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tv   BOS Government Audits and Oversight Committee  SFGTV  October 12, 2021 11:00am-1:21pm PDT

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. >> chairman: good morning:
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this meeting will come to order. this is the october 7th, 2021, government audits and oversight committee. i'm supervisor dean preston joined by supervisor chan and supervisor mandelman. thanks to corwin from sfgov tv for staffing this meeting. mr. clerk, do you have any announcements. >> clerk: yes. mr. chair. participants will be participating in this meeting to the same extent as if they were. public comment will be available on each item on this agenda either cable channel 26, 78, or 99. each speaker will be allowed two minutes to speak.
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your opportunity to speak during public comment period is available to you by phone by dialling (415) 655-0001. the meeting id for today's meeting is is 24907305333. following that, dial the pound symbol twice. when you're connected, you will hear the meeting discussions, but your telephone line will be muted and in listening mode only. when your item of interest comes up on our agenda and we are discussing it. dial star followed by three to raise your hand to speak for that item. best practices are to speak clearly and slowly and turn down your tv, radio, your streaming device, whatever you may be using. you may submit public comment in writing. you may e-mail them to myself, john.carroll@sfgov.org.
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or you may send your written comments by u.s. postal service to our office and city hall which is the clerk's office 2441 dr. carlton b. good place. i will forward it to the members of the committee and the board of supervisors and your comments will allegation be included as part of the official file in which you are commenting. finally, mr. chair. >> chairman: thank you, mr. clerk. let's call items one and two toogt. >> clerk: item one is a hearing on the 2020-2021 civil grand jury report entitled "van ness avenue: what lies
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beneath." members who wish to provide public comment on these two items should call in the public comment item. (415) 655-0001. 24907305333. press the found symbol twice to connect to the meeting and then press star followed by three to enter the queue to speak. mr. chair. >> chairman: thank you, mr. clerk. as a reminder, we had four grand jury reports that we have been addressing in committee, three of which were heard and forwarded to the full board last week and our board response is proof by the board of supervisors on tuesday. this one response around van ness was continued after a presentation last week from mr. mcgire and the grand jury
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and i want to, again, thank the grand jury for all their work on this. the departments for their responses, and also my colleague supervisor mandelman for his work digging in on all these detailses and drafting our board response which we'll be discussing later in this committee hearing. so i want to turn it over to supervisor mandelman. the mic is yours. >> supervisor mandelman: thank you, chair preston. i did have additional conversations with the city attorney and we reached out as well we continued to follow up with m.t.a. and p.u.c. and i think based on those conversations, i think we can have a full and frank conversation about these findings and recommendations in open session. i don't think that we need a
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closed session and we will have a set of responses for our findings and recommendations to suggest to you all. again, i also want to echo your thanks to the civil grand jury. one of the things that is lurking in the background of this as we talked about last week is the ongoing conflicts and disagreements between the contractor and the city and for me as i looked at some of the departmental responses to the grand jury, you know, it seems to me that there was particular focus and emphasis on making sure that no one ascribed to the city any responsibility for things that were not the city's responsibility, but in many some cases, i think for this board to just echo that
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language wouldn't completely grapple with the work and the conclusions of the grand jury. so i do have a few more questions, primarily on the findings that i would like to ask m.t.a. and if you all have any questions. we did talk enough about the recommendations last week. so i would like to just go through a few of the findings. finding one is that the delays in completion of the van ness project were caused primarily by avoidable setbacks in replacement of the water and sewer structure. and this seemed to me to be one where the information that was provided by the departments, by the m.t.a. in particular responding was interesting and understanding some more specifics about what happened and number of days and
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potential issues that might be the subject of the dispute but didn't really grapple with the basic question of whether the delays were caused by avoidable setbacks replacing water and sewer structure. were these delays about the water and sewer as i'm generally understanding is it the m.t.a.'s solution no some of these delays were about water and sewer, but most of them weren't. and that's sort of the question i have for m.t.a. representatives if they're here. >> chairman: okay. good. welcome back, mr. mcgire.
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go ahead and respond, please. >> yes. good morning, supervisors. i've got my colleague who is the project manager available too. so i first want to say that in some ways our response to this is -- it feels like we're sort of narrowly to say we either fully agree or disagree. the sewer water delays had a big impact on the overrule delay. i'm sorry that didn't come through in our response, but i don't think we disagree with what you said the question about the contractors.
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>> supervisor mandelman: was there something else from your perspective that was a bigger cause of the delay? >> so i think a lot of it had to do with the certainty of the infrastructure and we think because of the contracting model a lot of that responsibility sits with the contractor. the thing about the sewer and water was so impactful that we didn't have -- we the project in general didn't have enough information before the shovel was put in the ground. >> supervisor mandelman: okay. thanks help full and i think will shape the response and i'm
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making a little note assuming colleagues don't have anymore questions about that. okay. so finding two, i'm not going to ask about all these findings, but maybe half. so finding two, the potential impact of the utility replacement of the cost and duration of the overall process was given consideration in the initial process. is there -- how would that not be true in light of the fact -- and, again, not prescribing blame, but that statement seems in light of what, you know, you've just said which is that is the water and sewer stuff was way more than anyone
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expected? you're not saying who's fault that was, but should have been given greater consideration by someone in the initial planning process. do you disagree with that? >> no. so -- yes. in hindsight, yes, more consideration should have been given to that issue for sure. we believe we were using the practices that were available at the time. technology's definitely moved forward, but it should have gotten more consideration. that's correct. >> supervisor mandelman: okay. the third finding. it was known to the in engineers to be a major risk.
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only considered a moderate risk and assigned no mitigation strategy in the official register and let me see. i'm sorry. the m.t.a. agreed to that. there was a partial disagreement. can you explain your partial disgrooement on that finding. >> yeah. so our feeling is we believe it was a contractor who was required to do the potholing and this exploratory work in a timely fashion. you know. the contractor doing the
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exploratory and we just felt that was not meeting their duties as the construction manager. so they're supposed to be acting as the construction manager in this case. this is something where we have the opportunity to hold them accountable because we do oversee the contractor. at that point, the contractor is going to go over that. our feeling is the failing is on the contractor. >> supervisor mandelman: okay. my fedex question is on f-7. which resulted in inaccurate
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estimates and time lines. and this is something the m.t.a. disagrees with and can you explain that? >> yes. peter, could you speak to that? >> sure. i would be happy to. so this was the first time that the s.f.m.t.a. had done a contract and just so everybody's on the same page, the contractor was brought on a full year maybe 18 months before the project was completed. we requested a number of items such as the construction sequencing plan. there was there were a number of items that were only collected from the contractor when notice to proceed was
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issued. we decided to collect those ahead of time so there wouldn't be a rush. unfortunately while some of those plans were received and reviewed in detail and comments were provided back to the contractor, others fell through the cracks. this was in part because of our inexperience with this delivery method and we have learned from our lessons and in the future, we will have a much tighter process for taking the pre-construction deliverables and reviewing them. so there were items that if we have performed a thorough review on them and used them to gage the preparedness of the contractor, we would have come back and said, you know, we may not be ready to start yet. we may need more time to do our upfront work.
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so that much is true. the challenge we're having is from the m.t.a.'s point of view. we didn't have a process in place nor did we realize we needed one to gage where the contractor would need to start construction. we've received the pre-construction documents. we reviewed some of them and returned them. others got put up on the shelf and once the notice to receive were issued and in those cases, we lost some days at the very start of the project because items weren't ready and they had to be corrected or agreed upon and so as a result, we could have done that. the challenge that i think is unacceptable that we had with this finding was we didn't have
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anything -- any process in place nor were we asked to put a process in place. it was tell us if the contractor's ready to start construction. there were a lot of us that had individual pieces, but we didn't put those pieces together for a bigger picture nor did anyone ask us to put a bigger picture together nor is it standard practice for an agency administering a contract to kind of review the contractor submittals and say, you guys aren't ready to go. we reviewed individual submittals and when we found problems, we asked for them to be corrected and asked for them to be corrected to various degrees of efficiency. but this is something that isn't part of anybody's standard practice and it didn't occur to any of us to do during
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the project. we sent an official notice saying, yeah, we're ready to go. but on this project and other c.c.m.p.c. projects, my understanding is there's no procedure to basically evaluate a contract's construction. yes, check that box. move on. you have a construction sequence, yes, check that box. move on. all of those boxes were checkeded, but we didn't put all the pieces in place saying is this storm plan where we want to be. all of that is contractor's means and methods and i guess the assumption on our part was if the contractor felt they were ready to go, they felt better than we do and they'd be
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ready to go. >> and they're accountable for that judgment. so it's not just that we ignore that issue, it's that we are paying it to the c.m. >> supervisor mandelman: and the way i read that finding, it's not a and the city should have done this. in hindsight, the city should have done this, but not necessarily because it was a standard practice, but now we've learned from what happened here. and if you were doing the project again, you would do it differently. >> definitely. >> supervisor mandelman: okay. all right. so that's eight. i mean that's seven rather. but i also have.
