Transcripts For SFGTV BOS Special Rules Committee 21616 20160220

Items on the special committee is related but we will call them separately so please item 1 please. Item 1 is a initiative oar from the mayor for the proposed Initiative Ordinance submitted are by the mayor for the voters for june 7, 2016 for election entitled ordinance mending the planning code to maximize inclusionary or Affordable Housing and Economic Feasibility studies. We have staff here. We will have this presentation and if you get the powerpoint on the screen thank you. I want to be very clear the clear of this Initiative Ordinance is establish a pathway to maximize the amount of Affordable Housing that the city can require of developers. The current requirements are too low. Not only are they too low but theyre a one size fits all rules and acts if a luxury tower downtown has the same economics as a project in another neighborhood. The economics are different and the rules need to be different the mayor directed staff to bring working groups to bring stakeholders together for these requirements and its underpinned by a Feasibility Study by a independent consultant as all have done and in recent memory every time the board introduced a new fee or the inclusionary requirements its done with a Feasibility Study and looking how much it could be increased and feasibility and killing the golden goose. This is the Third Initiative in a serious of policy measures relating to maximizing of affordability that the mayor has put in front of voters with some of the other supervisors responding to what he knows to be the voters number one concern which is affordability. Proposition k in 2014 made it the policy of the city to build or rehabilitate 30,000 units by 2020, have of which would be affordable to low, moderate and middle income san franciscan and proposition k clarified and the strengthened policies using public land for Affordable Housing. This 2016 directive would turn from public to private Development Projects understanding that we need both halves of the coin to get it right and turn to private Development Projects and seeking to maximize the contribution from the private developers to the Housing Stock and make sure the city has a factual basis to accomplish that. Before you move on i believe supervisor peskin has a question or comment . Thank you madam chair. I want put this in some legislative and Historical Context as well as some political context starting first of all i welcome mr. Bridges comments they think there is a widespread sentiment that the current inclusionary rate at 12 is too low for the current Market Conditions and i welcome that, and i think that is what precipitated the introduction of a Charter Amendment on december 15 of 2015 by supervisor kim and myself which i believe lead to the january 19 introduction of this measure as well as another measure that we will discuss as the next item on the agenda, but i actually wanted to harken back to a decade and a half ago when the city actually did not have an inclusionary law. It had an inclusionary policy that was used in some instances and not used in other instances, and my then colleague on the board of supervisors mark leno introduced the first inclusionary law i will at section 3 17 of the planning code if my memory serves and it was quite contentious. As a matter of fact there were people in the Development Industry who while they didnt oppose it indicated that if as a matter of fact senator leno and i were having this conversation a few days ago if it was 1 10 of 1 north of 5 it would kill new development starts. We actually without a Feasibility Study picked 10 which was the guideline that planning had been working with and life went on just fine. By the time i left office at the beginning of 2009 that number had grown to 15 . After i left office in a deal that im not interesting or important to revisit, but in exchange for creating a Housing Trust fund there was a Charter Amendment that put the inclusionary dropped it from 15 to 12 and stuck it in the charter. I dont want to second guess that but once it went into the charter the conversation in the legislative branch, in the Planning Department, in the community, in the Development Industry about changing that number became impossible without a vote. Now, let me go to the political context. I just ran a somewhat charged race for supervisor, and i can tell you at least in the northeast corny of San Francisco that Everybody Knows that 12 is much too low. Yes, the cost per square foot of building today is astronomically high and the sale prices are high and i do not begrudge Developers Making money. I am delighted they hire union labor in many instances and it provides a modicum of Affordable Housing but i believe, and i believe many of our colleagues share the sentiment that we can and should do better. This is not a new crisis. This crisis has been going on for a number of years. The fact that we have not as a city been acting more quickly is troublesome to me. The fact that a Feasibility Study could have, should have done last year, the year before, the year before that where we could have captured many more units. Now, we are in the process of moving forward with the Charter Amendment in june rather than in november in order to capture more projects moving forward so that we can actually have a higher level of affordability for working class san franciscan for the individuals who build these projects, for teachers, for firefighters, for everyday people in this town which is by anybodys estimation at a crisis. That i think is what supervisor kim and i have been attempting to do. I am delighted to have a conversation about fiscal feasibility but now let me deal with the last political reality and i want to be very clear, honest and transparent about this. It is my profound hope that because of the way the Charter Amendment is designed which takes it out of the charter and allows us collectively as a government to legislate Going Forward, which is our goal. Take those numbers up when building prices go down, and sale prices stay high to bring those numbers down when were in a recession it should be a dynamic law, but i would hope that on or before march 1 and i had this conversation personally with the mayor that the two items before us today will be removed from the ballot. The mayor will remove his. The four members of the board who signed on to the next item that is not been us but called in a few minutes will remove theirs and we will collectively find the sweet spot, figure out grandfathering, get this thing out of the charter and should have never went in 2012 and doing the work incumbent upon us and to build units that nobody can afford but units that are expensive that some folks that work in the town can afford. Thank you supervisor peskin for the lengthy conversations and if we can go on to the presentation. Supervisor it sounds like were on the same page but before moving back to the presentation it maybe the first time that the inclusionary was introduced. There wasnt a Feasibility Study and raised to 15 i am sure there has been and we will give you a list in the presentation about eight times since there there have been feasibility studies so i think i said in recent memory and depends on your definition of recent and we agree that 12 is too low but we have serious concerns about figuring out what the right number is. Its clearly above 12 and some projects its probably 25 but we dont think its 25 for most or all projects. We will be getting into that conversation. If i could have the next slide so as you recall [inaudible] there we are. I am just summarizing the proposed Initiative Ordinance and what it says is briefly its fairly simple. The controller and the Planning Department within six months of the passage of the ordinance should lead a study looking at the feasibility of changes to the inclusionary requirements. That study should be repeated every 24 months. Supervisor peskin thats the sort of response to your well taken point that the economy goes up and down and our requirements need to figure out a way to go up and down with the economy. Again in response to that sort of two rigid existing requirements they dont do that now. They just stay where they are no matter where the economy it is. The Initiative Ordinance would say theyre justed if theyre too low for afford for private developers and in effect leaving housing on the table or too high and killing projects and not getting the affordability and that way directs that the Planning Department would bring to the Planning Commission legislation for the inclusionary based on this analysis and the commission has the normal process would refer to the board of supervisors. It continues to say that adjustments should address all three ways of providing inclusionary housing, on site, off site and in lou fees and this is different from the current inclusionary rules. It should cover a range income levels. We nbl San Francisco we should be providing Affordable Housing for people making 55 of Median Income and defined as low Income Housing and up to 150 of income and two teachers salaries and one child. Those households need to be served by inclusionary at the 1201 50 ami level and lastly the feasible idstudy mand mandated on this sorry the changes for the inclusionary are based on the study and the nexus and not the same as a Feasibility Study and all other relevant data so what i will pass this on to my colleague leslie who will hopefully describe a little more about what we see as a feasible idstudy doing and how it can help set the policy correctly. Good afternoon supervisors. So we just like to take a few minutes to walk through some of the critical questions that the study should answer and the first one on peoples minds what are is the sweet spot for Affordable Housing and without making it not feasible and we dont know yet. We suspect its higher for todays rates for most sites and projects but we did preliminary analysis of the new proposed inclusionary rates and i will share them in the next item on the agenda and the analysis suggests the rates are not feasible for all types of development so the Economic Feasibility studies will dig deeper and getting an important policy change like this right. It would define the concept of feasibility and the Economic Conditions that a developer would or not choose to build housing and in numerical terms and test the different housing proposals and rule out the ones that numbers fell below the Feasibility Study threshold. Another important question is whether there is a better alternative to the one size fit approach that we currently take. We apply the same rate to all projects regarding of neighborhood or project and luxury high rises are subject to the same rates compared to other neighborhood and these buildings should shoulder the burden of more Affordable Housing and feasibility but the maximum rate are dealer killers for many of the smaller neighborhood projects with smaller margins so we should seriously move beyond the single rate system. Otherwise we will have luxury projects providing less than fair share of Affordable Housing or modest projects never built because the burden is too great and neither wi are we maximizing Affordable Housing creation so this study will enable us to take the nuisanced approach even further to figure out how to tailor a policy for housing needs. We could study how to best expand the program with different enemies such for teachers and firefighters and in a way not to privilege one over another. Many developers meet this by two options. They designate options on site that are affordable or pay in lieu fees. Each of the options has a different rate and currently under todays policylet two rates are cal braitded so one option is not essentially cheaper or more expensive for a developer to choose and we get a combination of units and in lieu fees which is ideal and this housing can meet the needs of different kinds of families. The proposed initiative requires that we do a Feasibility Study at least every 24 months and ensures that we and the successors can consider the housing requirements if conditions change over time so by contrast what happens if we dont have the flexibility . Well, this is exactly the situation that were in now. Our inclusionary rates were at low levels when the Housing Market was weak and the board hasnt been able to change them as conditions change. The other side of the coin is the new rate that we set right now hopefully with the Feasibility Study could work well to maximize Affordable Housing in todays market but less than optimal during a future downturn so thats why we want to mandate this study happens every two years and keep a constant eye on the market and maximize this. The study will allow us not to have the pitfall of setting the Affordable Housing requirements too high. We know when a developer considers to move forward with a project they look at the revenues with the proposed cost and the rate of return to buy the land and construct the project. If the rate of return is too low Funding Sources wont lend money and the builder cant build the project. This translates into lower rate of return and lower returns relative to the projects costs. Ideally developers could get the this back by and pay less for land and balancing out the reduced revenue