The nonpermitted use, and the recommendation would be without affecting whether or not that use was permitted, if you did have a lease commitment for a certain type of nonpermitted use that would exempt you for the tax. An example. There is flexible retail permitted in the southern half of the city and less so in other parts of the city. A conditional use will not permit that in many areas of the city. If a Property Owner of the vacant unit had a lease commitment, however, that deserves to exempt them from the tax. It shows they are trying to find a tenant and are on the ball. Whether or not the city wanted to grant a variance as needed is an entirely separate issue. To conclude the main part of the report is the problem ofvay cant store vacant storefronts is not divorced from the general issue of declining retail trade in San Francisco during a period of very strong Economic Growth in the city. It is possible to design this tax in a way that is positive and possible to design a tax in a way to create risk factors for Property Owners trying to do the right thing. That is behind the spirit of our recommendations. I am happy to take questions. Any questions or comments from colleagues . I am happy to make a comment. I want to thank mr. Eagan for the report. The comment is as to additional tailoring and exceptions we have that ability so far as with prop e and other things before the voters there is the ability of the board of supervisors by twothirds vote to continue to refine and tailor it. I want to point that out. I would submit that additional financial risk for Property Owners is in any economy regardless of market fluctuations is leverage for the lessee, for the Small Business. That is one of the fundamental underpinings of this concept. If the landlord knows they are going to get 25,000 a year tax, that might motivate them to lower rents in recession because they dont want to have a vacancy. Supervisor mandelman. Thank you, chair fewer and mr. Eagan. I assume the answer is no, i am under the impression that other cities have tried vacancy taxes. Did you look at those or no . Many Different Things in practice are called vacancy taxes. Washington, d. C. Has a vacancy tax on vacant land. That is a more common approach rather than taxing vacant storefronts. I wouldnt say it was a comprehensivery view. Are you aware of another city that has Something Like this. No. I want to say that i have to push back a little bit about your estimate when it says on page 5. Not page 5 but you quote in page 5 based on the d. B. I. Fee revenue. I think this is a very modest and highly inaccurate number to actually base your assumptions about revenue, that it would how much revenue it would generate because of this. In my district in 2016, i was told i had zero vacancies because of the loophole. As you know, my office wrote legislation to close that loophole, but i myself did crowd sourcing in my neighborhood. I had 165 vacant units, vacant storefronts just in my neighborhood. I request imagine that you crimes that by 11 different districts. Plus i dont have as many commercial corridors as other districts. I think the number i is higher than estimated. When you look at the numbers here, i understand there is no other measure but to see who is registered. When i wrote the legislation last year there were actually only 40 vacant store fronts vacant because of the loophole. What we see in 20182019 is a sharp increase. This is by no means the representation or a true representation how many vacant storefronts this would affect. I believe it is probably at least 3 or four times or more than this. Also, we should keep in mind that it is not just one vacant storefront vacant for a short period of time. In my district they have been vacant for over a decade. I would love an analysis, also, on the impact of other Retail Businesses when there were more than three or four vacant storefronts on the commercial corridor. That would be interesting, quite frankly analysis to see. How much impact does one vacant storefront have on one block . How many is four, five . I have a person that owns five or six on one spy block in the commercial corridor. How does that affect the commercial businesses . That would be a good analysis. I just wanted to say that i think that it is conservative, your amount. We know that because we know that so much i think we can all point to in our own neighborhoods places vacant for a very long time that had never registered as a vacant storefront. Thank you for your presentation. Thank you. I just want to clarify. We didnt actually use the d. B. I. Information for the revenue estimate. We looked at the kind of guesstimate there it is easy to get from brokers the since of overall Retail Vacancy rate. Hohow many have been vacant for 1821 subjec1821 was 182 woult to error. We applied it to the street frontage for the estimate. We have heard from others there are issues inputting too much stock into the d. B. I. Data. Thathat is not why we used it fa revenue estimate. We would lover to work with you further on that. Thank you very much. I would love for this to be San Francisco first. Oakland in 2018 actually did a commercial and Residential Vacancy tax, very different than ours of 6,000 per parcel for 50 days or more and passed with 70 in oakland and is now implemented. Thank you. Supervisor stefani. How will the Tax Collector identify and assess the tax. Will it be selfreported or community reported or will there be a department actively monitoring the merchant corridors . Thank you. Thanks to all of you and the voters we have had taxes implementing new taxes over the last few years. This will not be the first. We have been working hard with supervisor peskin to understand this tax and figure out the best way to implement it. With all