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yes. so eight was the effectiveness of the design process too late. ask the m.t.a. with the findings would a contractor being brought. you can't always do it. all else being equal, it would be better to have them involved earlier. >> yeah. i'm sorry if this sounds like splitting hairs, supervisor, i think we agree that it would have been better to have them
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on board earlier, no doubt. maybe i'm reacting to the words. the contractor with the design team and the agencies to familiarize themselves with, you know, what they were getting into in this project. so more time would have been better and maybe a year wasn't enough time but, you know, it's not like they showed up and had a pile of drawings stuffed in their lap and had a few weeks to get ready. they had a year. that's why we had a partial disagreement. >> supervisor mandelman: and maybe you can also speak -- so finding nine led to additional cost for work that could have been predicted and included in the original contract. and your position is, well,
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maybe, but that's not really what -- that's not really the problem here. is that right? >> yeah. peter. >> yeah. sure. there were specifications that now that we're looking at them at least i would like to see tightened up some. for example, the potholing issue has come up and continues to come up. we used the standards that public works has used for decades. the interpretation that the walsh team had once we were in construction. no questions were raised during
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the year that walsh had the plans and we were gopping alongside of them. but once we were in construction, the questions that were raised by the contractor and they're completely different interpretation of what the specifications meant to what we thought they meant caused problems and the contract changes to keep the construction moving and to make sure everybody was appropriately compensated for the work they were doing. so apparently we needed to make them tighter. and the fact that we had those negotiations and challenges shows that we need to make these specifications tighter. i guess the challenge we're having with the under
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specification and technical requirements is that, as i said, some of these specifications have not changed in decades and other contractors that we've worked with in the city has had the same interpretation of the city staff and we didn't know. and suddenly we had a situation where apparently the city staff and the contractor had different interpretations of what the speck meant. >> supervisor mandelman: okay. thank you. so my last question is around finding f-13 and that is the one that states that a lack of an in the field point of contact between walsh and the city during the early stages of
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construction led to delays and increased costs in the project. there seems to be a factual disagreement between the m.t.a. and the grand jury about whether there was not an in the field point of contact between walsh and the city. is that right? >> yeah. this is a special agreement. i would agree with that, supervisor. we have a resident engineer who's on the street, on the project site every single day who's available to walsh and has been since the beginning of the project. i think walsh wasn't always -- no contractor is happy from every decision from the resident engineer, that's the nature of the construction, but just because they're not happy with the answer, doesn't mean we didn't have a contact available every time they were working. that's why we disagreed wholly.
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>> supervisor mandelman: and then i will ask the civil grand jury why they included the office. >> hi, supervisor mandelman. i'm happy to answer that question. yeah. you know, i think we found that it was insufficient to the point of and i think specifically during early phases of construction and, yes, there's a resident engineer on the project, but we found that, you know, later on in the project, there was someone who was hired specifically to do this kind of liaison between walsh and the city later on in the contract after disputes had arisen. and that's the person that we're talking about that really was dedicated to solving these problems on the ground that wasn't there from the beginning. and so that's what we're
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indicating in these findings is that person wasn't there from the beginning to creatively solve these problems rather than getting caught up in arguments of project specifications. >> supervisor mandelman: thank you. and just for the m.t.a., was there a fact a change in how that on-the-ground contact workeded between the early phases and later on? >> can i take this one, tom? >> go ahead. >> so the resident engineer's official point of contact on city projects and we've had the same on board. i also feel i need to point out that during the preconstruction phase, one of the things that the contractor and the city agreed to was co-location of offices because we wanted to make sure the location was done. it was not more than 100' from
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the contract offices during the entire length of this construction. this was a cmcg contract. a general manager contractor. as he got further into construction and the issues multiplied, we -- the city staff on the city side, we realized not just the staff that there was not a construction manager handling the issues on the contractor's side. they weren't doing what we thought of as the construction management portion of the contract. the three directors at the time public works, p.u.c., and sfmta agreed we would bring in an overall construction manager to do that work. but the reason they weren't on board from the beginning of the project was because as the cmgc states, it was expected that the contractor would be
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handling the construction management and the general contracting of the project and in the end, we needed to provide that construction manager to work through the negotiations. >> yeah. and to add to that, i think that, you know, there's obviously some real insight behind this finding and it's the day-to-day communication was not as good as it could have been and we saw that happening in real-time and that's why we brought in the person that peter's referring to to try to engage walsh at a more senior level and basically try to get a construction manager work administered more effectively. you can look at that as -- i mean, that was an adaptation that we felt we had to do. >> supervisor mandelman: but that's different from the inthe
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field point of contact. >> yes. >> supervisor mandelman: all right. colleagues, those are my questions. i'm not sure, do we need to take public comment again or i'm not sure if either of you have further questions? >> chairman: just on the findings, i wanted to ask finding 11, i was trying to understand from the response why that was a wholly disagree rather than a partially disagree. this is about the impact of the removal and synergy between walsh and the city. i was wondering if you can elaborate and explain why that's not partially. >> yeah. thank you, supervisor. i'll start and then peter can add details if we need to go further. you know, ultimately under the contract, the decision to remove a contractor belongs with walsh, so it was their decision to remove the
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contractor. what happened on the project was when synergy was removed, walsh had to go find a new contractor which we definitely recognize was a challenging position to be in. the bid came in for the replacement to synergy. the costs we were seeing were much higher than what synergy would have charged and this is an issue that was dealt with in a claim. we ended up not paying anything on the claim. as this project moved on so it was definitely a tough break for walsh and i'm personally sympathetic for the position they're in. but they understand they assumed that risk and that was -- yeah. i don't think it's fair to say
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that, you know, like our commercial relationship with walsh can be blamed on that because it was ultimately their decision to place synergy. >> chairman: okay. i guess i just didn't read it as a fault to the city on that. i read it as more of a comment that that contributed i think the words contributed to. but m.t.a.'s position is that regardless of the reason for that that didn't impact or create a deteriorating of the relationship, that that wasn't like a contributing factor to the relationship. is that why it's a wholly disagree? >> yeah. >> chairman: when i read that one, it seemed a little more
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like a common sense statement and then when i saw 'wholly disagree' i guess i'm trying to get at was this one of the factors regardless of who's responsibility this is. was this the fact to the deteriorating relationship or not. some are saying you're not. >> i think the finding has said the opening of the utility bid's coming in much higher than the negotiated price. we would have agreed with it. but everybody was on board with the work. and we still had a very cordial working relationship with walsh. it wasn't until we opened. and i just want to say there
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was a lot of work being bid out by them and if the utility work had come in at price or under and the landscaping came in three times the expected price. that would have led to the deterioration just as quickly. it wasn't the removal of synergy, it was the subcontracting bids coming in much higher than anticipated and blowing up the contractor project margin. >> chairman: thank you for that clarification. sometimes splitting the hairs gets us to the answer. and i appreciate that clarification. thanks so much. i don't have additional questions right now. i don't know, supervisor chan, if you do or if we should go to public comment on this item. seeing no one on the roster. mr. clerk, let's open these two
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items up for public comment. >> clerk: thank you, mr. chair. we're working with the department of technology who's checking to see if we have callers in the queue. for those watching the meeting on channel 26 or streaming via sfgov.org. dial (415) 655-0001. enter the meeting id 24907305333. press the pound symbol twice and press star followed by three to enter the queue to speak. for those connected to our meeting via phone, please press star followed by three. and for those already on hold in the queue, please continue to wait until you're prompted to begin. you will hear the prompt informing you that your line has been unmuted. mr. coolly, can you please connect this to our first
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caller. >> we have two callers. >> clerk: is there a caller on the line? >> caller: yes. hi. good morning. this is barry toronto. as a cab driver who works at night, i noticed that they stopped working all along van ness avenue and i thought maybe they'd be done by the end of november. based upon the fact that i don't see them hardly working at all at night that i'm wondering how much longer is this project gong to take. when they block streets off, the flaggers and the people directing traffic are making it confusing, it's still horribly managed. it's still terribly managed and i don't see any end in sight 0 the the completion of this
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project. just for an example of that, in district eight, look at castro street between 24th and 20th streets. it's a war zone. it's a complete war zone and i'm wondering why we have to destroy our tires and our suspensions over this. so it's similar with van ness avenue but it's taken months if not guilty years to deal with this. and i don't know, is the city saving money by not doing work at night. why don't they want to expedite the completion of this project which has probably destroyed many businesses along there and made it difficult for people that live along there to live decent lives at this point. so i think a lot more answers need to be -- questions need to be addressed and answers be required of the contractor.