and reduced cost. However, this is only a possibility if the developer has not already bought the land and even then they have to convince the owner to sell at a low price which is challenging because many of the remaining opportunities sites in San Francisco have Revenue Generating uses on them already. If im a landowner with a profitable parking lot or a refail store i will only consider selling to a developer if they offer enough money to forgo the revenue stream into the future and the less money the developer can offer to pay for the land the less likely theyre willing to find a seller so this is the back of envelope example to illustrate how a landowner may e the offer. Its say its a 10,000 square foot parcel and retail or commercial business. Based on the revenue stream that parcel could generate as retail commercial under todays rent we believe its worth about 8 million. In a neighborhood with 75foot height limit and fit 60 units on that land and if you do the division if the land cost is 8 million and 130,000 per unit and in the ball bark what developers believe they can pay today but if the land drops below 8 million its irrational for the landowner to sell. Now its possible that land prices could drop somewhat before running into this situation on some potential housing parcels, but again its about finding the sweet spot which is what we need the Feasibility Study in order to do. So how does it work from a technical perspective . We need to include a lot of research about the inputs that a developer considers when evaluating the feasibility things like costs and rental and condo prices and todays numbers and historical numbers and used how conditions might change into the future, understand land dynamics fully and look at prices just to ascertain how sticky they are and pin pointing the value of housing opportunity sites, parking lots, storage, retail sites under the current uses. As i described earlier it would operationalize the concept of Development Feasibility and test different proposals to see whether they meet this metric and for the promising proposals it would test them under varying conditions. Based on our experience working with Economic Consultants on other projects we believe it could take as short as two, three months to do it correctly once the consultant is hired and i will turn it back over to ken rich to conclude. So i wanted to quickly were almost done here talk about some precedents we believe are relevant. The planning code does in section 410 require the controller to report how much impact requirements affect affordability. Were not sure how much its been followed but were trying to connect the second part of it and once its done and essentially done more often than every five years it should translate into the Planning Department upon the advice of the controller and other experts proposing changes to the inclusionary ordinance. That part hasnt been done. We feel that is very important and secondly as i promised you let me see if i can read it from the notes quickly. I got it and precedents and on the screen and going back to the early parts of the inclusionary Housing Ordinance and the rincon and market octavia plan and the plans at market and special use district, eastern neighborhoods and was long with financial analysis, the Transit Center district around trans bay and the Transportation Sustainability fee and under development and you will see this in front of you in around a year or less the central soma area plan which has an extensive Feasibility Study associated with this. Next slide. So to conclude we pretty much said these things. We feel that the current requirements are too low and we feel increasing the extractions particularly inclusionary housing is the most financially costly of all without a Feasibility Study is risky to do and i want to repeat we feel strongly that the requirements are one size fits all want thats not good for the city at this point and we need a more nuisanced is the of requirements and not possible without a Feasibility Study and with that we will end the presentation and were available for questions. Thank you for your presentation. Supervisor peskin. Thank you madam chair. I guess to mr. Rich and this is not in anyway meant to be combative, but given the incredible spike in housing prices and incredible amount of new construction thats happened in this cycle why hasnt there been effort by your department or the Housing Office to conduct the Feasibility Study. We dont need a Ballot Initiative to do it. We can hire someone to do the study. Why didnt we do it last year or the year before . I dont know. I wasnt here. Thank you supervisor for the question. It was increasingly clear that we need to turn to the private side. I characterized the total picture of affordability of the programs and the private side. Last year you know the mayor was engaged in passing a historically housing bond for 310 million. Only done once in past history. Failed before that. There were efforts by the departments sitting here with me focused on that. As soon as that passed in november of last year we immediately the mayor had us immediately turn to okay. What about the private side and the mayor wanted to raise the inclusionary requirements and called a working group together and we engage an Economic Consultant. That was done and took a few weeks. As you know these dont happen overnight. We got that going fairly quickly and its moving and the intention was to aim for november 2016 ballot understanding we did have to change the charter. We didnt believe we could get the Feasibility Study required and all the stakeholders around the table in time for the june ballot cut off which was four, five months before the election, so thats what has been going on. In fact when when supervisor kims Charter Amendment and follow up Initiative Ordinance came out we actually side tracked very briefly our consultants who were on board at that time with the study to specifically look at that proposal because we knew we had to look at the economics of that and we did that. In the next item we can talk briefly about those findings. Now that is done were turning back to the Feasibility Study but even before that side track not done in time for june and now certainly wont be but by november it can be done. And through the chair while i welcome this widespread belief or fact that the inclusionary percentage can go up i am nervous about this and lets talk about what 25 means because in reality the proposal set forth in the Charter Amendment until the board acts is move the 12 at 55 of ami back to the 15 where it was, and then add a working persons layer up to 120 of ami, and additional 10 of that. Thats how we get to the 25 . Look i have been in the real estate business since the 1980s and gotten lots of appraisals and they like feasibility studies are an art, not a science, and theyre different appraisers to get the answers you want. You can cook a Feasibility Study. Im nervous that there is this predetermination that in many instances or i dont know your name most is the word you used. Most instances that 25 is at 15 and 10 that we discussed is going to be overly burdensome. When we see as recently as last week relative to the project in the Mission Street on bryant 40 . What we see at mission and m and sea lot [inaudible] and seeing across the board so i am nervous that there is already a predetermination. I want to say for the record i have met with maybe not every but most of the market rate Housing Developers oneonone, and when you meet with them oneonone they will generally tell you if we were given this instruction in 2012 we would be building at 25 now. You stick them in a room and as far as 99 of them are males they wont do that. They wont say that in the fraternity meeting but when meeting oneonone hey, this comes out of the land cost. We can do it, so how can we trust in you not doing the Feasibility Study in 13, 14, 15 and its not cooked and you havent come to a predetermination that 25 is too high . Supervisor i think there are two things there to respond to. First of all i am glad you brought up projects like 5m and the giants. I want to be make it clear that the projects that hit the high numbers, 30, 40 , in every single instance bar none they received dramatic city subsidy and 5m got and the giants are getting. In the form of cash 5m got cash from the city and the linkage fee reinvested in the project. We thought it was predid you not policy but its clear they couldnt come without the city subsidy and one ability folsom is another one out there. And every time we have the means and the ability to find the subsidy and a project affordable we do it because its a great policy rather than putting the cash somewhere and spending it later. We want to do with a project in front of us. I dont think there are projects out of the high teens or 20 when there is 8020 Financing Deal available on their own steam. Your second point how can you make sure we dont cook a Feasibility Study. Anything can be cooked. I would say appraisals are more black boxy than the study and we expect you to scrutinize everything that the controller and everyone does and there is a time that the board has to go through it. You raised the Transportation Sustainability fee based on the Feasibility Study not you supervisor but before you came on the board. I assume that it was accurate and therefore acted on that so we 1r9 obligation to help you scrutinize any study you got. I actually voted on it. Thats true, yes. Thank you. Before we go to a question from supervisor cohen i want to acknowledge supervisor kim that joined us today and to build on that and i am glad there were discusses on giants and the 5m project because in other neighborhoods in the city where we wont see large projects like that i think my concern it could go to item 1 or two really, but you mention there are some points where there are projects where whether there is a percentage too high or what not wont be able to move forward and can you talk about the analysis behind that and what i guess the unit size would look like for projects that potentially not move forward under a certain percentage . Again because i am more concerned about the smaller size projects. So as a hunch we are also more concerned about the smaller size projects and i will say in general everything is expensive in San Francisco right now but in general our small and medium projects that occur out of the core of the city are significantly cheaper even though theyre still expensive. I dont want anyone to think that anything is cheap but if you look at projects out on ocean avenue or in other parts of the city and what theyre marketing the rent for while its expensive its market dedly cheaper in this part of the city and because the rents are cheaper it makes them reasonerable not to afford the inclusionary because they dont have the huge revenue and also you cant build very high out there the projects cant get the amortization with the units and its our hunch it will be confirmed or denied that those projects are most vulnerable to that. And do you have an idea of what you mean with medium and small size . 50 to 100 units. As supervisor peskin it is its an art and not a science. I dont know where the cut off would occur but probably less than 100 units out in the outer neighborhoods. Thank you. Supervisor cohen. Thank you. I appreciate the spirited discussion. I have a question for you. What are other cities doing . Are they doing feasibility studies for Affordable Housing . Thank you. I can speak to this one. Its fairly ubiquitous for other cities to do thesed is its. Los angeles, seattle, bc, vancouver. Oakland is looking into one to implement a inclusionary housing policy and the bay area of bay area governments recommends it all cities changing their programs and in fact were not aware of any cities that have mandatory inclusionary housing that is not backed up by a Feasibility Study i will interject here. What cities did you study or find the answer to this question . What cities did you survey that you call to find out if they did the study or not . So this is based on staffs expertise, our research, what we know is out there. We could do a systematic survey as part of a study but we havent gone through the 50 largest cities sis matically but one other example is in new york city they have a proposed inclusionary policy being considered and underpinned by a Feasibility Study. What it actually found in kind of the weak and moderate market areas of new york city the proposed inclusionary housing requirement would have killed any development and any investment so they have have taken inclusionary housing out of those neighborhoods. I dont think were suggesting that would happen here but its an example of the city being really responsive to a Feasibility Study. Okay. Thank you. Supervisor mar. Thank you. I wanted to thank supervisor peskin for giving the historical and political context on the debate on the two competing initiatives but i have a question off the top. I acknowledge like supervisor peskin our city is wide out of balance for low income to middle income people to survive and stay in the city. Thats why creative efforts like the kimpeskin initiative is being moved forward, but i guess my question is why do we need a Ballot Initiative from the Mayors Office