Department of Building Inspections for fiscal years 20182019 and 20192020. Before item two. I did receive a phone call from nicole kidman, presenting item three and cannot make it due to illness. I respect that we continue that. Nicole wheaten. Nicole elliott. Thank you. Forgive me. I am going to catch a lot of heat for that. Nicole kidman will be at the next meeting. I will catch heat for that. Number three is so a discussion of possible action. We are going to move that to the next Commission Meeting if there is no objection from anybody. I hope she feels better. That is nicole, not kidman. Would staff like to come up regarding the budget . Good morning. I am dan kushner from the finance services division. Deputy madison is out of the office this morning. I will give the second budget presentation. This should be fairly short since there are minimum updates presented at the last meeting. I will get to the actual numbers. No updates to the proposed 1819 and 1920 revenues. They all stay the same. There are some minor adjust mets to the 1819 and 1920 expenditures in professional services and services by other departments. Those are minor updates. We are waiting to hear back from the state attorney to see if we need to make adjustments to the budget for legal services. That adjustment would be online item called services by the department. Any questions . Commissioner walker, please. What specifically does that reflect . Does that recalculate the agreements between other departments . Right, right. Shoveling money around. The net was like a negative 50,000. Then once we approve here it goes to the Mayors Office and they make make adjustments. Do we hear it again after that or will you let us know if there are adjustments made not the next meetings but the meeting after the process goes through . I think so. I think the Deputy Director madison would correct that. As a reminder as the budget moves towards final adoption there could be additional changes by the Mayors Office or the board of supervisors. It would be great to be notified of that. Sometimes we are and sometimes we arent. That would be great. Thank you very much. That is pretty much it. No other questions, then we need to take a vote. We need a motion. I make a motion we approve the fy1819 and 1920 budget for the department of the building inspection as presented. Second. Any Public Comment on the budget . Okay. Seeing none, i will do the roll call vote. President mccarthy. Yes. Vice president walker. Yes. Commissioner gilman. Yes. Commissioner constance. Yes. Commissioner lee. Yes. Commissioner war shall. Yes. That carries and the budget is approved. Item three is continued to the next meeting. The next item is item four add adjournment. Motion to adjourn. Second. All in favor. We are now adjourned at 9 21 a. M. Thank you for everyone coming out. A way of life in San Francisco. When the next major quake hits, the city hopes a new law requiring seismic upgrades to five story buildings will help keep more residents safe and sound. Tell me a little about the soft Story Program. What is it . Its a program the mayor signed into law about a year and a half ago and the whole idea behind it was to help homeowners strengthen buildings so that they would not collapse. Did you the soft Story Program apply to all buildings or building that were built in a certain time frame . It only applies to buildings built in the time frame of 1978 and earlier. Its aimed at wood framed buildings that are three or more stories and five or more units. But the openings at the garage level and the street level arent supported in many buildings. And without the support during a major earthquake, they are expected to pancake and flatten ~. Many of the buildings in this program are under rent control so its to everybodys advantage to do the work and make sure they protect their investment and their tenant. Notices have gone out to more than 6,000 owners of potentially atrisk properties but fewer than onethird have responded and thousands might miss an important deadline in september to tell the city what they plan to do. Lets talk worst case scenario. What happens in a collapse . Buildings have the tendency of rolling over. The first soft story walls lean over and the building collapse. In an earthquake the building is a total loss. Can you describe what kind of strengthening is involved in the retrofit . One of the basic concepts, you want to think of this building kind of like rubber band and the upper three floor are very rigid box and the garage is a very flexible element. In an earthquake the garage will have a tendency to rollover. You have to rubber band analogy that the first floor is a very tough but flexible rubber band such that you never drive force he to the upper floors. Where all your damage goes into controlled element like plywood or steel frame. So, here we are actually inside of a soft story building. Can we talk a little about what kinds of repairs Property Owners might expect . Its a very simple process. We deliberately tried to keep it that way. So, whats involved is plywood, which when you install it and make a wall as we have done here already, then you cover it with this gypsum material. This adds some flexibility so that during the earthquake youll get movement but not collapse. And that gets strengthened even more when we go over to the steel frame to support the upper floor. So, potentially the wood and the steel it sounds like a fairly straightforward process takes your odds of collapse from one in 4 to one in 30 . Thats exactly right. Thats why were hoping that people will move quickly and make this happen. Great. Lets take a look. So, lets talk steel frames. Tell me what we have going on here. Well, we have a steel frame here. There are two of these and they go up to the lower floor and there is a beam that go across, basically a box that is much stiffer and stronger. ~ goes so that during the earthquake the upper floor will not collapse down on this story. It can be done in about two weeks time. Voila, youre done. Easy. For more information