taxes our challenge is to do significant taxpayer outreach and education so that anyone who could be subject to a tax understands how it works. That will certainly be at play here should this pass, and, yes, all taxes are selfreported. When you file the taxes in the spring to the irs, yes, they take your employer data. Most of it is generally on the honor system at first pass. That is true for business taxes as well, but we wouldnt be doing our jobs if we just left it up to that and we have a very robust enforcement team. That includes investigators and auditors and everything in between to make sure we understand who should be paying the tax so we dont over burden good over bad actors. In this case, this tax has a number of ways that we think we can implement this quite i wont say easily but without a whole lot of new resources. First, it is a finite list of properties subject to the tax. That makes our job easier. We worked very hard with the City Attorney to craft precise definitions of vacancy, who would be subject to the tax, the Taxpayer Group and then the data sources that we will use to make sure our enforcement is fair and complete. You know, we will certainly utilize information coming from d. B. I. As well as commercial rent databases and our own data from collecting the newly passed commercial rent tax and other tax data. We will rely on continues from the public. I think this will be a tax that businesses in the commercial corridors will say, hey, we think you should check this out. It looks vacant for some time. We anticipate a robust system forgetting continues from the public as well. As followup. When you say finite list of properties, do you know how many . It is rare that we have a geographically defined business tax, that does make our ability to enforce a little easier. Supervisor mandelman. I dont know if this is for the Tax Collector or d. B. I. How is the definition of vacancy in this ordinance different from what d. B. I. Is treating as vacancy now . I would look to my colleagues at d. B. I. To explain the current definition. Good morning, bill strong. Under the current ordinance if you are vacant 30days or more, you must register. That was per the recent amendment. It doesnt really matter whether you have a for lease or for sale sign. Under the previous ordinance if you had that, we werent looking to enforce it. This, obviously, looks at a very different time period. We are currently enforcing anything over 30days. I mean more in the sense of what unoccupied, uninhabited or unused means. Is that the current vacancy standard . When is a Property Owner obligated to declare the property to be vacant . 30days after the vacancy. What is the vacancy . They are no longer occupying that space. Is that a lease . Or someone going in and out the door. Going in and out of the door. It is the same. Do you have any sense of i guess last year we think there were close to 300 vacancies reported. Do you have a sense of how much underreporting is going on . That is a little difficult to speculate about. I do know that since the passage of supervisor fewers ordinance we have gone from roughly 44 registrations to now 283 registrations. The number of people actually coming in to register has gone up significantly. What kind of affirmative work does d. B. I. Do to go out and identify vacant storefronts . Our district inspectors during the normal course of duties in each of the districts gets a notice of vacancy, they report to the Code Enforcement group. As well as we rely on the public calling in and notifying us on a complaintdriven basis. There is tremendous interest on this board to see more vacancy enforcement over the last couple of years. I am curious if d. B. I. Allocated Additional Resources to identify the vacancies during that time. That is correct. Our Code Enforcement aspect has nearly doubled. What does that doubling mean . From one or two Code Enforcement officers to four who are now doing that job. Fully tacked . Focused on the vacant storefront, vacant building aspect. Thank you. You are welcome. Thank you very much. Supervisor peskin a question for you. For clarification if a landlord were to lease out property to a Small Business after keeping it vacant for 180 days, the clock starts over at that time . Thats correct. I wanted to verify the Small Business would not be penalized. That is absolutely correct. If you give me one second i will read you the magic words. I love magic words. Which is in section 2904 subsection d and, of course, there are various definitions at the front of the legislation. It says a person shall be liable for the vacancy tax only if that person kept taxable commercial space vacant in a tax year. When that person leases to another person, it starts over. Thank you very much. Given all of the exemptions for the time periods when a Building Permit or conditional use permit is filed and during construction, how likely is it that a Small Business could be on the hook as a tax for the lessee . Is this real or perceived risk . If you add up all of the timeframes. This would not go into effect until beginning of 2021. If you add all of the timeframes together in sequence, it is 2. 