to do more studies . And why is this even necessary to put as a ballot measure . Great question. I think as youre aware were starting down that road anyway. I think the mayor felt in order to make sure frankly as he saw proposals coming up not based on the Feasibility Study he felt it was important for the voters to make that connection that there not only be a Feasibility Study but the staff propose changes to the ordinance on a regular basis on that board, so its important. Its one thing to do a Feasibility Study but we need to get it in front of changes to the proposed measure and were seeing changes of the measure not with the luses lus inclusionary and the mayor cosponsored with some members of the board and let the voters weigh in and agree if theyre willing do and how do you get this and now turning to the private sector were seeing in order to really get at inclusionary housing and affordability you need to understand the economics and he felt like that rose to the level of a policy statement from the voters. I think supervisor peskins question earlier why didnt you do the feasibility studies earlier . We could easily do them legislatively cant we . I think i answered that when the supervisor peskin asked. We are engaged with the bond that took incredible work. Nobody thought we could pass it. We passed it and as soon as that was over we turned to the private side and starting with the Feasibility Study so i dont think thats fair. We did it as soon as the opportunity came up. Thank you. Supervisor kim. Thank you. Just to actually ask again supervisor mar and peskins question and with the ballot and we didnt have previously incredible amount of money coming to the budget and the voters authorized a housing bojd and we didnt have one previously and 106 million and now that the bond has passed why not start the study today without going to the voters . Again the best way to answer it its in the spirit and follows two things again. It follows from the two policy statements from the voters and supervisor kim i think you were a cosponsor of and established priorities by the voters. We believe this rises to the level of an important priority and we should make sure were maximizing Affordable Housing and creating inclusionary ordinance that serves a large range much income and will of income and increase the Affordable Housing and not decrease it. It sounds like to us as important as the previous prop ks and its on the ballot and it happens and has to happen. Okay. I agree. Not everything that we put on ballot and many can be done via the board of supervisors by ordinance and the proposition ks can be done in the legislative process but we set goals. In the first case we establish we wanted to hit 33 production of Affordable Housing, 50 with middle Income Housing and we wanted to hear from voters that that was a goal that San Francisco should be working towards, and the second place and the second prop k it was an ordinance to prioritize Surplus Properties for the production of Affordable Housing for formerly homeless to middle income households and because that ordinance hadnt been truly been followed for the previous 13 years as originally authored by supervisor chris daly it amend sense to go to the voters and we need a mandate because the city didnt follow the previous versions of the ordinance and we thought going to the voters would give it more teeth but my understanding we always did feasibility studies and the percentages are feasible for developers and i think all of us in the room want to see maximum Housing Production and affordability production of the Housing Production that we have, so i still question whether this needs to go to the ballot. I would encourage our city departments to begin that fiscal feasibility today because i would like to see the numbers and as we go on to the next item and talk about what the numbers could look like and think getting rid of a ceiling in the charter that i think we all agree upon. We want to zoo what the we want to see what the numbers are and maximize the Housing Production so my question or thought remains the same. This isnt necessary for the ballot that we can go forward with this today. Thank you. Supervisor peskin. Thank you madam chair. Further to supervisor kims comment and maybe this is just one supervisors view of the world, but theres certain things that one must go to the electorate in order to achieve. If we want to float a bond, if we want to raise a tax, if we want to change one word in the charter. All of that as a matter of law must go before the electorate. The fundamental issue before us, and i think theres agreement on this is we errd or the world changed and we shouldnt have put the inclusionary rates in the charter. The Charter Amendment that supervisor kim and myself and cosponsored by a number of other members of the board put on the ballot is really aimed at one thing which is taking it out of the charter and allowing us all, the executive branch and the legislative branch to do our jobs and pursuant to fiscal feasibility studies. I am delighted to hear about the notion of tiered parts of the city that would have different inclusionary rates. We should have been doing it years ago but this is the only way we it have that mature sophisticated policy conversation if it comes out of the charter, so i quite frankly am lets be frank with the public which is the measure that we are discussing right now which you admits not necessary, and the measure that were about to discuss which i admit was in response to your measure, the administrations measure, is also arguably not necessary so hopefully between now and the end of this month we will remove both measures from the ballot and work on the ordinance that will succeed the passage of the Charter Amendment, so we can raise nose those numbers. I find with feasibility now or in the future whether 24, 36 month basis. I would like an inclusionary law if someone smarter than me can figure it out that would self adjust and the cost of construction or housing went up or down and spit out an inclusionary or in lieu percentage. I dont know we will ever figure out how to do that. Thats Rocket Science but i think we should cut to the chase and negotiate this in public and why dont we get rid of both unnecessary Ballot Initiative and work on the successor ordinance. I thinks that sounds like a plan. I think our hearing is over then. Thank you for the comments supervisor peskin and i will state the obvious and we have common goals here to adjust what the affordability rate is in the city and i am hopeful after this hearing there is more discussion and hopefully a positive result to this so are there other questions or comments on item 1 colleagues . Okay. So at this time i will open up item 1 to Public Comment. I have a couple of cards. Some dont state whether you want to come up for item 1 or two but first let me state those that stated which one. [calling speaker names] come on up. Good afternoon supervisors and thanks for the opportunity to speak and from the outset i am tim colen on behalf of the 300 members of the Housing Coalition and our members actually were intimate involved in the citys inclusionary ordinance in 2002 and it has been our policy ever since we should support an inclusionary rate that gives the most Affordable Housing and thats never changed. Obviously were concerned about where this is going now. In our experience its unprecedented that a change is made to the inclusionary rate without Feasibility Analysis and i think its essential that somehow changes of this magnitude that can have such profound impact on the Housing Market have to be grounded in real world data, and our position has been we have to follow this and follow the data. It will tell us where to go and the second thing is i think its what would really alarm us and would be unfortunate is a policy that hammered which we expect it will smaller scale, lower cost construction outside of the urban core. If we cant get something that keeps the incentives for that to continue to be produced but greatly accelerate it theres not much hope for us in terms of ever getting our hands on the affordability crisis, so i think be cautious. Be humble. Do the analysis and follow where the numbers go and thanks. Thank you. Next speaker please. If i called your name please line up towards the windows. Good afternoon supervisors. My name is mark mcdonald. Im a principal with Dm Development a local development firm. I am here today to support the mayors proposal to request a Feasibility Analysis for implementing new Affordable Housing requirements. Affording more Affordable Housing is paramount to our city in terms of keeping it diverse, thriving and competitive and i am pleased to say every residential project we built includes these units on site but the requirements to double the requirements to 25 is untenable especially for smaller and medium boutique projects which we specialize in building. Based on current costs and rents it will be challenging if not impossible to build housing with the 25 requirement without up zoning or subsidies and significant surtail market rate Housing Production and stifle the new units that the ordinance is intended to create so instead of rush this to ballot its imperative to conduct a proper Feasibility Study and create Affordable Housing to responsible levels without shutting down the production of all levels and devastating the industries and the construction trades and its imperative we have responsible grandfathering provisions for projects that filed applications and made significant financial want haves to move forward under the original rules. Thank you for your time and i hope you seriously consider the concerns and a thoughtful study and discussion as a city we could build more Affordable Housing, not less. Thank you. Thank you very much. Im going to call a couple more cards. [calling speaker names] hello. My name is kerry miller and a independent reeps broker in the city and been here for four years and came from chicago initially so i am initially encouraged. Sounds like people are working things out. Thats great. It would save us a lot of time. I understand theres a large need for bmr and inclusionary housing. There isnt a lot of discussion what happens for middle class san franciscan and make more than average middle class citizen in a city but the reality is theyre renting until they buy somewhere else and theyre buying a Vacation Home before buying in the city and market rate is what there is available to take care of the folks and like most places and not a lot of concern for these folks in the meetings but thats what the small time developer is doing and important to keep in mind intended consequences versus unintended consequences and the things that everything that goes to a Ballot Initiative will find the right solution and not necessarily born out over time. I think prop 47 had good intentions behind it and now there is broken blases and bikes get up and walk away all over the city. Its important to keep in mind if you pass a blanket number, 25 across the board, there will be lots vacant indefinitely and i dont think thats what the city needs. The crisis doesnt need more impediment to development. Thats all. Thank you. Thank you very much. Next speaker please. Hello. I am [inaudible] a local market rate developer. First i would like to thank everyone for being involved in the legislation. We are really supportive of any way to increase Affordable Housing within the city. However, we are concerned about the impact of the new legislation on existing projects. As an example we submitted a 44 unit project for planning almost two years ago and under the existing structure and if the rules were to change the project would be significantly impacted and at risk. We therefore would appreciate and support some Feasibility Analysis for the projects to make sure it does what its set out to do. Thank you. I am carlos wallace. Dear supervisors i appreciate your time today and the candid comments back and forth from both sides of the room and supervisor peskin you outlined a solution that were looking for and a solution of common sense and as a personal note i care about the housing in the city. I lived here for 20 years and we have projects in the pipeline that would be negatively affected without a solution but i have kids growing up in the city and i worry about their ability to buy housing when they grow up. Theyre 13 years old now and if theyre not high income earners i dont know where they will be and have trouble buying housing when they grow up and its a problem we need to tackle together but i think its important to set a rule, make it clear, and be cautious when its changed and right now youre talking about a big change that potentially can ice thousands of in the city now or the future so if youre changing the rule it has to be cautious because the markets will react and we could find ourselves ten years from now with little production. Some projects may work at 25 but many may not so the Feasibility Study proposed whether via the mayors proposal or some compromised ordinance that comes into place at the same time as the Charter Amendment is extremely important to move cautiously i think is very important for people in your position. As a sign of respect to the city the residents and everybody that