zoning administrator. a notice of violation subject property is in violation of planning code section 317 for the removal of a residential unit through an unauthorized residential merger. a communicating door was installed connecting the living rooms of unions four and five and the cooking facilities in unit five were removed, exceeding the scope of building permit no. 201607011459.

a conditional use authorization is required for a residential merger. we will hear from the appellants first. >> i want to apologize and thank everyone for being so patient, especially the cutie right there. [laughter] >> thank you very much, commissioners. i appreciate your time tonight as well. i'm ryan patterson representing the appellants. commissioners, this is an unusual appeal tonight. i'm here pro bono for reasons you'll see shortly. this appeal unlike the last matter of great significance to the city is of great significance to a family. this is about a door between two t.i. c. units and the door predates claudia moving in as a tenant 20 years ago, it predates section 17, the merger requirement, conditional use requirement. the door between the two units

is necessary, because this family has two children. it's a two, one-bedroom apartments linked by a door. if that door is forced to be closed they will be living in separate apartment from their children. i'll let the family speak. >> good evening and welcome. >> good evening, commissioner. i would like to explain shortly our story. claudia and myself are together since 2002 since we were living together in this small one-bedroom apartment and especially since the birth of our first kid. we started to look around for places with small space. we were visiting houses and apartments in various places of the city and all around the bay. so when the opportunity came to us to buy the top floor of where we were already living, it

certainly unlocked many things. our apartment four and five were already connected by an existing door. so it made quite some sense for our family of four. so with some inheritance money and with the help of both our families in europe, we could make it possible to buy that t.i. c., that's what we did. in 2016, our kids were ten and four, we made the purchase,

four, we made the

purchase, and i drew the plans to upgrade one of the kitchen. we removed one of the kitchens to make more room so both kids can have their own room. and as parents we have our own space a little bit like a loft. claudia and i sleep in this space. to us this is also something that seemed logic. we kept the pipe inside the wall so there has been nothing permanently removed. as an art teacher at san francisco state, i make about $3,000 a month, and claudia when she is hired by her art school as a lecturer makes about $4,000. beside our regular taxes we pay around $10,000 of property taxes per year. therefore i hope this commission will help us. thank you. >> thank you.

merci. >> good evening. my name is claudia. i want to confirm that the connecting door was here when i moved into the apartment on september 11, 2001. lived in the other apartment and when he was not home, he let us use both apartments to have a bit more space for our family. so our living situation worked for us because of this single door. so here i brought a very old picture where you can see the door. >> a www. >> the whole thing started because we applied for a short-term rental license. we were trying to make ends meet and were taking in roommates from airbnb several years ago with the license and occasionally renting the apartment 6 down the hall. but this completely stops some

time ago. so apartment 6 is only a long-term tenants and only our family is occupying apartment 4 and 5. so we are struggling to remain in san francisco as a family of public school art teachers. if you force us to close up the preexisting 20-year-old doorway linking us with our children, i don't know how we are going to stay in the city. so thank you. >> thank you. >> i was asked to take a look at the door. i reviewed the permit history and city records for 15th street units 4, 5 and 6 and conducted an inspection in october. based on inspection and the type of integrated door hinge and the time of how the door was helping you and the installation

technique in my professional opinion was done in the late 1990s. it could have been ten years earlier but it's about 1995, '98. it could have been a replacement door to an earlier door. could have been an opening. but the door clearly was not installed in 2000. >> thank you. >> thank you. >> he is doing this pro bono, are you also doing this pro bono bono? thank you. >> we will now hear from the planning department. >> thank you. scott sanchez, planning department. subject property located within an rh-3 zoning district, built in 1961 and contains six separate and distinct dwelling units. in this case, the questions and notice violation relate to the units on the third floor have --

let me put on the overhead, plans from 2016 remodel which show an issue. there is an opening between the two units here. this is unit 6 at the end of the corridor. as you can see very clearly doesn't show the opening which the property owner that the owner has admitted that they didn't include it on there because they knew it wouldn't have been allowed. also this work shows remodel of both the kitchens but they've also stated they removed one of the kitchens. obviously this permit was obtained under false pretenses but inaccurate information to the city. this was in 2016, the same year they obtain aid short-term rental certificate for unit 4. then subsequently i think it was 2018 they sought one for unit 6 at the end of the hall. it's our understanding that around this time they were using all three units basically as

one. and that actually in the denial of the certificate for unit 6, it was stated that doesn't meet the requirements for the short-term rental because they are not the primary residents of that unit. they just merged the spaces. but it appeared to be used as an office area. at that time, there was also shortly after this, this was in january 2018, in july of 2018, the certificate for unit 4 was revoked because the issue about the units being merged, looking through some of the materials at this time and there are more than 140 reviews between 2013 and 2018 on airbnb so it was used fairly heavily, in some cases they were there as hosts and other cases they may have been gone. but in terms of the revocation,

the revocation was based on review of information from the hosting platform, occupancy and availability metrics, it appears they do not reside in the same individual dwelling unit at least 275 nights per year being used for short-term rentals and have exceeded over 90 nights of unhosted short-term rentals in the last year for unit 4. it appears the space being used was apportioned as a separate dwelling unit which was illegally merged, a reference to the enforcement case, into another dwelling unit. under the planning code, communicating opening between two dwelling units is merger of units as testified by the appellant team. there's the permit to authorize this where one would have been required. one cannot be approved now to legalize the situation. they can go through the conditional use authorization process, seek approval from the planning commission.

that's the appropriate process. i had a conversation with them today where we discussed what that might look like and whether penalties would be assessed during that time. and i stated and i'll state to the board if they get a application within 30 days and diligently pursue that then penalties would not be accruing. and they would have to work diligently on that and abide by the decision of the planning commission. but again, what we have here i think is very clear, they understand that the door is not allowed, they didn't show it on the 2016 plans. it's an illegal opening between the two units. it is a unit merger under the planning code. they don't have conditional use authorization. and now they are in violation and they need to go through the process to legalize this. this is just a very clear implementation of the rules. >> are you done? >> yeah. >> if the door was a pre-existing condition does that

change whether it's a violation? >> if it was established at a time when such door would have been legally allowed then yes, it would be allowed although they are still in violation of the permit which shows no door there and also shows a kitchen being remodeled and the kitchen is not there so they are in violation of the permit. >> this notice of violation is just about the door, not about violating the permit, right? >> it's about the door and removal of the cooking facilities but just even if the cooking facilities were to have remained the door alone would have been enough to consider it a merger. >> when you said legally established before they moved in you mean with a permit or was it legal to do it without a permit? >> a permit would have been required. and that they had a permit and they don't have a permit. >> i've got a couple questions. let's assume that they are not bad people and we deal with bad

people and bad actors on a regular basis. and they've evidently had to deal with omar which is quite challenging already at this point. i love omar but yeah. what is the walk around for this this? evidently they're fairly coming along here as residents of this great city and by forcing them to make all these things legal and correct. >> they own three dwelling units in san francisco. they could rent them out. certainly, i mean -- >> are all three one-bedrooms? >> i think there are plans here. yes. all three of them are one bed. i'll put the plans back on the overhead. >> i couldn't remember, you did put that above. >> the two units in question are these two. and this is the third unit. rent-controlled units so the

illegal merger is removing rent-controlled housing from the city's housing stock. and it's exceeding density so it wouldn't be able to be restored under the planning code. >> i'm sorry? >> it wouldn't be able to be restored under the planning code because this is about density. >> so they couldn't put a kitchen and a door back? >> we require them to restore that was there before, what was illegally done they need to undo but if it was legalized, if board says this is in fact legay been merged and the unit counts produced then we wouldn't be able to restore that. >> we can't remove rent-controlled units, period. >> i mean, there's a process they can seek a conditional use to remove the unit. that would be the appropriate process. they've known for several years this interior connection is illegal and haven't done anything to abate the violation. >> can you repeat that?