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so i don't think you need to do a lot more inquiries rather than just accept the answers of staff. and the last thing, the m.t.a. board was not happy with the answers of the staff present today. >> clerk: speaker's time has concluded. thank you, barry toronto for sharing your comments with the committee. can we get the next caller, please. >> caller: so i've been attending the meetings from the inception and not while a few that i see on the screen participated in those deliberations. so fundamentally you know that van ness is a highway and ya'll didn't pay attention to how
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serious the damage would be not only to the buses and the cars but to the businesses. ya'll have destroyed hundreds of businesses. money was set aside to help the businesses and you didn't help them. and you're blaming walsh and blaming synergy. that's what ya'll do. at one time, you had muhammad nuru at one time, you had ed holland and ya'll two clowns who work for the m.t.a. and i know ya'll. i know ya'll directly and indirectly just making excuses. waste of money on this project.
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with the same old contractors, crooked contradictors matt walsh. if you follow walsh, you'll see how crooked he is. if you follow synergy, you'll know how crooked they are. [inaudible] what am i saying? we have inept, stupid people who cannot do a needs assessment. waste our taxpayers' money and then when the grand jury and others bring ya'll -- >> clerk: thank you for sharing your comments with the committee. can we get the next caller, please. >> caller: can you hear me okay? >> clerk: please begin. >> caller: great. david pillpell. sorry i was having some technical issues this morning. so i only joined the meeting a
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few minutes ago. i will catch up on that discussion later. meanwhile, the sunshine ordinance test ran from 4:00 until past midnight this morning and so we're all a little sdonged after that. i would refer back to my comments about van ness from this committee's meeting last week and to recap part of that, i am frankly a little less concerned about walsh and the specific experiences on and more concerned about what this means and the lessons learned from the project delivery method and project m.t.a., p.u.c., d.p.w. and how we coordinate on both simple and frankly on the more complicated inner agency coordination
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projects and also with caltrans. what we think we know what's above and below ground and what we clearly don't know what's below ground and so the questions of potholing and risk and all of the coordination stuff really, those are absolutely policy issues to be wrestled with. there's no simple answer. i would encourage you to continue to monitor this and perhaps have the capital planning committee to look at it since that's an inner agency body that already exists, has public meetings and this definitely impacts project delivery within the city's capital plan. those are my thoughts at this time, thanks for listening. >> clerk: thank you for sharing your comments. do we have any further callers in the queue? >> we have no further callers. >> chairman: thank you. with no further callers on the
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line, public comment on this two items is now closed. i did want to just follow up on i believe it was mr. toronto, one of our public commentors was asking about in his words that the project was still horribly managed, i think he said. i am curious to clarify what the scope of the grand jury report just temporarily here. you know, to what period does your report cover and to what extent if at all does it get into some of the issues he raised around more current management of the project or would that be the subject of a separate inquiry? do you want to clarify just the scope of the grand jury's
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report on this? >> yes. absolutely. our report covers through about the beginning of june when we submitted our report to the judge for publication. >> chairman: thank you. appreciate that. and, mr. mcgire, i don't know if you wanted to just comment at all around ongoing management plans. i don't want to get beyond the scope of the hearing and report, but i do feel like it was raised in some of the issues in the report, you know, through june may carry over or connect with the ongoing project manager. >> yes, supervisor. i think. i think in general, our take-away from this report not just things we know. one of the comments was about doing more potholing utility
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exploration. an example of us doing better is we've done some rail work over the last couple of years. we did more utility on that street than we did on van ness. even though the utility. it's a more residential area of van ness. and that's just an example. so, you know, i don't think any of us think the van ness project worked perfectly. there's a ton we need to work from it. we're trying to apply those lessons on a continuous use improved basis. >> chairman: thank you. and one of the other issues raised in public comment just around the m.t.a. board. can you clarify, are the m.t.a. responses presented to the board approved by the board 1234 has that happened? does that happen? what's the process there in terms of if the board weighs in and, if so, when? >> so these have gone through the m.t.a. board.
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peter, i don't remember what the date was, but the m.t.a. board has already weighed in on these. >> yeah. i think it was the second meeting of august. we had to have our responses approved by our board by the end of august. >> chairman: thanks. thank you for clarifying. supervisor mandelman. >> supervisor mandelman: thank you, chair preston, and thanks again to the staff who've helped us through this. and i'll thank the city attorney anne pierson and folks in the city attorney's office. and my office who has spent a lot of time laboring over this stuff and trying to understand it and, thanks again to the grand jury. what i would like to do is go through these on item two, the blanks in the resolution and try to fill in -- propose some
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of these fill-ins. i would propose that we amend that resolution, i think this is a motion that i'm making -- that we amend the resolution in the following ways. for finding one, state that the board of supervisors reports that they agree with the finding. for finding two, state that the board of supervisors agrees with the finding. for finding three, state that the board disagrees partially because the preparation of a risk register was a shared responsibility of city staff, the contractor, and an independent consultant and the risks were deemed moderate because the measures were deemed not carried out by the contractor as required. for finding four, state that the board disagrees partially because even with accurate documentation of existing underground facilities, private time lines still may not have been estimated correctly with field investigation. for finding five, report the
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board agrees with the finding. for finding six, report that the board agrees with the finding. for finding seven, report that the board agrees with the finding. for finding eight, report to the board partially -- disagrees partially. because the record reflects that the contract effectiveness was reduced by subsequent actions of the contractor. for finding nine, report that the board disagrees partially because the record reflects that under specification of technical requirements was not necessarily responsible for cost overrun and that the contractor's own settlement of claims and lack of technical requirements during preconstruction support this conclusion. for finding ten, report that the board disagrees partially because the record reflects that numerous other factors contributed to this
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deterioration in relationship between the city and contractor. for finding eleven which our chair asked about, report that the board disagrees partially because the record does not demonstrate that the cost estimates were necessarily poor, only that there was disagreement over the subcontractor's proposed price. for finding f-12, report 245 the board agrees with the finding. for finding 13, report that the board disagrees wholly with the finding. and for finding 14, report that the board agrees with the finding. that's the findings proposed. responses on recommendations. recommendations r-1, report that the recommendation has been implemented. recommendation r-2, that the recommendation requires further analysis and hereby directs the budget and legislative analyst issue a report by march 31,
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2022. for major capital projects. for recommendation r-3, that the recommendation requires further analysis and he or she urges the san francisco public utilities commission to review its policies regarding as billed documentation and the feasibility of establishing a digital document repository and to deliver its findings to the board of supervisors by march 2022. four, the recommendation requires further analysis by the transportation agency to analyze options for adopting a policy for setting forth the best practices or industry practices and to limit the findings. for recommendation r-5, that the recommendation requires further analysis. to analyze options best
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projects and deliver it's findings to the board of supervisors by march 2022 and urges the sfmta to analyze options for adopting policy to be awarded no later than at the 30% stage. laying out options and key considerations for an ordinance to amend the administrative code. to remove the mandatory criteria and awarding cmgc contracts. for recommendation r-8, that the recommendation has not been ed but willing implemented and hereby urges the sfmta to comment on preconstruction
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deliverable. for recommendation r-9, that the recommendation has been implemented. for redemption r-10, hereby the sfmta hereby develops a policy and to deliver its findings to the board of supervisors by march 31, 2022. and recommendation r-11, that the redemption has been implemented. a mouthful. we will be -- but i hope that came across and i want to thank, again, members of the grand jury for their diligence and good work and level of detail. they were able to go into. i've learned a lot from this. i think the whole department and agency has. i do think actually the
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experience -- i mean, i don't think staff brought up better market but i think the experience on van ness has impacted how the city thinks and how we are not going forward with plowing up the stretch of market street until we have a better sense of how we're going to deal with what lies beneath. so, again, thanks everybody and that's my motion. >> chairman: thank you, supervisor mandelman, for your thorough work on this. and let's go ahead, mr. clerk. if there's further discussion or comments on those amendments. there appears not to be. let's go ahead and call the roll on the motion to amend by
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supervisor mandelman. >> clerk: on the motion to amend as offered by supervisor mandelman, [roll call] mr. chair, there is no opposition of amendment to agenda item number two. >> chairman: thank you, mr. clerk. so the motion to amend passes and let's go ahead and call the roll on the motion to send the resolution as amended with positive recommendation to the board of supervisors. >> clerk: just for my clarity, who is the mover? >> chairman: i will move those. >> clerk: okay. on the motion offered by chair preston that the resolution be recommended to the board of supervisors as amended, [roll call] mr. chair, there's no