wants to solve the affordability crisis in the city. Thank you. Thank you. Next speaker please. Thank you supervisors. My name is joe and with avalon bay communities. Were the developer and owner of about 3,000 units in San Francisco and currently building 300 more in the dog patch. I live in San Francisco and earlier in my career i respond spent eight years building Affordable Housing with a nonprofit and i know how difficult and critical it is that were building new Affordable Housing. Inclusionary housing is a key tool in the tool box to do this and its critical to maximize the effectiveness of this tool. I am actually very eager to be joining with you and with city staff to be working on ways to maximize this most effectively. I dont believe it can be done arbitrarily or by decree. Its a great way to get the highest percentage but the only way to get the projects paying that percentage is with a formula and careful look at feasibility. The mayors Housing Working Group is working on this. I think there is tons of potential and an opportunity for San Francisco to be a leader in this area, and supervisor peskin mentioned the Rocket Science of coming up with a formula that is automatically. I dont think its impossible and i think you know we can we have a lot of smart people in this room and other rooms in the building. I think we can come up with a formula that adjusts automatically with the conditions and its the only way to ensure that the public gets as much it deserves from this policy while not leaving anything on the table. As one final note i am a market rate housing developer. I will provide a little anecdotal evidence. We control a piece of land in San Francisco and would like to use it and add to the city stock and Affordable Housing. At 12 we may be able to make it work under the Market Conditions. With 25 we cant make that investment. I cant get people to invest in the project. Thank you very much for the time. Thank you very much. Next speaker please. Good afternoon rules committee. Were saving nickels, saving dimes, working until the sun dont shine. Since we left our Affordable Housing behind were city blue bayou but were coming back some day when we got more pay, and were blue bayou, where the folks are fine and we make some dimes and the city shines with their fishing boats, with their lobster float if you could only see that we want affordability housing. Everybody plays with housing rules sometimes. Theres no exception to the rules. I aint lying. It maybe factual, maybe cruel. Make it happen, wont you . Thanks. Thank you very much. Next speaker please. Supervisors, recently we lost a housing advocate in dr. Espinola jackson and she she would make a statement and affordable to who. I have been involved with this issue of Affordable Housing for the last 35 years. Maybe before one individual on the right side was doing some sort of housing but the rest of you were not there, and i studied all the devious [inaudible] richard blum and Jon Stewart Company and witness to what i say. This city has sold out Affordable Housing meaning you cheated on those people that made this city our neighborhoods and favor the developers. Now, i represent the first people [inaudible] who have been in this area for 13,000 years. All this land was stolen so here we have the thrives deciding how to make best of the land making millions of dollars. Now, who challenged the academy of Arts University who took so many rental units away . Why are they giving all the developers the Public Housing that the department of defense paid for 100 times over . So that this middle class families and people that we really want to stay here in San Francisco and indigenous and i can say that off mic . Thank you very much. Next speaker please and before that i will call up the cards where they didnt indicate whether theyre speaking on item 1 or two. [calling speaker names] hi. My name is sonia and i want to take issues with peskins claim earlier that life went on fine after the first inclusionary fees were instituted. Life is not fine. Were in a horrible housing crisis. Things are fine for Housing Associations and others but generally its not fine. High fees can i have Marginal Development and thats the development we want the most, stuff that happens at the beginning of the cycle aka the end of the recession when people most need jobs and in the neighborhoods and low profit margin and projects at the end of the cycle and wind up being sold when they open at the bottom for a third off. Those are the most delicate projects and those are harm and when you willynilly set the fees too high and thats what i am really keen on you know based this on the Feasibility Analysis and its true that the Feasibility Analysis can be cooked either way. Right . They can be cook that you can afford a higher or a lower fee. Its obviously a political process. I would suggest airing on the lower fee side for the development. Thanks. Thank you very much. Next speaker please. Supervisors. I am build inc. And i want to thank you all for the concern about housing. I certainly share it. Affordable housing is critical in San Francisco. And two things im going to say. One is weve got to get the percentage right whether with a Feasibility Study or some other way. We dont want to kill the goose thats laying the golden eggs here and get the grandfathering right we have a pipeline that is creating Huge Community benefits right now. I sit on the market octavia board and our budget in the next five years for the Pipeline Projects is 40 million in fees and directly impact that neighborhood. Multiply that over the entire city and you see that throttling the production of housing at all levels of affordablity would be greatly deteleious to People Living in San Francisco. Its important to keep that housing pipeline going. The Affordable Housing market rate housing are linked. If we dont either delink them or if we stifle the production of market rate housing it is going no doubt will have a Chilling Effect on the production of Affordable Housing, so please consider carefully what youre doing here, and find the right path for us. Thank you. Thank you very much. Next speaker please. Hi. My name is oz ericson and president of emerald fund. Just one point before i address this issue. I was on the committee that senator lenos committee on Affordable Housing. I went to meetings for nine months every wednesday at 12 00 oclock and contrary to what supervisor peskin says we considered economics of that Affordable Housing very, very carefully, spent an enormous amount of time on it and widely supported by many of the Market Rate Developers contrary to what supervisor peskin says. I was one of them. I worked very hard on it. It was very good legislation and that should be the way what we approach this legislation. We should do an Economic Analysis to make sure its prudent. I have passed out a letter that was signed by the people who build, develop and construct well over 90 of the housing in the city. You can not build despite what supervisor peskins and i would love to hear the names of these individuals. You cannot build with 25 . It is impossible. It drives the land below zero. You cant do it. You have raised this twice that you talked individually. I have had budgets run by six of the Market Rate Developers and flee of the Affordable Housing three of the Affordable Housing developers. Its impossible. You pass this. You kill housing. You layoff thousands of union jobs. You should amend the legislation and include an Economic Feasibility into the ordinance. Thats the way you should do it and grandfather the projects. Its too important for the city. Thank you very much. Madam chair if i may respond. Supervisor peskin. Because his comments were directed at me. First of all relative to the letter that just received because youre requesting my veracity. I have been contacted by folks that have never seen the letter and did not authorize their name you have been contacted by one person that said that by the swig company. I have a letter from the swig company authorizing it. Thats true. They have done it [inaudible] all right. [inaudible] take it off line. That would be great. Respectfully calm down. Its not correct. Its not the swig company but i would like to also go back to 15 years ago because youre questioning my veracity. Yes, there was a negotiation and yes it was done in conjunction with people in the Development Company as supervisor kim and supervisor mar and of the sponsors of this measure are trying to do. My point to mr. Rich was it was done absent a Feasibility Study. It was a negotiation. That was the point that i was making. I suggest you calm down, but we want to get this thing right and we appreciate your input. Thank you. And now if we can move on to the next speaker please. Thank you. Hi. My name is alyssa and representing spur. We support the mayors measure for the Feasibility Analysis to inform San Franciscos inclusionary housing requirements. Inclusionary housing produced thousands of units since introduced in San Francisco and we agree theres more to be done and there is room for change. We agree we should periodically challenge our assumptions but finding the right level is key to maximizing the production of Affordable Housing. Too low and not asking enough and too high developers will not produce housing at all levels that we like. It can be done thoughtfully and smart based on the controller and the department and inform discussion that is currently under way. Spur hopes that the discussion reports market rate and Affordable Housing rather than pitting one against the other. We continue to believe that what it will take to drive down housing cost is a set of changes to enable the production of more housing at all price levels. Supervisors we encourage you to incorporate teasablity language into the Charter Amendment currently on the table. Thank you. Thank you very much. Next speaker please. Good afternoon supervisors. My name is lea chang [inaudible] and in San Francisco doing development for 25 years and an advocate for Affordable Housing but were concerned about the proposed amendment on the table right now. First increasing the percentage as you propose is not economically feasible to obtain any Capital Projects [inaudible] you have to show a certain return and what youre asking those returns are not achievable. The end result would be end to housing supply and bmr supply and on site, off site in lieu fees. Second any policy that we believe needs to to be made with this significance requires a analysis and Feasibility Study and we highly encourage that the supervisors consider such and last that we ask that you consider the projects in the pipeline be grandfathered in and not unreasonably subjected to a significant change like this. We appreciate your time and ask you to consider these points. Thank you. Thank you and at this time if anyone wants to speak on item 1 on the agenda please line up by the windows and come up for Public Comment. Thank you supervisors. My name is Patrick Kennedy and the owner of panoramic interest. Share the desire to produce Affordable Housing in the city as well and have focused our firms efforts building affordable units by design, micro apartments and the similar. I would like to bring to your attention a to potential issue and cost to hawkins and that bill as you know limits rent control on new construction and old construction, and although there is a san jose case that upheld inclusionary requirements it specifically limited to for sale units, and if you double the inclusionary requirement and make projects both Going Forward and the past ones financially infeasible i think theres a very good chance you may drive developers to the courts to question the legality of the inclusionary requirements in San Francisco in light of cost to hawkins. I have been part of the Development Community here supporting the 12 set aside and the current efforts to see whether more can be done, but i think to summarily decide to impose a 25 requirement could in fact be the straw that breaks the camels back and throw all of this bmr question into the courts with nobody benefiting from it. Thank you. Thank you. Next speaker please. Good afternoon. My name is craig hemberg with ddt. Were a local Real Estate Investment firm. Thank you for the opportunity to speak today regarding the mayors proposed Feasibility Analysis and inclusionary housing requirements. During the previous recession our firm purchased several of the market octavia freeway parcels from the city. We then spent the next five years working very closely with the neighborhood and local jurisdictions to design and build multifamily projects and help to sell the vision of the market octavia plan. All of our projects fall in the smaller and moderate scale, 35 to 50 units and for sale condominiums. We included on site inclusionary units in all of our projects and very proud to say that. In preparation for todays hearing i reviewed our performance to better understand how increasing the on site inclusionary component or percentage 25 and the revenues to off set the change. On average our units sold below the current average per unit sale price of 1. 