on how to get your building earthquake ready, this is a special meeting of the budget and finance committee. I am supervisor fewer, vice chair of the committee, im joined by supervisor stefani. Our clerk is mr. Victor young. I would like to thank sf gov tv, jessie and charles for broadcasting this meeting. Do you have any announcements . Clerk clerk please make sure to silence all cell phones and electronic devices. Speaker cards should be submitted to the clerk. Items acted upon will appear on the february 27th board of supervisors agenda unless otherwise stated. Mr. Clerk, can you please call items 1 and 2. Hearing on the current status of the citys leased owned portfolio within the civic center and update on the Portfolio Five year plan. Item 2, potential three year enewly and amendment of a lease of approximately 27,826 square feet of space at 1390 Market Street with purchase 1390 market as landlord for use by the department of Public Health. Thank you. I think we have a presentation from john updike from the department of real estate . Thank you, vice chair fewer. Supervisor stefani. Before i get into the presentation, i want to the last time we gave a real estate Portfolio Update to this committee it was charmed by carmen chu which tells me we need to do this more frequently. But its a pleasure to be here today. Director of real estate, john updike. Background on the data that formed the presentation. The ownership data comes from our facility system of record. Thats a joint project between real estate and Capital Planning. And its a database that resides on our website and their website and is a realtime snapshot of what the city owns and is available to the public at any time. The leasing data comes from an app that manages the lease hold portfolio. We want to thank the Controllers Office for their help in aggregating some of this data to help us visualize the status of our portfolio. So first, i wanted to take a 30,000foot view of what the city owns and leases. So our portfolio citywide contains approximately 44 million square feet of buildings and land, thats not including rec park holdings. That is within the city limits, so it does not extra territorial land which is significant outside the city and county of San Francisco. Of that, we lease from private properties only 4 . Of our portfolio. This has been an issue that is concern of the board of supervisors as we brought leases forward as to what is the constitution of our portfolio. This really tells the big story. Were at 4 . We had a discussion with many of our peer organizations across the country. We found an average range when you look at aggregate portfolio, there is a lot of land in the portfolios nationwide, they range from 14 . New york city, austin, texas, right at 4 . So we feel were in line with the peer cities in terms of how much is leased and how much is owned. To try to address that concern that the board has raised, are we at the right mix . We believe we are. Now well dive deeper. How do we break down the 1. 8 million square feet . 55 of it is leased for office uses. 45 is leased for other types of use. That could everything from supportive housing, ground leases and building leases, clinic uses, other special public uses. So less than half of the office use leases lie in the civic center, so were drilling down from the overall portfolio to the office portfolio. And now were going to take a deep dive into the civic center where the heart and bulk of our offi Office Leasing takes place. How do we define civic centre . This is a map we felt best depicted our assets in the civic center that revolve around city hall as the point of government. And those units that need proximity to city hall need to be within this radius. Beyond this radius doesnt feel or act like its in civic center. Thats a sense of how we defined it. So now lets take a look at a snapshot today and how were moving this portfolio in the future. How do we move that needle from 19 leased today, to an even lower percentage, which is our goal. First thing i want to mention, we took a look at peer city organizations, those who could slice the data to this level. Most could not produce this kind of data in this presentation. Most just dont have the information, but for those that do, two really good examples as a method of comparison, the city of san diego. Their Downtown CoreOffice Holdings are 64 owned and 36 leased. Again were at 19 today. The state of california sacramento area, office portfolio, which is huge, at 16 million square feet is actually split 5050 owned and leased. Again, i think we look very favorable to those two organizations. Claudia, my assistant director who played a great role in putting this presentation together, take calls monthly from other organizations across the country asking us how we do what we do. Thats an indicator were the best practice here in a number of factors as to how we manage the real estate portfolio. So how do we move that number from 19 down to 15 by 2022 . Were going to tackle it by touching six different departments and their lease holds throughout the civic center, who have lease expirations that lie between summer 2020 and 2021 and affect lease space. As we move closer to those dates of termination, well give you more details as to the locations. The specifics of each. One of them will be before you today. The next item, which is why we asked to have the presentation before that. Because it ties in nicely with how this is all part of a grander strategy to reduce our lease hold footprint. The dph Environmental Health item. One of the ways we can also move that needle down in our lease hold is to consolidate around service functions. So, i think the most famous of those at this point for all of you, would be the new permitting center as 49 south van ness. Something weve been calling project chess over the last several years. As you can see by the photos, its under construction im pleased to say with the final product shown on the right of the screen to be delivered in mid 2020. So we aggregate around