5 years. I think the question that you are asks is what is the likelihood that a lessee who abandons the lease would be liable for the tax, that would be the vast, vast minority of cases. The majority of vacancies you see are not leased. They are vacant and owned by the Property Owner and there is no lease in the ground floor commercial space. It should be uniform. If you are a lessee and you have got a five year lease. After year one you decided to close the business, that lessee would be liable in years two, three, four. Presumably if they couldnt pay the rent and got out, they have probably either filed the chapter or trying to get out of the lease. That aspect is there and would apply in a small number of cases. Thank you very much. Would it be possible to exempt Small Business lessees with a business license while holding them accountability if they lease spaces vacant . A couple of things. I defer the legal question to competent council. As policy matter the vast majority of the colored spaces either do not allow formula retail or only allow formula retail with conditional use, which depending on the Planning Commission in the particular neighborhood are difficult to get. I would say as a policy matter that when it is a small landlord or large commercial landlord it should apply. The incentive is to get Property Owners to get ground floor commercial space. I dont see a difference between one kind of business in formula retail. This is about getting bad actor landlords off their duffs. Supervisor stefani. That example made me nervous in terms of the lessee on the hook. They entered a long term lease with the landlord and the business doesnt make it which happens. I am worried the fear if they know that if they dont make it on a five year, seven year, 10 year lease or something. That fear of having to pay this tax might then impair their ability to even put forth the Business Plan and make something work. I am thinking it through if that is an unintended consequence that we should think about. I just dont want to put any i dont know. Limitations on the business that wants to start off if they fear if they dont make it i have three years of this tax to pay . If they are on a five year lease and after the first year it fails and there is remaining four years left on the lease. I think we would want to put pressure on then the Property Owner to quickly engage in a new contract with a new lessee. Are there things that we can do . Are there mechanisms to put in place to protect the small Property Owners Small Business owners . [please stand by] i mean, generally one what happens when you go out of business if you cant pay the rent anyway. There you go. Does that make any sense . But if they cant pay the landlord. If they are on the hook, though, and they are stuck in this lease and the landlord his not going to at that point, he will be subject to this tax. I am worried that it will be on that business that cant even pay the rent. Yeah, but they are probably out of business is the point. But who pays the tax at that point. I would imagine it would be uncollectible if the business is no longer a business. Supervisor, yes, you are correct. If the business goes through bankruptcy, it is certainly quite difficult to collect. I will say you dont have a warm and fuzzy thoughts about a Tax Collector for a reason, so we would certainly do our best to collect on any debt owed to the city. Another thing i would say is insofar as this entire concept is designed to give Small Businesses and lessees leverage in a negotiation, i would assume that lessees would start negotiating exit clauses, right . Yes, they have a fiveyear lease , but if there is an act of god or they go out of business in your two, that there is an exit clause. Lets ask the City Attorney. If there are mechanisms that we can put in place, i thank you have heard the conversation and the sentiment of supervisors that i think there is we know that so many Small Businesses fail in San Francisco within the first year. So we are looking to relieve the burden of the tax off the lessee and put it right back on to the Property Owner if they are not engaging in a new lease within a certain period of time. Is there going to say his or something, a mechanism that we could put in that actually does that . I think the biggest practical obstacle to that amendment today is that the timing of the process we are placing this measure on the march ballot, but we should start with that. Supervisor peskins proposed amendment took the amendment today. If the Committee Adopts the amendments, that will trigger continuance to another committee meeting, special committee meeting, i believe anticipated for monday, sending the measure out to the board as a Committee Report to pass on the 19th, next tuesday. You cannot make any additional amendments today because our office wont sign off on amendments on the floor to ballot measures because of the nature of ballot measures. You could, in theory, make additional amendments on monday and that would trigger the only way to then get it onto the ballot for march would be for the board to hold a special meeting. Either way it next week or early the following week, we would have to work that out with the Courts Office and the supervisors to figure out what is possible. And the time between today and monday, we can certainly work with your office to figure out whether its possible to shift the tax burden to the landlord in a situation that you are positing. So, im sorry, supervisor peskin, one second for clarification purposes. It would mean then that if we introduce something on monday at our special budget meeting, then we would have to have a special board of supervisors meeting with a quorum. Is that correct . Thats correct. The deadline for the board to place this measure on the ballot is the end of thanksgiving week. The last regularly scheduled word meeting before thanksgiving is next tuesday. Any amendment to a ballot measure automatically under the municipal elections code triggers another public hearing with Public Comment before the board can vote to place the measure on the ballot. If you amend on monday, you would need to schedule a special Board Meeting with a committee as a whole to allow the Public Comment and the board with then, after the Public Comment, and then as a committee as a whole, vote to put the measure on the ballot. Okay. I think what i am