so i can understand the process before them. they need a conditional use authorization to legalize the opening and that also would be the same for the unit loss or no? >> so the opening is considered to be the unit loss. this is a unit merger. >> one application for the merger and loss of the unit at one time. >> they go from six to five units that unit couldn't be restored. >> great. thank you. >> thank you. >> thanks. >> thank you. is there any public comment on this item? any public comment? okay. >> cut to the chase, what's your prescription of keeping a family in san francisco and not dislocating them and disrupting their life? how do we -- how does that happen? >> there's a process for that, going through the planning commission. >> and you prescribe that and

describe that process, could you describe that process in the, in terms of a timeline and also describe that process in a fashion that this family doesn't get dislocated from their living conditions during the same period of time. that's what the bottom line is. >> as long as they get the application submitted and pursue that, they would be able to stay in the unit as is, as they are today, as they have for many years. and if the planning commission approves it, then it would be legalized and it would be in perpetuity. if the planning commission denies it they would have the ability to appeal that to the board of supervisors and if that decision is final, then they would be required, at that point, the notice of violation would then take effect and they would be assessed penalties until they address the situation. >> could you please remind me an idea of a timeline.

is this week it is, months, years? >> it's months. certainly to get a hearing before the planning commission could be six months. >> in the meantime during that period of time when they are going through this process, which is obviously creates stressful situation because you wish for the best and you wish for compassion and humanity, but sometimes it don't work that way. so there's a lot of stress. what happens to them in the meantime? >> status quo. they would be no penalties would be assessed as long as they are diligently pursuing the conditional use authorization. if they are not, then we would move to assess penalties. sometimes the conditional use application and walk away from the permit, they don't respond to request for additional information. they don't make themselves available for hearings. so as long as they were diligently moving it forward, and they have an attorney who is doing this exact same thing on

another case right now. so there is a -- that has been months in the making as well. but as long as they diligently pursue it, they would be continuing with the status quo and have their day before the planning commission to legalize it which is the process that the law requires. >> can i ask -- >> just one -- so you consider the odds of this process moving forward given your knowledge of the past, given your knowledge of the current environment and the terms and conditions that exist with this family, do you consider this a plausible path? >> you know, no one can say. i would never tell anyone what this board is going to do on any given night. never know what the planning commission is going to do or decide. what they are going to look at -- >> that was my question,

commissioner swig, could you tell us with these types of mergers that have come forward on this path, how have they been looked at? do any of them get through or is it a nope, they are not going through? >> there's a substantial burden on the applicant. and i would think not the statistics but my estimation is that more get denied than get approved. and i don't know how the planning commission is going to weigh if the short-term rental history is going to weigh in and factor in on that. it had been illegally used for some time now. i understand they are having tenants that are in that six-unit was relayed to me as not a permanent tenant but may be getting the tenants off airbnb but have them for longer than one month stays which is allowed under the law but that's always at market rate, not subject to rent control because

no tenant is there for long-term. they are dwelling units. >> so it's probably -- it's possible but maybe a slimmer chance that this would be approved, based on historical? >> yes. i think the commission would -- >> looking to merge dwelling units and remove rent controlled units. >> it's a challenge, yes. >> depends on the situation >> can i double-check something about what i asked earlier. the notice of violation, they gave mr. patterson an additional two weeks to search for records which may indicate the door was installed legally, and it says of particular interest if the door was installed prior to 2003, section 102 that cites the doors as constituting residential mergers went into effect. isn't that saying if the door was installed before april 2003. >> with permit. and also under that interpretation, i believe that they were required to maintain the cooking facilities in the

second, which didn't happen here. >> interpretation. but if it was before then you are saying even then a permit was required. >> yeah >> when i read this the first time, i thought after reading this that before april 2003 you could just do it. >> no >> and they wanted to know, well, if you prove it was before '03 it's free and clear. >> a permit would have been required but it would have been approvable. >> okay. thank you. >> thank you. we are now onto rebuttal. mr. patterson. >> thank you, commissioners. i want to respond to a few things and clarify a few things. in the short-term rentals are not the issue in this appeal. but i want to clarify a few statements that were made. the family for a while back was bringing in short term renters

with a license as essentially roommates in one of the rooms in their units that they were living in. trying to make ends meet. they also did occasionally do short-term rentals in unit 6 down the hall, which they should not have done, and that's why they applied for a second short-term rental license which was denied and that touched off this whole situation. they stopped doing the short-term rentals. unit 6 for some time has been occupied by long-term renters in accordance with the law. and that's their plan going forward. they have not had short term renters in their unit with them for quite some time. when the door was installed, as mr. sanchez said, the door was allowed. this predates section 317. i don't know why the previous owner didn't have a permit for that. we couldn't find one. situation today is why not get a c.u.? that's the question, right? the answer is applying for a

c.u., going through that whole process is time-consuming, very expensive and highly unlikely to succeed. there's a reason we are here today instead of going straight to the planning commission. you look at the numbers. it's extremely unlikely. i won't say zero percent chance. i think they have a compelling reason for this. but it's unlikely. the other reason is they don't actually want to merge these two units. what we would like and what we ask of the board tonight is not necessarily to overturn the notice of violation, if the board were willing to keep this, continue it to the call of the chair, the violation would still exist. and when this family someday moves away or sells, it can be reactivated and force them to close that door before they move out or before they sell. they are even willing to record a notice on title, notice of

special restrictions requiring this. all they want is to be able to continue living as a family with this preexisting opening between two units. the question of removing the kitchen, that was more recent under the previous permit at the time of the previous permit. the family, the parents are living in the kitchen, to be clear. they sleep in that room. so if they are required to restore appliances in there, they can but they will still be sleeping in that room. so i think this is the request to the board. if you continue this to the call of the chair, and they can continue living as they have. >> counselor. >> people consistently call this the people's board. and we have wide and broadening powers. unfortunately just from a brief, and i do have sincere empathy in keeping a family as well as two teachers in here. and i'm not totally against

