tv LIVE Web Stream only CCII Commission on Community Investment and... SFGTV February 16, 2016 1:00pm-5:31pm PST
speaker please. >> hello. i am [inaudible] a local market rate developer. first i would like to thank everyone for being involved in the legislation. we are really supportive of any way to increase affordable housing within the city. however, we are concerned about the impact of the new legislation on existing projects. as an example we submitted a 44 unit project for planning almost two years ago and under the existing structure and if the rules were to change the project would be significantly impacted and at risk. we therefore would appreciate and support some feasibility analysis for the projects to make sure it does what it's set out to do. thank you. >> i am carlos wallace. dear supervisors i appreciate your time today and the candid comments back and forth from
both sides of the room and supervisor peskin you outlined a solution that we're looking for and a solution of common sense and as a personal note i care about the housing in the city. i lived here for 20 years and we have projects in the pipeline that would be negatively affected without a solution but i have kids growing up in the city and i worry about their ability to buy housing when they grow up. they're 13 years old now and if they're not high income earners i don't know where they will be and have trouble buying housing when they grow up and it's a problem we need to tackle together but i think it's important to set a rule, make it clear, and be cautious when it's changed and right now you're talking about a big change that potentially can ice thousands of in the city
now or the future so if you're changing the rule it has to be cautious because the markets will react and we could find ourselves ten years from now with little production. some projects may work at 25% but many may not so the feasibility study proposed whether via the mayor's proposal or some compromised ordinance that comes into place at the same time as the charter amendment is extremely important to move cautiously i think is very important for people in your position. as a sign of respect to the city the residents and everybody that wants to solve the affordability crisis in the city. thank you. >> thank you. next speaker please. >> thank you supervisors. my name is joe and with avalon bay communities. we're the developer and owner of about 3,000 units in san francisco and currently building 300 more in the dog patch. i live in san
francisco and earlier in my career i respond spent eight years building affordable housing with a non-profit and i know how difficult and critical it is that we're building new affordable housing . inclusionary housing is a key tool in the tool box to do this and it's critical to maximize the effectiveness of this tool. i am actually very eager to be joining with you and with city staff to be working on ways to maximize this most effectively. i don't believe it can be done arbitrarily or by decree. it's a great way to get the highest percentage but the only way to get the projects paying that percentage is with a formula and careful look at feasibility. the mayor's housing working group is working on this. i think there is tons of potential and an opportunity for san francisco to be a leader in this area, and supervisor peskin mentioned the rocket science of coming up with a formula that is automatically. i don't think it's impossible and i think you
know we can -- we have a lot of smart people in this room and other rooms in the building. i think we can come up with a formula that adjusts automatically with the conditions and it's the only way to ensure that the public gets as much it deserves from this policy while not leaving anything on the table. as one final note i am a market rate housing developer. i will provide a little anecdotal evidence. we control a piece of land in san francisco and would like to use it and add to the city stock and affordable housing. at 12% we may be able to make it work under the market conditions. with 25% we can't make that investment. i can't get people to invest in the project. thank you very much for the time. >> thank you very much. next speaker please. >> good afternoon rules committee. we're saving nickels, saving dimes, working
until the sun don't shine. since we left our affordable housing behind we're city blue bayou but we're coming back some day when we got more pay, and we're blue bayou, where the folks are fine and we make some dimes and the city shines with their fishing boats, with their lobster float if you could only see that we want affordability housing. everybody plays with housing rules sometimes. there's no exception to the rules. i ain't lying. it maybe factual, maybe cruel. make it happen, won't you? thanks.
>> thank you very much. next speaker please. >> supervisors, recently we lost a housing advocate in dr. espinola jackson and she she would make a statement and affordable to who. i have been involved with this issue of affordable housing for the last 35 years. maybe before -- one individual on the right side was doing some sort of housing but the rest of you were not there, and i studied all the devious [inaudible] richard
blum and jon stewart company and witness to what i say. this city has sold out affordable housing meaning you cheated on those people that made this city our neighborhoods and favor the developers. now, i represent the first people [inaudible] who have been in this area for 13,000 years. all this land was stolen so here we have the thrives deciding how to make best of the land making millions of dollars. now, who challenged the academy of arts university who took so many rental units away? why are they giving all the developers the public housing that the department of defense paid for 100 times over? so that this middle class
families and people that we really want to stay here in san francisco and indigenous -- and i can say that -- (off mic). >> thank you very much. next speaker please and before that i will call up the cards where they didn't indicate whether they're speaking on item 1 or two. [calling speaker names] >> hi. my name is sonia and i want to take issues with peskin's claim earlier that life went on fine after the first inclusionary fees were instituted. life is not fine. we're in a horrible housing crisis. things are fine for housing associations and others but generally it's not fine. high fees can i have marginal
development and that's the development we want the most, stuff that happens at the beginning of the cycle aka the end of the recession when people most need jobs and in the neighborhoods and low profit margin and projects at the end of the cycle and wind up being sold when they open at the bottom for a third off. those are the most delicate projects and those are harm and when you willy-nilly set the fees too high and that's what i am really keen on you know based this on the feasibility analysis and it's true that the feasibility analysis can be cooked either way. right? they can be cook that you can afford a higher or a lower fee. it's obviously a political process. i would suggest airing on the
lower fee side for the development. thanks. >> thank you very much. next speaker please. >> supervisors. i am build inc. and i want to thank you all for the concern about housing. i certainly share it. affordable housing is critical in san francisco. and two things i'm going to say. one is we've got to get the percentage right whether with a feasibility study or some other way. we don't want to kill the goose that's laying the golden eggs here and get the grandfathering right we have a pipeline that is creating huge community benefits right now. i sit on the market octavia board and our budget in the next five years for the pipeline projects is $40 million in fees and directly impact that neighborhood. multiply that over the entire city and you
see that throttling the production of housing at all levels of affordablity would be greatly deteleious to people living in san francisco. it's important to keep that housing pipeline going. the affordable housing market rate housing are linked. if we don't either delink them or if we stifle the production of market rate housing it is going no doubt will have a chilling effect on the production of affordable housing, so please consider carefully what you're doing here, and find the right path for us. thank you. >> thank you very much. next speaker please. >> hi. my name is oz ericson
and president of emerald fund. just one point before i address this issue. i was on the committee that senator leno's committee on affordable housing. i went to meetings for nine months every wednesday at 12:00 o'clock and contrary to what supervisor peskin says we considered economics of that affordable housing very, very carefully, spent an enormous amount of time on it and widely supported by many of the market rate developers contrary to what supervisor peskin says. i was one of them. i worked very hard on it. it was very good legislation and that should be the way what we approach this legislation. we should do an economic analysis to make sure it's prudent. i have passed out a letter that was signed by the people who build, develop and construct well over 90% of the housing in the city. you can
not build despite what supervisor peskins and i would love to hear the names of these individuals. you cannot build with 25%. it is impossible. it drives the land below zero. you can't do it. you have raised this twice that you talked individually. i have had budgets run by six of the market rate developers and flee of the affordable housing -- three of the affordable housing developers. it's impossible. you pass this. you kill housing. you layoff thousands of union jobs. you should amend the legislation and include an economic feasibility into the ordinance. that's the way you should do it and grandfather the projects. it's too important for the city. thank you very much. >> madam chair if i may respond. >> supervisor peskin. >> because his comments were directed at me. first of all relative to the letter that
just received because you're requesting my veracity. i have been contacted by folks that have never seen the letter and did not authorize their name -- >> you have been contacted by one person that said that by the swig company. i have a letter from the swig company authorizing it. that's true. they have done it -- >> [inaudible] >> all right. >> [inaudible] >> take it off line. that would be great. >> respectfully calm down. it's not correct. it's not the swig company but i would like to also go back to 15 years ago because you're questioning my veracity. yes, there was a negotiation and yes it was done in conjunction with people in the development company as supervisor kim and supervisor mar and of the sponsors of this measure are trying to do. my point to mr. rich was it was done absent a feasibility study. it was a negotiation. that was the point that i was making. i
suggest you calm down, but we want to get this thing right and we appreciate your input. >> thank you. and now if we can move on to the next speaker please. thank you. >> hi. my name is alyssa and representing spur. we support the mayor's measure for the feasibility analysis to inform san francisco's inclusionary housing requirements. inclusionary housing produced thousands of units since introduced in san francisco and we agree there's more to be done and there is room for change. we agree we should periodically challenge our assumptions but finding the right level is key to maximizing the production of affordable housing. too low and not asking enough and too high developers will not produce housing at all levels that we like. it can be done
thoughtfully and smart based on the controller and the department and inform discussion that is currently under way. spur hopes that the discussion reports market rate and affordable housing rather than pitting one against the other. we continue to believe that what it will take to drive down housing cost is a set of changes to enable the production of more housing at all price levels. supervisors we encourage you to incorporate teasablity language into the charter amendment currently on the table. thank you. >> thank you very much. next speaker please. >> good afternoon supervisors. my name is lea chang [inaudible] and in san francisco doing development for 25 years and an advocate for affordable housing but we're concerned about the proposed amendment on the table right now. first increasing the percentage as you propose is not economically feasible to obtain
any capital projects -- [inaudible] you have to show a certain return and what you're asking those returns are not achievable. the end result would be end to housing supply and bmr supply and on site, off site -- in lieu fees. second any policy that we believe needs to to be made with this significance requires a analysis and feasibility study and we highly encourage that the supervisors consider such and last that we ask that you consider the projects in the pipeline be grandfathered in and not unreasonably subjected to a significant change like this. we appreciate your time and ask you to consider these points. thank you. >> thank you and at this time if anyone wants to speak on item 1 on the agenda please line up by the windows and come up for
public comment. >> thank you supervisors. my name is patrick kennedy and the owner of panoramic interest. . share the desire to produce affordable housing in the city as well and have focused our firm's efforts building affordable units by design, micro apartments and the similar. i would like to bring to your attention a to -- potential issue and cost to hawkins and that bill as you know limits rent control on new construction and old construction, and although there is a san jose case that upheld inclusionary requirements it specifically limited to for sale units, and if you double the inclusionary
requirement and make projects both going forward and the past ones financially infeasible i think there's a very good chance you may drive developers to the courts to question the legality of the inclusionary requirements in san francisco in light of cost to hawkins. i have been part of the development community here supporting the 12% set aside and the current efforts to see whether more can be done, but i think to summarily decide to impose a 25% requirement could in fact be the straw that breaks the camel's back and throw all of this bmr question into the courts with nobody benefiting from it. thank you. >> thank you. next speaker please. >> good afternoon. my name is
craig hemberg with ddt. we're a local real estate investment firm. thank you for the opportunity to speak today regarding the mayor's proposed feasibility analysis and inclusionary housing requirements. during the previous recession our firm purchased several of the market octavia freeway parcels from the city. we then spent the next five years working very closely with the neighborhood and local jurisdictions to design and build multi-family projects and help to sell the vision of the market octavia plan. all of our projects fall in the smaller and moderate scale, 35 to 50 units and for sale condominiums. we included on site inclusionary units in all of our projects and very proud to say that. in preparation for today's hearing i reviewed our performance to
better understand how increasing the on site inclusionary component or percentage 25% and the revenues to off set the change. on average our units sold below the current average per unit sale price of 1.1 million dollars. our average unit size was 150 square feet in size. in order to make the same projects work with a 25% on site inclusionary percentage our average unit prices would have have to increase over 140, $150,000 per unit. essentially wiping out our land base in the project so they could be zero and our projects would not come to the same returns. unfortunately given current construction costs and increases we have seen over
the years north of 20% long lead times and the politicized -- (off mic). >> thank you. sorry. we have to give everyone the same amount of time. next speaker please. >> my name is jon stewart. i am a resident of san francisco and principal in our company and been involved with affordable housing for 30 years. we don't oppose the 25% threshold per se. in fact with a 12% let threshold the way it's turned out in the market is probably too low. we think there are cases where deals could go through in excess of 25% particularly with public support. we oppose the one size fits all. what are you going to do with a small in fill project? let's say it's a lazy asset to bring into play and no economy of scale, 50 units. what is
the unit if you have a environmentally challenged site and high land basis because you have to clean it up. what is the plan for the market changing in two years when rents plummet faster than costs? my recommendations are four fold briefly. if we solve this problem through an ordinance and i am in agreement with supervisor peskin we shouldn't do it through the city charter. let's make a provision for change at a global systemic level, the number for all projects. one. two, let's make a provision of change at the project level and there are good deals you don't want to baby the baby out with the wash on so i think you want to look at two folds. let's address the grandfathering and lastly i hate to
say this and presumptuous and bringing the for profit and non-profit communities in and go to a bond school. remember the adage from divorce lawyers and a muses me -- [inaudible] leisure. >> thank you. and last call again for public comment on item 1? >> good afternoon. my name is david sternberg, i do have comments about the second item which i'm going to hold until that comes before us but regarding the nekts nexus study i still to this day don't understand why real estate developers have to bear the burden of all of the affordable housing that the city supplies. i don't understand why people that benefit from buying houses
for $50,000 and 20 years later they're worth $2 million why they don't bear that burden? why people that flip existing houses bear that burden? why microsoft or any of those companies that maybe in the city paying payroll tax and paying taxes on that why they don't bear the burden? i'm not an attorney. i'm not a politician. but it seems that there are three forms that could generate an ongoing constant amount of money for affordable housing, and that would be transfer taxes, payroll taxes and property taxes. again developers are here d business the same as everybody else in the business and i have been an architect in the town for 40 years. most of my clients are
building small to medium projects. they're not wealthy people like so people think. they're not land rapers. by the pay city fees and capital gains taxes and need money for the next project you're poor again, so i just don't understand. maybe somebody can explain it to me. thank you. >> thank you very much. any other members of the public who wish to comment on item 1? seeing none. public comment is now closed. [gavel] and colleagues any additional comments or questions on the first item? supervisor peskin. >> i just want to make one kind of overarching observation which is i'm delighted that we all agree that the number should go up. i appreciate the gentleman that said proceed cautiously. i agree but where was that caution in 2012 when the market was already going through the roof when some
decision was made to reduce the percentage from 15 to 12%? where were the advocates who claim to care about affordable housing and claim to want to obtain as much as is feasible where were they in 2012? mr. rich with all respect, and i mean it sincerely. i think the administration can do a bond at the same time that it can be do a feasibility study. they're not mutually exclusive. i am delighted that we have sparked this conversation. i am delighted that we have sparked it six months earlier in june rather than november because i don't think we can or should wait and i for one look forward to working with my colleagues on the board and the administration to find that sweet spot. >> thank you. supervisor kim. >> i wanted to respond to a couple of things. i know supervisor peskin mentioned