hearing is it is not impossible. It would take some manoeuvring around peoples schedules and to see if people were available to have a special meeting if we so wanted to move in this direction i think what i really want to ask supervisor peskin now is this something that you would like to explore, or do you think in your judgement that this is something that does not need to be addressed at this time . Im happy to explore it. I was under the impression that we actually did explore it and had some issues between an excise tax and other forms of taxation and thats why we ran into this problem, but i am happy to explore it. In terms of timing, i would say two things. One is this requires two readings. One to submit. An ordinance on the ballot only requires one reading. You can hold a special meeting of the board, have a committee as a whole, and vote to place it on the ballot that day. And there is no way to have a committee of the whole on the 12 th because i mean yeah thats right. In this situation, if the amendments that supervisor stefani and fewer are suggesting are feasible and we can look at that with them over the next several days to see what is possible, the committee would be making an amendment on monday and we would have to notice of meeting to receive Public Comment on the amended ordinance that would be at least 72 hours away. We would have to talk with the Courts Office about whether they need any additional time for noticing on special meeting. Right. And the other way we could do this would be with trailing legislation with a two thirds vote. Thats right. Either before or after march 3 rd election, the board can adopt an ordinance with a two thirds vote creating exemptions or amending the measure. Right. Like we did an inclusionary where we would actually amend it prior to its passage. Yes. Right . Okay. Supervisor mandelman . Thank you, chair fewer. I think i would like to start by thanking supervisor peskin for taking on this clause because i represent a couple of neighborhoods that have been heavily impacted by vacancies and i am frequently asked by people why we dont have a vacancy tax. So i think there is tremendous desire out there to do something along the lines of a vacancy tax i also want to thank supervisor peskin for and lee hepner for their willingness to engage around amendments and reshape the proposal and apply it to the only neighborhood commercial districts and add in additional time for various city approval processes. I think this proposal has changed significantly since it was initially introduced and i think those changes are for the good, including the amendments that are getting introduced today. I do have concerns, which i have shared with the author. I have a concern about enforcement based on our experience with the vacancy seat which may be getting corrected, but it is too soon to tell whether based on supervisor fewers legislation, we are actually capturing, you know, even a fraction of the vacancies that are problematic for our neighborhoods. I also do have a concern about fairness. The assumption underlying this legislation the target is at a landlords, and the assumption is that we have a lot of the vacancies that we do because we have a lot of bad actor landlords, and i know that we have Property Owners who are being unreasonable and and or keeping rents unreasonably high, who are not making sufficient effort to hold onto viable businesses and are putting 50 and 80 page leases in front of them in a weak moment. And those Business Owners are deciding, you know, after 10 or 15 years of doing this, i dont need to deal with this landlord, and i dont need this headache, so they go out. I do think there are Property Owners out there who are having a great deal of trouble filling spaces and who may not just the problem of the citys slow processes, but are actually having trouble finding viable tenants who meet Community Standards and have the financial wherewithal themselves to have a go of it and justify the kind of tenant improvements that might need to get made and all the other things. So my hope is that this will be incentive for Property Owners to be more realistic about where our retail is in the city, and their need to lower rents. And also to internalize some of the community costs that are being created by their failure to act more expeditiously to get those spaces filled, but i dont know that we have the ability to foresee every circumstance and to understand what is going on with every building that may be impacted by this, and how many of these Property Owners are negligent or malevolent, and how many are just stuck. I do know i served on the board of the lgbt center for five years. We had a vacant storefront and we were absolutely unable to get it filled. That is a concern, but, all that being said, one of the things that i do like about this legislation is that there is the ability to tailor it. If my view of how this should work in, or my constituents view of how this should work in our neighborhood commercial districts is different from other superstar supervisors and their view of how it should work there, then that may he something we can do. So i am going to be willing to forward this to the full board. I may want to, prior to passage of this thing or prior to supporting it, figure out, you know, some changes that may need to get made to make this more workable for the neighborhood commercial areas that i am most responsible for. Those are my thoughts at this point. Thank you very much. I just want to comment also that upon learning that i had 156 vacant storefronts, i sent correspondence to every single Property Owner of the vacant storefront in my neighborhood. Two people have responded. We were able to assist them. I have just been notified that four of my longtime