bending rules. why are you taking them on pro bono? >> i'm here tonight not charging for my time tonight because i think this is a really compelling case. >> how did they come upon -- this is part of it. because they look like a lovely family, and i would love to help everyone. but as the zone administrator said, their poverty level is extreme but they have three t.i. c.s, even though they are one-bedrooms and evidently the track record for rental indicates that it's hardship. but at the same time i like people that are struggling that are trying to do better with their life. and i too thought about the call of chair. i don't know enough about this case to do that. but i mean going forward, if it went to a c.u., would you be representing them continually for free or would you not? >> i don't know. i would have to talk with them. that is a lot of work going

through that process. a lot of time. they are under a lot of stress in the meantime. >> i get it and to have your life upside down is crazy. >> with very little chance of success there i would say. >> i wouldn't say it's impossible. we love our teachers in san francisco so i don't think it's impossible or i don't happenable. but you gave us the work around, it's up to us to consider that. >> thank you. the key point in what we are suggesting the is units are not lost. there would be no loss of rent-controlled housing. >> i thought about that too. are they into a time constraint at all for that? or is it just going to be are you recommending an infinite call of the chair? >> my suggestion would be request would be call of the chair. with a notice of special restrictions recorded on title. that way you have a guarantee if someone else comes into buy it they are going to see that and know there's a major issue with the city that has to be

resolved. >> is there any issue with it being a t.i. c.s of recording it on the title? >> that's a good question. i would have to look at that. it's possible the other owners would need to prove it. but this is it shall these are their units. >> one other owner, right? >> one owner downstairs? one other owner. >> thank you. >> thank you. >> thank you. okay. nothing further from the planning department. commissioners, this matter is submitted. >> i think i have a -- could you put up the planning again? i don't have them. overhead, please. thank you. >> is there a realm of

possibility that a door be installed at the entry hall between -- that there's a common door to serve both units that the units maintain their separate nature you can require closing that door in between the units and is that a possibility to have a door that serves both, that serves both units in a subkey situation, and then of course you have the kitchen issue to deal with. i'm trying to get creative here. >> i think if we -- the code doesn't specifically address that situation but generally if we were doing plans and had concerns about units being

illegally merged we probably wouldn't allow something along those lines because it furthers the illegal merger. everything beyond that door becomes the entry door and everything beyond it is a merged unit. they are operating together. >> not if the doorway's to both units stay in place and they are locking doorways and have numbers on them >> that's not a precedent we would want to establish. >> i'm trying here. >> moving forward. >> i find that interesting. they remove the merging doorway and they just add even a gate in the corridor, i mean i suppose then there's a potential fire issue. but -- >> yeah, is there -- >> the entry door then. >> so your position is the code would prohibit that >> everything beyond that door is a merged unit, it's one unit. >> i think we really don't -- we either move this to the call of chair and let them exist as it's

current or we basically put the guillotine on them >> not going to put the guillotine on them. come on, man. >> one additional though, scott, and i've never seen you guys do this when the department is the respondent, but do you ever settle cases with appellants? have you considered settling for exactly what mr. patterson requested, a notice of special restrictions? >> no. that would come before the board. what we are going to do and typically -- we'll be flexible with -- first of all, that hasn't been proposed to my knowledge. that's the first that's being heard. i had a conversation with him and he didn't mention about continuing it to allow them to do the c.u. process. our standard direction is we won't be able to go through the legalization process or give them time to come into compliance but not indefinitely. we would say you have to address this by the end of the year, 60 days, 90 days, depending facts of the case but never such an

open-ended resolution where it would be put on ice in perpetuity. >> nothing within your power to do to extend something like that? >> not something we have made a practice of. whether we have the ability to -- then we are going to be getting that request for every case that comes before us and we are never going to be resolving things. everything will be -- in this case why did we do it here for this nice family but we are not doing it. >> well, you can always say no. >> so to give you an example what we have put to the call of the chair in the past, eduardo, is that we had a 17-unit building that got caught for illegally, for putting vinyl windows in their property which is a planning no-no, and they showed proof that they were not able to financially deal with that.

so we stepped that to the call of chair. >> i think you still have to call the chair. >> that happened with that case. i think the board did give them a very specified. they said you have to get this resolved in five years which i should probably check on that. >> oh, great. >> we've had other cases like the union bank signs downtown, the roof level, they were approved in error. we sought revocation of the permit. this is late 2000s. and the board gave them i think ten years to basically remove it. and so they came in at year ten with a permit to remove the signs. >> sorry, 2012. commissioner fung was -- >> in the aforementioned case i was active on that. there was a woman who owned a house and she had the windows, and we told her that she was

breaching the law and we gave her till 2025 to fix it. so and she happened to be, i believe, in her mid-70s, and this was three years ago, so do some math. we gave her an extended life to stick around. so if we could -- if we could do a similar trick and -- sorry, and extend compliance until these children are out of high school, that would be a wonderful thing. >> we would certainly prefer a decision from the board with a timeline to comply versus an indefinite continuance. just more -- >> so what would your language like to see? >> i mean the board has done this before >> i'm asking for your guidance. >> they must obtain a permit to

restore the separation of the units and restore the merged unit >> within ten years. >> by december 31, 2030. >> why don't we confirm the children's ages? >> how hold is your daughter? >> seven. >> so december 31, 2030. that gives you ten years to resolve your issue. that's better than a -- >> i would say merci. [laughter] >> she would still be in high school at that point. >> i understand but it's ten years, you know, the world is changing at a ridiculous rate as we sit here >> they may want to sell it at a good rate by that point. we don't know if we have the votes. >> if the board is inclined i request in addition the earlier of that date or them leaving the unit, because we wouldn't want

this -- sale of the unit or vacating the unit. >> or rental >> vacating the unit for their permanent habitation. >> or at what point separating them and correcting the issue. i think that's fine. the kids are older and they have their own apartment. kind of cool. >> want to make that a motion? >> i'll make that motion. >> comment? >> i guess the matter is submitted. >> do we have public comment? >> we already did and no one came forward. >> i don't remember that actually. i'm getting old. >> i'll make a motion to accept the appeal and condition it that the permit holder has to either restore the property to the code compliance as per both building and the planning department or to vacate the property.

and that term would be till 2030. >> december 31, 2030. >> december 31, 2030. >> this is abuse of discretion. >> also the part in n.s.r. >> and to record the n.s.r. special use of restrictions. >> this is a motion to put it to the call of the chair. >> no, we are making a decision so it's not in perpetuity. it's till the date that we accept it which -- >> i see. >> ten years down the road. >> i understand. >> what would be the language? please get the podium, sir. >> to record a notice of special restrictions with the following conditions that the unit be restored no later than >> december 31, 2030. >> december 31, 2030 or the time

of vacating the unit, either unit, and/or selling the property. and it would be if those come sooner than that is. but no later. >> that's my motion or we are going to make him a commissioner. we don't get paid enough. >> n.s.r. says? >> yeah. that the n.s.r. would have those conditions that finding the property is in violation of the planning code that the units have been illegally merged but requiring compliance, delaying compliance until the earliest of december 31, 2030, their vacancy of the unit or sale of the unit. >> vielation until -- >> requiring compliance, giving a compliance deadline but finding there's a violation but requiring compliance by that date. >> no penalties in that time period, i think. >> no penalties will accrue