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opposition. >> chairman: thank you, mr. clerk. so the motion passes. thank you all. and on our hearing item number one, i believe given that there are a number of open items and calls for further action as stated by supervisor mandelman that we should go ahead and i'd like to move to continue the hearing to the call of the chair. mr. clerk, please call the roll. >> clerk: on the motion that the chair motioned that the hearing be continued to the call of the chair, [roll call]
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preston, and good morning supervisors. so the two resolutions before you are related to amendments to the city's
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existing infrastructure and financing district or i.s. d., to keep it short, for treasure island. these are the first steps under state i.f.d. law. the resolution of intention, stating our intent to make these amendments and outlining the proposed changes, as well as calling the public hearing. and the second resolution directs our office to submit the amended plan, which we will return to the board for quick approval. a reminder of what i.r.f.d.s are and how they work, we're pledging incremental property taxes related to the increased and assessed value resulting from new development, which we call tax increments. and it is used to finance specific infrastructure and affordable housing costs that are related to this development in this i.f.d.. it funds project costs up
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front or can be used for (indiscernable). the pledged property taxes are from the 1% property revenues from city (indiscernable) and schools are explicitly excluded. no tax increment revenue until growth occurs. assessed values generally tend to lag actual development activity, and it works particularly well, when you're doing redevelopment in an area that had no development, which in the case of treasure island, is the case of is there significant growth potential, and they have currently limited land ownership. so this is the map of the treasure island i.r.f.d., and there are five project areas, which are sub areas in the i.r.f.d., and these have all already been
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formed in 2017, and they're geographicp specific, and develop specific parcels. the milestones for treasure island, and the c.f.d., which we confirmed concurrently, the development agreement was executed between the developer and the city, as well as tita, and so the first building permits for vertical development were pulled in urbabena avenue, and in 2019, it was collected (indiscernable).
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>> in octubre of 2020, and july of 2021, we did bond issuances in that area. and this september, we introduced legislation to amendment the i.r.f.d., and in october and november of this year, we plan on bringing our third bond issuance to the board for approval. and then in january and february of 2022, i suppose we'll be holding a public hearing on the amendments to this i.f.p. and we'll have a special land-owner election and other board-related actioned, with the in tent of having our first bond sale for the i.r.f.d. in spring of 2022. and overview of the treasure island r.f.d.,
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the city has pledged a portion of the 1% property taxes on properties with the i.r.f.d.s specifically in the project areas, as shown. an 82.5% will reimburse the developer for eligible public infrastructure costs, and 17.5% will provide funding for affordable housing, and it will also pay for administrative costs of the i.r.f.d. the necessity for the i.f.p.for the treasure island i.f.p. was by the controller's office. they are largely administrative in nature, to allow the controller's office to administer the i.r.f.d. in accordance with the i.r.f.d. laws, and the long-term 40 years plus administration that will be going on for this district. the first one is changes in project area boundaries. at the time of the
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original formation in 2017, the development parcels for certain project areas looked as they do in the first map. the -- as a result of mapping changes that have occurred in the past four years, certain parcels have grown, and other parcels have shrunk, and they no longer match the original boundaries. the lines don't line up entirely, and the green parcels are going into the pink parcels, and pink parcels are going into the green parcels. because the project area boundaries are no longer matching the new actual assessor's parcels, we have a challenge in collection of the tax increment in the i.r.f. d. we were looking to have it assigned by the board of equalization, because the
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properties much match actual assessor's parcels. and the legislative approvals and the legal documents that outline the boundaries have to match the parcels as well. that is sort of what required this first amendment process. and so we're also adding certain parcels to project area "e," which is purple, because of the same mapping issue we're talking about. parcels c.q.h. has tentative maps that were not introduced to the board yet, but will come to the board, and it will ultimately change the shape of that parcel, but it will keep that ache cage. the street will be pulling into the top of the parcel, and the parcel will be shifting down to the left and to the right. and so in preparation for that, the concern is that you can't annex property into the i.r.f.d. without
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doing an amendment process. so we're trying to be pro-active in doing this ahead of time so we don't have to come back again. and all of the parcels that are being added here are all tita-owned parcels, and they are all going to be used for parks and open space. the parcel c.q.h. is going to still be a tita-owned parcel with an interest for a hotel development .in order to fully collect the increment, we're sort of expanding that, so that were the new parcels is record, they will be within the purple boundaries. due to i.r.f.d. law, any amendments not specifically laid out in the i.f.p., must undergo
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the full amendment process, including the legislative process, along wit special election. it allows the city to make amendments to the i.f.d., strictly to ensure that project area boundaries match the actual legal assessor parcels, which only a single approval is required by the board for these amendments, which would still satisfy the state board of equalization's requirements. it would allow only to adjust existing project area boundaries for tentative or final map. the third amendment is to correct the i.f.p., which laid out the is distribution of the 1% tax rate. at the time of the execution of the development in 2011, the city did not break out the county office of education's portion of the 1% from the city's portion. as such, it was included in the amount to pledge
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the i.r.f.d., and this is not allowed under state i.r.f.d. law, which prohibits the 1% property taxes from being pledged. this revised table shows the new amount with the county of education portion broken out and excluded. and we're also extending the percentages out per state law. the final amendment will allow the city to eliminate the special election requirements of the i.r.f.d., only if state i.r.f.d. law is changed. this is specifically in reference to the state's recent decisions to amendment the enhanced infrastructure financing district, or e.i.f.d. law, for taxing industries opting in to pledge. the reason is there is not a new tax being levied. it is just the apportionment of the 1%. and the city would still be doing all of the financial impact analysis required to annex new
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properties into the r.f.d., but would extend the timeline, which we are currently undergoing. as you can see, this is the process. we're up here, and we'll finally be through the full process in february. so you can see there is a lot of introductions. there are a lot of steps along the way. this is really as a result of the way that the state i.r.f.d. law is currently laid out. and so the idea would be that if i.r.f.d. law was amended to look like an e.i.f.d. law, then a lot of the intermittent steps would be cut out. we are doing a land-owner election at this point in time because there are only land owners. but once there are 12 registered voters within
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the district, it changes to registered voters' elections, which have extended periods of noticing, and days between calling the election and when the ballot actually can go out. and it becomes significantly more expensive to do the special elections. and so as far as our schedule here, you can see that these two resolutions are sort of -- they'll go to the board if approved by the committee. next week the first resolution will go, and then the state law requires that the second resolution cannot be adopted until after the first one. so then that one will go, and then we will start mailing out the resolution of intention to all of the land owners. and that will have the public hearing data there, and we'll also sort of begin doing notices for that public hearing. the next step there would be the office of finance, once directed to prepare the i.f.d. amendment, will
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prepare it, and then we'll introduce it to the board for approval, along with the other resolutions related to the public hearing and the election. and then we do have just two amendments to the resolution of intention. and it is specifically to add the place and time for the public hearing, which will be the committee sitting as a whole at the january 11, 2022, board meeting at 3:00 p.m. and with that, if there are any questions, myself and jamie from the treasure island development authority are here to answer them. >> chair: thank you, mr. pearl. we have some feedback here. is everyone else hearing an echo? >> clerk: mr. chair, we're going to mute
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mr. brewer's mic. >> chair: wonderful. thank you, mr. clerk. and i see supervisor chan. >> thank you, chair preston, and this is actually for my lay person, education here, you know, knowing that this, first, is a significant project and that it will come back to the board a few more times for approval. i want to be sure to lay a foundation of understanding about what we're about to do. so i think there is part, really, a validation of how to try to paraphrase of what you just presented and what i have read, and try to get you to validate my understanding, whether that is an equate accurateunderstanding or not. it seems that the changes to the boundary, why we
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want to do that right at the get-go, from here, at this moment, is so that you don't have to come back for approval again for -- in the event that you need to make any changes to the project boundaries. but not specifically about what to do with the areas within the boundaries. is that a correct understanding? >> so the approval here, it would be just for the change of project area boundaries to match their actual parcels now. the second amendment, which gives us the ability to do future amendments to adjust lines in the future, that would still require board approval, and we would still have to come back with that. what it would eliminate is the full, extensive election process.