this earlier but i have talked to developers also, personally more than one and 25% is feasible and they can do as long as it's baked into the deal as they move into the process and i am happy to make sure they speak publicly and i think we need to be careful when we scare people about job loss. i think that's inappropriate and that we're scaring people about the future and depend on construction. construction is doing well in san francisco and i never seen an inclusionary housing policy that has hurt our housing construction and what hurts it is our economy. it's financing. it's not building more affordable housing and mad rot housing and for the workers in the city today. i want to address who contribute toss affordable housing? first when we reformed the business tax a few years ago and moved from
payroll tax to gross receipts we did actually dedicate a portion to the housing trust fund growth. we have also looked at increasing the real estate transfer tax every few years and in fact i have two ballot measures in the hopper today and 1% increase to the hotel tax where our hotels and tourists contribute to helping us house family homelessness, the fastest growing demographic in the community today. that hopefully will be on the ballot in june. in november we're looking at increase in the transit tax and luxury building and $5 million or more and $25 million or more and everybody is contributing to the affordable housing crisis and not just the developers although they play a key role as they build and profit in the city we expect them to give back to the city. yes we want you to build more affordable housing so to say that only one category
folks is targeted to build affordable housing i think is incorrect so just wanted to address that point. i know we will make further comments as we speak about the next ballot initiative. >> thank you. supervisor cohen. >> thank you. my question is through the chair to supervisor kim and my apologies if my question makes you feel uncomfortable but in the interest of transparency and discourse in the conversation who developers are you talking to? who has agreed and acknowledged that 25% is doable? >> supervisor i am happy to speak to you off line and get the developers to speak publicly themselves but i have definitely heard from a number of developers and we should clarify when talking about 25%. 15% is always what developers have done and that is building affordable housing at 55% of ami and below. what we're merely asking is build another 10% for middle income housing and requires
less subsidies and much of the market rate housing should be affordable to middle income housing and it's not and they're building at two 70% of income and seeing the numbers developers are often building for housing of four that make $270,000 a year and i don't know how many people in the room that make that much in san francisco but it's a problem and a problem that developers say theant can't build this housing and make 80 to $100,000 a year and can't live in san francisco and if developers can't build to this category and we're in a lot of trouble but i have to remind the board and many in the room that over ten years ago when talking about increasing inclusionary from ten to 15% developers said over and over again it would kill all development and it did
not so i think it's important as we continue to move forward and push the envelope what it means to build in the city and yes we need to do the analysis. yes, we need to make sure everyone's at the table but we all need to give a little more. >> so i guess i'm going to take a page out of your book supervisor kim. you didn't really answer my question and i think it's fair for us to put it out in the public. i too talk to developers all the time as chair of the land use committee and being the supervisor for district 10 there where there is a plethora of development happening and i don't that as a good thing but it's a reality, a reality that i have a pretty good ear with the development community, and i quite frankly and i will go back to everyone, big and small ones and surveying them. i want to know which developers are saying that 25% is certainly doable. the other
thing and i want to make sure that i heard from the mayor's office correctly they didn't say nobody is able to did but my take and understanding is most of the development community wouldn't be able to do this. i'm not looking to do favors for the development community and we need to come to the right number and supervisor peskin nailed it and you put on a measure and the mayor's office put on a measure and it's bullshit and we need to keep it going and there are important things that we need to deal with. [applause] thank you. there are important things that we need to deal with, homelessness being one and talk about building for them and the affordable housing crisis. it's frustrating that we have a special rules committee and all these people come for the conversation and admittedly we can deal with it by pulling it off so it's frustrating to sit here and deal with this. let's
get on to item number 2 and get on with it. >> thank you supervisor cohen. any other questions or comments from colleagues? okay. seeing none can we get a motion to file item 1. >> yes. >> second. >> moved and seconded. the hearing is filed and now call item two mr. clerk. >> item two is a hearing for the initiative ordinance by four or more supervisors for the june 7, 2016 election ordinance amending planning code to set forth the minimum inclusionary affordable housing fee requirement. >> thank you. do any of the sponsors wish to make comments on this? >> i think it's been made. >> any department staff wish to comment on the second item? >> sorry. >> i'm sorry. mr. rich. >> we wanted to quickly go over a couple of things and i wanted to preface this we definitely understand there's been a lot of discussion about
compromises and discussions that should occur. i am obviously not authorized to have a negotiation sitting here in the board chambers but we understand it will happen and we understand there's a lot of stakeholders such as the construction trades and others that want to be part of that conversation. i did want to spend a quick moment having my colleague describe and we will do it quickly because it sounds like this is a short presentation why we are concerned about a 25% across the board number. again very clearly there are times when 25% will work. it will certainly work when there is a lot of public investment in a project. it will probably also work sometimes anyway when there is significant up zoning from 40 feet to 200 feet and may work but i wanted emily to take you through quickly the overall concern with 25 percent. i do want to point out unlike the
charter amendment which we're not talking about today the initiative ordinance before you today can't be changed and if put on the ballot by the voters it could only be changed by going to the ballot so we feel the obligation to give you the results of a preliminary preliminary analysis on the 25% because it can't be changed in the form before us today so go ahead. >> and if i may -- >> supervisor peskin. >> before she speaks let's just be clear, and i have been remarkably transparent. had the previous item not been introduced on january 19 at 4:24 p.m. this item wouldn't have been introduced ten minutes later. that's reality, so i just want to put that on the record. >> certainly. we just have to respond to something before the committee. >> i actually have a question for either sponsor of this particular item, number two. i mean out of a very basic level can you talk how it is that we
arrived at the 25% across the board? any sponsor, supervisor kim or supervisor peskin? >> i think supervisor kim touched on it and as you have heard and scene and interestingly enough when i was quizzing mr. rich about projects that went far north of 25 the response was "those were on city land. those had been conferred major height increases or density increases or what have you." that doesn't address the situation from last week relative to the project on bryant street. here's a perfect example and it's not a 25% example but we had a situation on december 8 with the board and rejected a project on van ness and the financial terms and low and behold said the developer
can do 8% more affordable housing at the same sale price the city is offering. the reason i am telling you this it's our job to move the numbers as high as we can and still have market rate with affordable housing occur. we know that the numbers can and should have moved north of 15 for 55% ami and below, and as supervisor kim said we believe that creating an inclusionary amount for middle income actually -- because it requires significant less subsidy is feasible and while we're not naming folks -- excuse me, in the fraternity, that told us they believe it's feasible going forward because ultimately it's a function of land costs, and yes we have heard from at least one individual that says at 25%, 15 and 55 and ten at 120 that you would drive land costs
down to where the land cost is zero. that is absolutely not true. nobody in the business is saying that except it's scare tactics, hyperbole and brought a wonderful conversation and to all of us agree that prop c is a conversation of the past and our job to find the sweet spot. >> if i may add on. and i appreciate developers or examples going beyond the 15% but what analysis went into how you arrived at the 25%? supervisor kim you're the sponsor. supervisor kim. >> so going to the charter amendment and the ballot initiative that is before us today the main premise of the charter amendment is what we of course all agree on and get rid of any ceiling in the charter that restricts the amount of affordable housing that our developer community can build
and currently set at 12%. we are bringing back our original percentage point which we know builders can build at which is 15% on site and on top added 10% for middle income housing and we believe developers can do. with that said because we want to spend to make sure these projects are feasible for broad range of developments for 25 units and above we set this as merely an interim controls and the important part of the amendment is read the board to be flexible and how much affordable housing our private developer community can build and in many cases as mr. rich points out with city subsidies and achieve higher and 33 and 40 of affordable housing housing. the measure before us today and sets a floor of 25%. we are again open to withdrawing this
measure with the krawrl of the other measure as well and we know there are conversations with projects in the pipeline that depended on the previous formula and far enough down the road in their process where it would be difficult to change their pro forma. that is one piece of the negotiation. the second of course is what is feasible for the wide range of developments to build in the city? what can large and medium size projects do? of course we excluded projects 24 and under because we believe they can't build more than they currently do. that is really the conversation before us. i don't think in the room is trying to halt development or layoff construction jobs. what we're trying to do is push the envelope on the discussion what has become the number one issue in san francisco today which is maximizing our affordability and
building the most affordable housing and middle income that we can and these ballot measures kick off the dialogue and ensure that we have that conversation so our offices have already started meeting with the developer community to see what we can do and again i want to reiterate we can pass this all via ordinance as long as we remove both ballot measures that are before us at rules committee today. >> okay. i appreciate and hope that certainly there will be more discussion. i think the main question again is what kind of analysis was done behind the 25%. i will just say that i appreciate us trying to incentivize building housing for middle income, absolutely, but if there is a percentage that means that potentially we may not see that that is concerning to me so again i wanted to what analysis went into the 25%. >> mr. rich you had something. >> through the chair if it's okay i would like emily to do
what i said and a quick presentation. i want to comment on supervisor peskin for the land going to zero. staff hasn't said it will go to zero but below the current use would support and retail rents are high in san francisco. if you have a piece of land with a retail store on it or a parking lot that is worth a lot of money so it doesn't have to go to zero for development to stop, but just below the current value of the land and with lots of sites and commercial corridors you have i business or parking lot bringing in hundreds of thousands a year and capitalize that and get a piece of land and emily will show seven, eight million dollars and in many cases a developer under 25 couldn't pay them. that landowner will not sell the land so that's the issue. it's not about a zero land value. >> before the presentation i
want to ask are you saying that development cannot do 15% affordable and 10% middle housing in any scenario? >> no not any scenario but in many scenarios that's what we're saying. >> so you're saying in some scenarios it's impossible for developers to hit 25% and it's a surety. >> yeah, that's what i am saying and based on a surety and looks like many projects can't hit 25%. that's correct. >> all right. let's move to the presentation. >> i will be brief and i will go over the slides and part of the record and in your packet so as ken mentioned we had an economic consultant teed up for the feasibility study with the working group and do the analysis of the 15% plus the
10%, the 25% proposal so to be clear this isn't the feasibility study but backed up by extensive research by the consultants and vetting by the mayor's working group so you find the report in the packet. it's also posted on-line at the mayor's office of housing and community development website. the consultants looked at a number of types and midrise, low rise and apartments and condos and studied the inr inclusionary rate of 25% and the in lieu rate of 33%. i will walk through one case as an example. it's a midrise apartment project so seven story rental building and assuming it has on site inclusionary and 12% under today's requirement and 25% under the proposed requirement, so just as the first exercise we want to show what a rate of return would be for this project under today's market conditions so the industry standard for a
return for this type of rental project is return on cost and it's a slsmcasion and divide annual revenue and the development costs and that's what an investors looks at when deciding to give money to a project or not worth it and give the money elsewhere so with this building and the 25% the preliminary analysis showed 4.nine return and substantially below what financial institutions are targeting today and i would stress is a historic low and based on the interest rates are today. so that difference between the foirntd 9% and the five and a half to 6 percent is significant and it strongly suggests that a
developer who is trying to build this project wouldn't be able to get financing. the project wouldn't be able to go forward unless of course they found a way to adjust one of the other inputs and the return on cost equation so looking at revenues adjusting the market rate housing revenues line is -- you know that is set by the market the affordable housing revenue is set by the inclusionary policy and based on the 25% in this case so they're not things we can adjust. construction costs are largely driven by regional factors and that leaves land and part of the discussion today so if uktd change you could convince the developer to go down in land value and change the value so that's what we looked at next. we took -- first of all we studied this project under the current rates of 12% and calculated a land value that a developer could reasonably afford to pay a owner and hit the five and a half minimum
return on costs. it came out $138,000 per unit and vetted with the mayor's office working group we found that was really in line with what their comfortable paying for land today. we then adjusted the land value -- sorry, plugged in the 25 percent affordable housing requirement which changed the top of the equation, the revenue line. we kept the return on costs constant and the minimum of five and a half percent and see how far land value would have to go down to keep that constant. for this particular prototype it needs to drop by 40%. again the land value that ken mentioned we described in the previous presentation for that same type of same piece of land, same type of projected retaining a retail use, you know that $8 million value comes up about $130,000
per student so the 82,500 is substantially below what the land is worth to the owner running their current business. this is just one example in your packets and the report posted on line we show the land value changes for the different types and it varies by building type, by tenure type. and the feasibility analysis of course would explore that further. there is one more thing to synthesize from the numbers and how much a developer could pay for land under the new policy if they're planning on building on site unders versus the in lieu fee and what we found with the exception of one product type, a low rise apartment building, the economics will work notably better to do the in lieu fee rather than built inclusionary units. >> what do you mean by low rise if you could break out the low
and high? >> we about it based on construction type and why we segmented it and construction costs are higher when you get into a taller building type and it's in the packets. i believe we're at five stories for low rise and seven for midrise -- i don't have it in front of me and 12 for high rise is the minimum threshold. it maybe lower for high rise in fact, but in any case only when you have this low rise apartment building which will have the lowest relative construction costs does it make economic sense for a developer to do the on-site program and in every other case when you have the choice of 25% on site or 33% in lieu it makes more sense to do the in lieu so what we could end uch having is almost all of our projects deciding topate in lieu fee and very few of
providing on site inclusionary and as i said in the previous presentation we think would be a good policy is a mix to serve as many families as possible. that concludes this. i wanted to give an example now that the numbers are out there. >> thank you very much for the presentation. colleagues any questions or comments? okay. i just have one quick question. i know in this particular initiative measure there are three extensions from the requirement so for example one if they're on a site and a height limit has been approved by the vote of the electors. secondly if they entered into a development agreement and third if they procured a final discretionary inclusionary approval and i don't know if this is for planning staff or who else and wanting to know what the exception covers and
currently in the pipeline or why they're in here? >> good afternoon supervisor. john ram planning department. i don't have the numbers on that in front of me but there are a number of projects that received entitlements and meaning planning commission approval or staff approval that aren't yet under construction. they're in the process of being approved primarily through the building of inspection and i don't have the numbers in front of me and i don't know if we have them here either. with the other question that was certainly the exceptions they wanted to put in there. i will say i am of staing a working group and the mayor's request to look at which should be done and looking at entitlement application to actual entitlement so there's a range of options on the table that we're discussing right now. >> thank you. supervisor kim.
