mr. updike, i believe there is a report on this item. >> good morning, supervisor fewer and supervisor stefani. this lease is an existing lease. it had a five-year option to review but the division made a decision to enter into a new 3-year lease with additional options because the department of environmental services is intended to move into the new city-owned building on south van ness. the cost rent under the new lease is about $64, almost $65 per square foot. this is determined to be market rate by the appraisal in review in conformance to the administrative code. the first year costs are $1.8 million. if the department stays in the fox plaza lease for the entire three years, it will be $5.6 million over the three-year term. our understanding there is a plan to terminate the lease with notice so that this division can move into the new building and we recommend approval. >> supervisor fewer: thank you very much. are there any members of the public who wish to speak on this item? seeing none, seeing no public comment, is there a motion on this item? >> i believe there is public comment on 1

mr. updike said, this did not require an appraisal, it fell below the threshold by the administrative code. rental rate for the warehouse portion is 1.50 per square foot, in the survey range that the real estate provided us. the cost of the lease over the approximately five and a half years of the term would be to the city, $2.8 million. i think our one issue with this lease and you'll see it also in future legislation coming forward is the cost of the tenant improvements. the budget we were provided by public works, $3.2 million. we do, for use that would be five years or less under the lease. we did talk to the department of homelessness. their goal for the navigation centers are for a mix of short-term and longer term navigation centers with centers being open at least three years. we actually ended up recommending approval because the tenant improvement costs are consistent with the tenant improvement costs with other navigation center, and because this would add beds to the navigation centers at the same time that two of the other centers will be closing in 2018. so as i said, we do r