permitting. That provides certain economy scale efficiencies in our portfolio and allows us to increase density in buildings and get out of leases. Beyond that, were looking at hub based planning for both fiscal uses at 1155 market, being the hub for that in the future. As we restack our various buildings and portfolio when the new building comes online, thats the permitting center and then a hub around Family Services at 1650 mission, from which the Planning Department will vacate and we will back phil that with uses complementary to the Human Services uses there and across the street. Create twoing hubs, well have greater efficiencies, not only our own internal operations but how we serve the public as well. What lies ahead . So, responding to various audits and report was the budget and legislative analyst, and others, you will see the real estate action plan framed a little more in detail in the capital plan going forward, were working handinhand with heather and brian at Capital Planning committee as we dovetail the real estate plan with the Capital Investment plan. You will see soon transfers of assets from the successor to the redevelopment agency, ocii, so those will be individual board items that will be teed up in the spring and summer coming ahead. Youve already seen the hall of justice administrative exit plan brought before you conceptually with one approved lease at 350 rhode island, youll see in the next 60 days, two additional actual leases, approved, but now you have the leases for brannen and bryant shown on the slide. That will enable us to move our add minute functions out of the hall. Thats temporary. To come back to a site that is a new hall of justice. And then of course, youre going to see our involvement of meeting the real estate needs for housing and homelessness, whether that be to support housing ground leases, continue to see acquisitions for housing as we saw for the mcdonalds in the hait and other interim uses as necessary. Thats a bit of a snapshot of what real estate sees in its work plan in the year ahead. I am happy to answer any questions you might have have the presentation before we move on. Supervisor fewer seeing no question, i believe, thank you very much for the report. I believe we have a report from the budget and legislative analyst on item number 2. Would you like me to present on item 2 before moving to the report . Yes, that would be great. Unless you have questions on the presentation. Supervisor fewer i do have a few. So let me ask. Excuse me if you addressed these before in a previous presentation. But is it our policy to normally try to buy land increase our real estate portfolio . Im sorry . Supervisor fewer is it part of our real estate plan to try to increase our real estate portfolio . Are we looking to buy . We are doing our best to not increase the overall size of the portfolio. I will say that as every organization faces when you execute a move, ive likened it to compressed jello. When you move them from point a to point b, that responds on the move. We often see some movement because of antiquated space, but thats been offset recently with the new ways that frankly our staff wants to work in an open plan, less offices, more collaborative space. That does allow us to increase our density and decrease our space. So hopefully, on the whole, that keeps it static and our effort has been to migrate from leased space into owned space. Which fiscally is the better play for us long term. Supervisor fewer the only reason i ask, some leases come before us for space and those rental agreements are very, very expensive. So i know that while we transition out of old spaces into new spaces such as the hall of justice, that were constantly looking for space to house during transitional times. So this is where im seeing the really expensive leases. That moving the District Attorneys Office out of the hall and justice and then that lease is expensive. I just think that the cost of leasing or renting property is going to really increase. Its not going to decrease. And that it seems as though we have a shortage of space actually when we do these types of transitions. I understand were using our current real estate stock in a very different way, in a more dense way actually to consolidate some of the buildings that were one or two stories before, such as the one on otis, i believe it was an old building, antiquated, not very high. I think. So i can see from the plans for 2020 were going taller and denser, but i ask the question because were facing a lot of leases that are really expensive because we dont have extra space to accommodate while were building. And we know that sometimes it necessitates an urgent move, so were into the leases that are quite frankly, very, very expensive, because we dont have another space for them. This is the reason i ask, are we looking to increase the real estate portfolio . Really over the last five years, weve increased the occupancy rate of the own cityowned portfolio, where its over 99 . There was a time, a decade ago, where we had a lot of vacant space. Thats also not a good best practice. We dont want space lying there fallo, but weve been trying to create some small areas throughout the city, whether its civic center or around the Public Safety hub where we have at least small areas where we can bring folks in to do tenant improvements in the buildings, what we call swing space. But we dont want a lot of that. Its balancing between having ownership right to space we may use in the future and then having it underperform. Its better to be able to spring into a lease if we can. This market has made it difficult, youre certainly correct, its very expensive. Supervisor fewer i know this is about Civic Center Office leases, so i look forward to a conversation, a broader one such as i just spoke to, and theyre cramped for space with all the renovations and remodeling and the new buses they need. Actually, i think my question to them was, why didnt we acquire property for this if we knew we were going to need these larger spaces