>> thank you. this maybe a question for director ram or ken rich, but in looking at an ordinance which is sponsored by our president and also our mayor which increases affordable housing in the viz dare i don't and fill more corridor and to 23%. i know this is in case where the developments elect to go to the higher density or height in the rezoning and i am curious that in kind of the greatest height or bulk that we could provide in this rezoning what would most of those projects qualify? would they be low rise? midrise? high rise? >> you're referring to the visadaro corridor. >> yes and fillmore. >> in that case the rezoning was not an increase in height. it was removing a density limit. >> okay. >> which we did in planned areas so that had a dramatic effect on the area and what
could be built on the site and the controlling factor is not the units per acre but the height and bulk and prop c allows us to ask for more affordability -- >> i think that's a positive thing. i support the direction that this legislation is moving in, but if we take out the constraint on the density what would most of these projects qualify as, low rise, midrise, high rise with the mayor's office? >> i believe most are below 65 feet so i guess midrise per your analysis if i have that correctly. >> (inaudible). >> they are low rise and based on the building type i guess. >> so we believe that midrise projects can achieve 23% affordability some. >> maybe it's low rise affordable itd. --
>> i'm sorry. i don't know if that qualifies under the analysis. >> i'm sorry. is there a further question. >> yes. this ordinance states that certain types of buildings and elect to no longer have the density bulk constraints and reach 23% of affordability on site and i am curious to these developments and what are they, low rise, midrise, high rise? >> i think they're generally low rise and the zoning in there changed and with that you do as (paused)i wasn't
involved in that piece of legislation but this is voluntary. a developer would have the ability to look at going by the old rules and doing fewer units and the affordability and the density and affordability and it's a choice made. >> i appreciate that. but if you're putting forth legislation to increase the affordability and it's not symbolic and developers will elect to move the density constraint and build at 23%. that's the hope; right? so i then move to the next step is that you do believe that low rise developments can hit 23% affordability, that it's possible?
>> again it's possible. >> i heard previously was that you believe that certain types of developments could never achieve 25% -- >> supervisor -- >> and -- in other cases you're saying -- >> supervisor -- >> and please let me finish. >> and that's what i got from the presentation and never achieve that and we putting forth legislation that developers could do that. >> the situation there supervisor -- the situation there caught us by surprise. maybe it shouldn't have. the land was bought before there was a inc.ling of a zoning change and assuming that you had four, five story height limit and in that zone fairly limited ability. out the sites and not
like doubling the height. if you left the density increases the same but doubled the height you would get the same number of units and in a case there has been public subsidy conferred. it can take two forms. one is cash and one is more development capacity. these parceled doubled or tripled the capacity and therefore it could work, yes. >> what would prevent the landowners selling on the market with the additional value conferred? it would limit what they sell for; right? >> i didn't understand the question. sorry. >> you are saying that the land was prebought i think the assumption is that the landowners will develop because there is a wind fall and it's limited (pause, change of captioners).
actually in agreement in this room that what we are impact the the greatest when it comes to land based on affordability is land value. we have how we maximize this is actually grandfathering. the real issue is the grandfathering issue and not in the future where it will impact the land sale. >> in order to make that statement be true in my opinion you would have to assume that most parcels in the city could get a density bonus like the ones in dwis droe, when emily made the presentation she just made, she assumed a doubling, i think more in this case of a doubling of a number of units done on the parcel.
we said from the beginning, when you begin offsetting, it sometimes works. you could propose that the 25 come along with a doubling of the zoning and that would frankly be a lot closer in working with more cases. >> it wouldn't be fair to say that it's impossible for low rise projects to achieve 20%. it's possible, just depends on the number of factors required. >> it's a factor and in general a subsidy from the city from a development capacity. >> it would not be impossible ? >> with those conditions i just stated, not impossible. >> thank you. >> thank you, colleagues, any other questions or comments? okay. i'm going to open up for public comment. please lineup. names names
( calling speaker names ) >> i'm going to call a couple more cards. >> committee chair, before we go to public comment. i have a question for you. i don't know if this was already proposed. i wanted to know if owd did a ballot analysis of this measure? >> that's what we presented. there is a report, a much more detailed report in your packet. we presented the review of that. >> did you answer my question? i didn't hear it. did you answer the question that 25% is not the right percentage? >> i think our position is no percentage is the right
percentage. we are hoping for many projects that might be built in this city. >> do you have a percentage that would work? >> not until we complete the feasibility study. >> how long is the feasibility study going to take? >> a few months. okay. any other questions? okay. seeing none, let's go to public comment. public speaker: hello. we are aware that the ordinance follows a legislation but it's a 25% requirement for the ordinance. if the ordinance is required for inclusionary housing. it will make matters worse. it's important to ensure that the 25%
requirement is not already too high. the information gives us no -- assurance that 25% is not too high. to ensure that any increase requirement for inclusionary housing does not mean that fewer units means inclusionary housing. thank you. >> next speaker, please. public speaker: we are encouraged by supervisor's presentation hearing today as essentially being part of our -- as being a bargaining chip that would drive negotiation with regard to more rational higher housing percentage. >> i myself was astonished at the
number. it could be easily higher. it would be higher in different degrees depending on circumstances so that it would be a calculated result and where and when and how much it could be increased. as noted we did a public records request and the information we received, the actual feasibility had been considered. we are not confronted by private assurances from developers to say something publically that i have usually said only in labor circles and with all due respect with never underestimating a capitalist stabbing you in the back. in the 1980s supported or opposed an extension of an exemption for mission bay from the prop m requirements.
so these are possible that with developers who feel they will be grandfathered in and the properties with more value and the rents higher after deconstruction of the measure that frustrates construction. we would ask you to take this into consideration. thank you. public speaker: good afternoon. my name is tony rodriguez. my mom and dad met in san francisco. they got married, they had great paying jobs and bought a house and raised four of us. i like them followed on with the american dream. i went to school here. joined the union jobs that
paid well. met my wife and got married and bought a house in the city but now that dream doesn't seem to be there for my kids. my two kids who are narcotics, -- nurses, they went to live outside of the city. my other kids can't even buy a house let alone rent a house. i am for affordable housing. what really scares me is this cat and mouse game. we are held hostage, my kids are held hostage and the rest of san francisco are held hostage by this game. i understand the need for affordable housing and the 12% being way too low, but to put forth something that the voters are going to vote on and not do a feasibility study. i don't understand that. the only thing i have seen so far is that it's going to hurt. every report i have read it says it's going to hurt. so why the rush? it takes 10 years to approve a
project and yet you are rushing through this like it's got to be done tomorrow. instead, do it responsibly, get the study out there. that's your job, not our jobs. say this is a good ordinance. you need to do that. be responsible, thank you. >> thank you. next speaker please. public speaker: hello. my name issalia from spurs. there is more information based on what we have seen. from staff, we do not think that 25% is viable. imposing this requirement will disrupt the production of many thousands of units that are in the pipeline plus units that have not been built yet. some community members don't believe that market race housing
plays a role in affordability so they don't care if the numbers are too high. we have to remember that most of us won't win the lottery affordable housing or otherwise and we have to navigate our way through the unsubsidized market. this will apply the only way to impact affordability through much of the population. it does matter if you bring it to a halt. 25% may sound great, but we ask you to insure it is the right requirement. it should support both the market rate and affordable housing rate. we urge you to withdraw this measure and ask you for the language
acquired for this analysis. >> thank you. i think i see supervisor kim on the roster? no. okay. after public comment. all right. i'm going to call a couple more speaker cards. ( calling speaker names ) >> public speaker: good afternoon, my name is john, local 38 union. over the last few years our building and trades union have taking their work. these city residents will take their income and search for better houses for their families. we want these city residents to stay here in the community to
bring prosperity and example of accomplishment for them. to get inclusionary housing right and i will vote for all of us. get it wrong, those will face long commutes and strains for themselves and their families. right now we believe that 25% housing inclusionary requirements gets it wrong, thank you. >> thank you, next speaker, please. public speaker: thank you. on behalf of the housing coalition. a little history. i want to stand up for planning. the facts are that in 2011, the city delivered 269 units of which half were for affordable redevelopment. in 2012 it was starting to get a little better, but you have to remember at that time that was the greatest regulation that anyone of us
can ever remember. non-union was at 35%. staff was down to skeleton crews. there would be no distinction that there would be housing boom in 2012. we are crawling out of a huge hole. i would say on the 25% by the same logic, 50% would be better on housing. we agree that affordable housing is necessary. what is it so special about the 25%? then on this issue of the land price taking it down to zero, i'm your last expert. this is not my area of expertise, but i assume the analysis. what's clear in the limited cases that been analyzed is it takes residual land value, it takes a hit of 25, 35, 40%. you have seen the example here. i know there is this bond myth that we can do this and the
landowner will take the hit on the price. what i hear again and again and again from our members is that it's not remotely how it works on the real world. you are telling a landowner, what i offered you last week, i will pay you 40% less. that owner is likely to say, that parking lot looks pretty good right now. we are going to start to see falling applications. public speaker: morgan. i think we should proceed cautiously.
i know we do need more affordable housing and you know the market rate is real high, extremely high, but it's driving the market right now. i remember 8 years ago when all the other surrounding cities and other counties, you know the housing thing just collapsed and this thing was the only thing that was keeping all of us working, you know, realistically we need affordable housing and we should proceed cautiously and don't monkey around too much with this market because there is a lot of people getting jobs now in the inner cities, in some of the inner districts and bayview with city build and it's doing a lot of positive things. you know, i think we should proceed
cautiously to this. and be careful. >> thank you, next speaker, please. public speaker: good afternoon. we recognize and support the need to include housing mandates but we understand the effects of the members livelihoods. the question is not to just raise the levels but to maximize the production of housing and help meet the overwhelming needs and demands that is driving much of the displacement
in town. carpenters in local 22 are asking the right to the inclusionary housing by reform of regulatory analysis. those who higher the contractors as well as the investment community including pension advisors worry that the proper design would hurt our numbers. we are concerned that as currently designed, this change will also incentivize developers to drive down labor standards for all workers and cut opportunities for local workers to enter apprenticeship programs. we also continue to work on solutions and proposals to increase affordable housing production and support labor standards for construction
workers and provide opportunities for san franciscans enter the trade in sustainable construction careers. as you move forward, we want to caution you that simply moving this aside is essentially approved. 25% is still something. >> thank you very much. thank you. next speaker, please.. public speaker: i want to state a number of facts. the last four housing elements that was sent for us to review, each of those housing elements are before our courts because our faulty documentation. so, from mac russ to mr. green. i followed them, read all of them and they truly do not address
affordable housing. so we can revive it again and again which has been done here, but the most important thing that i want the planning department and those so-called experts is your heart in the right place. i don't see that. i don't see that. it's how you initiate things, keep things hid from the public and when it comes to affordable housing you have the lottery system and i went to the system. it's a gimmick. even if you have very good credit. whose got the money to put $300,000, $400,000 down to make reasonable mortgage payments? who in this city? so we are bluffing
ourselves and the people at home are hurting. in the last 10 years over 40,000 distant families have left san francisco. if you want to build higher type of housing for the new comers and destroy our cities, destroy the culture, destroy the hard work of good san franciscans, think about it, think about it. too many gimmicks. >> thank you. next speaker, please. public speaker: good afternoon, again, david sternberg, architects. first off, supervisor kim, i appreciate you responding to the comments that affordable housing financing may come from other sources, but it sounded like it was minimal at best. so i should
still like to state my opinion. i don't understand why developers have to bear the burden. but having said that, i walked into this meeting having no idea that these were not serious proposals, that they were just posturing from one side of our government to the other. now that i have heard that, let's remove them. we've done it before. we've had committees from both sides with anti-bills with economic input. let's get to work. thanks. >>supervisor katy tang: thank you. next speaker, please. public speaker: good afternoon. villalobos, 251. if you go forward, i think
it's responsible. we have names of developers supporting this. i don't see any. i would like to see one of them. and again, i would just like to echo everybody's overwhelming opinion on this. like somebody said, 25% of 0, it's still zero, you are killing jobs. thank you. >>supervisor katy tang: thank you. next speaker, please. public speaker: good afternoon, supervisors and planning department. i think this is one of those rare things where everybody's working hard to come to a resolution and i believe both sides have already stated clearly that they have a resolution, mr. peskin, we are happy to have you back and sticking up for the city which was long over due. but i believe peskin and supervisor
cohen said it best which is withdraw both legislations and let's do it responsely. i applaud the planning department and board of supervisors for coming up with a resolution. let's move forward and let's be done with this. thank you. >>supervisor katy tang: thank you. next speaker, please. public speaker: good afternoon, supervisors. to what the last speaker said, we pull both legislations because if owners from one to another, maybe we should cool off and think about the legislation and let's walk together. i think we all agree that something has to be done. it how we achieve the goal which will be the most important of all. if we make it too trek yann -- it doesn't make things better. maybe it's kumbaya time.
let's walk together and drop what it is right now. let's get back to the table and sit down and work it out. thank you, supervisors. >>supervisor katy tang: thank you. next speaker, please. public speaker: supervisors, ken buckley in san francisco. i will keep it short. i think i like what cohen said. i will leave it at that. thank you. public speaker: supervisors , i'm from san francisco. i want to give an example of my own personal experience. i have a project i'm working on now. the project is a 15-unit project that we've had since 2010. after 2012 we were working on a financial project.
prop c passed in 2012 and it was cut 12% and low and behold we got financing. i know it's worth only -- this goes back, right? i have another project in the pipeline okay that's coming up around 20 units. i don't know where we are going to get financing. that's all i'm saying. thank you for your time. bye. public speaker: supervisors, good afternoon, john with the residential builders. i appreciate the experience of initiative to work with the legislative branch to figure this out. i thank everybody for coming together here to get this right. we have made several attempts to the 2002 to 2006, through 2012. if you look back at prop c, it was bad.