1 Million Dollars. Our average unit size was 150 square feet in size. In order to make the same projects work with a 25 on site inclusionary percentage our average unit prices would have have to increase over 140, 150,000 per unit. Essentially wiping out our land base in the project so they could be zero and our projects would not come to the same returns. Unfortunately given current Construction Costs and increases we have seen over the years north of 20 long lead times and the politicized off mic . Thank you. Sorry. We have to give everyone the same amount of time. Next speaker please. My name is jon stewart. I am a resident of San Francisco and principal in our company and been involved with Affordable Housing for 30 years. We dont oppose the 25 threshold per se. In fact with a 12 let threshold the way its turned out in the market is probably too low. We think there are cases where deals could go through in excess of 25 particularly with public support. We oppose the one size fits all. What are you going to do with a small in fill project . Lets say its a lazy asset to bring into play and no economy of scale, 50 units. What is the unit if you have a environmentally challenged site and high land basis because you have to clean it up. What is the plan for the market changing in two years when rents plummet faster than costs . My recommendations are four fold briefly. If we solve this problem through an ordinance and i am in agreement with supervisor peskin we shouldnt do it through the city charter. Lets make a provision for change at a global systemic level, the number for all projects. One. Two, lets make a provision of change at the project level and there are good deals you dont want to baby the baby out with the wash on so i think you want to look at two folds. Lets address the grandfathering and lastly i hate to say this and presumptuous and bringing the for profit and nonprofit communities in and go to a bond school. Remember the adage from divorce lawyers and a muses me [inaudible] leisure. Thank you. And last call again for Public Comment on item 1 . Good afternoon. My name is david sternberg, i do have comments about the second item which im going to hold until that comes before us but regarding the nekts nexus study i still to this day dont understand why Real Estate Developers have to bear the burden of all of the Affordable Housing that the city supplies. I dont understand why people that benefit from buying houses for 50,000 and 20 years later theyre worth 2 million why they dont bear that burden . Why people that flip existing houses bear that burden . Why microsoft or any of those companies that maybe in the city paying payroll tax and paying taxes on that why they dont bear the burden . Im not an attorney. Im not a politician. But it seems that there are three forms that could generate an ongoing constant amount of money for Affordable Housing, and that would be transfer taxes, payroll taxes and property taxes. Again developers are here d business the same as everybody else in the business and i have been an architect in the town for 40 years. Most of my clients are building small to medium projects. Theyre not wealthy people like so people think. Theyre not land rapers. By the pay city fees and Capital Gains taxes and need money for the next project youre poor again, so i just dont understand. Maybe somebody can explain it to me. Thank you. Thank you very much. Any other members of the public who wish to comment on item 1 . Seeing none. Public comment is now closed. [gavel] and colleagues any additional comments or questions on the first item . Supervisor peskin. I just want to make one kind of overarching observation which is im delighted that we all agree that the number should go up. I appreciate the gentleman that said proceed cautiously. I agree but where was that caution in 2012 when the market was already going through the roof when some decision was made to reduce the percentage from 15 to 12 . Where were the advocates who claim to care about Affordable Housing and claim to want to obtain as much as is feasible where were they in 2012 . Mr. Rich with all respect, and i mean it sincerely. I think the administration can do a bond at the same time that it can be do a Feasibility Study. Theyre not mutually exclusive. I am delighted that we have sparked this conversation. I am delighted that we have sparked it six months earlier in june rather than november because i dont think we can or should wait and i for one look forward to working with my colleagues on the board and the administration to find that sweet spot. Thank you. Supervisor kim. I wanted to respond to a couple of things. I know supervisor peskin mentioned this earlier but i have talked to developers also, personally more than one and 25 is feasible and they can do as long as its baked into the deal as they move into the process and i am happy to make sure they speak publicly and i think we need to be careful when we scare people about job loss. I think thats inappropriate and that were scaring people about the future and depend on construction. Construction is doing well in San Francisco and i never seen an inclusionary housing policy that has hurt our Housing Construction and what hurts it is our economy. Its financing. Its not building more Affordable Housing and mad rot housing and for the workers in the city today. I want to address who contribute toss Affordable Housing . First when we reformed the business tax a few years ago and moved from payroll tax to gross receipts we did actually dedicate a portion to the Housing Trust fund growth. We have also looked at increasing the real estate transfer tax every few years and in fact i have two ballot measures in the hopper today and 1 increase to the hotel tax where our hotels and tourists contribute to helping us house family homelessness, the Fastest Growing demographic in the community today. That hopefully will be on the ballot in june. In november were looking at increase in the transit tax and luxury building and 5 million or more and 25 million or more and everybody is contributing to the Affordable Housing crisis and not just the developers although they play a key role as they build and profit in the city we expect them to give back to the city. Yes we want you to build more Affordable Housing so to say that only one category folks is targeted to build Affordable Housing i think is incorrect so just wanted to address that point. I know we will make further comments as we speak about the next Ballot Initiative. Thank you. Supervisor cohen. Thank you. My question is through the chair to supervisor kim and my apologies if my question makes you feel uncomfortable but in the interest of transparency and discourse in the conversation who developers are you talking to . Who has agreed and acknowledged that 25 is doable . Supervisor i am happy to speak to you off line and get the developers to speak publicly themselves but i have definitely heard from a number of developers and we should clarify when talking about 25 . 15 is always what developers have done and that is building Affordable Housing at 55 of ami and below. What were merely asking is build another 10 for middle Income Housing and requires less subsidies and much of the market rate housing should be affordable to middle Income Housing and its not and theyre building at two 70 of income and seeing the numbers developers are often building for housing of four that make 270,000 a year and i dont know how many people in the room that make that much in San Francisco but its a problem and a problem that Developers Say theant cant build this housing and make 80 to 100,000 a year and cant live in San Francisco and if developers cant build to this category and were in a lot of trouble but i have to remind the board and many in the room that over ten years ago when talking about increasing inclusionary from ten to 15 developers said over and over again it would kill all development and it did not so i think its important as we continue to move forward and push the envelope what it means to build in the city and yes we need to do the analysis. Yes, we need to make sure everyones at the table but we all need to give a little more. So i guess im going to take a page out of your book supervisor kim. You didnt really answer my question and i think its fair for us to put it out in the public. I too talk to developers all the time as chair of the Land Use Committee and being the supervisor for district 10 there where there is a plethora of development happening and i dont that as a good thing but its a reality, a reality that i have a pretty good ear with the Development Community, and i quite frankly and i will go back to everyone, big and small ones and surveying them. I want to know which developers are saying that 25 is certainly doable. The other thing and i want to make sure that i heard from the Mayors Office correctly they didnt say nobody is able to did but my take and understanding is most of the Development Community wouldnt be able to do this. Im not looking to do favors for the Development Community and we need to come to the right number and supervisor peskin nailed it and you put on a measure and the Mayors Office put on a measure and its bullshit and we need to keep it going and there are important things that we need to deal with. [applause] thank you. There are important things that we need to deal with, homelessness being one and talk about building for them and the Affordable Housing crisis. Its frustrating that we have a special rules committee and all these people come for the conversation and admittedly we can deal with it by pulling it off so its frustrating to sit here and deal with this. Lets get on to item number 2 and get on with it. Thank you supervisor cohen. Any other questions or comments from colleagues . Okay. Seeing none can we get a motion to file item 1. Yes. Second. Moved and seconded. The hearing is filed and now call item two mr. Clerk. Item two is a hearing for the Initiative Ordinance by four or more supervisors for the june 7, 2016 election ordinance amending planning code to set forth the minimum inclusionary Affordable Housing fee requirement. Thank you. Do any of the sponsors wish to make comments on this . I think its been made. Any Department Staff wish to comment on the second item . Sorry. Im sorry. Mr. Rich. We wanted to quickly go over a couple of things and i wanted to preface this we definitely understand theres been a lot of discussion about compromises and discussions that should occur. I am obviously not authorized to have a negotiation sitting here in the board chambers but we understand it will happen and we understand theres a lot of stakeholders such as the construction trades and others that want to be part of that conversation. I did want to spend a quick moment having my colleague describe and we will do it quickly because it sounds like this is a short presentation why we are concerned about a 25 across the board number. Again very clearly there are times when 25 will work. It will certainly work when there is a lot of Public Investment in a project. It will probably also work sometimes anyway when there is significant up zoning from 40 feet to 200 feet and may work but i wanted emily to take you through quickly the overall concern with 25 percent. I do want to point out unlike the Charter Amendment which were not talking about today the Initiative Ordinance before you today cant be changed and if put on the ballot by the voters it could only be changed by going to the ballot so we feel the obligation to give you the results of a preliminary preliminary analysis on the 25 because it cant be changed in the form before us today so go ahead. And if i may supervisor peskin. Before she speaks lets just be clear, and i have been remarkably transparent. Had the previous item not been introduced on january 19 at 4 24 p. M. This item wouldnt have been introduced ten minutes later. Thats reality, so i just want to put that on the record. Certainly. We just have to respond to something before the committee. I actually have a question for either sponsor of this particular item, number two. I mean out of a very basic level can you talk how it is that we arrived at the 25 across the board . Any sponsor, supervisor kim or supervisor peskin . I think supervisor kim touched on it and as you have heard and scene and interestingly enough when i was quizzing mr. Rich about projects that went far north of 25 the response was those were on city land. Those had been conferred major height increases or density increases or what have you. That doesnt address the situation from last week relative to the project on bryant street. Heres a perfect example and its not a 25 example but we had a situation on december 8 with the board and rejected a project on van ness and the financial terms and low and behold said the developer can do 8 more Affordable Housing at the same sale price the city is offering. The reason i am telling you this its our job to move the numbers as high as we can and still have market rate with Affordable Housing occur. We know that the numbers can and should have moved north of 15 for 55 ami and below, and as supervisor kim said we believe that creating an inclusionary amount for middle income actually because it requires significant less subsidy is feasible and while were not naming folks excuse me, in the fraternity, that told us they believe its feasible Going Forward because ultimately its a function of land costs, and yes we have heard