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>> right. and i think that would be -- so i'm glad that it will be come back to the board for approval. could you walk me through, really quick, what does the board approval look like and, just, you know, that you will introduce amendments to the project boundaries, or project development, and then it would come to land use. as typical, we'll have a 30-day hold. kind of walk me through a little bit of how extensive does board approval process look like? when it comes to land use, there are so many different kinds of rules. some are 90 days hold. kind of help me understand. >> yeah. so this won't be going back to land use as there is not any changes to land use, per se. what we're laying out here is the sort of existing
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infrastructure plan of the i.r.f.d., and what we'll be submitting. the changes will not be substantive in nature, and they'll strictly be administrative in nature. we have already determined there is not a fiscal impact, and we won't have to go through any of that original analysis that was done in 2017. all of those sort of approvals happened back in that period of time, as well as sort of when the project was going through entitlement process. so what we're doing here is really just the financing mechanism enabling the controller's office to administer the district correctly. >> okay. so what you're explaining to me is it is actually more as a resolution to just kind of introduce and strictly go to the board for approval without a committee hearing? >> the full amended
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infrastructure financing plan is actually an ordinance, so that will be, it will be approving that amended i.f.p., and that will still go to committee for a hearing. >> great. and because without a special election to require to approve amendments to a project area, be it larger or smaller -- well, not so much a larger or smaller area, because you're determining this is it -- i guess you could make it smaller, if you choose -- is that correct? >> the goal would really just be if a project area -- if project area "b" and project area "c" together are two acres, but they started as one
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acre and one acre, but now one is 1.1 acres and one is .9 , that still requires that we amend that project area boundary and go through a legislature approval for us to be able to approve the boundaries and collect the tax correctly. >> while i absolutely agree that it sounds very cumbersome at times, right -- tt coming, my personal short coming of not really having a visual or better understanding of actual the land -- you know, who is there and what is there now and how it exists now. so that is my bad, in not knowing it.
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so i'm only projected or really speaking out of a lay person's assumptions. while it is true that it sounds like a very cumbersome process for a very minor change, also to understand that if there are people there and there is the land there, that minor change could be significant for the people who are currently living there or being there or working there. i guess i am trying to have a better understanding before we sort of kind of -- i'm not going to give away the authority, but i think it is more or less to say we are doing away with a troublesome process. and sometimes i also am on the side of appreciating a process that really while may be cumbersome to some, it interjects some checks and balances in the reviewing. so that's really where i am coming from.
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if you can help me understand better -- >> yeah. i think what we're talking about right now is not project areas where anyone lives. it is all development parcels for treasure island. they're all currently owned by the developer or by tita, to be transferred to the developer, and so they all have specific entitlements that are associated with all of them. i think maybe jamie from tita can speak to the mapping process. so what we're talking about here is changes in the shapes of the boundaries that are a result of a tentative or final map going through the board process as well. and so we would only be changing our lines if the actual parcel lines are changing, and that would only happen because of a board process. >> that's correct. thank you for your
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question, supervisor chan. i think to kind of piggyback off of what luke was just mentioning, the project areas "a" through "e," that you saw on prior maps in earlier slides are currently being developed, so there are no current residents on these parcels. and really what we're attempting to do with this sort of administrative amendment is to ensure that the final development parcels are aligned with the final assessor parcels so we can correctly collect and attribute tax increment as this development occurs. it is anticipation of issuing bonds later neck next year. so we want to make sure from the city readiness standpoint, we're setting the right foundation ahead of collecting that tax increment. so a lot of the shifts that we've learned in the
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past couple of years is from 2016, actually, to today, as a developer is going through the subdivision mapping process, tentative mapping process, and ultimately the final maps, sometimes the geographic regions of these parcels change. and because the district was formed looking at a 2016 snapshot of the island's parcels' makeup, versus today, we just want to make sure we can align those correctly, again, for the correct tracking of tax increment for these projects. one thing i wanted to know in terms of future approval and future additions to the i.r.f.d. district, this is not going to be the full district. this is sort of the district as it exists today. and as future development parcels are transferred and finalized, we will be annexing additional property into this
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district as the development phases occur. so there is a separate annexation process that is also approved by the board. so this is sort of the correction at a point in time, but the process for annexation of expanding this district as we, you know, expand the phases of the development will continue to undergo the annexation proceedings that this board will see at a future date. >> which requires a land owners' special election. >> so we're not changing the process looking ahead. we're sort of just trying to, in some ways, fix the boundaries that existed today. this is in an tentative map phase, but we anticipate it being final some time next year. >> ok. help me understand with this amendment of this property for boundary, by expanding it, again, i'm just looking at it, but
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obviously there is a big purple there, a rectangle, and knowing that in mr. brewer's presentation earlier has talked about the majority of it -- this parcel here seems to be really anticipating parks and open space, and possibly a hotel adjacent to it or in that area, and so by us amending these boundaries, and in this case expanding it, are we saying -- and this is also for the purpose of collecting tax. so are we also saying -- are we saying that that means that while there could be parks and open space within this boundary, we will now allow possible developments? we don't know how big the portion of developments, but does that mean we're allowing developments in this area now? >> no, no, we're not.
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so really the reason why that purple project area "e" grew from a smaller two-parcel boundary to this larger boundary, including open space, is really the anticipation of that c2h parcel moving in either direction. it is going to move south because of the expansion of avenue of the palms. but as part of the i.r.f.d., you cannot shift parcels outside the boundary of a district. so what we're trying to do here is sort of cast a wider net in some ways, including publicly-owned tita parcels that will still continue to be planned as open space, but as a way of sort of casting a wider geographic boundary to anticipate that shift because we don't know exactly what the legal boundary will be. and so that it is really
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in anticipation of that shift, but it will not change the future public parks use and plan for that parcel. and because it is a public parcel, the city won't be taxing itself for tax increments, so there is no sort of economic impact as well. >> and in order for any development to occur on those parcels, jamie, correct me, they would have to go back to land use? >> absolutely. bob, who is the director of tita -- he is also on this call -- but that would require a change to the use of that parcel going forward. >> thank you. and so -- chair peskin, this will be my last question, but thank you for allowing me to ask these questions and taking the time. my last question is: i'm trying to have a better understanding, and this is -- yd about it and touched on it
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on the item 4on this slide right here, about the lem elimination of the election requirement. i'm going to reference the controller's report, which is item 4, that specifically this change will protect bond owners that, you know -- could you please help me understand who are the bond owners in this case? >> so there are currently no bond owners. we haven't sold any bonds publicly yet. and so that will eventually be in some level of institutional and retail kind of investors. and because this is a 40-year district, the challenge becomes if you run into problems in year
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20, there is a level of risk that currently investors they undertake the risk. they know that risks like this are of a political nature, and in order to correct anything once the project is fully developed, and there are people living on the island, if there was any sort of security or revenue kind of collection concern, you won't be able to do any of the amendments -- the future residents of treasure island would hopefully be supportive of something like that. but if it is administrative in nature, and these are taxes that have been pledged by the city, and they're not
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additional taxes, and they're not special taxes, that would just mean that if the state did change i. r.f.d. law, they would not have to that. that would be dependent if the state changes the laws. and we reference that because they have changed other i.f.r.d. laws to be able to be used more broadly. >> i see. would it be fair to say with this -- what we're trying to do today is sort of lay the ground work to make sure that as we move forward, that we are hoping we find ways that streamlining the process
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that is aligned with the board of supervisors or legislative process, with some of the ways with how we would move forward with, like, our bonds or our development -- would you say that is kind of optimally the goal here? >> yes. i would say that is exactly the goal. the goal is to make sure we're doing things in accordance with state law, we're doing things in accordance with board procedure, and that we're doing things that ultimately both protect the city and the future bondholders, while also helping the project to continue move at its current pace, which i think is what everyone would love to see, 8,000 residential units. >> yes, i agree. and 290 acres of parks and open space. and thank you. i want to say that, believe it or not, i just needed really you to walk me through that. i really appreciate chair
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preston en dull jing me indulgis time. and thank you very much for answering my questions and walking me through. it seems to me today what we're approving is an initial step to lay the ground work for this to move forward and to say, you know, what we're doing is to try to align the board of supervisors and the legislative branch of government in san francisco, in the city and county of san francisco, as much as we can with the rather complex system which the state put forward for us. thank you. i appreciate your time. >> chair: thank you, supervisor chan. i have just a couple of quick clarifications or questions, i guess. i'm wondering, mr. brewer, in your presentation, you referenced on the expenditure of funds side, the break down is 2.5% for
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structure, and 17.5% for affordable housing. is that a state-mandated figure? or is that something that -- how is that arrived at? >> thank you. thank you, chair preston. i will defer that to jamie or bob. >> this is jamie curbin, finance manager with tita. the 82.5 and the 17.5% split is not a state mandate requirement for i.r.f.d.s. it was a negotiated position as part of the development, between tita, the city, and the matter developer, t.i.c.d.