during the -- >> can we clarify this? if we sell units four four and e what if they decide to stay in one and sell the other? >> doesn't matter as long as they comply and they are not doing the merger separation, they are complying with the city and county to correct the violations as per code >> sale or vacancy for either unit four or five? >> they would have to split them >> right now it's a 50%. i don't know what the agreement is like but the t.i. c. agreement doesn't seem to be by unit. >> if they sell one of the units they have to comply. >> yeah. one or more. if they sell one or more of the affected units. >> okay. so i think i would like to have it -- i would like to have it that they have to either separate the units or sell, right? i mean correct the problem or sell, right? >> i think they have to correct

it before they sell or vacate the unit. >> if they correct it they can still live in the units, right? yeah. okay. sorry. it's getting late, i apologize. >> if i can make one quick comment to the family, we see a lot of people here who violate codes, and it is exceedingly rare and the people who have been on this board even longer can attest, exceedingly rare this board makes exceptions like this, and i hope you will take that seriously and also take seriously that complying with the code is very important. and i would hate for this to invite any further knowing violations of any of the city's laws or codes. >> awesome. >> okay. i'm going to try and read this back. i'm tired. it's 10:00. okay. so -- who made this motion?

honda. we have a motion from vice president honda to grant the appeal and uphold the n.o.v. on the condition it be revised to require that there be a delay in the compliance aspect and that an n.s.r. be followed on the property, which has the following conditions: that the unit shall be put in compliance based on the earlier of either the sale of one or more of the units or december 31, 2030, whichever is earlier, and this is on the basis that the -- on what basis? >> to retain -- >> the error. >> i would say abuse of discretion. >> abusedhis discretion. >> wow. can we really?

error, error, error. >> do you prefer error? >> the only part of the languagy or they need to comply by this certain date? i don't think we need to put delay because it's allowing us to -- yeah. >> comply, okay. so on that motion, commissioner -- >> i'm sorry. you are on rare ground tonight. go ahead. >> there's one word left out which is the affected units. if unit 6 down the hall is sold i assume that's not a problem. >> just the units with the doorway. >> on that motion, [roll call vote] that motion carries. thank you. >> merci.

a u revir. [please stand by]

>> roll call, please. >> clerk: all right. i'll go ahead and mention that director chang is sitting in as director haney's alternate. with that -- [roll call] >> clerk: noting that director tavares is absent, with that, you have a quorum. >> we're going to change our agenda here in a little bit and start with the closed session. before we do, i'd like to

rerecu recuse myself for the closed session. i'd like to ask that director hirsch, as i did so last time, take control of the closed session. so i'll be back in the board room and hopefully come back out today. good luck in closed session. >> all right. thank you, vice chair gee. as he noted, we are going into closed session. this is an opportunity >> clerk: all right. the tjpa board of directors meeting is back in session. and in item 8, closed session, there is nothing to report. go ahead and move into next item? >> please. >> all right. item 9 is communications, and director do directors, i'm not aware of any. item 10, new business.

all right. we'll go into item 11, the executive director's report. >> good morning, directors. we have a busy morning, but before we get started, i'd like to update you with some items. first, i'd like to update you on the community response to the novel coronavirus. we have taken several measures to enhance the health and safety of all salesforce transit center services, including coordinating with federal, state, and local health officials and other transit agencies. they include the san francisco mayor's office, our officers at a.c. transit and muni, and the

department of emergency services and transit and joint information center. we have also expanded our cleaning measure including the frequency of cleaning of the touch points such as door handles and sink handles. we have updates information on our digital screens and we're posting the posters from the department of health -- san francisco department of health all over the building. information can be found in common areas throughout the transit center, public rest rooms, and staff areas, and we -- and as we all know, the situation is changing rapidly, so we'll continue to monitor and respond appropriately. next, i'd like to update you on

our way finding project. as you know, after opening the transit center, it was determined to anecdotal feedback that the current wait signage needs improvements. we have been working with the san francisco transportation commission and our operators to conduct a way finding gap analysis and these efforts are underway. the way finding consultant team has completed a general assessment through a deep dive into the existing systems, survey research, public -- public passengers interviews, pedestrian journey tracking, volunteer test journeys, and a series of interviews with everything, including our janitorial staff as well as the cap riders. the analysis is expected to be completed by the end of this month or early next month and

once this is done, i'll present the findings to the boards. i'm happy to announce that phil's has opened two locations. they have already added to the neighborhood, adding more vibrancy options. at this time, i'd like to ask rich payette from lincoln property, our asset manager, to provide you with a brief operations update. rich? >> thanks, mark. thanks. as mark talked about, we are addressing the covid-19, so we

have a very good janitorial company that's working with us. they're a vendor, and they're cleaning everything that people touch. doorknobs, touch screens, elevator railings, and we do have signage up educating people. the third floor bus deck continued to operate at normal capacity with a.c. transit, greyhound, and they continue to operate at the corner of mission and fremont. on-site was our first tenant that opened, and they opened in november. our anchor tenant, fitness s.f., opened in december, and we have two fill coffees that

are open today. a quarter after that, we'll have spring fertility and happy lemon, and later, we'll have charlie's philly steaks, kaiser, and others. this slide just shows some of the activity of our construction. fully built out s.f. fitness, fitness s.f., and things in progress, and stores coming -- opening soon. 69,000

of that square feet is already executed and board approved, so that's 81%. another way of looking at it, 35 retail spaces, and 25 of those spaces have been executed and/or board approved at 71%, and our committed rent is 98% of -- of what we projected.

we have l.o.i. -- promising l.o.i.s on seven of those spaces, but we have interest in all 11 spaces. the next few will just be kind of, like, site plans or floor plans of each floor. that might be a little hard to read, but this is the first floor. anything in purple is already committed, and everything in green is still in negotiation. here's the same thing for the second floor. kaiser, fitness s.f., springtime fertility, and they will have that lease signed this coming week. that will leave just one space, space 232, that we're still working on. we have strong interest in that space, and we expect to have the second floor fully leased

shortly. and then here's our third park level, same thing. the restaurant, fully committed, and then, we're still negotiating on the pad. now we're at the point if anybody has any questions. >> any questions from the board? thank you for your report. >> thank you. >> directors, just to resume my report, we have a financial report. if you have any questions, aaron can answer them, and my last item, i wanted to update you on the m.o.u. with the metropolitan transportation commission, san francisco transportation authority, san francisco transbay joint powers board to enhance the facility of the downtown extension. this is to implement a new organizational structure -- do i have it? -- to support the tjpa projects

in the most efficient manner in collaboration with the partner agencies in the bay area. the goal is to -- is to be -- to take the d.t.x. to shovel ready status in the next two to three years. as way of background, in july of 2018, we received an allocation of approximately $10,000 million from sfcta tot resume work on the preliminary engineering on the downtown extension. that was suspended in december 2018 after a discovery of the fiss fissures detected in the tunnel