if you look back at 2012, there were construction back in 2010. no financing could be acquired. at the same time we developed and what is being dmantelled by the state and to get funding and building affordable housing. at this time we should look at many different aspects. one size doesn't fit all. i look forward to get things right this time and hopefully everyone can get it together and figure this out. public speaker: sean, good afternoon. i'm happy to hear the words of a withdrawal. that would be very encouraging to everybody. this conversation ultimately
deals with grandfathering, on-site policies, off site policies and land dedication policies. it needs to deal with different sizes and scales and different types and different economic conditions. sometimes we are in booms, sometimes we are in bust. it would be nice to have policies that address this. different neighborhoods have different resale values. different deal structures. sometimes people get high bonuses, sometimes people get land, sometimes people get cash. these policies need to be nuanced. it is almost possible to achieve this in ordinance. this conversation when it happens needs to have every group at the table. hopefully that conversation will strive to maximize the percentage of affordability.
deal with the grandfathering issue. create a new set of rules that we can rely upon and they will not change in the middle of the game. most importantly, we need to create a policy which creates a stable economically viable projects for our members so we can provide for our families. that's what this needs and unfortunately this ordinance or anything short of gathering around the table will not achieve it. thank you. public speaker: hello, supervisors, any other name is greg. just to reiterate some of the comments that have been said. i would ask you to go back to the drawing board to reconsider what has been also been put out. >>supervisor katy tang: thank you very much. any other public comment on
item 2. is there any additional public comment? seeing none, public comment is closed. >> what marks the sentiment that everybody seems to be expressed to come through and both matters will be withdrawn. the charter amendment was introduced originally on the 15th day of december of last year which is about 2 months ago. we could have done a few, according to you, mr. richards 2 months to do this report. that report could be done now and we can be negotiating the feasibility report. please go out and get one. we'll have one by the middle of april. it will inform our discussions. let's see what process i think members of the board would like to work with you to ensure that happens. i also want to note that yes, nobody realized that in 2012 the
market would take off. that was 4 years ago. the way i look at this is that a lot of folks in the development community have had at a minimum a 3% inclusionary holiday for 4 years in one of the most robust markets that this country has and maybe one of the most robust markets we have seen since the gold rush. i want to take that into account. what am i saying? it's that some of these individual corporations have made millions and millions of dollars. mr. sternberg who asks, who is paying, after the passage of prop a which we all supported. every proneers -- property owners in san francisco are paying, many are paying for the next 30 years. everybody is shouldering the burden and there are handful of
individuals who have a turn to pay as well and they have had an inclusionary holiday. let's make it right. >>supervisor katy tang: thank you. supervisor kim? actually i think supervisor peskin made all the concluding remarks. so i will submit. >> all right. thank you. i guess there is a lot of work to be done. thank you very much for being here today and so at this time then i would like to see if there is a motion to file this hearing? >> so moved. >> all right. seconded by supervisor mar and we'll take that without objection. this hearing is filed. mr. clerk, anymore items today? >> there are no more items. >> all right. this meeting is adjourned. [ meeting is adjourned ]
>> we're here to raise awareness and money and fork for a good accuse. we have this incredible gift probably the widest range of restaurant and count ii destines in any district in the city right here in the mission intricate why don't we capture that to support the mission youths going to college that's for the food for thought. we didn't have a signature font for our orientation that's a
40-year-old organization. mission graduates have helped me to develop special as an individual they've helped me figure out and provide the tools for me that i need i feel successful in life >> their core above emission and goal is in line with our values. the ferraris yes, we made 48 thousand >> they were on top of that it's a no-brainer for us. >> we're in and fifth year and be able to expand out and tonight is your ungrammatical truck food for thought. food truck for thought is an opportunity to eat from a variety of different vendor that are supporting the mission
graduates by coming and representing at the parks >> we're giving a prude of our to give people the opportunity to get an education. people come back and can you tell me and enjoy our food. all the vendor are xooment a portion of their precedes the money is going back in >> what's the best thing to do in terms of moving the needle for the folks we thought higher education is the tool to move young people. >> i'm also a college student i go to berkley and 90 percent of our folks are staying in college
that's 40 percent hire than the afternoon. >> i'm politically to clemdz and ucla. >> just knowing we're giving back to the community. >> especially the spanish speaking population it hits home. >> people get hungry why not eat and give >> ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ it looks at good and tastes good and it is good in my mouth pretty amazing. >> ♪ ♪ ♪
♪ ♪ ♪ i am the executive chef i've been here as a chef at la concina since 2005 reason we do the festival and the reason we started to celebrate the spirit and talent and trivia and the hard work of the women in the la concina program if you walk up to my one on the block an owner operated routine i recipient it's a they're going to be doing the cooking from scratch where in the world can you find that >> i'm one of the owners we do rolls that are like suburbia that is crisp on the outside and
this is rolled you up we don't this it has chinese sister-in-law and a little bit of entertain sprouts and we love it here. >> there are 6 grilled cheese grilled to the crisp on the outside outstanding salsa and a lot of things to dip it knocks you out and it's spicecy and delicious i was the first person that came here and we were not prepared for this every year we're prepared everybody thinks what they're doing and we can cookout of our home and so the festivals were part of the group we shove
what we do and we w we tried to capture the spirit of xrifs. >> and there from there to sales and the hard part of the sales is 250 assess our market and creating a market opportunity giving limited risks and sales experience to our guys and food in san francisco isn't just about expensive eat but food for everyone and there's organizations in the city that are doing really good work making sure that healthy food it assessable to everyone.
more and more as follows are are becoming interested in upper arlthd they want to joy the open green pace sea know where their food it coming from we'll look at 3 programs talking ushering agricultural and garden to new heights. so what exactly it, your honor agricultural >> it the growing food or flowers within city limits traditionally we've been referring to communities gardener that is a raised bed over and over upper argument has a more a farming way of farming. >> so tell me 0 what's growing in this garden.
>> a really at all plant. in the one of the rare places, you know, people have access to green space 24 is one of the places to grow things like the purple floor. it is sort of recognizing that the more diversity in given space the better not to just have one thing by everything supported each another >> it provides the community with an opportunity to get their hands dirty and reach 0 out and congressmen with the community in ways they might have not otherwise to engage with one other. >> now the dpw urban planning program so see how the garden community.
>> so i grew up on a farm in air force base we picked the foods open the trees and share with other families and as i drive around san francisco i see any trees with apples or mrumdz and lemon trees i can see the food going to waste and brought that idea back to the department many of the trees where the fruit would go to waste we origin or crop and pick other fruits and delivery this to food banks or shelters to people who need them. >> i'm here with nang wong hello nang. >> hello. >> i need to understand house this gleaning work. >> we come and harvest like for example, we'll come over here
this is the lemon and plug it like this. >> (laughter). >> made that good, good and ease. >> the trick is how not to hurt the branches. >> like the thing. >> i'm so excited about this. the people are so passionate about where the food goes to the private property owners give us the food they're happy that no of a t is going to waste >> oh. thank you. thank you. again job aura natural >> (laughter). >> from backyards to back lots
let's take a look at the food and community bonding at the free farm. >> my idea was to start growing food and giving it away. and getting my neighbors to who had space and having a kind of event that brings people together not to run our food program this time around but to share the wealth of the abundance of our welfare. we were all divorce and as part of our philosophy of working together and working together. >> what's the most rewarding aspect of volunteering for the free farm stand. >> well, we could is a generalic satisfaction but something about giving food away
it's giving something i brought that in and sort it and gave it to you it's primitive to be able to give something some basically to someone else. >> now serving number to 49 come on down. >> we have the capability of producing this food and in san francisco you can grow food all year round so the idea we're capable of prougdz food in our own backyards we're here to demonstrate an bans of food and i think that giving it away for free we show individuals it in have to be a comedy. >> we build time together and it's the strength of any ideas of the connections we'll turn
that connection and the more connections you make no mistake about it the more you can have a stronger power and not have to rely on money that's the people power. >> in this episode we've seen the urban farms and gardens provide more in fruits and vegetation people can have the special produce available it can be a place to give back by donating food to others and teach our children the connection to the earth and environment it's truly
february 11, 2016, public safety and neighborhood services committee. to my right is >>supervisor david campos: and >>supervisor john avalos:. i would like to thank mr. smith and staff from sf govtv. madam clerk, do you have any announcements? >> yes, please be sure to silence all cell phones and electronic devices and speak are cards should be submitted to the clerk. items will appear on the agenda. >> item no. 1, an ordinance amending the administrative code to require event organizers seeking additional police department personnel. >>supervisor jane kim: i
would like to welcome >>supervisor david campos: and >>supervisor john avalos: to make comments to run this hearing. >> >>supervisor david campos: thank you very much, madam chair. it's not as cold as i thought it would be. it's good to be here. i would like to thank my sponsors for this legislation. supervisors farrell and avalos. the legislation before you today is essentially legislation that i think has been in the works for many years. it's something that's been talked about for years since i was on the police commission this was something that came up. the point of this is to ensure that we are protecting the diverse culture, arts, as well as community festivals in san
francisco. those that makes san francisco what it is and attractive to many of us to san francisco. security plays an important role in our festivals but it can also be very expensive and costly. what we are doing today is creating a clear timeline, a transparent process for how organizers apply for security. we are ensuring those organizers aren't stuck with unforeseen cost days prior to an event which can be very paralyzing and can actually keep the event from happening. after working with this for more than a year, with the los angeles p.d.. the festival community, we have legislation that we believe have struck the right balance between fairness and being measured.
festivals are huge economic events for san francisco. in 2014 t economist for the city estimate that the total direct and indirect economic impact of spending just lgbt festivals is about $495 million. it is also estimated that 4270 san francisco jobs were created by these events in 2014. if we actually look at large outdoor festivals, these festivals had more than direct and indirect impact to the city's economy. not only that, but those festivals supported more than 9300 private sector jobs and that did not take into consideration the smaller
festivals we take place in the city that impact more than 5,000 people. this legislation is made up of three components. a clear timeline when organizers must apply for an application with the police and the amount of time that will be required. the second thing this legislation does is it creates an appeal process to the chief of police if a request for a police personnel happens to be denied or the suggested number of police officers is actually higher than what the festival organizers had budgeted. this asks the chief to take a second look at what is being proposed and recommendeded to ensure we have the right number of people involved. the last thing is to create a data collection process through san
francisco entertainment commission detailing how many police officers were used for an event, how much money was being spent related to 10b and the importance of this data collection is to give the police department, then at -- entertainment commission and the city how to understand how this process impacts this city as a whole. i would like to thank gregory chief suhr for supporting this legislation. one of the things we did was to meet with chief suhr to explain what we were thinking. i also want to thank lieutenant fazon and he and officer navin have been very critical to making this happen. they are certainly invaluable. i also want to take this opportunity to
thank the festival community. we have some representatives here from that community. in particular guy carson who is the cochair of the california music association. c mac for their work throughout this whole process. he's not here but he also has a lot to do with making this happen, terry allen has also played a very important role and c mac brought this to the attention of officials for such a long time. i'm sorry it took so long to get to this point, but i'm glad that we are finally here. the fact is san francisco wouldn't be the city without the many festivals that san francisco, music, dance, culture, food, every single
year. it's hard to imagine san francisco without those many events. i would like to thank my office for the help with this. and prior to this, nate -- who used to be working with me on this process several years ago. with that, i want to thank everyone who has made it possible for us to be here. i want to give my colleagues an opportunity to say anything and if not, i will ask sergeant to be here. if not, anyone else who would like to offer any information.
>> i would like to report that we have no objection to the legislation in its final form. >>supervisor david campos: colleagues, if we have any comments. we have speaker cards of folks hear to speak. ( calling speaker names ) anyone who is here please c'mon up. public speaker: hi, i'm one of the cochairs of c mac and cofounder of the bar. i'm also a bar owner in san francisco and an event organizer and producer in the city. there is obviously no objection to
this. i don't want to reiterate this. this is a really big deal for us. it maybe a small administrative fix or process, but this is a process that has been plaguing event throwers and outdoor festival goers for a long time in san francisco and one that made a lot of us pull our hair out. i want to thank supervisor campos and the police who have come to the table to make this happen. thank you. public speaker: good afternoon. i'm daun holaday. as you can imagine budgeting for close to 3 quarter of a million people and 90 bands over 3 days, the budget is massive and taking into
consideration the police department and all the different 100% recouperable areas in the city is a task. the police have always been wonderful with us, but having this clear for others is great. i fortunate enough to have the foundation behind me. it hasn't been as big of an issue, but it can be daunting not knowing what your police situation is going to be. it can be a game changer. so, this is fantastic and what you have done and the police have done for our community is solid. i want to thank you all.