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[inaudible] this district is the only financial district that has affordable housing eligibility and funding component to it. as it says here, 17.5% of the i.r.f.d. proceeds over i think it is a 70-year term will be allocated to fund affordable housing on the island at up to 27 -- or at 27.2% of the 8,000 units. this is one of three affordable housing funding sources. the other two being a developer housing subsidy that the master developer pays as market-rate units are built. and the third is being the direct funding of inclusionary units on the island. >> chair: thank you. i appreciate the clarification and the other sources as well. i wanted to make sure i
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understand that we're not -- by this resolution, we're not setting or tinkering with or -- these figures are provided by way of background information as to what these more technical amendments -- the funds they will facilitate, how those are allocated through decisions that have already been made or approved -- >> that's correct. >> chair: is that right? >> thanks correct. >> chair: thank you for that clarification. and then how -- just the timeline over all here, i'm curious how this lines up with the most optimistic case of when residents are moving into the project area? when is the soonest that folks would be moving in, and how does that line up with what you have on the screen here? >> i can take that on, unless bob, you want to
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provide the overall picture of residents? >> well --, yes, bob beck, treasure island director with treasure island development authority. the first new building -- residential building on the island is scheduled to be completed near the end of this year with new residents moving in in january and february. that doesn't fall within this i.r.f.d. project area. the first building within this project area that is already under construction is a 100% affordable building, which is the apartments being constructed by schwartz shares and chinatown community development corporation. that building is slated to be scheduled completed the middle of next year and fully occupied by the end of next year, but there
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are an additional roughly thousand units of private development that are in the building permit process that are within the parcels being considered today that are expected to be completed by the end of 2024. >> chair: thank you. and so right now, when we're talking about the land-owner elections, we are talking about the developers at this time? how many -- when i see elections, and i see something that limits elections, i guess worried, even though i hear you that some of this is just technical amendments in compliance that changes the state law. but who are we talking about here? right now, how many land owners are there in the project area who would be voting on any of these changes? >> i'll take that one. thank you, chair preston.
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we currently -- while there are no owners that will be moving into the island, the amendment that we're doing here is for the entire i.f.p., not just the project areas on the island. on yorba buena avenue, there is the condominium, which is slated to have move-in at the beginning of the year. right now there is only the developers as land owner. so there is the partnership, which is wilson, meany, lennar, and they always have sold two of the parcels to poly global u.s.a. on treasure island itself. so there are really three owners that are currently there, with two of them being part of the master development group. and they both -- the share
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of their vote is based on the sale. >> chair: okay. thank you for clarifying. mr. clerk, let's go to public comment on these items. >> clerk: thank you, mr. chair. we're working with technology to bring any public callers who want to provide their public comment on these two items called together. for those watching our meeting on channel 26 or through sfgovtv.org, please follow the instructions on your screens, and that would be dialing 415-655-0001 and entering the i.d. 24907305333, press the pound symbol twice and then star followed by three. for those who have all already
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connected, please press star 3. you will hear a prompt that informs you that your line has been unmuted. mr. chair, i understand we have one listener, and that listener has their hand up to provide public comment. mr. cooly, could you please connect us to that caller. >> caller: so, supervisors, may i inform you there is a consulting group called goodwin consulting group that has done a needs assessment on treasure island. and this document is dated september 18, 2020. it gives you a lot of information. so i do not trust anybody who works for tita. and robert beck knows me pretty well. in 1999, when i worked for the presidio, with chuck swanson, we did a very
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good survey of treasure island. it is very contaminated. so all of this bullshit about parcels and getting money off of it should be investigated. in my opinion, these folks you're going to place on treasure island, which is a manmade island -- you're going to place people, mostly poor people, take advantage of them while creating all of this infrastructure revitalization to revitalize the financing district and so on and so forth, which i know a lot about. so this document done by goodwin consulting group gives you a very simple but very precise model of how these crooks are going about their business.
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tita is corrupt. in everything that it does, including its commission. it does not allow l.b.e.s to get contracts on tita. it prefers to pick contractors from outside. so i don't know why -- >> clerk: your time is concluded. thank you, mr. decosta for sharing your comments with the committee. mr. cooly, do we have any further callers in the queue? >> we have no more callers. >> chair: thank you. with no more callers in the queue, public comment on these items is now closed. i did want to ask if there is any support or opposition from residents on treasure island or
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yorba buena? i have not heard, but i'm curious if anyone has registered for opposition with any of our presenters. >> i'm not aware of any opposition. again, this is director beck with treasure island development. >> chair: thank you. so, colleagues, if there are no further comments or questions on these items, can we have a motion to make the amendments that were referenced in the first presentation? >> so moved. >> chair: moved by supervisor mandelman. mr. clerk, please call the roll. >> clerk: in this is a motion to amendment the resolution to schedule the committee of the whole hearing date for
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january 11, 2022, to begin at 3:00 p.m., and to direct the clerk of the board of supervisors to prepare the appropriate noticing for that. that motion offered by member mandelman, on that motion: [roll call taken] >> clerk: mr. chair, there are three ayes. >> chair: the motion passes. can we have a motion to send item three with positive recommendation to the full board? >> clerk: on the motion offered by member mandelman, the agenda item 3 be recommended to the board of supervisors: [roll call taken] >> clerk: mr. chair, there are three ayes once
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again. >> chair: thank you. the motion passes. is there a motion, supervisor mandelman, for item 4? >> as amended as well, i believe? >> >> clerk: number four has not been amended. >> chair: to send item 4 with recommendation to the board? >> clerk: on the motion offered by member mandelman, agenda item number 4 be recommended to the board of supervisors and to be considered on october 19th: [roll call taken] >> clerk: mr. chair, there are three ayes. >> chair: thank you. the motion passes. thank you all for your presentations and work on this. mr. clerk, please call item 5on our agenda. >> clerk: item 5 is a resolution authorizing the director of property to sell up to $1,200,000
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gross feet of transferable rights from city hall. at our above fair market value. to execute and record certificates of transfer and to action such actions that may be necessary to affectuate one of more actions of the transferable development acts. members of the public who wish to provide public comment, call the public comment line, 415-655-0001. today's meeting i.d. is 24907305333. press the pound symbol twice to connect to the meeting, and then press star followed by three. and await your opportunity to provide public comment once pliblght public once public comment is open. >> chair: thank you. and we're joined by jerrico pennick. >> thank you, schair chair
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preston. good morning. i'm enrico pennick. i'm seeking your positive recommendation authorizing me to sell up to two million square feet from city hall. i will now share a brief presentation with you, if i may. transfer development rights are basically a mechanism where an historic building that has unused development potential can transfer to another building that has need of that development right in order to satisfy an f.a.r. requirement. the sale of t.d.r. does not entitle a project. it does not waive a height
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limit or other requirements, other than being able to allow a small, narrow project that might run into an f.a.r. limit before they reach their allowable height limit, to avoid that conflict. the owner of an historic building can't usually take advantage of the development rights they have because the building's exterior can't be changed. however, the rights from historically-significant building can be transferred to another developer in order to reach the allowable height, irregardless of the gross f.a.r.. the city hall's t.d.r. program is we'll be taking t.d.r. from city hall, and city hall has rentable
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square feet and a mezzanine and attic. it has 1.3million square units of t.d. r. i'm asking to issue and sell 1.2 units of t.d.r. we will be keeping the other units should we want to do some rooftop or exterior works, this t.d.r.would allow for those projects. the city hall t.d.r. program is building on the secretary of the war memorial t.d.r. program. in january 2014, the board of supervisors authorized the director of real estate to sell 1.1
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millions of t.d.rthe thirs .the second trons was sold between july 2019 and may 2021. the war memorial t.d.r. t.d.r. program had proceeds of approximately $32 million. at the request of one or more of the supervisors, we are doing something different from what we did at war memorial as it relates to pricing. the pricing for the city hall t.d.r. will be on a gross square foot or dynamic pricing. i'm sorry, is my screen advancing, supervisors?