under the street. after that, the sfcta initiated a peer review of that effort, and at the same time, the board asked me to initiate a peer review with the american transportation association. the peer review was concluded in may 2019. that concluded in recommending that the tjpa have less reliance on consultants and have more depth on tjpa staff to have more institutional knowledge. but they also recommended that the tjpa consider retaining an independent engineer to assess and monitor the program and report directly to the board. the report that was done by afta was done by public sector leaders with proven experience in managing delivery of large complex projects. they included the assistant manager with the denver regional transportation

district, including the receive program manager for l.a. metro, including the vice president and senior privice president w lewis and berger. after some discussions, the sfcta review was adjusted to recommend a new organizational structure for a new tjpx under the sfcta. so -- so moving forward, the new organizational structure that's being discussed right

now contemplates the formation of a new structure. the expectation is the steering committee will be driven by managers and executive managers of these agencies. and then, the first order of work of the executive steering committee would be to approve or recommend to the tjpa boards a work program that analyzes the roles and responsibilities of each entity, and give us a clearer road map how to get from where we're at right now to shovel ready for the downtown extension. the -- the -- the -- under discussions right now with the e.f.c. roll will be to made recommendations to the tjpa board, but the tjpa will remain having final authority over the downtown project, and they can accept or reject the report of

the executive steering committee. the executive steering committee will meet on a monthly basis and can report to the tjpa on a monthly basis when they're ready. so thwe welcome that, but it'sp to them to do that. it would be composed of the same agencies and led by the tjpa project director. and the work plan will include items to be delivered, and who's going to be delivering these items, and who's going to be reporting about these items?

on this is a draft organizational chart that's contemplated as part of the discussions that we're having on the m.o.u. on the right-hand side, you'll see that this is a normal operations of the transit center. tjpa, right now, we have the executive director reporting to the board, and the executive director is supported by the chief of counsel, facility director, chief security officers, and the c.f.o. on the right-hand side, we will have, at the very bottom, the tjpa managers working on the -- on the downtown extension project. they'll be managed by the project director, which is a tjpa employee, but he or she will be part of the integrated management team, they'll report directly to the executive steering committee, and the executive steering committee will report to the board. the formation of the o.s.c.

would provide another tool in the tool box and have leaders of various agencies, tjpa, high speed rails, and others, to really give the project a shot in the arm and the tjpa a shot in the arm in regionalizing the project and making sure we're doing this in full collaboration. and it'll also better position us in securing funding, especially at the states and the federal level and also helps us with resolving any -- any discrepancies or conflicts in the development of the project, especially when it comes to operations and other issues, so we'll have all the parties in one room, discussing in a formalized manner. some of the challenges that this structure introduces, as

there is no single person that's really responsible for the downtown extension, you've got a committee composed of six individuals representing six agencies reporting to the board, so when the board receives this recommendation, there is no one particular person that could be held accountable. the chair and the vice chair of the steering committee are not permanent members. they could come and leave, so two or three years later, the board will not be able to hold anybody accountable for these particular decisions. however, it's also going to -- heavily involve the engagement of the executives, so they'll really have to free their time up and be involved in the project. and also, the success of this

structure predicates on everybody's engagement. i want the board to know there's some costs involved here. that concludes my report as director's report and m.o.u. again, i hope to finalize the m.o.u. and bring it to you for your consideration at the april board meeting. i do recognize, and i'm sure you do, that given that this changes the way that tjpa does business, we need time to finalize this m.o.u. >> any questions from the board? director chang? >> through the chair, thank you, vice chair gee, and thank you for that. i wasn't aware that we were going to be discussing this, the potential for the m.o.u., the hope that it comes out. on behalf of our prior work on

the transportation committee, just want to highlight the goals for this effort particularly for some of the members and members of the public who may not have been following it over the past year. it's to regionalize the project further, but to further promote participation amongst the regional -- state, regional, and other partners who are already on this board and involved. also, to boost capacity of the effort, and there are different way to see do that, of course, but this way, i think brings the benefit of the coordination that is sort of inherent about having all these folks around the table with the resources and to move this project forward, and to frankly try to accelerate it and make it receive more state and other funding. so those were sort of the intent behind it, and i think some of the issues that you

raised behind accountability, we have seen partnership approaches to development. it's a fair concern, and i think something that we should be, you know, better able to address once we've finalized the m.o.u., but i think there are better ways to address it, and the wa and -- address it in the ways that we've seen these partnerships work both nationally and internationally. that's all i'll say right now. thank you. >> sorry. my intent was not to highlight the m.o.u. in a negative fashion. it was just to highlight there's some complexity in the reporting structure, and i wanted the board to be aware of that. >> thank you for this. we need the entire board aware of all of the hard work going on to create this m.o.u. as well as the public. as cited, the two previous reports in the peer review, and

one of the greater reasons is transparency, so transparency to the board and to the public. >> clerk: and we'll move into item 12, the construction closeout update. >> good morning, directors. ron alameda, director of design and construction for the tjpa, specifically phase one. also, the acting city architect for the city and county of san francisco. we have -- we're at that stage of the project where there's a lot of background activity and somewhat modest movement but steady movement. most of you are familiar with this pie chart as we start trying to gray out the pie

chart and achieve closeout on all of the 49 subcontractors which will clear the path for us to close out with webcor on phase one. as we sit today, we've got four trade groups that have moved into the final pathway towards four and final change order closeout. we remain with 13 that are in dispute resolution. out of the 13, i anticipate six to seven will probably take the longer path of either litigation or mediation. we're aiming for may, but i think the trend is towards june to have a closed session legal briefing for the board as we

move a little bit closer to that stage of the closeout. and that leaves -- out of the 42, we've got 39 that are closed out. i believe that was a movement from january of 29 total, to a total of 32. so as i said, lots of activity in fact background -- in the background, modest but positive movement achieved in that. as we look at the construction contingency, we look at the actions that were taken on closeout, probably the most thing to note of it since the last report, we've got 2.3 million drawdown on construction contingency, and

we've actually had a replenishment of 2.4. although we've been very successful with the d.r.a., the resident path issue, which was originally earmarked as a cmgc contingency, the d.r.a. recommendations are a result -- move that responsibility to construction contingency, so that's what you're seeing there on that slide. in summary, we've got a remaining balance of construction contingency of 1.6 million. getting a little thin, and probably an indicator of some movement of some reserve in the future, but that's to be shook out. cmgc contingency sits at 5.9,

with an overall program reserve of 31.8, totaling an availability of 39.3 million to work with as we navigate through the remainder of the closeout activities, we takes us to the budget slide. again, the total phase one program of 2.21594 million stays steady. a little bit of movement internal, with an estimated at completion of construction sitting at 1.454$1.45482 billi or million and for phase one, a total of $2.174 billion, and

below that line is reflective of the unanticipated drawdowns on the overall phase one improvement, and that would be the tenant improvement and the 301 mission. so that was, in total, about $62.6 million drawdown on the overall budget. but again, we're holding steady to stay within our -- the confines of our overall budget despite all the ups and downs with t.i. legal, cracked beams, and the such, so we're bringing this thing home. and that concludes my summary right now. >> thank you, mr. alameda. questions from the board? okay. thank you. >> thank you. >> clerk: all right. go ahead and move into your next item? >> next.