from at least one individual that says at 25 , 15 and 55 and ten at 120 that you would drive land costs down to where the land cost is zero. That is absolutely not true. Nobody in the business is saying that except its scare tactics, hyperbole and brought a wonderful conversation and to all of us agree that prop c is a conversation of the past and our job to find the sweet spot. If i may add on. And i appreciate developers or examples going beyond the 15 but what analysis went into how you arrived at the 25 . Supervisor kim youre the sponsor. Supervisor kim. So going to the Charter Amendment and the Ballot Initiative that is before us today the main premise of the Charter Amendment is what we of course all agree on and get rid of any ceiling in the charter that restricts the amount of Affordable Housing that our Developer Community can build and currently set at 12 . We are bringing back our original percentage point which we know builders can build at which is 15 on site and on top added 10 for middle Income Housing and we believe developers can do. With that said because we want to spend to make sure these projects are feasible for broad range of developments for 25 units and above we set this as merely an interim controls and the important part of the amendment is read the board to be flexible and how much Affordable Housing our private Developer Community can build and in many cases as mr. Rich points out with city subsidies and achieve higher and 33 and 40 of Affordable Housing housing. The measure before us today and sets a floor of 25 . We are again open to withdrawing this measure with the krawrl of the other measure as well and we know there are conversations with projects in the pipeline that depended on the previous formula and far enough down the road in their process where it would be difficult to change their pro forma. That is one piece of the negotiation. The second of course is what is feasible for the wide range of developments to build in the city . What can large and medium size projects do . Of course we excluded projects 24 and under because we believe they cant build more than they currently do. That is really the conversation before us. I dont think in the room is trying to Halt Development or layoff construction jobs. What were trying to do is push the envelope on the discussion what has become the number one issue in San Francisco today which is maximizing our affordability and building the most Affordable Housing and middle income that we can and these ballot measures kick off the dialogue and ensure that we have that conversation so our offices have already started meeting with the Developer Community to see what we can do and again i want to reiterate we can pass this all via ordinance as long as we remove both ballot measures that are before us at rules committee today. Okay. I appreciate and hope that certainly there will be more discussion. I think the main question again is what kind of analysis was done behind the 25 . I will just say that i appreciate us trying to incentivize building housing for middle income, absolutely, but if there is a percentage that means that potentially we may not see that that is concerning to me so again i wanted to what analysis went into the 25 . Mr. Rich you had something. Through the chair if its okay i would like emily to do what i said and a quick presentation. I want to comment on supervisor peskin for the land going to zero. Staff hasnt said it will go to zero but below the current use would support and retail rents are high in San Francisco. If you have a piece of land with a retail store on it or a parking lot that is worth a lot of money so it doesnt have to go to zero for development to stop, but just below the current value of the land and with lots of sites and commercial corridors you have i business or parking lot bringing in hundreds of thousands a year and capitalize that and get a piece of land and emily will show seven, eight Million Dollars and in many cases a developer under 25 couldnt pay them. That landowner will not sell the land so thats the issue. Its not about a zero land value. Before the presentation i want to ask are you saying that development cannot do 15 affordable and 10 middle housing in any scenario . No not any scenario but in many scenarios thats what were saying. So youre saying in some scenarios its impossible for developers to hit 25 and its a surety. Yeah, thats what i am saying and based on a surety and looks like many projects cant hit 25 . Thats correct. All right. Lets move to the presentation. I will be brief and i will go over the slides and part of the record and in your packet so as ken mentioned we had an Economic Consultant teed up for the Feasibility Study with the working group and do the analysis of the 15 plus the 10 , the 25 proposal so to be clear this isnt the Feasibility Study but backed up by Extensive Research by the consultants and vetting by the mayors working group so you find the report in the packet. Its also posted online at the Mayors Office of housing and Community Development website. The consultants looked at a number of types and midrise, low rise and apartments and condos and studied the inr inclusionary rate of 25 and the in lieu rate of 33 . I will walk through one case as an example. Its a midrise apartment project so seven story rental building and assuming it has on site inclusionary and 12 under todays requirement and 25 under the proposed requirement, so just as the first exercise we want to show what a rate of return would be for this project under todays Market Conditions so the Industry Standard for a return for this type of rental project is return on cost and its a slsmcasion and divide annual revenue and the Development Costs and thats what an investors looks at when deciding to give money to a project or not worth it and give the money elsewhere so with this building and the 25 the preliminary analysis showed 4. Nine return and substantially below what Financial Institutions are targeting today and i would stress is a historic low and based on the Interest Rates are today. So that difference between the foirntd 9 and the five and a half to 6 percent is significant and it strongly suggests that a developer who is trying to build this project wouldnt be able to get financing. The project wouldnt be able to go forward unless of course they found a way to adjust one of the other inputs and the return on cost equation so looking at revenues adjusting the market rate housing revenues line is you know that is set by the market the Affordable Housing revenue is set by the inclusionary policy and based on the 25 in this case so theyre not things we can adjust. Construction costs are largely driven by regional factors and that leaves land and part of the discussion today so if uktd change you could convince the developer to go down in land value and change the value so thats what we looked at next. We took first of all we studied this project under the current rates of 12 and calculated a land value that a developer could reasonably afford to pay a owner and hit the five and a half minimum return on costs. It came out 138,000 per unit and vetted with the Mayors Office working group we found that was really in line with what their comfortable paying for land today. We then adjusted the land value sorry, plugged in the 25 percent Affordable Housing requirement which changed the top of the equation, the revenue line. We kept the return on costs constant and the minimum of five and a half percent and see how far land value would have to go down to keep that constant. For this particular prototype it needs to drop by 40 . Again the land value that ken mentioned we described in the previous presentation for that same type of same piece of land, same type of projected retaining a retail use, you know that 8 Million Value comes up about 130,000 per student so the 82,500 is substantially below what the land is worth to the owner running their current business. This is just one example in your packets and the report posted on line we show the land value changes for the different types and it varies by building type, by tenure type. And the Feasibility Analysis of course would explore that further. There is one more thing to synthesize from the numbers and how much a developer could pay for land under the new policy if theyre planning on building on site unders versus the in lieu fee and what we found with the exception of one product type, a low rise Apartment Building, the economics will work notably better to do the in lieu fee rather than built inclusionary units. What do you mean by low rise if you could break out the low and high . We about it based on construction type and why we segmented it and Construction Costs are higher when you get into a taller building type and its in the packets. I believe were at five stories for low rise and seven for midrise i dont have it in front of me and 12 for high rise is the minimum threshold. It maybe lower for high rise in fact, but in any case only when you have this low rise Apartment Building which will have the lowest relative Construction Costs does it make economic sense for a developer to do the Onsite Program and in every other case when you have the choice of 25 on site or 33 in lieu it makes more sense to do the in lieu so what we could end uch having is almost all of our projects deciding topate in lieu fee and very few of providing on site inclusionary and as i said in the previous presentation we think would be a good policy is a mix to serve as many families as possible. That concludes this. I wanted to give an example now that the numbers are out there. Thank you very much for the presentation. Colleagues any questions or comments . Okay. I just have one quick question. I know in this particular Initiative Measure there are three extensions from the requirement so for example one if theyre on a site and a height limit has been approved by the vote of the electors. Secondly if they entered into a Development Agreement and third if they procured a final discretionary inclusionary approval and i dont know if this is for planning staff or who else and wanting to know what the exception covers and currently in the pipeline or why theyre in here . Good afternoon supervisor. John ram Planning Department. I dont have the numbers on that in front of me but there are a number of projects that received entitlements and meaning Planning Commission approval or staff approval that arent yet under construction. Theyre in the process of being approved primarily through the building of inspection and i dont have the numbers in front of me and i dont know if we have them here either. With the other question that was certainly the exceptions they wanted to put in there. I will say i am of staing a working group and the mayors request to look at which should be done and looking at entitlement application to actual entitlement so theres a range of options on the table that were discussing right now. Thank you. Supervisor kim. Thank you. This maybe a question for director ram or ken rich, but in looking at an ordinance which is sponsored by our president and also our mayor which increases Affordable Housing in the viz dare i dont and fill more corridor and to 23 . I know this is in case where the developments elect to go to the higher density or height in the rezoning and i am curious that in kind of the greatest height or bulk that we could provide in this rezoning what would most of those projects qualify . Would they be low rise . Midrise . High rise . Youre referring to the visadaro corridor. Yes and fillmore. In that case the rezoning was not an increase in height. It was removing a density limit. Okay. Which we did in planned areas so that had a dramatic effect on the area and what could be built on the site and the controlling factor is not the units per acre but the height and bulk and prop c allows us to ask for more affordability i think thats a positive thing. I support the direction that this legislation is moving in, but if we take out the constraint on the density what would most of these projects qualify as, low rise, midrise, high rise with the Mayors Office . I believe most are below 65 feet so i guess midrise per your analysis if i have that correctly. inaudible . They are low rise and based on the building type i guess. So we believe that midRise Projects can achieve 23 affordability some. Maybe its low rise affordable itd. Im sorry. I dont know if that qualifies under the analysis. Im sorry. Is there a further question. Yes. This ordinance states that certain types of buildings and elect to no longer have the density bulk constraints and reach 23 of affordability on site and i am curious to these developments and what are they, low rise, midrise, high rise . I think theyre generally low rise and the zoning in there changed and with that you do as paused i wasnt involved in that piece of legislation but this is voluntary. A developer would have the ability to look at going by the old rules and doing fewer units and the affordability and the density and affordability and its a choice made. I appreciate that. But if youre putting forth legislation to increase the affordability and its not symbolic and developers will elect to move the density constraint and build at 23 . Thats the hope; right . So i then move to the next step is that you