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>> chair: now it is. before it was not. >> my apologies. the pricing schedule, as i was saying before, the base price for the city hall t.d.r.s will be $37.50 per unit. during the initial period, which is september 1. 2021, through december 31st, 2022, the t.d.r. units sold up to just shy of 200,000 units and will be at this base price. the dynamic pricing recognizes three types of market: a slow market, a normal market, and a hot market. and those are measured by the amount of t.d.r. sowed t.d.r. soldin any given year. there will be no annual adjustment if we sell less than 50,000 units in any
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one year. there will be an increase of $2.50 if we sell t.d.r.s between $50,000 and just under $200,000. sorry, supervisions, i'm having some technical difficulty in advancing the slides. >> director pennick, right now i'm on slide six. if you can just give me cues, and i can go through it for you. >> thank you. if we're in a hot market, which is measured by selling more than 100,000 units of t.d.r. in any one year, there would be an immediate adjustment of 15%, recognizing we're in a hot market and trying to take advantage of that by price escalation. if we do have a premium price escalation, the annual price increase will be delayed by one year but
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will not compound. so what that means, for example, if we experience a hot market in 2022, and we increase the price by 15%, the normal price increase of $2.50 will not happen. that price increase will be delayed until 2024, and it will be $2.50, as opposed to $5. i.e., it wouldn't compound. but if we were to have another hot market in the following year, there would be another 15% price increase. hopefully that makes a little bit of sense. in determining what the price should be, t.d.r.s are considered sold when we have a fully executed purchase and sale agreement, even if the parties haven't yet closed escrow. next slide, please.
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the benefits of this price scheduling over what we were doing for war memorial are, one, at war memorial, we increased the price on a set calendar schedule. so all those price increases regularly, but it did not react to market demand. it didn't recognize a slow market, nor did it recognize a hot market. in this way, we can take advantage of hot markets and potentially increase our gross proceeds. also have a set schedule, even though it is dynamic, incentivizes buyers to look in early to avoid scheduled price increases. it guaranties their availability of t.d.r. and it demonstrates that t.d.r. is selling at market price. we anticipate gross
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proceeds to be in the $41 million to $50 million range. that compares to the proceeds of war memorial, which is at $30 million. we use standard proceeds in our sales, they are required to put down 1% deposit at the time of contracting, and the price is guaranteed for six months. when a developer needs t.d.r., they're putting in an entitlement application to planning. they may put in alternative entitlement requests, but they don't know with specificity exactly how much t.d.r. they need when they submit their application. they would only know that once their application entitlements are approved. but they do have a range. so we allow for them to set both a minimum and maximum so they're not caught short or
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oversubscribed t.d. r. . we do allow for refunds, but only upon t.d.r. default. we propose using the t.d.r. proceeds for the following projects: we have a roof access and dome leak repair, phase 2, approximately $3 million. the signature project is the dome revitalization project, which is $20 million, approximately. we have some exterior stone and grout work that needs to be done, approximately $7 million, and the balance of the proceeds will go to qualifying interior
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preservation projects, zinc, wood, grass, historic feature inside the building. this concludes my presentation. i am available to answer any questions that you may have. and i want to thank the b.l.a. for their work. >> chair: speaking of the b.l.a., i believe we have b.l.a. to present on this item. >> thank you. good morning, supervisions. this resolution would authorize the director of property to sell up to $1.2 million of gross square feet and transferable development rights from city hall to certain other planning zones as specified in the planning zone. it is approved by the zoning administrator. the resolution allows for sales starting at $37.50 per square foot, which at
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that price would generate $45 million. the use of funds under the resolution is restricted to city hall rehabilitation project, on mage four of our report. and the request is consistent we prior actions approved by the border. we therefore recommend approval. i'm happy to answer any questions. >> chair: thank you, mr. minard. and i -- i will confess, i'm still wrapping my brain about this fascinating thing. i want to thank the director for taking the time and educating about what this is and what this is not. when i first saw it, i think i thought it was a much bigger potential threat to zoning rules, height rules, and other things around the city. i understand it is far more limited than that.
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i just want to kind of clarify that. so while we're in public here. my understanding is the developer that purchases the t.d.r. does not get any additional right to exceed existing height or zoning restrictions that might be -- my understanding from our conversations, it is actually -- it is in the areas usually -- probably on small parcels, where they actually can't build up to the height limit because of the f.a.r. issue. i was hoping you could just elaborate on that. am i getting that right? and maybe explain to the public what the developer can and cannot do with the t.d.r. once purchased? >> thank you, chair preston. that is an excellent question, and i'd be happy to do so. i would ask the clerk if
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they could bring up the presentation in terms of slide two. the illustration there i think will help illustrate the point you were making earlier. [please stand by]
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grey line, but if they were allowed to go to the existing height limit, they would get some additional floors. what transfer development rights does, it basically, one property owner, in this case, the city, sells its development potential to the developer so that they can then ignore the bulk limit and reach the existing height limit. the sale of t.d.r. does not entitle the property, it does not waive the existing height
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limit. affordable housing requirements, in-lieu payments, anything that is required of the project by law, or by discretionary approval of the board would still exist. the only exception is those developers that have a narrow parcel where we're going to reach the f.a.r. limit before they reach the height limit. if you think of the city as just one big giant development potential, what this does, it doesn't change the amount of planning that they've authorized for the city, it just shifted it, because that is not spread evenly throughout the city. some areas have more development, some have less. by being able to sell development rights from one area to the other, you keep the overall development the same, you're just shifting which slide it's located on.