>> item 13 is the citizens advisory committee, and i did see derek holt, the tjpacac chair. >> good morning, directors. >> good morning. >> i'm derek holt, and this past evening, we -- the c.a.c. appreciated the updates from the tjpa staff, including christine, erin rosema, direct director zabaneh, and others. several members have reached their term limits, and we'll miss their comments, their plans, and their analysis. several applications have been placed for strong candidates.

our c.a.c. utilized the transit center resources as well as the rooftop park, and we have stronger appreciation for the covid-19 safety measures that have been put in place and the use of the website and other means of communication. we really appreciated the comments, and we're excited by the transit center tenants that are opening in the next few months as well as later on this year. we do recognize that the temporary closures delayed some of the momentum that was building last summer, and we still believe that contributing guilty parties should still be held accountable. our thanks to the high speed rail team that presented to us thursday evening. their 2020 high speed rail business plan looks strong, and they particularly focused on northern california, the central valley, san jose, san

francisco, and the role of the d.t.x.-ii project. i can tell you i can't wait for the option of taking a 45-minute commuter train to fresno instead of the three-hour drive that i had to make this last month. i think that the d.t.x. will help with that from what i understand. >> we've been helping you out. >> thank you, thank you. >> i didn't hear the date. >> noteworthy was the finance presentation focused on the 2020 tax allocation bonds by the tjpa chief financial officer. it was detailed, focused, and very clear that these strategic steps will save significant money, especially freeing up $35 million that can be used for the d.t.x. project. it sounds like a very wise move to take advantage of declining

federal treasury rates over the last six months or so. there was strong analytical discussion of the use of the money that could be saved. the csca took a vote, and it was unanimous. the c.a.c. has gone on record to, one, request that the financial strategy be employed, and if second, if there were $35 million freed up, that could be dedicated to the phase two project. the c.a.c. recognizes that the d.t.x. plays a role in the san francisco safety project that was presented at our meeting this past january. the c.a.c. recognizes that the d.t.x. has been voted on and approved on by regional voters, we recognize that the d.t.x. is a significant piece of the transit center and the overall

expansion of region. we, the c.a.c. strongly encourage the tjpa to support the proposed d.t.x. project. there was rigorous discussion by the 15 members of the c.a.c. tuesday evening, and we acknowledge that the introduction of additional regional players could lead to preventing or resolving conflicts, keep the tjpa involved in day-to-day politics, and there's recognition of the tjpa as a megatransportation in the region and the state, california, so we, the c.a.c. are requesting the board to support the funding and strategy actions and do what you can to raise the influence of more regional influencers to

champion the d.t.x. project. thank you. >> thank you. any questions from the board? and mr. holt, please extend our thanks to the members that are opting out because of their service. >> clerk: okay. next item. this is the time for public comment. i this is the time to address members of the public -- i see mr. patrick. >> i'd like to address the members of the board. this came out of the transportation authority of san francisco and has effectively delayed this project two years. out of this delay, we've studied the project, and we've said we're going to put a new management structure between this board and the operations.

that matter's been structured who we composed of substantially the same people who sit on this board, or maybe one level down. this is a quid pro quo. the quid is we have to change the management structure. the quo is we'll then give you the money. i don't know about you, but i find that objectionable. we've essentially delayed the project two years. now as i look at this next thing, what will flow out of that, in my opinion, is a tremendous amount of money for transportation improvements as we need to gin up the economy and get it going again. we will be sitting with our shoe in our back pocket, not ready. i think this whole thing has been terrible, and it's a boondoggle. thank you. >> clerk: okay.

that concludes members of the public that wanted to address you on that item. move onto the consent calendar? >> yes [agenda item read]. >> clerk: at this time, we've not received any notification that anybody wishes to have any items severed. your items are 15.1, approving the minutes of the february 3, 2020 meeting, 15.2, approving the meeting of the february 20, 2020 meeting, item 15.3, 15.4,

and 15.5. >> thank you, miss gonzales. any questions or comments? >> i'll move approval. >> is there a second? >> second. >> all right. there's a motion and a second. >> clerk: great. with a moved and a second -- [roll call] >> clerk: that's seven ayes, and the consent calendar is approved. >> thank you.

please continue. >> clerk: all right. we are ready to move into your regular scecalendar, and with concurrence of the board, we'll go ahead and all items 16, 17, and 18. item 16, approving the issuance of not to exceed $315 million, and finance additional costs associated with the construction and design of the transbay terminal project. item 17 is approving changes to item 17, debt management policy, and item 18 is amendment 1 and amendment 2 to the 2020 operating budget. >> directors, this will be presented by our chief financial officer, erin

roseman. i'm not trying to influence your vote, but i'd like to thank her for her work on this program. >> so we're here presenting to you the 2020 tjpa bond sale. this will be our inaugural bond sale, the tax allocation bonds. we have three main goals in doing this bond sale, and this is to refinance our tifia loan, to refinance any balance, and to execute our loans. we expected a loan in 2010 at an interest rate of 5.7. it currently has an outstanding balance of $179 million with a final maturity in february 2051. we anticipate in this market that we would be able to

refinance the full amount, the 179 million, still secured by net tax increment. our good faith estimate as of february 20 had a -- has a saving or an interest rate of approximately 3.5%. the market is continually moving -- in the last few days, it's been rather volatile, but still moving in a direction favorable for us. we would anticipate level annual savings and a net present value savings of at least 10% or about 20 million based on that good faith estimate. this slide is actually stale now that we've gotten to this point. you have to get all your documents together, but as of march 6, the 30-year m.m.d. was 1.52. it is dependent on the day of this week. it has gone down and up, and down and up, and today, it's

essentially been suspended, but the rates are still lower than our good faith estimate and kind of moving in our favor. we're hoping to be able to capitalize on this good market by the time we get to a june closing. the city financing is another debt that we'd like to refinance. out of the risk analysis the m.t.c. did in 2015, we were able to increase our program reserves by $260 million for contingency. part of this 260 million was city financing. there was 100 million from bota, and then, 160 million from the city and county of san francisco. we've only drawn $103 million out of the city's portion of this contingency. that 103 million had been secured by net tax increment,

and it was on parity with our tifia loan. the interest rate on city financing is a variable rate interest. as a requirement of our tifia loan, since we've added the city financing, we had to get interest rate caps to the hedge the variation in the interest rate. we had taken on three different interest rate caps over the lifetime of this. the interest rates did what they were supposed to and kept our payments within reason. the city financing expires in 2020, so we had drawn 103, and we've repaid some to our outstanding balance, but there's no ability to draw anymore on this facility. we anticipate the city

financing to be refinanced, one, through the city's own efforts to issue c.f.d. bonds, or community facility district, at a fixed rate. we would expect their bond sale to proceed around the may time frame, and our bond sale to close around june. if there was any amount that the city wasn't able to capture in their financing, then our tax allocation bonds would take up the difference. our third goal in this financing is to generate new money proceeds. we'd anticipate $115 million new money proceeds that would go towards tenant reserves,