public speaker: thank you, supervisors and representatives. my name is robert cole and director for north beach jazz festival. we folded because of rising city cost along with other community festivals and various other free events have been lost due to inevitable rising city cost and this isn't necessarily anybody's fault or anybody to blame. it's just the part of the demography of the city and the growth and expense of the city. at the time i started working with c mac to find a way to give the police department the foresight and planning to properly allocate their resources and at the same time give festival promoters and band organizers the planning they needed. the
idea is to get people at the table way way out before anybody has allocated any resources and before it gets hectic. this forces the event and responsibility for promoters. we are responsible for our own events in this legislation and what's nice about it is this is going to create better events and better organizing in the city and give the police the consideration they deserve for their own planning. thank you for your support. >>supervisor david campos: thank you. any other speaker? please come forward. public speaker: good evening, supervisors. i didn't come down to speak today but just for 2 minutes. i figure it's about the events and alcohol and applications and
events. i'm at the fillmore corridor ambassador who request in the same edition. we have three events. june sundays and jazz festivals. all of those three major events in my corridor. i want to put them on notice with the police department because they come in to fillmore. there is a new sheriff in town. that's me. all events have to coordinate with the police department to ensure that is a fair process through fillmore corridor. we have the jazz festival to make sure it's all okay with all the support. the oldest event which is the proclamation event for the
blacks that were freed, there is not much the city is doing for those events. i want a little balance this year and here on out i'm going to have a corridor ambassador where i will reduce block to block. i want to put this city on notice as well as the city and county and the mayor that in fillmore we will not tolerate this to come to our community and do what you want not so long as i'm an live. my name is ace and i'm on the case. is there any additional public comment? seeing none, public comment is closed. with that colleagues, again, i want to say that as noted by some of the folks in the audience that it's as basic and
simple as having clear timeline and more transparent process can actually make a big difference in terms of how these events and these festivals are put together and not only what we are putting in terms of safety but how to make it easier as well. it's one of those rare things where you have a win win for everyone involved. i'm very proud of that. i would like to thank my staff, carole, for making it happen. i think it's a good day for the cultural life of san francisco. >>supervisor jane kim: thank you,
supervisor camp os for offering this legislation. i think it's very apropos for having this discussion around san francisco who we subjects -- subsidize that we really should be supporting in san francisco because they come out to the community and live here and work here and create community events for our residents and our workers. we don't have a really good framework for a lot of our events. this is great to setting up some framework so at least there is coordination and getting to deal with the cost so we can enjoy
these events. seeing no comment from committee members, can we take a motion on this ordinance? >> so moved. >> with a motion to move forward with recommendation. we can do that without objection. >> madam clerk, any other items for us today? >> there is no further business. >> seeing no further items, we are adjourned. [ meeting is adjourned ] >>
>> good morning everybody welcome to the san francisco board of supervisors budget and finance question meeting for wednesday february, 10, 2016. i want to thank jennifer low and charles for covering this meeting. do we have any announcements? >> please silence all cell phones. items acted upon today will appear on the february 24th board of supervisors agenda. >> item number one resolution authorizing the recreation and park department accept grant in the amount of approximately $27 million from the state of california department of housing and community development to fund housing related park
projects. >> thank you very much. >> good morning committee members. my name is tony. i'm the grant manager for the recreation park capital and improvement division. the item before you is legislation to authorize recreation and park to retroactively accept and extend a grand in the amount of approximately $2.6 million from the california department of housing and community development department. the legislation also authorizes general manager of the recreation and park department to reallocate grant funds as needed to maximize city recovery for this grant program. the program is a formula grant that is based on the number of low income housing units and bedrooms that are permitted for construction for the calendar year 2014. the program provides funds for
the acquisition and development of parks and community centers in communities that have infield development. the program provides bonus dollars if those park and community projects are located disadvantaged and park efficient communities. city staff and capital improvement division, the mayor's office of housing and the planning department, collaborated on a grant application that resulted in a $2.6 million award. the selective park projects that would meet the bonus cry tore why to ensure we got the maximum grant award. we were notified in june of the award, we're now ready to move forward with 11 projects. little background in the past we received two of these grants. in both occasions, we did have to reallocate funds to other
approves projects to extend the full grant amount. that's why we requesting that the general manager have the authority to grant funds. are there any questions. >> supervisor kim. >> can you go over the 11 projects that are listed in the resolutions and what are you doing for them and how you decide to select them based on the criteria? >> for the recreational and parks project, which are the first five projects, the 17th and folsom park, we selected that project because it had a funding gap. that will close the funding gap to allow to construct that project. the balboa pool is one of our 2012 bond programs which had a funding gap and we are -- we've been allocating to basically close funding gaps for recreational park facilities that were funded through 2012 or the 2008 park bond. the geneva community garden is a
project that has no bond funding. it is fully funded. the two phases of this project from this funding source alone. hilltop park is another project that received $5 million grant from the state department of parks and recreation. that project had a shortfall. >> where is hilltop park? >> it's located in the bay view hunters point neighborhood. as we go through the next set of projects, would be glide foundation, chinese, affirmative action center, the mission neighborhood center, the bartowla family connection. those projects were elect selected by the mayor's office of housing. they did a request for proposal and had a list of projects they wanted to fund.
they're using these grant funds to help supplement their funding. the final project is central market living innovation zone. that particular project is highly favored by the housing, the -- sorry, the housing parks program people. they have a collaboration with the exploretorium. if you have further questions about why they selected in project. but that project is located on market street in one of the lower income census blocks. >> do you know which part of market street? >> i'll let him speak to that. >> thanks so much for having me. i'm from the planning department.
the first will be in un plaza. we received funding for the same grant program last year. within two years funding, the second year is going to supplement it. it will be done by the exploretorium. it's going to be installed in april, mid april. the second one is a collaboration between central library and an organization called youth art exchange. which is going to be built on the folsom street access. it's going to be design built project -- design and built by high school students. it's to try to bring some focus on the civic center plaza. we know these are challenges to bring healthy activities. >> my last question, i only ask this because i know we've been talking a bit about equity
metrics with potential new revenue. when you said that these projects met the program in disadvantage community, can you explain that further? it seems these project would fit under the criteria just based on what i know about the neighborhood. i want to understand how rec and park determine what the criteria and disadvantage is and can you explain that to me and how these projects met those criterias? >> the disadvantage community criteria by the federal census data, each project have to be located in census block or bordering a census block that has 50% of the residents living below the federal poverty line. they actually have very specific
-- in terms of park efficient, the grant program requires that we use the california state department park and recreation community fact finder report. what the report does, you locate -- you place a pin on the park and it captures a half a mile radius around the park. if there are less than three acres per one thousand resident, that is considered a park efficient community. >> great, thank you so much for pointing that. >> colleagues be, any further questions. we'll move on to public comment. anybody wish to comment on item one. >> chair make a motion to extend the resolution with a recommendation to the full board. >> we have a motion by supervisor tang. call item two. >> resolution authorizing the
acquisition of real properties on the san francisco unified school district located at 1101 connecticut street for the price of $1.8 million. >> okay. thank you very much. >> good morning supervisors tang and kim. legislative aide. as you all know district ten includes four of the five largest public heights. it has been a keep priority for supervisor cohen. we've seen the transformation in public housing has made in the lives of residents and the entire communities. we are already starting to see this at the new integrated units where we are going to be able to transform that development into a new mixed income community with absolutely no displacement. a commitment we have made to residents. what you have before you today
is a critical first step in the large development for the rebuilt of the site. the acquisition of 1101 connecticut will allow the construction of a first building of the sites without requiring relocation of placement and enable them to stay in their neighborhood during construction. this guiding principle is essential in helping preserve the front community that currently exist and is important for the redevelopment. the mayor housing -- i hope to ask for your support for this item today. >> thank you very much. >> good morning supervisors. director of mayor housing. this is the last piece of the transaction that was before the
board a couple of years ago when the city was able to negotiate a basically trade and a purchase between the school district and the city. 1950 mission, which is the current location for the navigation center, 1101 connecticut, both surplus school district properties. were exchange for central freeway parcel e. an additional funds to sort of true up the values between those two projects. we weren't able to come before the board at the time, we actually purchased 1950 because that parcel was going through the environmental review process which just completed. we had to enter into an option agreement. but this is the culmination of that particular transfer which i think is a win-win for both the school district and the city.
it includes the project manager rebuild. we'll talk about the specific transaction. thank you. >> thank you very much. >> hi i'm a project manager at the mayor's office of housing. i'm here today to request authorization to acquire the property located at 1101 connecticut street for future use as affordable howing in connection with the hope sf project. the 1101 connecticut parcel is a drive thousand square foot lot currently owned by the san francisco unified school district. most agreement is to purchase the site for $1.8 million which see expires in march of 2016. 11101 connecticut is included in the master plan which received planning commission approval in december of 2015.
1101 connecticut is located at the corner of 25th street in connecticut. it is a desirable site for acquisition due to adjacent to annex. hope sf is the mayor signature and anti-poverty initiative. it seeks to transform san francisco's most critically distressed public housing into new mixed income community. annex is three acres located on the south side of health. the new community will include 606 replacement affordable housing units and approximately 200 new affordable housing units. up to 900 housing units for maximum density of 1700 units. bridge housing was selected as the master developer in 2008. acquisition of 1101 connecticut is a critical first step in
implementation of hope sf. one of the primary goals is to achieve revitalization of housing with minimal displacement to residents. the project will completed in multiple phases. 1101 connecticut will be the first phase of construction and will require no relocation. because the parcels is currently vacant. it will be combined with an adjacent five thousand square foot basketball court. the resulting 30,000 square foot parcel, known as block x, will be knowned by mostly b for 99 years. for families on the site. this building will serve as new housing for aren'ts in the first phase of relocation of the master plan development. thank you, that concludes my presentation. i am here for questions and claudia is here from the department of real estate as well.
>> thank you very much. supervisor tang. >> thank you. what is the time line again on this project? >> we're hoping to bring to planning exhibition, for the haight in the summer. we'll start construction shortly there after. >> construction starting within this year you think? >> yes. >> i know that was in the budget analyst report, maybe for the record, i know the purchase price is $1.8 million. there are a couple of appraisals done both by the school district and i think our real estate division. wondering if you can speak to that? >> i can speak to that. the $1.8 million is the mid-point between the two appraisals that were commissioned. one was in 2009 and one was in 2013. there was some time in between
there. >> okay. it look like -- i had just wanted to make sure it was in the record. it looks like the appraisal done in 2009 was for about $1.6 million and then the one in 2013 was about $2.1 million. >> that's correct. >> supervisor kim. >> just to follow up. was it based on what we will be building on that site? was it kind of the market rate value of the land? i know this is a big conversation with sfusd -- >> when we were in negotiating with the school district, we really looking at the high and best use. we're trying to like for like in terms of their parcels. the highest and best use at that time. clearly, the appraisals are
orlandolder from 2009 to 2013. the values of land probably exceeds that amount at this time. that's why it was very important that we option the parcel at the time we purchased 1950 mission. but basically, both of those appraisals were -- the initial appraisals were done by the school district and done at the highest and best use. >> so the assumption for the value of the land is assuming we build 100% market rate at the site? >> that is correct. >> when did we decide to do that? sometimes when you negotiate with property owners, you say if we're building 100% affordable that should be how he based the value of the atlanta. when did we decide to do that and decided to pay full mar --
market value? >> in the case of school district, they were looking at the sort of the option of selling it to market rate developers to fund their operations. >> to their facilities -- >> any proceeds from the sale of the property would go back into their capital funding so they can do improvements, balance of their facilities. they're under i obligations to do it at the highest and best use. part of it is also, when we acquire a particular piece of property, we will look at the property and lot of it depends on whether there's a competition for those parcels or not. often when there's a competition like 490 south, we'll have to pay what the market will bare. there are actually competing
proposals. we will look to increase the value that we get out of a particular site. in this case, we both the parcel was not currently done -- zoned for housing. far -- fair market value at that time was far. we're increasing that value by going through the environmental review process and creating the entitlement. we also look at the question of whether we can create more density while on a particular site and do more housing than what was previously entitled for. it's really a question of are there competing offers for a particular site? is a situation where it's just a question of doing appraisals and we trying to come to a win-win. >> i understand.
i was curious about the process. i'm not trying to shortchange the school district. sense i came from there. i was curious, kind of how the thinking is around land purchase. i appreciate that. i know this has been in for years. i was on the school board. i'm glad we'll be able to utilize it to build affordable house. >> okay. seeing no other questions. mr. rose, go to your report please. >> mr. chairman and members of the committee, initially i want to state on page two of our report, i want to correct our report for the record. that under the background section in that the purchase price of $1,800,000 includes the $450,000 payment made by the city. the san francisco unified school district under the separate option agreement between the city and san francisco unified school district. that is contrary to the
information that was first provided to us. so that the total purchase price is $1,800,000 that includes $450,000. on page three of our report, as you know, the board of supervisors previously appropriated 1 million atmosphere hundred thousand dollars -- $1,000,800,000,000. to purchase the 1101 connecticut street property. we do recommend that you approve this resolution. >> any questions? we will open up to public comment. anybody wishes to comment on item two? seeing none, public comment is closed. colleagues any further discussion. is there a motion? >> through the chair that i make a motion to forward out item two with call to recommendation to the fal -- full board. >> we can take that without objection. madam go to item three. >> is an ordinance authorizing
the sub ordinary nation of program loan to a new loan to health right 360 and clinic located at 1563 mission street. >> thank you. i believe we have both dph and mayor's office of housing. >> good morning members of the committee, my name is don. i'm a senior project manager. the mayor's housing of community development. i want to give a brief background as to this request and be followed by staff from dph. most in the department of public health request the loans in part by two properties by health right 360 to a new loan from the nonprofit finance fund in the amount of $8.5 million from the
construction of hr360. new headquarters and clinic building located mission street. in 2005 and 2007, the city made two loans respectively to hr360 for size i can upgrades for one -- seismic upgrades. at the time the loans were made, the value of the property did not meet the requirement contained within the seismic and safety loan program ordinance. the city required 890 hayes and 214 haight street as security. hayes and haight street properties are no longer required in the security of their these loans. section 66a.7 of the anonymous authorizes -- ordinance
authorizes the city to the loans. providing financing for the rehabilitation of the property if the underwriting is met. in this case, the conditions of the section are not met because learned requesting sub ordinary nation is not providing financing for the rehabilitation of the property that benefited from are or secured by the seismic safety loan. these -- those properties, 890 hayes and haight street receive no benefit from the new construction loans. if not approved, completion of hr360 new headquarters and clinic may not be feasible. hr360 will be required to rent office space and clinic spaces in san francisco's current high cost market. this resolution assist hr360
securing stable headquarters in san francisco and ensuring that 20,000 low income san franciscans continue to have access. also -- we're available for questions after the dph staff make their presentation. >> good morning supervisors. i'm colleen chaplain the deputy. from the health represent, the resolution before you is important. dph contracts with health right. they serve approximately gets thousand san franciscans every year. as you know, healthright 360 is
the nonprofit organization with the merger of two other long time san francisco nonprofit. since then hr360 has expanded. they currently operate for primary care medical clinics, health treatment program, four outpatient day centers and two gender response to jail program. in addition to san francisco, hr360 currently prates in eight california counties. they purchased its new headquarterses building at to do two things. to replace the services that it provides at its rented location and to ensure its continued ability to serve san franciscans without fear of displacement or
eviction. this is made possible in part by california's implementation of the affordable care act. which result in more san franciscans being covered by health insurance. hr360 serves predominantly low income population. in addition all of hr360 subsidy services is under drug program. dph already made two key agreements with hr360 to support this board's action should it
approve this resolution. these are in the the areas of monitoring of oversight and on sight presence. dph director and our cfo will hold quarterly meetings with hr360 to review quality assurance measure. that will ensure they remain in good standing with the city. should uncover any areas of concern, we have a corrective action process that we will initiate to ensure any concerns are remedied. form of corrective action plan are developed in coordination with the staff at dph and monitored by our health commission. we have an agreement with hr360 to lease 2000 square feet on site at their new mission facility. we have an initial team of five years plus an option to extend and also a first right to purchase the property.