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>> thank you. and what are the mechanics -- just still on the developer's use of t.d.r. -- when do they purchase and how does that relate to the approval or non-approval of a project? is this something the develop arer goes on the market, purchases it, and put it's on their application and then if for whatever reason it's rejected or they don't get the height limit, they resell it? or does the actual purchase of the t.d.r. occur once the project is approved? >> the purchase of t.d.r. can be done at any point during the entitlement process. normally, a developer would not seek to purchase t.d.r. until
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they're well along the entitlement process, but not at the end, because they can't get their height limit until they can demonstrate to planning that they have t.d.r. that would allow them to reach the height that they would like. so, the -- the t.d.r. is basically administered by the zoning administrator. they literally keep a register who has eligible t.d.r., how much of that is sold and to whom. and so a developer halfway through the development process will say, well, i know what my entitlements are, but i haven't been able to check the box on the height limit. i'm going to go to the city or other sellers of t.d.r., buy the necessary t.d.r., shows that contract and certificates to the zoning administrator and zoning administrator will then allowme to get to the legal height limit now that i don't have the
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constraint of the bulk limit. the real mechanism is the planning and zoning administrator, where no project would be approved until the developer could show they had certificates of t.d.r. in hand that allows them to do that. >> thank you. on your graphic there, assuming -- and this, director, i don't know if this is more of a question for the planning department than you, but is it your understanding that the inclusionary requirement in your example there, if the developer were to buy sufficient t.d.r. to go up to that top line, the city inclusionary requirements would apply to the full project including all the units that they gained by using the purchase t.d.r.? >> that's correct. so, if we had a project -- if
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you just visualize the illustration again -- if they reach their f.a.r. limit and that limits them to "x" number of units, their inclusionary would be based on x. if they got t.d.r. and were able to go to the legal height limit, that inclusionary would be based upon the units that are in the project. >> thank you. colleagues, any -- >> assuming it's a housing project, of course. >> thank you. colleagues, any additional questions for budget legislative analyst or for director pennic. seeing none, let's go ahead and open up public comment. >> thank you, mr. chair. we're checking to see if there are callers in the queue. those watching, if you wish to
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speak on this item, call in by following the instructions displaying on your screen. dial 1-415-655-0001. enter the i.d. of 2490 730 5333 # #. and then press star followed by 3 to enter the queue to speak. and for those who may already be on hold in the queue, please continue to wait until your prompted to begin. you'll hear a prompt that your line has been unmuted. i'm receiving word from mr. coolly that we have no callers in the queue. >> thank you. so public comment on this item is now closed. i did have one additional question, director, you touched on this, but how do we establish the fair market value of p.d.r.? i appreciate the attempt to build in some flexibility, but
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i'm wondering if you could explain how we arrived at these projections. >> i would be happy to. we do it by appraisal. there is actually a market for t.d.r. the city is not the only seller in that market, so we are a dominant player because of the amount of p.d.r. that we have on offer. the t.d.r. for city hall was appraised by an m.i.a. appraiser. the appraised market value was $32.50. you will note that we are proposing to sell city hall t.d.r. starting at $37.50. that's because after that appraisal was done, we sold additional war memorial t.d.r. at $35. so keeping to the war memorial price schedule, the next price increase would have been the
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$37.50, which we believe even with covid is still the market. what would happen if we find that we reach price resistance? which basically means that we're selling t.d.r. for $37.50, but no one is buying it. or if we see developers buying t.d.r. from other sellers, we would either, one, wait for the market to catch up to our price point, or two, i would come back to the board and ask for permission to reduce the price to where we believe the market currently is. >> thank you. and you referenced a couple of times other sources of t.d.r. i wanted to flesh that out. what are the other types of sources of t.d.r.? >> t. -- in order to be a seller of t.d.r., one, you have to own a building. two, it has to be historic. and three, it has to be in a c-3
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or p zone. so think of historic churches, other historic buildings within our city. those are all potential sellers of t.d.r. however, the -- being a seller of t.d.r. comes with some constraints. one, once you enter the t.d.r. program you're not allowed to change your historic building. so you couldn't, for example, keep a historic facade and then completely gut and remodel the building and increase the height limit for example because you've already sold that development right to someone else. so if you're going to be a seller of t.d.r., you have to be fairly certain you have no future plans to change your building. that's easily done with the government. we have no plans for war memorial or city hall.
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other owners have to think long and hard if that's the case if they want to enter the market. secondly, you can only use the proceeds for historic preservation of your building. so it's not free money. but for those that have historic buildings and are keen to preserve them, it's a valuable way to get revenue for that purpose. and those are the other competing sellers in this market. >> thank you for providing that additional information and i want to say that it's been fascinating to learn about this program. i'll just editorialize for a minute, as a democratic socialist, it never ceases to amaze me that our real estate rules allow, incentivize and create systems to monetize what
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in many ways are -- i don't want to say imaginary things -- but at least things you can't put your hands on. and this is certainly one of these cases, but at the same time we have a state system that allows us to generate here significant revenue for historic preservation and the city. and i think with some significant guardrails on it that have been laid out, and thank you to the director for all your time, not just today, but with my office walking through what this does and doesn't do and also the fact that this is -- i think in many ways -- a creative way to fund the preservation of one of our most amazing historic resources. so with that, i am prepared to support it. although, i remain somewhat -- i don't know what the right -- amused by the whole premise i would say. but that is not at all a commentary on your good work on
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this. and i will leave at that. with my thanks. i see supervisor mandelman. >> supervisor mandelman: thank you, chair preston. i think the other -- in the sort of non-city hall context, i mean i do think there is potentially a good purpose or use of things like transferrable development rights and ensuring that buildings that otherwise would have development potential, but where that would be a, i think, from public policy perspective, a bad thing, we don't want to see that historic building demolished and replaced with a tall building, that there is a structure that allows for those churches or owners of those historic properties to, you know, get some of the value that they would get by plowing down a historic resource without plowing under the historic resource. so -- it is ingenious, it's
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weird. it's not exactly democratic socialist, or not even close [laughter], but it is, i think, a thing that does some good in different places, so... >> thank you, supervisor mandelman. yes, i have not landed on the right adjective to describe it, but one thing for sure, it's revenue-generating for the positive purpose of keeping historic resources intact for generations to come. so, i will leave it at that and do we have a motion on this item to send this with positive recommendation to the full board? did someone move? supervisor chan? >> on the motion offered by vice chair chan this be recommended to the board of supervisors,
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vice chair chan? >> supervisor chan: aye. >> supervisor mandelman: aye. >> supervisor preston: aye. >> mr. chair, there are three ayes. >> thank you, supervisors. >> thank you, again, director, i appreciate it. and this -- the motion passes. and let's go ahead and, mr. clerk, call item 6 through 22 for closed session. >> agenda items 6 through 22 are 17 ordinances settling attorney fee claim and settlement of lawsuits against the city and county. members of the public, wish to provide public comment on the litigation agenda should call the public comment number, it is 1-415-655-0001. enter the meeting i.d. of 2490 730 5333 # #. and then press star followed by the number 3 to enter the queue to speak. >> thank you, mr. clerk.
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let's go ahead and open up public comment for the closed session items. >> mr. coolly, do we have callers who entered the queue for the litigation agenda? >> there are no callers in the queue. >> thank you. seeing no callers in the queue, public comment on these items is now closed. and i'd like to move to convene in closed session. mr. clerk, please call the roll? >> on the motion offered by the chair preston that they conseen in closed session. >> supervisor chan: aye. >> supervisor mandelman: aye. >> supervisor preston: aye. >> mr. chair, there are three ayes. >> thank you, mr. clerk. we will noaway. mr. clerk, please report on the closed session deliberations. >> thank you very much, mr. chair. the committee acted unanimously to put all the board of
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supervisors. >> thank you, mr. clerk. i'd like to move to not disclose the session. please call the roll. >> on the motion that the closed session not be disclosed. >> supervisor chan: aye. >> supervisor mandelman: aye. >> supervisor preston: aye. >> mr. chair, there is no opposition. >> thank you, mr. clerk. the motion passes. any further business before the committee, mr. clerk? >> there is no further business. >> all right. then we are adjourned. thank you.
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shop and dine in the 49 promotes local businesses and challenges residents to do their shopping and dining within the 49 square miles of san francisco. by supporting local services within our neighborhoods, we help san francisco remain unique, successful, and vibrant. so where will you shop and dine in the 49? >> my name is ray behr. i am the owner of chief plus.
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it's a destination specialty foods store, and it's also a corner grocery store, as well. we call it cheese plus because there's a lot of additions in addition to cheese here. from fresh flowers, to wine, past a, chocolate, our dining area and espresso bar. you can have a casual meeting if you want to. it's a real community gathering place. what makes little polk unique, i think, first of all, it's a great pedestrian street. there's people out and about all day, meeting this neighbor and coming out and supporting the businesses. the businesses here are almost all exclusively independent owned small businesses. it harkens back to supporting local. polk street doesn't look like anywhere u.s.a.
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it has its own businesses and personality. we have clothing stores to gallerys, to personal service stores, where you can get your hsus repaired, luggage repaired. there's a music studio across the street. it's raily a diverse and unique offering on this really great street. i think san franciscans should shop local as much as they can because they can discover things that they may not be familiar with. again, the marketplace is changing, and, you know, you look at a screen, and you click a mouse, and you order something, and it shows up, but to have a tangible experience, to be able to come in to taste things, to see things, to smell things, all those things, it's very important that you do so.
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good morning. and welcome to the country club. and i really want to first of all thank billy and the country club and the whole team for hosting us here today. for those who don't know, the country club is it one of the core community pillars in the castro for many people seeking recovery can have support. and the castro. so thank you castro country club for aou

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