do believe that low rise developments can hit 23 affordability, that its possible . Again its possible. I heard previously was that you believe that certain types of developments could never achieve 25 supervisor and in other cases youre saying supervisor and please let me finish. And thats what i got from the presentation and never achieve that and we putting forth legislation that developers could do that. The situation there supervisor the situation there caught us by surprise. Maybe it shouldnt have. The land was bought before there was a inc. Ling of a zoning change and assuming that you had four, five story height limit and in that zone fairly limited ability. Out the sites and not like doubling the height. If you left the density increases the same but doubled the height you would get the same number of units and in a case there has been public subsidy conferred. It can take two forms. One is cash and one is more development capacity. These parceled doubled or tripled the capacity and therefore it could work, yes. What would prevent the landowners selling on the market with the additional value conferred . It would limit what they sell for; right . I didnt understand the question. Sorry. You are saying that the land was prebought i think the assumption is that the landowners will develop because there is a wind fall and its limited pause, change of captioners . Im hearing that we are actually in agreement in this room that what we are impact the the greatest when it comes to land based on affordability is land value. We have how we maximize this is actually grandfathering. The real issue is the grandfathering issue and not in the future where it will impact the land sale. In order to make that statement be true in my opinion you would have to assume that most parcels in the city could get a density bonus like the ones in dwis droe, when emily made the presentation she just made, she assumed a doubling, i think more in this case of a doubling of a number of units done on the parcel. We said from the beginning, when you begin offsetting, it sometimes works. You could propose that the 25 come along with a doubling of the zoning and that would frankly be a lot closer in working with more cases. It wouldnt be fair to say that its impossible for low Rise Projects to achieve 20 . Its possible, just depends on the number of factors required. Its a factor and in general a subsidy from the city from a development capacity. It would not be impossible . With those conditions i just stated, not impossible. Thank you. Thank you, colleagues, any other questions or comments . Okay. Im going to open up for Public Comment. Please lineup. Names names calling speaker names im going to call a couple more cards. Committee chair, before we go to Public Comment. I have a question for you. I dont know if this was already proposed. I wanted to know if owd did a ballot analysis of this measure . Thats what we presented. There is a report, a much more detailed report in your packet. We presented the review of that. Did you answer my question . I didnt hear it. Did you answer the question that 25 is not the right percentage . I think our position is no percentage is the right percentage. We are hoping for many projects that might be built in this city. Do you have a percentage that would work . Not until we complete the Feasibility Study. How long is the Feasibility Study going to take . A few months. Okay. Any other questions . Okay. Seeing none, lets go to Public Comment. Public speaker hello. We are aware that the ordinance follows a legislation but its a 25 requirement for the ordinance. If the ordinance is required for inclusionary housing. It will make matters worse. Its important to ensure that the 25 requirement is not already too high. The information gives us no assurance that 25 is not too high. To ensure that any increase requirement for inclusionary housing does not mean that fewer units means inclusionary housing. Thank you. Next speaker, please. Public speaker we are encouraged by supervisors presentation hearing today as essentially being part of our as being a bargaining chip that would drive negotiation with regard to more rational higher housing percentage. I myself was astonished at the number. It could be easily higher. It would be higher in different degrees depending on circumstances so that it would be a calculated result and where and when and how much it could be increased. As noted we did a public records request and the information we received, the actual feasibility had been considered. We are not confronted by private assurances from developers to Say Something publically that i have usually said only in labor circles and with all due respect with never underestimating a capitalist stabbing you in the back. In the 1980s supported or opposed an extension of an exemption for mission bay from the prop m requirements. So these are possible that with developers who feel they will be grandfathered in and the properties with more value and the rents higher after deconstruction of the measure that frustrates construction. We would ask you to take this into consideration. Thank you. Public speaker good afternoon. My name is tony rodriguez. My mom and dad met in San Francisco. They got married, they had great paying jobs and bought a house and raised four of us. I like them followed on with the american dream. I went to school here. Joined the union jobs that paid well. Met my wife and got married and bought a house in the city but now that dream doesnt seem to be there for my kids. My two kids who are narcotics, nurses, they went to live outside of the city. My other kids cant even buy a house let alone rent a house. I am for Affordable Housing. What really scares me is this cat and mouse game. We are held hostage, my kids are held hostage and the rest of San Francisco are held hostage by this game. I understand the need for Affordable Housing and the 12 being way too low, but to put forth something that the voters are going to vote on and not do a Feasibility Study. I dont understand that. The only thing i have seen so far is that its going to hurt. Every report i have read it says its going to hurt. So why the rush . It takes 10 years to approve a project and yet you are rushing through this like its got to be done tomorrow. Instead, do it responsibly, get the study out there. Thats your job, not our jobs. Say this is a good ordinance. You need to do that. Be responsible, thank you. Thank you. Next speaker please. Public speaker hello. My name issalia from spurs. There is more information based on what we have seen. From staff, we do not think that 25 is viable. Imposing this requirement will disrupt the production of many thousands of units that are in the pipeline plus units that have not been built yet. Some Community Members dont believe that market race housing plays a role in affordability so they dont care if the numbers are too high. We have to remember that most of us wont win the lottery Affordable Housing or otherwise and we have to navigate our way through the unsubsidized market. This will apply the only way to impact affordability through much of the population. It does matter if you bring it to a halt. 25 may sound great, but we ask you to insure it is the right requirement. It should support both the market rate and Affordable Housing rate. We urge you to withdraw this measure and ask you for the language acquired for this analysis. Thank you. I think i see supervisor kim on the roster . No. Okay. After Public Comment. All right. Im going to call a couple more speaker cards. calling speaker names public speaker good afternoon, my name is john, local 38 union. Over the last few years our building and trades union have taking their work. These City Residents will take their income and search for better houses for their families. We want these City Residents to stay here in the community to bring prosperity and example of accomplishment for them. To get inclusionary housing right and i will vote for all of us. Get it wrong, those will face long commutes and strains for themselves and their families. Right now we believe that 25 housing inclusionary requirements gets it wrong, thank you. Thank you, next speaker, please. Public speaker thank you. On behalf of the Housing Coalition. A little history. I want to stand up for planning. The facts are that in 2011, the city delivered 269 units of which half were for affordable redevelopment. In 2012 it was starting to get a little better, but you have to remember at that time that was the greatest regulation that anyone of us can ever remember. Nonunion was at 35 . Staff was down to skeleton crews. There would be no distinction that there would be housing boom in 2012. We are crawling out of a huge hole. I would say on the 25 by the same logic, 50 would be better on housing. We agree that Affordable Housing is necessary. What is it so special about the 25 . Then on this issue of the land price taking it down to zero, im your last expert. This is not my area of expertise, but i assume the analysis. Whats clear in the limited cases that been analyzed is it takes residual land value, it takes a hit of 25, 35, 40 . You have seen the example here. I know there is this bond myth that we can do this and the landowner will take the hit on the price. What i hear again and again and again from our members is that its not remotely how it works on the real world. You are telling a landowner, what i offered you last week, i will pay you 40 less. That owner is likely to say, that parking lot looks pretty good right now. We are going to start to see falling applications. Public speaker morgan. I think we should proceed cautiously. I know we do need more Affordable Housing and you know the market rate is real high, extremely high, but its driving the market right now. I remember 8 years ago when all the other surrounding cities and other counties, you know the housing thing just collapsed and this thing was the only thing that was keeping all of us working, you know, realistically we need Affordable Housing and we should proceed cautiously and dont monkey around too much with this market because there is a lot of people getting jobs now in the inner cities, in some of the inner districts and bayview with city build and its doing a lot of positive things. You know, i think we should proceed cautiously to this. And be careful. Thank you, next speaker, please. Public speaker good afternoon. We recognize and support the need to include housing mandates but we understand the effects of the members livelihoods. The question is not to just raise the levels but to maximize the production of housing and help meet the overwhelming needs and demands that is driving much of the displacement in town. Carpenters in local 22 are asking the right to the inclusionary housing by reform of regulatory analysis. Those who higher the contractors as well as the Investment Community including pension advisors worry that the proper design would hurt our numbers. We are concerned that as currently designed, this change will also Incentivize Developers to drive down labor standards for all workers and cut opportunities for local workers to enter apprenticeship programs. We also continue to work on solutions and proposals to increase Affordable Housing production and support labor standards for construction workers and provide opportunities for san franciscans enter the trade in sustainable construction careers. As you move forward, we want to caution you that simply moving this aside is essentially approved. 