this leads to arrangement, allow dph to have on sight presence in greater involvement in their success. we have not made a determination what we will house there, we plan to be an active member of their community. director garcia is here to answer any questions. inknow healthright hr360 director is here today. >> just real quick, supervisor tang have some questions. we fund out of our -- i know they do an amazing job in our neighborhood and is needed. we fund their operations. we're now giving them loans and renting backspace from them from loans that were given on their buildings? >> yes, it would be the fair market rent. asking about the rental loan
back. >> from a city perspective, what are we getting back? aside from clinic not shutting down? it's part of a broader conversation here i have on this. i don't want to dominate this. supervisor tang has a question. >> good morning. barbara garcia director of health. part of the issue that i see in this ability to support hr360 to purchase this building is to stabilize their services. i was brought into this after the mayor's office recognized that in order to subordinary nature this issue, it does cause a concern for the city to do that. our concern is that if we do not this as an example, lion martin will probably lose their ability to be where they are. that leaves us up pretty soon. they're willingness to build this building -- there was a
concern from the mayor's office of housing to ensure stability and financial stability. so the first process we thought, let us get in there to have a footprint to ensure anything went south we would be present in the building. we also ensure -- i've been managing hr360 in my career for over 15 years. i was part of the merger between the two entities originally. i've watched this organization grow and we've been pretty tight about really watching the way that its grown financially. i've had commitments from both executive and we'll be meeting with the board of supervisors. what we get out of this is the stability of hr360, which is the largest behavior and substance abuse mental health program in the city. >> i totally agree. i know value it is.
i'm worried about what's happened here and the potential for something like this to happen again from the city perspective. where we're lending to an organization that we fund out of our city budget. when they get into trouble financially, we continue to been the hook. the recourse is, if you don't do this, we're shutting this down. if this loan won't be enough, some circumstance, another $8.5 million, you got to subordinate again. i'm supporting the budget and i will continue to do so. now we're a lessee from them. our involvement seems so intertwined. i was asking our budget analyst, it seems too big to fail organization in the city. i guess i'm wondering how we got here but also how do we make sure this doesn't happen going forward? >> i totally agree with you.
i was brought in this process. i'm here to support the fact that hr360 is a very important organization. the process already been brokered. the loans already been done. i was asked to see if i can support mayor's office of housing in this process. we do know that it's different kind of situation and we are at the end of the day, the department of public health will have to continue to provide these services whether it's hr360 or several other entities. i can tell you that it would be very difficult for us today, to try to replace what hr360 is doing very quickly. it would take us i think at least over two years to try to replace them because of the number of providers and you can see the extent of their services. we're happy to take these out. we were just trying to do as a form to really show not only that we would support them by financially helping with their
lease by having a 2000 square footprint in the building. that was one of the ways we felt we could secure their financial stability. but as the money that we're providing, $45 million, they're changing financial situation is very different today. because of the aca and their increased revenue. that was one of the greatest concerns that i also had was can they financially afford this loan. i'm much more confident of that today because of the fact that they're going to be getting several different funding sources from the state and federal government. i probably wouldn't be supporting this if that wasn't the case today. >> i appreciate those comments. i completely agree. we can't suffer any lapse of services. they do a great job. no problem. this is around the financial conundrum we're in. whether it's providing these type of services or anything else that might contract for us
for the city of san francisco. it's kind of piecemeal approach. we support them out of our annual budget, loan, subordinate loans. you keep picking on someone, you continue to put money so you don't have a picture what was up front. that's my concern on this. we can't jeopardize any of that. i fully agree with that. question of how did we get here and how do we learn from it. >> supervisors, one other thing that we learned in this process some of the original loan on these two properties date back to the early '90s. sort of the restrictions or the terms of those, they're very different than the terms on our current loans. the question of -- it's not
clear on the question of subordinate financing on the process, etcetera. one of the things that we did through this process is one to be beef up our asset management requirement and the existing loans to make sure that the assets we're now subordinating will be funding and maintained in a proper way. then the other requirements to make it very clear, that these assets. those affordable housing assets are not to be used to as collateral for related loans because affordable housing is precious to the city. it's on the mayor's office to go back and take another look at our portfolio in terms of our older borrowers to make sure they're aware.
we continue to be good managers of the portfolio over all. we came late in this process also when the work will be done on their headquarter building. again, this is very unusual request and that's why it's here before the board because it does violate the ordinance and it requires the board to resolve to allow us to do the suborde-- we support this. >> one of the things we
learnedded is to be working closer together on these issues. that's an example. for every one of the programs in dph who have these type of loans, make sure they understand with the mayor's office, what this means when we provide them these kinds of funding and why these leans are so important. i think that's an important learning lesson for us. also win i work -- when i worked with the healthright 360 they need to understand that we need to be brought in sooner for these processes to get them the support and their understanding as to why the processes and the loans that we provide and the leans that we have on these to protect these kinds of facilities that are so important for us. i do want to say that hr360 is not just in san francisco. it is in eight other counties. they're a very large organization. that's probably one of the other reasons -- as you know supervisors worked very hard on ensuring that nonprofits in san
francisco become more diverse in their funding. many of them are 100% depend end on us. when we talk about how well we work with them, they're an extension of our role. hr360 is a bit different. they're doing really good fundraising outside of their general fund. they're also in eight other counties seeking other resources to diversify their funding. they're all dependent on the city as a whole. they are a very big provider for us but i think there were several lessons that we learned between two departments to ensure that we provide greater over sight around the liens and loans that many of the nonprofits have. it's a good lesson for us to learn and we need to be more vigilant about it. >> my comments -- i completely agree with everything you said about the organization and their value to our city. we need the services and so
forth. it's more about the financial aspect. how did we get here? are we lending and supporting organizations that become too big to fail. they can keep coming ban for more and more and we say we have to keep funding them for more and subordination is more out of the annual budget. that becomes a challenge. that can lead us on a slippery slope. that's i want to question whether this organization or any other one. but thank you. supervisor tang. >> thank you. thanks for your question forever fai -- supervisor farrell. i wanted to go back to the basic question of how we got here. i don't know if that's a question that your department want to answer or healthright 360. just to dig deeper as to why we're faced with this decision in the first place. >> i'll let my colleague respond to this, i was asked to come
in. first of all i think hr360 did good diligence trying to find those. what they didn't understand they couldn't take the full assets of their assets. they couldn't take full credit of their assets because they have liens. they thought that would be an easy thing to do to ask the city to subordinate those. i was asked to come in by the director to help. he knew how important these services were. we strategized about what would happen if we didn't do it. what would happen if the building did not get purchased because of this process. we were kind of left with how do we go forward with this considering the ramifications. that's the role that i came into in trying to support the organization. really understanding the situation that it puts the mayor's office on. i'll let my colleague describe his participation in that.
>> we were approached early on. i think the development of the mission street project by lenders representing healthright 360. they requested subordination of the asset. this initial lender, we said no. we're not going to do it because it's not related to the two particular buildings. we were later approached by a subsequent lender to fill a gap for the mission street project. we said, well, why don't you go to a nonprofit lender who will understand why we can't subordinate to these assets. it actually worked out to the
benefit of healthright 360. they were to access to market tax credits which filled the gap for their development on mission street. but they still needed the issue of security on that loan. they came back and said, we can't close our loans along with the new market tax credits unless the city does something to subordinate to allow us to lien those two additional properties. we were sort of caught after the fact since the project had been already initiated. to avoid the financial difficulties of stopping construction and also because we are not healthcare lenders. we're affordable housing lenders
and trying to underwrite a healthcare organization was confront sort of our -- beyond our expertise. we were also brought into this sort of after the fact. i think the common misconception for healthright 360 is these were their properties and not the city's properties. these are not their properties or the city's properties. they're collectively the city's property that we share and we hold as stewards for their use, for the city of san francisco. for their lenders, they didn't really care. they were just pieces of property in san francisco that had incredible value from the time we purchased them in 1990 and they would secure their lo
loan. their lenders beyond their current nonprofit lenders didn't understand what it means to secure affordable housing site for another purpose. i think that is the service part of the organization, some would say equally or more important than the residential treatment. some would say. it's the fact that they're treating that as their own personal property as they're holding it for future generations of san franciscans. that's the thing that we have to sort of make our borrowers realize that it's not just theirs. they're just the temporary stewards. >> i appreciate the department's responses. i would love to hear from hr360. i believe they're here today. just to get their perspective as to how this all came about. >> thank you so much.
i want to thank both mayor's office of housing and dph for supporting. this is a complicated project. i probably can give you -- i will try to give you how this project came about. healthright 360 currently hones number of facilities in the city and stewards. we rent a bunch of properties and facing the same challenges that every other nonprofit faces in san francisco. we began to look forward and think about how do we replace those properties. we have long term leases which are ending january 2017. for about $38,000, it was about 40,000 square feet of clinic space. outpatient behavorial health, mental health services, residential treatment, primary care clinics. we have 40,000 square feet and a lease that ends in january 2017. i have to replace that space. we knew this was coming. we started thinking, what would
really ineensure our long term future. would be to purchase something. purchase a property that we can move in and essentially convert what we'll be paying for rent, paying debt. that's exactly what we did. amazingly we found a space at the rock away. it's in are the same community. we serve the people who live on division street. we're in the going to lose them. we'll be able to continue to do that. we're just converting what the risk of rent into debt. we looked at what the comparable cost were for replacing the rent. our debt service is clear. they're lower than the cost. want to make clear, we are not asking for any loans from the city for this. this project is 100% financed. it's financed with very complicated group of lenders. bank of america is the only commercial lender, rest of
lenders are nonprofit financial institutions many whom specializes in healthcare. they really tested six lenders came in together to create lending package for this project. they tested and probed absolutely everything about -- they tested all our assumptions. they looked at financials and challenged us. we had to prove we can make that service. we can make good on those debts in the long term. these are not -- this is not like countrywide financial with subprime lenders who want to get the deal. these are people who are invested in community health and they're nonprofit lenders. they agreed to give us a loan. there was a misunderstanding that we thought considering there's $8 million of debt on $38 million worth of property. we did not realize that complexity of the subordination of the seismic safety loan. that conversation is what led to the new market tax credits, which we didn't know anything
about. we never developed a project like this. it sent us in if the direction to get the new market tax credit which brings $13 million back to us off the cost of the property. we are not taking any loans from the city for this. all we're asking is a subordinate position for a period of time. the debt services cheaper than rant would be. we faced this challenge even if we didn't have this. we'll be having a different conversation. the debt services, it absolutely -- we're acting as stewards of the services that we provide in san francisco. we made a decision to do that. i'd be happy to answer any questions. some ocomply -- those residential facilities are seen as housing facilities. they are healthcare facilities. it's a bordel model -- model that dph understands.
our residential programs that are funded in part as affordable housing have always been resident through healthcare facilities. they've been residential treatment facilities. >> given that then, i know the budget analyst report had said that, i guess mohcd staff is not able to verify whether you're able to repay the $8.5 million loan or refinance the balance of it after seven years. can you peek to that -- speak to that? >> again, we have every reason to believe that we can repay that loan cash and operation and through the growth in our business that comes about through the affordable care act. which completely changed how we're able to stabilize. we never had more stable funding in subsidies than we have
today. san francisco is a very generous county invested in a lot of dollars. now that is a federal entitlements. those moneys are being replaced by federal dollars that aren't going to go away. business model is more stable. we operate in eight different counties there is an insufficient capacity for treatment in system o -- some of those counties. those counties are all doing anales of do they have the capacity and are coming to organizations like us looking for expansion. when we project an expansion in our business, that is very real. that's a very real possibility. it's a probability because again, there's many counties that have insufficient capacity because they didn't invest the general fund dollars in building an infrastructure for residential treatment. now it's a federal benefit, they need it, they don't have it. it's not -- it's a conservative
estimate growth for our business. other thing that happened for healthright 360, we've grown through mergers. we have probably completed on average about one merger per year. we projected that to continue. it is one thing if you're grant funded or if you're county funded. medicaid has a whole different standard of challenge. we were always approached by other organizations that believe that as long as they can continue to preserve great services that they have and be responsive to the communities that they serve, they look to us for support through merger. we've done at least one a year since 2011. >> okay, thank you. again, none of these questions take away from how we all feel
programmatically. >> supervisor kim. >> i appreciate you being here. i think with healthright 360 provides to the city is invaluable. representing the district. i'm very excited because that building had long been vacant. it's an incredible eyesore for the neighborhood. in having that space will be incredibly important. it's amazing that it will be dedicated to most vulnerable residents that need these health services. it's clear what the purpose this is. just to help address some of the questions, i believe that with the business model, it's very likely that you'll be able to repay these loans. can we talk about what will happen if for any healthright 360 is not able to pay back the $8.5 million, what would occur then?