businesses, they have been in my neighborhood for a long time, serving my residence, are now facing a rent increase of four times the amount of their rent and they will be closed down. So i am looking forward to this, quite frankly. I think that i understand that there it could be there could be some landlords that are having a hard time filling the vacancies, that i also think some of the rents are just too high, and also they are not giving out fiveyear leases. It is a year to year lease now. So you will see that happening all along the commercial corridors. I dont know what else to do besides a mechanism like this to actually get the ball rolling, but what i do know is that our Small Businesses are the backbone of all of our districts they are the businesses that serve our residents on a daily basis, they know our neighborhoods, they provide safety in our neighborhoods, and also, keep, i think a reality check on just what is happening in the neighborhood in general because they have their ear to the ground all the time. So although i raise issues today , i want to thank supervisor peskin and lee hepner for bringing this forward. I think this is a mechanism that we, as a city and county, are now forced to implement or try to implement just because we have had such blatant, blatant violations of these storefronts. I have always said that if you do not want to rent out your retail space, then you should not be in the business of owning retail space. Having said that, lets open this up for Public Comment. There is no b. L. A. Report on this. I have four cards here. [calling names] if i butchered a name, my apologies. Please come up. Everyone will have two minutes to speak. Good morning, supervisors. Thank you for having me. Name is tobias and i am the staff stuff attorney for Legal Services for entrepreneurs at the Lawyers Committee for civil rights. As part of my job, i advised San Francisco low income Small Business tenants about the lease for the business space. We propose we know that this is trying to help Small Businesses by including supplies , spaces, and reducing rents. We share this goal unwelcome supervisor peskins amendments that would benefit Small Business tenants, however, we still worry the burden of this tax will eventually fall on the citys Small Businesses because even if the landlord is the one responsible for paying the tax to the city, they can and will find a way to pass through the cost of this task talks to prospective Small Business tenants by the lease contract. As i have seen in my own work, they will pass it through by increasing the monthly rent for a vacant space or including the tax and the tenants share of taxes and operating costs for the building. Landlords can do this without limitation because it prevents cities from San Francisco to limiting the rents that landlords charge to Small Businesses. We will work to repeal this law, while it remains in place, we need to think of a way to prevent landlords from passing the vacancy tax onto tenants. A supervisor fewer mentioned. We want to help you figure out how to completely eliminate the vacancy taxs burden on Small Businesses and to do so, we urge the supervisors to give Small Businesses and their advocates more time to suggest amendments to the tax before it comes to the voters. Thank you for listening. Thank you very much. Next speaker, please. Good evening good afternoon. Legacy business north beach of 70 years. I represent our organization which strongly supports this legislation. Historically we have advocated for this for two decades when we were back as the north Beach Merchants Association before we merged with the north Beach Chamber of commerce in 2011. It has been one of the cornerstones of our positions that vacancies that are held off the market by landlords, and bad actors, need to be penalized on some level because they not only blight the neighborhoods we live in, they also distort the market for rents, commercial rent. The vast majority of landlords, commercial landlords, are good people. They are not bad actors. But there are a handful. And my neighborhood, in particular, right next to me, we have a storefront that has been vacant for 30 years. We have multiple storefronts on columbus avenue where we held a press conference, and i think it was january or february, along with supervisor peskin and supervisor fewer that have been held off the market by two landlords. Low and behold, when that press conference occurred, signs went up on all the vacancies on our neighborhood which is 17 . And low and behold we just did another survey of those vacancies and we turn this into the supervisors office. And between that sixmonth period we started about we started talking about this legislation and now [indiscernible] thank you. Thank you very much, sir,. [indiscernible] thank you. I am happy to engage in a private conversation. Im sorry, your time is up. Thank you. Thank you. Actually, every member would be welcome to come and have two minutes each which would be collectively, i dont know how many minutes. Thank you very much. Good morning. Im with the San Francisco chamber of commerce. We share the desire to keep retail spaces occupied in our neighborhood commercial districts thriving. We appreciate some of our suggestions are reflected in the amendments that were discussed today. We still have concerns that this measure still may host burdens on Small Businesses who maybe on the hook to pay the tax when they are trying to market and occupy a retail space. Retail vacancies occur for many reasons as we know. Online retail, because small merchants also cant afford the cost, time, and uncertainty of the citys permitting processes, things like that. The days that would be considered vacant in this measure even as amended still dont allow