replacements, and then any other reserves, fully fund a debt reserve and the cost of issuance which would be final to the buyers, trustees, etc. the capital replacement reserve is an account that was required by tifia, and with the refinancing of tifia, we would like to continue with that practice and formalize it into our practices of tjpa and not just the requirement of a loan. so we're attempting to fully -- or not fully fund, but fund a portion of capital replacement that we identified with tifia. there was a schedule that we provided to the tifia loan that programs are informed how much we should have over the life of the facility, and so we feel like 29 million is a good starting point. we should fund it to -- or we've committed to funding it

to 193 million with the tifia loan, so 103 million is a starting point. -- 29 million is a starting point. if the rate will allow, we'd like to go up to 40 million if the fund is available. so the total source for the bond sale, we anticipate generating 318 million from the proceeds of our bond sale, and another 176 million from the city's bond sail, for a total of 394 million, as a repayment to tifia, funding the phase one program reserve, funding the program cost of issuance, and slowly funding the debt service reserve. the structure of the bonds would be we -- in our documents, we're asking permission to issue a par amount of not to exceed $315

million. we would expect the bonds to be primarily tax exempt. the only bonds that wouldn't be taxable would be the capital replacement reserve. all the bonds would be reserved with net tax increment. a term of 30 years, we would expect the bonds to be all fixed rate. we've gotten indications that we would be green bond certified by the climate bonds initiative. our building is silver lead certified, or we're in the process of being silver lead certified, so it was an easy process in that record. the net revenues would be held by a trustee, and payments would be made by a trustee.

our good faith estimate assumes we would be able to achieve 3.86 with the market refinancing, and if the downfall continues, that could belower. in order to achieve this, we've done our fee to secure underwriting syndicate. we went through an extensive to come to the selection of steve full and dean witter stanley. we felt like as they're leaders in their industry, they would be best positioned to help us. additionally, we've chosen morgan stanley. they have a great distribution network that can help distribute our bond. the finance calendar has this coming to you for your consideration, and then, we'd

move to the city and county of san francisco's board of supervisors so that they could consider finding a resolution of significant public ben any time in this term of refinancing would be a net present value savings that provides a benefit to the public. so reducing the amount of debt, generating the 10% net present value, should be considered a significant value in regards of public financing. in addition, in april, we would finalize the credit ratings in discussions with our insurers and do the offering of documents in may and have a bond closing in june. since the city is doing their bond sale in conjunction with us, there is a bit of a pause between april and may to have their bond sales matriculate

from theirs to ours, so we know the exact amount that we need to finance of our bonds. in order to -- if we were successful with this bond sale, and in order to affect all the new proceeds and all the different changes, there would be a budgetary impact with all these -- this financing. the budgetary impact would require an amendment to the operations budget, an amendment to the capital budget, establishing and increasing a separate debt service budget, establishing a tenant improvement budget. we would bring money in to phase one and take an equal amount of phase one so there's a net-zero to the phase one program budget. it would also generate additional funds for or funding availability for phase two in the amount of 35 million, so it would be a shift of funds that now have an available use for

phase two. we would create the capital replacement reserve and fund that. the next few slides are tables of just the changes, so there's more lines to the operations budget, the capital budget. but for brevity of the presentation, i'm only showing the lines that have differences. the totals on the columns agree to the amounts that were approved before in the original adoption or amendments, but we're just showing the modifications. so the operating budget would decrease by 11 million, going from 37 million to essentially 26 million. the biggest difference would be taking out the debt service as a line out of the operational budget and then creating its own separate budget. and then, there's a series of revenue and expense adjustments downward by 5 million to

recognize a delay in construction and a delay in revenue in the operational budget due to the overly optimistic occupation of the transit center. there's an adjustment due to the reduction of residents. this shows or explains how the rearrangements happen. there's proceeds brought into phase one for tenant improvement, and then, the tenant improvement expense moved over to its own tenant improvement budget. there's money brought into the fiscal reserve that's created to -- to go into phase two, and then, additional bond proceeds brought in to support the tenant improvement capital budget with a contingency of the tenant improvements going

into fiscal reserve. so a lot to follow, but i'm willing to help anyone understand what all we're doing. in the debt service budget, we initially contemplated just interest payments to tifia and city financing, and now as we're doing these refinancing, this is a request expenditure approve to make the payment, so we're adjusting the debt service budget by bringing in the proceeds and expanding in t -- bringing in this in to expand the budget out. the next budget movement is the expression of the tenant improvement, so taking tenant

improvement out of the budget and phase one, bringing in the bond proceeds, showing that the 35.5 million that we had always anticipated is still the expense. we're also transferring a small amount of salary and benefits and marketing and leasing commissions and then putting 15 million into fiscal reserve for contingency second generation tenant improvements. finally, this is a summary of all the movements to show the reserves, and so our total capital reserves would be $141 million -- i'm sorry.

skipped over one, the capital replacement reserve. adding 21 million for capital replacement reserve for a total of 141 million. on the operational side, we're requesting the operational reserve. we're asking for temporary use of the o.n.m. reserve until we're able to achieve the reimbursements from m.t.c. in order to all these budgetary movements, there's a couple of policy additions or changes as we have wanted to fund the c

capital replacement reserve, it's not listed in the policy, so we're asking to modify the reserve policy to modify the capital reserve and fund it between $29 and $40 million and also add funding into the fiscal reserve through the budgetary movement. and i'll take any questions if you have them. >> thank you for your patience in walking us through that. director forbes? >> yes. the t.i. budget, would those improvements come back to the board for review and authorization for actual projects of tenant improvements or is there further review? >> so with each of the leases that we've executed, there is a negotiation for each tenant on how much the tjpa is

contributing to the tenant improvement for that specific space. so with the approval of all the leases, there's been this approve of the amount for all the tenant improvements. >> i see, so it's cash -- we're not performing the tenant improvement. it's an allocation to the tenant? >> so a portion of it is allocation to the tenant, and then, there's a base building modification to the tenant's work, so it might be the floor, some of the utility relocation or bringing the utilities into the space. >> director sesay or -- yeah, go ahead. >> oh, similarly -- thank you, vice chair gee. subsequently, there would be a budget action or any other actions to apply these funds, is that right? this is a tax allocation proposal, but whatever use would be reflected in the

agency budgets or project budgets of the board. this is not a project afpprova, this is a tax allocation, that is correct? >> there's three separate actions. one is the approval of the sale of the bonds, so yes, we could proceed with the bond sale. then, there's the budgetary action. >> oh, there's a budgetary action? >> yes, there's an amendment to the capital budget creating and establishing a separate debt budget and establishing a tenant improvement budget. those are the budgetary actions. >> right. and it's not necessarily a project-level budget. i'm understanding it to be an agency action, correct? >> correct. >> oh, thank you. >> the program budget does not change, so the face one project of 2.221 billion does not change. there's money that goes in, money that goes out, but the -- >> thank you. >> thank you.