>> since they are superior position on our property on the collective property, it would depend on what the action of the particular lender would be, whether the learned would recast the loans. if they were to call the loans due, we would be faced with the option of carrying the default to preserve the property. which is the value what this subordinate note, which is approximately $8.5 million across the two properties. we will be faced with that option. >> when you say we, do you mean the city or healthright 360? >> obviously we would look to healthright 360 first to see if they have the resources to make the payment. if they didn't have to make the payment, we would look at the question of whether preserving
those housing assets was important and we had the resources to direct the $8.5 million to reserve those assets. clearly -- >> with the city funds? >> yes. whether it's from housing trust fund or from the affordable housing bond. it would be how affordable housing money will carry the default if healthright 360 did not have the resources from other accounts. >> has that happened in recent history where we had to do that? >> not in recent history. i think that -- part of this, it's a hybrid model of the residential care. it's not affordable housing with rents. there's no tax credit investor and the transaction. the stream of income is really related to the service contracts as it relates to it.
it's a unique situation. we have not been in a situation where we had to basically bail out owners of buildings. we work very hard to make sure that buildings are underwritten properly. we are now in a model where we own the land underneath all the buildings as a public land trust. that gives us great leverage in any sort of default by owners. again, this is a loan that was probably closed in 1990 or 1991. we did the seismic safety loan. some of the current writing and structuring is not contemporary. this is something that we would address through basically
negotiation with the subordinate learnedder. in this case it is nonprofit. hopefully we can come to some reasonable agreement with the nonprofit. i think the great hope overall is that the projections are correct and that they can make the debt service payment. by the time they are finished with their new market tax credit compliance period, they can refinance on different properties. these properties will no longer have that debt on them. the city would look to preserve its affordable assets. >> supervisor kim, one of the things that we are trying to do is be proactive in over sight. long before i know they're not going to make the note, we will be doing corrective action with them. that's why they're going to be required for the next seven years to provide quarterly reports and quarterly meetings with the department to ensure
they're watching their financial status. i had experience on closing on properties of the city. we do know how to do that. the issue here is that we would be responsible for that. i would take great responsibility for to ensure that these services continue and we have had those kinds of changes in the past with closures and nonprofits. with this organization, i think it's really important that we continue this ongoing over sight to ensure we're comfortable about their financial status. and their ability to pay back the loan. that's the commitment that the department of public health makes. we know how important this organization is. >> my last question, i i might have missed this in all the reading. i'm not familiar with the nonprofit finance fund. is there some type of agreement within the fund that building remain a nonprofit site or a public purpose site for a number
of years in exchange for being eligible for loans? one of my long term concerns is, as mr. lee had mentioned, which is that we're able to keep in property for public use in the long term. i think a couple of years ago, when we're faced with a nonprofit displacement issue and the heated commercial real estate market. many of us thought about we wished we could have bought up a lot of property. the city ends up paying those rental increases if they're contractors with the city in order to keep the services going. we want to make sure this property stays in public hands even if it's not specifically in the city. there's some several of assurance. >> i don't think that is in the loan agreement. i do think if you would ask -- the nonprofit finance fund is made quite clear, they would
never want to default on the property anyway. they are a nonprofit finance fund. they're in the business of supporting nonprofit institutions be it healthcare and social services. my since is, that is what their desire would be to do. i do not believe that it's written into the loan agreement if you will. >> okay. i think that's maybe just a long term discussion. maybe not this case. i love to see as we further support nonprofit in ownership and capital that we think about some level of assurance in terms of longevity of sites staying within site control of the community or of the city. i know this is an issue that came of recently city of refuge that did a loan and ended up selling. it was such a short commitment to remain a nonprofit. while i support nonprofits in making money in the market that we're in now, it was also sad to lose such a big site that was a
community facility as well. >> thank you. >> okay, mr. rose. let's go to your report please. >> mr. chairman and members of the committee on page 9 of our report it's showing in table two, over the seven-year term, healthright 360 the term of this $8.5 million loan from the nonprofit finance corporation healthright 360 will be required to pay a total of $6,267,112. at the end of the term, they would have to repay 3,000,683 of the total $8.5 million loan. that leaves remaining balance. therefore healthright 360 would need to pay off the balance at the end of the seven year term.
based on documents provided by healthright 360 reviewed by dph, healthright 360 considers the nonprofit finance fund loan to be a construction bridge loan which will be primarily repaid with funds from a healthright $36,015,000,000 capital fundraising campaign. healthright 360 will use operating funds to pay back its $24 million bank of america loan and the subject $8,500,000 loan. however, we note there are no guarantees that such fundraising efforts will be successful or surplus operating funds will be available. further, mohcd staff were not able to hr360 operating expenses as supervisor tang pointed out,
mohcd could not determine whether healthright 360 will be able to repay the $8.5 million loan or refinance $4 million of this loan. on page 11 of our report as supervisor farrell pointed out on january 7, 2016, healthright 360 signed a letter of intent to lease approximately 2000 square feet of space for initial term of five years plus one three year option to extend based on independent appraisal of fair market rent. we considered approval for the board of supervisors. >> so, can't validate the projections. can you talk about that and the
ability to repay the loan? >> our expertise is in real estate residential real estate and nonhealthcare financing. we didn't have the expertise to evaluate the operations of healthright 360 in terms of their projections and expenses. the mayor's office did not have the expertise to evaluate the financial statement. >> i want to emphasize that heth -- healthright is stating that the primary source to repay back
the loan is a $15 million fundraising campaign. obviously there are no guarantees on getting $15 million in fundraising unless they come up with something a says there is a guarantee. >> we got five. it's now ten more. we have $5 million down on the capital campaign. no lender would have loaned to us if it was on a promise of a $15 million capital campaign. there's actually a seven plan access. we do have lien on the property and they also had to sign of -- off on this. no lender would have made those loans to us on the hope of a $15 million capital. we had to be able to show that we could meet debt service even if we didn't raise $1. when they vetted us, these are not people that were in the business of making money for share hold, they do this to
support healthcare facilities. they wanted to ploy them carefully. they deeply understood our business, which is a healthcare business. they would have not done that had they not been assured if they didn't raise a dollar. likely it will raise at least another dollar. they would not have made those loans us to. they had to fight to get them. they have to get them from the federal government. they would not have done that if they were not completely comfortable that we would be able to make debt service. we may have to refinance in the future. we may not if -- if i don't raise $4 million, that i have to refinance, then we'll have a conversation with refinancing the value of the property as built maybe sufficient. hopefully it will be sufficient to carry the full debt. there's so many things that may happen between now and the next seven years.
what i do know is that without it, we still face -- we are not in a position of worrying about rent mitigation. nonprofit displacement. we'll be here and we'll have the ability that we'll be able to stay in that facility. >> the capital campaign that you're doing now, that is to pay down this loan? >> in a perfect world, we'd have that money now and we wouldn't be subordinating. that's option one. >> here's my question from a city perspective. you're not going to raise the next $5 million and use it for somebody else? >> no. >> this capital is dedicated to pay down the loan on this building? >> 98% of our funding is through government dollars. whether it's city contracts. we have medical clinics, medicaid payments. any funds raised goes to the
building. >> okay, thank you. >> barbara garcia, i would be more than happy to go over the board to get that resolution around their funding, their capital campaign for the purpose that you talked about and i'm happy to do that. i will be meeting with the board shortly to discuss this whole process. i'm happy to have them resolve that. >> i want to make one point of clarification, i want to be clear, if we were to get a loaner who gives restricted dollar, it has to go to lion martin health service. outside of nonrestricted fundraising efforts are 100% for the building. >> i think that would go a long way. okay. i appreciate it. colleagues i don't know if you have questions. mr. rose, thank you for your announcement and talking through
this. all of us had clearly this has nothing to do with the organization and mission and what you do and how value they are to the city. i appreciate everything you do. i do think from a city perspective, we are in a very strained situation that i don't want to be in again financially. mr. rosen, i'll submit a formal request for your office to look at legislative options to make sure we don't get in this bind again. this is not a reflection. please, i hope you hear that collectively. i don't want to be in this position again as a city. i imagine this board is going to support this. i don't know that others ones would. i'll submit that to you separately. any further questions? thank you very much. we'll open up to public comment. anybody wishes to comment on item three? seeing none, public comment is
closed. colleagues. >> through the chair that i make a motion to send forward this resolution with a positive recommendation to the full board. >> we have a motion by supervisor tang. item four please. >> is a resolution to and acquisition of one construction easement to permanent service access easements and one person easement for water utility purposes for john daly boulevard associates monarch ventures and wilbak investment for approximately $78,000 for the water improvement program. >> good morning chairman fai farrell. i'm here today to seeking your approval for purchase and sale agreement to four easements required of the regional ground water storage recovery project. claudia, assistant director of real estate and city and county
of san francisco is here today. the ground water project will consist of 16 ground water wells for use during dry weather years. in normal years, the wells will be allowed to naturally recharge and supply more water to wholesale customers in the peninsula. it will connect to the city daly city and the california water service company. this is the last major project in our water system improvement program. the project requires two access's eastment, a contemporary construction easement to apartment complex that is owned by a joint venture of john daly l.p., monarch ventures l.p. and wilbak investments l.p. i will be hame happy to -- i will be happy to answer any questions. >> any questions?
mr. rosen, go to your report. >> yes, mr. chairman. on page 14 of our report, four easements were appraised to have a value of 38,185. because of construction will be disruptive to the joint partnership tenants apartments. with the apartment complex. based on negotiations with paying additional $40,000 to the appraised value, there -- total cost of those easements the details are shown in table one on page 15 of our report. we recommend that you approve this resolution. >> any questions? public comment. anybody wishing to comment on item four. seeing none. public comment is closed. i have a motion. >> i move to send forward item four to the full board for recommendationu
recommendations. >> is a resolution authorizing the general manager of the to execute amendment number three to agreement number cs-1918 to continue providing construction management services for the construction and close out increasing agreement by $1 million for a total agreement amount not to exceed $20.5 million. >> good morning chairperson farrell supervisors tang and kim. i'm the director of water and improvement program. if we go to the slides please. this is an amendment for construction management services with a consultant named hatch motte macdonald to continue their work on a irvington tunnel project. agreement cs more 1918 is -- c
s-918. this project saw a failure of liner during construction. this was due to some subpar construction of the grouting and the space between the steel liner and the rock and the tunnel. we required an investigation of the full length of the tunnel. it required the project schedule to be extended. the contractors made all of those repairs. we do need additional construction management services to provide additional inspection staff to provide quality assurance of the repair work which included a lot of extra hours and overtime then continue for the final construction change order negotiations and close out of the project. just a couple of photos. these are the buckles in the liner that were discovered last
fall. we're able to repair those. we regrouted the entire length of the 3.5 miles of tunnel. the tunnel is now in service and serving water to 2.6 million people in the bay area. this is the capping of the tunnel at the portal. the restoration of the portals are shown here. request to action is to approve this resolution to execute this amendment with hatch motte macdonald to increase amount to $1 million and total amount not to exceed $20.5 million. it will allow the project to be closed out. >> thank you very much. any questions? mr. rosen, go to your report. >> mr. chairman. table one on page 18 of our report shows the budget and remain scope of work for the increase amount of $1 million to this hatch motte macdonald
contract. on page 18, we note that the revised budget for the new irvington tunnel project is $348 million. that's shown in table two on page 19 of our report. this budget includes the construction management services contract at a total cost of $20,000,500. i would note on page 19 supervisors that the new irvington tunnel project budget has increased by $132 million or 61-point% of the original 2005 budgets for the revised budget economy just noted $347 million we recommend that you approve the resolution. >> thank you mr. rose. any questions for our budget analyst. anybody wish to comment. seeing none. comment is closed. >> make a motion to send out
item five to the full board. >> motioned by supervisor tang. call item six. >> resolution approving the contract amendment with the children's council of san francisco to manage preschool of all programs subsidy to children of the city increasing not to exceed approximately $74 million for the period of july 12012 to june 30, 2016. >> good morning supervisors. in. we bring to you an amendment, which is amendment number six to children's council. this is to basically pay for preschool. the city has at the preschool initiative which is now in its 11th year. we are reaching 4300 children by the end of this school year. the majority of them are 4-year-olds. a big group of them are also
3s. these kids will be getting two years worth of preschool. which is an amazing thing. this has been an initiative that was reauthorized by the voters. prop c back in 2014. this is just continue the services that kids are getting. more than that, it's also to build the quality of these preschools. because of that, we've been recognized by the state of california to -- we're getting $5 million worth of grants through the state of california to continue to support these preschools. >> great, thank you very much. colleagues any questions or comments? supervisor tang. >> one quick question, the budget analyst recommended reducing the amount by about $1.4 million. want fog see if that's something the department is amendable to? >> well, not really. i don't know want to breed on
this resolution at this point. it's taken several months to get here. we need to reimburse over 150 preschools in are participating in this initiative. the reason i don't agree with it, because we're just going to be here in a couple of months requesting amendment number seven. if that is the case, that is the case in order to move this resolution forward. >> sorry, just one follow up question. can you talk about why you need the additional 1.5 that the budget analyst asked to reduce? >> in our previous resolution, which was amendment number five to children's council, we did not spend the full amount that was in that resolution. part of that was for a number of complicated reasons, one of it being that when prop c passed, it also remained in the legislation the administration of these funds to the newly created mayor's office of early
care and education. during that sort of transfer, first five agreed to one more year of managing the universal preschool initiative on behalf of the city to give the office of ece some time to build capacity. we did not fully extend amendment number five. this fiscal year, we've received additional funds from the state of california. in order to fully extend that amount, we need the full grant. we need to spend the full grant. authorize it's use it or lose it type of deal with the state of california. what the analyst recommendation is that because we didn't fully spend our prior year grant agreement, that amount, we still have authority to spend up to $27 million within that grant
period. i get it. it's sort of a technical adjustment. for us, it really is that we need to spend this money and we have a plan to spend the money through the preschools that are participating in this initiative. >> thank you. mr. rose wanted to respond. >> madam, mr. chairman and members of the committee. supervisor tang, first of all, as a supervisors know, we always submit a draft copy of our report to the department for their review. in this specific case, after they reviewed our report, where we had a larger reduction, they gave us corrected information, which we revised the report, which they agreed with. we lowered the amount to be reduced. it's very disconcerting for me to hear the department now say they have a problem with their recommendation after they reviewed it, suggested revisions which we did do, so we
absolutely stick to our recommendation when they go over the report on page 22 of our report table two. shows the budget for the requested increase of 27,063,776. we point out on page 23 of our report, $45 million through fiscal year '14 and '15 and is requesting additional 27,000,0 27,063,776. which is $1 million less than requested. our recommendation is to amend the proposed resolution to reduce the request of the contract amount by 1,498,528. we recommend that you approve the resolution as amended.
i want to reemphasize that we gave a draft copy to the department. they suggested change. by the way, our recommendation are based on the numbers that the department gives us. our recommendation is to reduce by the $1 million. >> i don't want to upset our neighbors because we're neighbors with harvey roads. but at the same time, i don't want to jeopardize the moving forward with this resolution. we have 150 preschools programs that we need to reimburse.
there's around 30 family child care providers that are part of that pool that really cannot carry that cost for another month. >> deputy city attorney. just to clarify the committee's options here. this is a contract approval under section 9.118 of the charter. you have yes or no authority over the contract that the department is providing you. if the department is saying, we're sticking with the $74 million contract here, the committee could approve that or reject it. but you can change the amount. only the department can change the amount that they're asking you to approve. >> mr. chairman, members of the committee. i don't understand, there are including on this report today, there are literally thousands of recommendations that we have made this regard. by the way supervisors, this is not an appropriation.
you're not appropriating any funds. you are just authorizing an amount of the contract. if we were wrong, which we're not, let's assume we're wrong, the department has every right to come back for an appropriation of funds that they would need under the authorized contract. i want to emphasize, you are appropriating funds here. you are just stating what you believe to be the necessary authorizing amount of the contract. >> thank you mr. rose. >> the budget typically makes recommendations just like this. literally thousands of times that the departments are okay with it. every one in a while the department is not okay with changing their contract. in a situation like that, which is what we have here, the committee can't change the contract. the committee has to decide whether to approve the contract as proposed by the department or reject it and then the department can come back with a
different version. >> the one before us is not that's amended down? >> yes. unless the department tells you we're willing to offer a different amended down version of $68 million or what not. >> supervisor tang. >> thank you. i appreciate the clarification what we can or can't do. i was inclined to support the department's requester if the full amount here today. really because i understand the transition that had occurred with the office, the newly established office of early child care education. knowing that would have to come back here for the additional amount anyway in the next approval, i was personally inclined to support the amount that was proposed by the department. >> okay. supervisor kim. >> i just need to understand this disagreement of understanding again. i'm just going to ask the dla to
comment on the $1.4 million and why we should include it in this contract? >> mr. chair and members of the committee. supervisor kim, if you take a look at our table four on page 23 of our report, the data that the department submitted to us, it shows actual expenditures under the contract of 45. they've requested 27063 based on numbers that they provided to us. so that the total actual expenditures and requested funds is $72,892,039. that's data boy provided by the department. the legislation request was $74,000,395.367.