for sufficient time to market retail spaces and build them out once rented or to come back from a devastating loss to do to a fire or earthquake or to successfully complete and move into a space after applying for a see you permit. If a business applies for a permit but is denied, will the Property Owner be on the hook to pay the tax if they exceed the 182 days . Unless the business takes at least at a crisis hits like an earthquake, what they get an extension or a time reset . We think that would be important im glad to hear that an appeal actually would apply on this case. We didnt think it would. It sounds like it does. We are happy to hear that. We feel additional time and flexibility needs to be built into this measure to ensure that small Property Owners and Small Business owners who are trying to market and open and neighborhood retail space in good faith are not overwhelmed with the additional burden of a vacancy tax for reasons that are out of their control. Thank you. Thank you very much. Next speaker, please. Hello. Im here with the golden gate restaurant association. Thank you to for hearing this item and all the work all the supervisors are doing to address this vacancy issue and the commercial corridors are facing. We are fully and support for the intent of this ordinance. I am here on behalf of businesses that supervisor peskin presented today. We felt would unintentionally be tied into this. We are happy to see stronger language around landlines been prohibited or less likely to pass these onto tenants. Would love to explore if there is a mechanism to prevent or protect our Small Businesses further. We hope we can continue the conversation and being able to support Small Businesses and vacancy issues for what our restaurants face on the regular, especially around permit processing and thank you for the consideration in all the questions that you posed around protecting the Small Businesses. That is really what we want to see here. Thank you so much. Thank you very much. Next speaker, please. My name is kristin. I wear multiple hats. I am a resident of the haightashbury and i own im here to speak on support of the vacant storefront tax. Something i have been speaking with. I assumed the role of owner nearly 12 years ago. We have seen a Record Number of vacancies more than even from the lean years of 2008 and 2012. There have been any of the number of reasons for the business closure including retirement. What has happened is storefronts have been left vacant longer and longer as Property Owners have held the property off market for unknown reasons or are holding out for higher rents. The circumstances that have left a situation where every block has at least one and usually multiple vacancies, and that has led to blight, trash, graffiti and has pressed foot traffic. At one point had five vacant storefronts including two which would remain vacant since 2015 and have not been actively marketed in that time. Before i listen i listen to ted egans report on the amazon effect. It is important to explain one of the industries to be impacted by amazon, we have not seen sales decline since i assumed ownership in 2007. Our sales are up even 20 . Jessica many other retailers, we have made up the sale. Internet has allowed us to increase our reaches and technology to increase our reach and seep employee our second week tap automated. The minimum wage and benefits have gone up over 60 and more to the point of this legislation , rent has increased over 80 . Since i went through the process of renegotiating the rent, i looked at every vacancy on haight street and it is clear they are asking way above. Thank you. Thank you very much. Next speaker, please. Given that they are approaching 80 pages of rent control regulations on the upper floor residential units, and nearly 200 permits required to open a momandpop diner, if i heard that correctly, the market is already approaching death by 1,000 paper cuts, absent further impediments. Main street has never quite recovered from the great recession. Small businesses and in the community have been rising for flailing and going under in waves as a matter of common occurrence over no less in the last couple of decades. There has been a great deal of competition for relatively few prospective tenants. The permitting process has been an ongoing deterrence. I think the Small Business community would be better off if you provided uptodate markets on a neighborhood by neighborhood base including the Crime Statistics such as vehicular vandalism and theft some vehicles and businesses. Small businesses have been experiencing a mandated increase in wages, potentially rising rents owing to the bay areas higher than state and national right of infant rate of inflation and constraint of Profit Margins owing to the uppermost limits and internet competition affecting the common products. The foot traffic going to the collective debt load that is carried by residents and regional tourists and discretionary spending. While we are not in unofficial period of small bubbles are being discreetly ruptured. It is thank you very much. Any other Public Comment . Seeing none, Public Comment is closed. Colleagues, before us we have amendments to approve. I would like to make a motion to approve the amendments that have been presented before us today and to continue this to, as amended, to our special meeting on monday of the budget finance committee. Thank you, chair fewer for making that motion. I just wanted to say a couple of things. I wanted to thank the members of the public for their testimony and associate myself and my experiences as a District Supervisor with the comments of mr. Evans. I was actually telling supervisor mandelman a story. Tomorrow morning at 11, i am joining my friends and neighbours in