director sesay? >> so i want to comment, the capital reserve, there's a footnote that you noted in your presentation that goes up to 40 million. so have we reflected that cushion in the authorized not to exceed amount? 'cause i know that you've made assumptions, so we're assuming the tax allocation bonds does not payoff the city financing, but it funds these three different buckets, including repayment of t.c.f. and if the city does not generate enough funds -- i'm trying to think how that balances out? do we have enough in terms of authority, not-to-exceed amount for you not to continue on? should there be an allocation be made to the result of the

city's finance. >> yes. there's an amount that we're asking for that could cover that difference. that cushion also includes a market contingency. if it moves outside of our good faith estimate, we would make sure that if the market moved so significantly that it wasn't advantageous for us to do this, we'd come back before we -- closing. >> the city board approval process is so lengthy, you have to get it right the first time. in terms of the reserves that you've identified here, my understanding is are they,

like, on board reserve so in the event that we want to withdraw from those, it couwou come back to the board to approve? for example, the capital reserve -- >> yes -- >> yes. so i'm just wondering what's not needed for phase one that goes into a program reserve, where does it get applied and what authority does the tjpa have over those dollars. >> for the phase one program budget, any withdrawals from the program reserve -- any withdrawal above $1 million requires board action. for the fiscal reserve, any withdrawal, regardless of the amount, requires board action. contributions to the fiscal reserve in excess of 15% require board action. for a capital replacement reserve, the revisions that we've identified allow for the e.d. or the c.f.o. to make

moves in line with the capital asset replacement plan. and so the 193 million that we identified as tied to the life cycle replacement of the component of the building. our guidance would be if it's time for the kiosk to be replaced, and whatever that replacement amount is, that would be the recommendation, but then, we would also include it into the annual budgeting process so that there's always board approval for that. it wouldn't just be a unilateral sort of move. >> and then in terms of the disclosures that were identified here earlier, what -- most specifically, we're talking about the capital replacement reserves that could potentially be on hand for longer than your typical spend down rule. so does that mean that would be a taxable leg so that you'd

have flexibility to bank that for longer than the three-year spend down rule? >> yes. everything that would be identified for the capital replacement reserve would be taxable so we're not subject to the i.r.s. spend down rule. >> it looks like most of it will be respent, program reserves and so on. and then, in terms of the action that we're taking today, the bond document identified, can you give an idea of what those are, just because this'll be the first time the board will be issuing the issuance of a bond and there are some disclosure requirements expected that we should be aware of. >> you called all the items together, and one of the items is the debt policy revision.

so because we hadn't had a public sale before, our debt policy didn't necessarily address public bond sales, so we've gone through and added the things that are necessary for a public sale. so the first sort of action should be approving the debt policy so that it informs the bond documents or the sail of the bonds. in terms of the bond documents that you have that are included in the packet, there's the resolution going through the specific items, so not to exceed 315 million with a good faith estimate attached, so what we could expect by terms of interest rate and what we're agreeing -- the terms that we're agreeing to for this 315 -- not to exceed 315 million par. then, there's a preliminary official statement that's attached, so that would be your offering document to your

investors, but since we haven't gotten fully through the structuring phase, there aren't fill ins in the full amounts, but there are some good faith efforts of what those would be, and they wouldn't exceed 315 million. but you would refer to the actual statements, which is our investor documents. additionally attached to it is the bond indenture, the disclosure certificate, and the continuing disclosure certificate. continuing disclosure are the rules that we, tjpa, have to disclose to the investor community. our financials, if there's any sort of material events in term of our credit changes, increases, decreases, so we're committing to disclose to any

investor our -- changes in our financial situation. the purchase contract is a contract between the initial underwriter and tjpa about the terms of the bond sale. and then, the bond indenture is kind of the full out terms of the description of the bonds and how the bonds will act. they won't be completed until we get through the rating agency, insurer conversations, and before we go to pricing, all the documents would become final and disclosed publicly. >> thank you. that's so helpful. and i'm going to go back to the numbers. so what we're approving today in terms of the sources and uses, the $50 billion for

t.i.-6, that's what's going to go back in the bucket. the program reserve of 35.5 is the number. >> yes. >> the 29 million is what we will adjustment. >> that is correct. >> and if there's moneys to be refunded to the city financing, that would be a separate line item? >> yeah. >> just -- i'm just making sure that what we're finalized except for the nuance on the capital reserve and the city financing refunding. >> correct. >> okay. thank you. i do want to also acknowledge my communications and actions on this is simply as a board member. as you know, i'm ocii, office of community investment and infrastructure. i'm not obligating or committing the agency at this point because there are references to our role in the

transaction, more specifically as how increment is facilitatds to the controller. i'm just wearing my tjpa hat as an ombudsman. we will have comments on the o.s. and the preliminary shifting. >> thank you. >> director hursh. >> thank you. with that, i'm happy to move items 16, 17, and 18. >> thank you, director hursh. there's a motion to approve. is there a second?

>> second. >> motion and second. >> clerk: great. with a motion first and a second on items 16, 17, and 18 -- [roll call] >> clerk: that's seven ayes, and items 16, 17, and 18 are approved. >> thank you. congratulations on all the hard work. >> now we want to know your ratings. >> clerk: go ahead and call your next item? >> please. >> clerk: item 19 is approving the applicants to the tjpa citizens advisory committee. >> kristina falvo is going to present the item. >> we don't need a presentation. do you need a presentation? >> i don't need a presentation.

>> i'll move. >> i'll second. >> it's been moved and seconded to item 19. >> clerk: no members of the public wishing to comment on that. on item 19 -- [roll call] >> clerk: that's seven ayes, and item 19 is approved. >> chair hull, please pass along our congratulations to the new c.a.c. members. >> clerk: all right. go ahead and all your next item? >> yes, please. >> clerk: item 20 is the election of chair and vice chair pursuant to the tjpa joint power agreement. looking for a nomination. >> looking for discussion pursuant to the nomination of the chair of this board. >> i would like to make a

recommendation. i would like to nominate director sesay to be chair. as many of you know, director sesay has a long history of building the center and the downtown rail extension, and she's also one of the lead architects of the entire financial strategy for developing the transbay district which was a central element of the funding strategy for getting built what we have now, and laying the groundwork for the downtown rail extension. she is one of san francisco's great leaders in creative capital financial tied to economic development, and her leadership is not only here but at the california level. she serves on the california debt and advisory commission. i can't think of a better person to lead this project

forward than director sesay. >> i second that motion. >> any other nominations? seeing none, by acclimation, all of those in favor say aye. i'll pass this over to you. >> so i guess i'll open this up for vice chair. >> i'm also happy to nominate, particularly the role that san mateo and caltrain have played in ensuring that the transbay center is indeed a regional effort, it's in san francisco, but as we've seen from the way the citizens advisory committee has formed, this project is completely dependent upon the cannoted leader -- upon the continued leadership of our commission with jeff gee, who

has shown strong leadership in this project and for projects throughout the region. >> may i second that, as well. >> okay. all in favor? [inaudible] >> i look forward to working with you. >> thank you. >> and board in this new capacity as chair. thank you. >> we'd shake your hands -- >> no. >> clerk: all right. so director, just to clarify, we have chair sesay taking on and director gee continuing on as vice chair. that does conclude your agenda for today. >> okay. we are adjourned. >> clerk: thank you.