>> okay. back to the department as to why this exist from actual expenditures? >> this was from prior year for '14 and '15. this was based on preschool enrollment that we had projected up to a certain amount. we did not hit 100%. part of that have to do with the transition of the initiative. it would occur this year too. it's really $1.5 million. >> we have to spend five of the $27 million of state funds. we have to spend those.
it's on reimbursment basis. the $21 million, if there is no -- if there's a fund balance, that fund balance goes back -- to the public education. >> then it's available for future use? >> correct. >> regardless, if you don't spend out the $1.5 million that the dla is recommending destruction of, it will get swept back into the fund available for use and future years? >> correct. >> the reason why this wasn't articulated in your initial conversations with the dla -- >> i did. this is why we started this process back in october. it's been months. >> okay, thank you. >> why don't we move on to public comment. anybody wish to comment on item six. public comment it closed.
>> through the chair colleagues, i will make a motion. open to other suggestions. i would to make a motion to approve the resolution as is. send it forward for full recommendation. >> i think it will be different if we were appropriating things here. i appreciate the comments and questions and certainly mr. rosen's work on this. i will support supervisor tang and i think we all will. we can take it without objection. item seven. >> is a resolution approving amendment number transdev services services to administer the city paratransit program. not to exceed $127 million for the term of april 1, 2010
through june 30, 2016. >> i'm the paratransit coordinator. this amendment will increase the authority of our contract with transdev. initial contract code and cost saving, we were able to extend the contract for another year without needing additional contracting authority. due to new labor agreement and some increases in service, the projected budget for this fiscal year is expected to exceed the contracting authority. we do agree with the recommendation of the budget analyst that the amount can be reduced by $1.3 million. we do anticipate a new paratransit contract to come to you for your approval by execution on july 1st of this year. thank you for hearing this item and i'm happy to answer any questions you may have. >> thank you very much. any questions?
>> can you explain more? i think it was a big question as to how there was some oversight on some of the budgetary needs that you were requesting from 2010? is that my understanding? i'm looking at an e-mail that i got from dylan. >> thank you supervisor kim for that question. i pointed out in my e-mail an item that was included in the sfmfta board item. there was three month expenditures from april 1, 2010 that was left out of the
expenditures. >> can you explain how that happened? that's from almost six years ago now. how is it was left out and why it took us five years to discover that that wasn't allocated? >> let me refer that question back to john who has more details. >> three months that weren't accounted for -- >> were not accounted for of >> yes. when we had -- when we first did the initial extension, it was only a five month period. we didn't include the three month start up that was required for the new contract. those are c-sts that we didn't account for. we weren't aware that they were included in the current contract. that's why we had to include it. we made the revisions.
>> when you didn't say you didn't realize it, you mean that transdev -- >> no, they were paid. we didn't account for that. those additional expenditures to be included in our current contracting authority. when we made the initial request to extend. >> sorry, i don't understand that response. >> as an outsider. i'm christian major senior planner and the paratransit sfmta. what happened was, this was a five year contract with five years option to extend. we came to you to ask for a one year extension. basically, we asked for a contracting authority to pay for five years plus one more year. at the time we didn't ask for additional contracting
authority. we thought we had enough money. we thought we were going to get six years worth of service for just fight years. -- five years. when we did that calculation and calculated that we didn't need extra money, we hadn't accounted for three month of service. labor was going to go up, the labor cost were going to go up because we increased wages due to a new union and prevailing wage ordinance. we didn't anticipate the slight increases in demand. so, we really needed -- at the time we extended to get six year contract with transdev. we needed six years and three months worth of money. we didn't quite have six years and three months worth of money. it's a great deal. we're paying for all of that with just five years of money budget so far.
>> i get that you're getting six years of service from an originally agreed upon five year dollar amount. you came back to the board for a one year extension, six months ago on july 2015. that's what i'm reading in the report. i guess my question really was not whether it's a good deal or not or how the good months had been inadvertently has been left out when it was over five years ago? >> i apologize, i started working at sfmta one month ago. we're counting information that we have from our manager. i think the calculations were done when we came to you for the extension. it was about six months when the error was made and not five years ago. does that make sense?
the error in calculation was made six months ago when we calculated, oh, we have enough money. we have $125 million. that will get us through the end of five years. through the end of six years. then we realized some time between six months ago and now that when we call lathed the 125, we hadn't included the three months. >> that already been spent and paid to transdev? >> correct. >> by the way, i understand the wage increases and the new union i think that makes sense that those cost increases went up. i support that. i wanted to understand the differential of three months. you've saying it already been paid. it wasn't included in the accounting when this came before
us. >> thank you. >> thank you very much. mr. rose, go to your report. >> mr. chairman members of the committee. on page 26 of our report, we report that sfmta's total expenditures under the agreement with april 2010 through june 2015 are $100,000,000.224000. through fiscal year '15 and '16 included contingency of $125.4 million. more than the existing agreement not to exceed amount of $118,000,599. that's shown on table one on page 26 of our report. our recommendation on page 27 is
we recommend you amend the proposed resolution to reduce the requested increase in the agreement amount by 1,000,035 from $8 million. reduce the total requested agreement not to exceed amount by the same $1,000,355.537. we recommend that you approve the proposed resolution as amended. >> thank you mr. rose. any questions for budget analyst? seeing none, we will open up to public comment. anybody wishes to comment? >> my name is aetna james. i'm president of a commission on aging. i'm -- there was some concern in our commission from about 30 organizations about transportation for seniors.
one of the things is that they offer free transportation sometimes and then they cut it off for the seniors. how is that affect the budget and it's confusing for the seniors. i wanted some input on that and is that the organization that provides that transportation? >> yes, the san francisco municipal transportation agency does operate muny. i believe you're talking about the free passes for seniors and persons -- is it free muny for -- >> can i ask, you can take this offline? after we work on this item? >> okay, great. >> thank you very much. any else wishes to publicly comment. public comment it closed. we have a budget analyst
recommendation. >> through the chair, i'll make a motion to accept the budget analyst recommendations for the reduction and approved and send forward to the full board. >> we have a motion by supervisor tang >> touch eight hearing to consider the annual recover and adoption the proposed draft budge for fiscal year 2016-2017 for the board of supervisors of the clerk of the board and requesting the office to report. >> thank you very much. >> members of the committee. i'm angela, the clerk of the board. i'm join end by my budget manager. others in my office mr. lane and, mr. jason freed. to begin i'll provide a high level overview of the department's current budget and present several budgetary
the department received a one time funding of $250,000 for record or digitation project and one time funding of $175,000 for the aab office reengineering project. which i'll talk about in a second. lastly, -- slide four highlights the proposed budget changes which respond to organizational priorities and the needs and to implement projects. the modest personnel adjustments that we're requesting include substituting a 1093 i.t. operation support number three
to 1094 i.t. operation support number four in our administrative division which will reflect growing job demands from implementation of new application. we're making one downward substitution of 1454 executive secretary tear to legislation clerk. in the legislative division, to provide uniformed centralized assistance for filing examination and compliance and appeal coordination. these are two existing positions. they have a net change of approximately $16,000 in salary and benefits. i'm making a small increase in tempt salaries of $5000 there to assist with personnel needs that are arising from vacancies and leaves. at the december guideline hearing, i requested your direction on the last two items, the general fund appropriation from lafco. the department has included these items in the proposed
budget and defer to the committee to whether or not include these items in the department budget for june. moving to slide five of nine. as you can see, we projected $310,000 decrease in the assessment appeals board revenues. due to the significant reduction in the number of appeals filed, as a result of the continued improvement in the real estate market, as you know, aab's revenue goes through a cycle that is tied to the swings in the real estate markets. the revenue peaked in fiscal year '11 and '12 it has been steadily declining as the property values has been have been going up in san francisco. our current budgets includes more revenues due to sharp increase and withdrawal of appeals. the department revenue are planning appeals surcharges and the outreach fund will remain unchanged. slide six provides a summary
table of the total costs in each fiscal year of the proposed adjustments. which are subject to change based on the direction we'll receive from this committee on the open issues of lafc homeworko. slide seven, the aforementioned combined with increase in salary and associated benefits mandated by the mous. as stated earlier, with the generous support of coit and director kate howard, we have received funding in the engineering and record digitation project. both projects are under way and will be delivered in the budget year. the beauty with the assessment appeals initiative, we're working closely with the assessor chu and her team to
streamline the process. this requires technology and changes to our business procedures. we have 175,000 already funded which will be usedder temporary program position to fully complete all aspects of the project. which will include phase five which we have not yet brought to this committee. but current funding will actually take care of both phase four and phase five. records positive tory to get all historic records digitized and rfp forming electronic data management system are being developed and will be issued this year. looking ahead, we have even more important technology projects on the horizon which will discuss further in june. currently, we must put into place a new contract for agenda management system towards end of the second year of the budget and we're now enumerating required expected experience from different stakeholders and breath of services to issue
solicitation in next year. we have a funding request to coit for this project in the amount of $360,000. regarding the creston system, we need to replace this system, this audio visual control system. so it can accept hd resolution. these changes will include the experiences and the experience of the public. it will facilitate new open government requirement. the funding request is already at the capital planning in the amount of $693,000. i want to thank john updike an his team for submitting that necessary work. >> when is that expected to happen? >> the capital plan calendar -- you're familiar when they will make these decisions?
>> i don't know the exact time line of when the capital planning expenditures will be made. they're typically final recommendations usually released some time in april i believe and are made in may. >> so it's slated to go in this year? >> that's correct. >> in summary. for fiscal year '16 and '17, the proposed budget shows less than a 1% increase. while it provides for necessary changes needed to meet the increasing complex demands in our department, it will fund a current critical i.t. project. as a reminder, i will await your direction for the two policy matters listed, the budget analyst cola and lafco general fund support. which we will know further in
june. i may come back in june for additional funding potentially for the language access pilot program should the board determine that program needs to continue. that concludes my presentation. i'm available for any questions you might have. >> thank you. i appreciate your presentation. look forward to having you continue discussions around policy stuff over the next few months. any questions now? we'll open up this up to public comment. anybody wishing to comment. public comment it closed. can i entertain a motion to continues the item. >> so move >> we can take that without objection. madam clerk. do we have any other business. >> mr. chair would you like to excuse supervisor yee? >> good idea. we can take that without objection. any other business in front of us? >> there's no further business. >> anyone thank you. we are adjourned.
[adjourned] >> (speaking foreign language.) >> shop and dine in the 49 promotes local biz and challenges the san franciscans to do their shop and dine in the 49 within the by supporting the services we help san francisco remain unique and successful and vibrant so where will you shop and dine in the 49 san francisco owes itch of the charm to the many neighborhoods people coma greet and meet it
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>> shop and dine the 49 challenges residents to do they're shopping with the 49ers of san francisco by supporting the services within the feigned we help san francisco remain unique and successful and rib rant where will you shop the shop and dine the 49 i'm e jonl i provide sweets square feet potpie and peach cobbler and i started my business this is my baby i started out of high home and he would back for friends and coworkers they'll tell you hoa you need to open up a shop at the time he move forward book to the bayview and i thinks the t
line was up i need have a shop on third street i live in bayview and i wanted to have my shop here in bayview a quality dessert shot shop in my neighborhood in any business is different everybody is in small banishes there are homemade recess pesz and ingredients from scratch we shop local because we have someone that is here in your city or your neighborhood that is provide you with is service with quality ingredients and quality products and need to be know that person the person behind the products it is not like okay. who
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consultants the police headquarters with the from 850 with a brand new fire station number 4 to serve mission bay swimming pools at office of economic workforce development in the fire station thirty. >> is the the hall of justice on bryant the new home for 2 hundred and 50 uniform and voiven compresses we all it was opened in 19 so sociothat is a 50-year improvement as far as structure and work environment had that will be a great place to work. >> when construction began in 2011 this was with an clear goal to make sure with the big one heights the resident will will have a function police department those are the highly
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mission rock is it serves the motorbike neighborhood and motorbike i moiks is a growing neighborhood and the intent of the bond to have please and fire serves to serve the community. >> hemming helping to keep the building and the stay safe was the not the only opportunity it creates many jobs with 82 bleb businesses overall san franciscans contributed one hundred and 87 thousand hours to help to complete the project it shows the city of san francisco the elected officials and police officers and more importantly the voters that paid for the building this is what we can do with when we wrorpt this is a beacon when we need to build new extra we can trust them with the money and the plan they did a