25 is still something. Thank you very much. Thank you. Next speaker, please. Public speaker i want to state a number of facts. The last four housing elements that was sent for us to review, each of those housing elements are before our courts because our faulty documentation. So, from mac russ to mr. Green. I followed them, read all of them and they truly do not address Affordable Housing. So we can revive it again and again which has been done here, but the most important thing that i want the Planning Department and those socalled experts is your heart in the right place. I dont see that. I dont see that. Its how you initiate things, keep things hid from the public and when it comes to Affordable Housing you have the lottery system and i went to the system. Its a gimmick. Even if you have very good credit. Whose got the money to put 300,000, 400,000 down to make reasonable mortgage payments . Who in this city . So we are bluffing ourselves and the people at home are hurting. In the last 10 years over 40,000 distant families have left San Francisco. If you want to build higher type of housing for the new comers and destroy our cities, destroy the culture, destroy the hard work of good san franciscans, think about it, think about it. Too many gimmicks. Thank you. Next speaker, please. Public speaker good afternoon, again, david sternberg, architects. First off, supervisor kim, i appreciate you responding to the comments that Affordable Housing financing may come from other sources, but it sounded like it was minimal at best. So i should still like to state my opinion. I dont understand why developers have to bear the burden. But having said that, i walked into this meeting having no idea that these were not serious proposals, that they were just posturing from one side of our government to the other. Now that i have heard that, lets remove them. Weve done it before. Weve had committees from both sides with antibills with economic input. Lets get to work. Thanks. Supervisor katy tang thank you. Next speaker, please. Public speaker good afternoon. Villalobos, 251. If you go forward, i think its responsible. We have names of developers supporting this. I dont see any. I would like to see one of them. And again, i would just like to echo everybodys overwhelming opinion on this. Like somebody said, 25 of 0, its still zero, you are killing jobs. Thank you. Supervisor katy tang thank you. Next speaker, please. Public speaker good afternoon, supervisors and Planning Department. I think this is one of those rare things where everybodys working hard to come to a resolution and i believe both sides have already stated clearly that they have a resolution, mr. Peskin, we are happy to have you back and sticking up for the city which was long over due. But i believe peskin and supervisor cohen said it best which is withdraw both legislations and lets do it responsely. I applaud the Planning Department and board of supervisors for coming up with a resolution. Lets move forward and lets be done with this. Thank you. Supervisor katy tang thank you. Next speaker, please. Public speaker good afternoon, supervisors. To what the last speaker said, we pull both legislations because if owners from one to another, maybe we should cool off and think about the legislation and lets walk together. I think we all agree that something has to be done. It how we achieve the goal which will be the most important of all. If we make it too trek yann it doesnt make things better. Maybe its kumbaya time. Lets walk together and drop what it is right now. Lets get back to the table and sit down and work it out. Thank you, supervisors. Supervisor katy tang thank you. Next speaker, please. Public speaker supervisors, ken buckley in San Francisco. I will keep it short. I think i like what cohen said. I will leave it at that. Thank you. Public speaker supervisors , im from San Francisco. I want to give an example of my own personal experience. I have a project im working on now. The project is a 15unit project that weve had since 2010. After 2012 we were working on a financial project. Prop c passed in 2012 and it was cut 12 and low and behold we got financing. I know its worth only this goes back, right . I have another project in the pipeline okay thats coming up around 20 units. I dont know where we are going to get financing. Thats all im saying. Thank you for your time. Bye. Public speaker supervisors, good afternoon, john with the residential builders. I appreciate the experience of initiative to work with the legislative branch to figure this out. I thank everybody for coming together here to get this right. We have made several attempts to the 2002 to 2006, through 2012. If you look back at prop c, it was bad. If you look back at 2012, there were construction back in 2010. No financing could be acquired. At the same time we developed and what is being dmantelled by the state and to get funding and building Affordable Housing. At this time we should look at many different aspects. One size doesnt fit all. I look forward to get things right this time and hopefully everyone can get it together and figure this out. Public speaker sean, good afternoon. Im happy to hear the words of a withdrawal. That would be very encouraging to everybody. This conversation ultimately deals with grandfathering, onsite policies, off site policies and land dedication policies. It needs to deal with different sizes and scales and different types and different Economic Conditions. Sometimes we are in booms, sometimes we are in bust. It would be nice to have policies that address this. Different neighborhoods have different resale values. Different deal structures. Sometimes people get high bonuses, sometimes people get land, sometimes people get cash. These policies need to be nuanced. It is almost possible to achieve this in ordinance. This conversation when it happens needs to have every group at the table. Hopefully that conversation will strive to maximize the percentage of affordability. Deal with the grandfathering issue. Create a new set of rules that we can rely upon and they will not change in the middle of the game. Most importantly, we need to create a policy which creates a stable economically viable projects for our members so we can provide for our families. Thats what this needs and unfortunately this ordinance or anything short of gathering around the table will not achieve it. Thank you. Public speaker hello, supervisors, any other name is greg. Just to reiterate some of the comments that have been said. I would ask you to go back to the drawing board to reconsider what has been also been put out. Supervisor katy tang thank you very much. Any other Public Comment on item 2. Is there any additional Public Comment . Seeing none, Public Comment is closed. What marks the sentiment that everybody seems to be expressed to come through and both matters will be withdrawn. The Charter Amendment was introduced originally on the 15th day of december of last year which is about 2 months ago. We could have done a few, according to you, mr. Richards 2 months to do this report. That report could be done now and we can be negotiating the feasibility report. Please go out and get one. Well have one by the middle of april. It will inform our discussions. Lets see what process i think members of the board would like to work with you to ensure that happens. I also want to note that yes, nobody realized that in 2012 the market would take off. That was 4 years ago. The way i look at this is that a lot of folks in the Development Community have had at a minimum a 3 inclusionary holiday for 4 years in one of the most robust markets that this country has and maybe one of the most robust markets we have seen since the gold rush. I want to take that into account. What am i saying . Its that some of these individual corporations have made millions and millions of dollars. Mr. Sternberg who asks, who is paying, after the passage of prop a which we all supported. Every proneers Property Owners in San Francisco are paying, many are paying for the next 30 years. Everybody is shouldering the burden and there are handful of individuals who have a turn to pay as well and they have had an inclusionary holiday. Lets make it right. Supervisor katy tang thank you. Supervisor kim . Actually i think supervisor peskin made all the concluding remarks. So i will submit. All right. Thank you. I guess there is a lot of work to be done. Thank you very much for being here today and so at this time then i would like to see if there is a motion to file this hearing . So moved. All right. Seconded by supervisor mar and well take that without objection. This hearing is filed. Mr. Clerk, anymore items today . There are no more items. All right. This meeting is adjourned. [ meeting is adjourned ] when a resident of San Francisco is looking for health care, you look in your neighborhood first. What is closest to you . If you come to a Neighborhood Health center or a clinic, you then have access it a system of care in the Community Health network. We are a system of care that was probably based on the Family Practice model, but it was really clear that there are special populations with special needs. The cole street clinic is a youth clinic in the heart of the Haight Ashbury and they target youth. Tom woodell takes care of many of the central City Residents and they have great expertise in providing services for many of the homeless. Potrero hill and Southeast Health centers are Health Centers in those particular communities that are family Health Centers, so they provide health care to patients across the age span. Many of our clients are working poor. They pay their taxes. They may run into a rough patch now and then and what were able to provide is a bridge towards getting them back on their feet. The center averages about 14,000 visits a year in the Health Clinic alone. One of the areas that we specialize in is family medicine, but the additional focus of that is is to provide care to women and children. Women find out theyre pregnant, we talk to them about the importance of getting good prenatal care which takes many visits. We initially will see them for their full physical to determine their base line health, and then enroll them in prenatal care which occurs over the next 9 months. Group prenatal care is designed to give women the opportunity to bond during their pregnancy with other women that have similar due dates. Our doctors here are family doctors. They are able to help these women deliver their babies at the hospital, at general hospital. We also have the wic program, which is a program that provides food vouchers for our families after they have their children, up to age 5 they are able to receive food vouchers to get milk and cereal for their children. Its for the city, not only our clinic, but the city. We have all our children in San Francisco should have insurance now because if they are low income enough, they get medical. If they actually have a little more assets, a little more income, they can get happy family. We do have family who come outside of our neighborhood to come on our clinic. One thing i learn from our clients, no matter how old they are, no matter how Little English they know, they know how to get to chinatown, meaning they know how to get to our clinic. 85 percent of our staff is bilingual because we are serving many monolingual chinese patients. They can be child care providers so our clients can go out and work. We found more and more women of child bearing age come down with cancer and they have kids and the kids were having a horrible time and parents were having a horrible time. How do parents tell their kids they may not be here . What we do is provide a place and the material and support and then they figure out their own truth, what it means to them. I see the behavior change in front of my eyes. Maybe they have never been able to go out of boundaries, their lives have been so rigid to sort of expressing that makes tremendous changes. Because we did what we did, it is now sort of a nationwide model. I think you would be surprised if you come to these clinics. Many of them i think would be your neighbors if you knew that. Often times we just dont discuss that. We treat husband and wife and they bring in their kids or we treat the grandparents and then the next generation. There are people who come in who need treatment for their Heart Disease or for their diabetes or their high Blood Pressure or their cholesterol or their hepatitis b. We actually provide Group Medical visits and Group Education classes and meeting people who have similar chronic illnesses as you do really helps you understand that you are not alone in dealing with this. And it validates the experiences that you have and so you learn from each other. I think its very important to try to be in tune with the needs of the community and a lot of our patients have a lot of our patients are actually immigrants who have a lot of competing priorities, family issues, child care issues, maybe not being able to find work or finding work and not being insured and health care sometimes isnt the top priority for them. We need to understand that so that we can help them take care of themselves physically and emotionally to deal with all these other things. They also have to be working through with People Living longer and living with more chronic conditions i think were going to see more patients coming through. Starting next year, every day 10,000 people will hit the age of 60 until 2020. The needs of the patients that we see at kerr Senior Center often have to do with the consequences of long standing Substance Abuse and mental illness, linked to their chronic diseases. Heart failure, hypertension, diabetes, cancer, stroke, those kinds of chronic illnesses. When you get them in your 30s and 40s and you have them into your aging process, you are not going to have a comfortable old age. You are also seeing in terms of epidemics, an increase in alzheimers and it is going to increase as the population increases. There are quite a few seniors who have Mental Health problems but they are also, the majority of seniors, who are hardworking, who had minimum wage jobs their whole lives, who paid social security. Think about living on 889 a month in the city of San Francisco needing to buy medication, one meal a day, hopefully, and health care. If we could provide health care early on we might prevent inaudible and people would be less likely to end up in the emergency room with a drastic outcome. We could actually provide prevention and health care to people who had no other way of getting health care, those without insurance, it might be more Cost Effective commissioner [kpwraoeupbl ]. Bonilla. Here. Commissioner levitan. Here. Commissioner mcdonnell. Here. Mine is on they should be on now. Yes. Thank you. So just a few quick eminders to please turn off any soundproducing devices. If you need to have a conversation, we would ask that you take it outside, so we can run this meeting as efficiently as possible. Also, each person will have three minutes to comment under Public Comment on each item. If you would like to make public cot