front of a cafe that has been there for 24 years he recently renegotiated his lease and is paying significantly more money, but that lease that he was forced to sign, because he wanted to stay, had a termination provision and the Property Owner for, no reason then i could ascertain, has chosen to invoke that. On december 31st, it is a beloved community space. He is going to have to vacate it after 24 years and that is how he supports his two kids and employees with benefits, so i said to him, there is any number of empty spaces in north beach. You can go up the street and find another spot. It is not that he is undercapitalized. It is exactly what mr. Evans said. Every single one of them were beyond the person where foot price point that he can afford while selling sandwiches and coffee and what have you. So and i want to take exception to this motion that somehow or another, this tax will be passed through to future tenants. A landlord is in the business to get as much money as they can out of the tenant, but if a landlord has been paying 25,000 on this tax and is trying to pass that on in a lease to a future, tenant, do you think any tenant will sign that lease . No, this will stay vacant and they will pay another 25,000 the next year. So what this tax does, which is completely avoidable, that we do not want to collect, is give Small Business lessees leverage in lease negotiations, and that is the fundamental underpinning. I am more than happy to work with you, supervisors, to explore the issues that you are talking about, whether it requires trailing legislation or special meeting of the board. [please stand by] and ground lease for 1064 mission lb in an amount not to exceed 74. 4 million for a long term of 57 years to finance construction of 256 unit multifamily Housing Development for a lease term of 75 years and annual rent of 1. Item number 14. Not to exceed 87 million. Thank you. I believe we have ocd here to kickoff the presentation and department of Public Health and office of Public Finance. Good afternoon, committee members. I have copies of the presentation for the clerk. Good afternoon. I am a senior project manager at the Mayors Office of housing and community development. I am happy to present 1064 mission and we have representatives here from dp h h sh. Mere is a rendering of the proposed project. 25 units of 256 units of housing new Homeless Services center. Last time we were here you authorized us to apply to develop the site as critical resource for the citys homeless population. Today we are here to request approval of the last remaining financing and ground lease to move toward construction starts in january 2020. So before you today are four resolutions and one ordinance associated with this development. I will present a project overview and the resolutions. One for Supportive Housing ground lease and loan agreement, issuance of multifamily revenue grounds and third Grant Agreement to fund the Homeless Services center and staff from the office of Public Finance will present the resolution and ordinance with the 5 million in certificates of participation of financing to build the Homeless Services center. 1064 mission is an extraordinary opportunity to build permanent housing in the south of market. This site was listed as Surplus Property under the federal Property Assistance Program in january 2017. Title 5 of the federal act identifies homeless as the top priority. They applied to develop 250 units of the housing was conditionally awarded the site valued at 36 million for 1. The federal program has a hard completion requirement. The project must be operational by november 2021. They issued the r. F. Q. And developed Episcopal Community services. Modular construction is for the residential portion of the project to meet the aggressive schedule and reduce costs. Here is a site map of the project centrally located on a major transit corridor on seventh street. A large parking lot adjacent to the federal court of appeals. The project is five floors over a concrete podium surrounding two courtyards with a Public Open Space accessible omission street. There will be 153 units for adults 103 seniors, two resident managers. They will support the services longterm. They propose to house the culinary job program for those experiencing homelessness, chefs on the ground floor. It will be focused on wellness and build on the long experience with helping residents age in place. All units will be subsidized by the operating subsidy program. So the Homeless Services center came about because as they were selecting the developer it became clear it could house other Critical Services to fit the intent of the site. They have been searching for new locations for the Critical Services due to seismic conditions of the building. This is a unique opportunity for a colocation for a new Homeless Services center. Mercy housing is the turnkey developer to be financed separately. Homeless services will be owned by the city. The relocated programs of dp h h sh proposed to be there are the urgent care clinic. Street medicine, de dental servs and there will be an entrance separate from the residential building. First resolution before you requests approval of 74. 4 million loan for minimum term of 57 years to finance construction of the project as well as approval of longterm ground lease between the city and limited partnership with annual base rent of 1 per year. The total cost is 143. 6 million. The Residential Capital sources include the funding, low income taxing tax credits and Federal Home Loan Bank a regard. It is 74. 4 million of which 27. 7 million from the first allocation of no place like home funding targets to create the permanent housing for chronic homeless with serio
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