Portfolio. We want to thank the Controllers Office for their help in aggregating some of this data to help us visualize the status of our portfolio. So first, i wanted to take a 30,000foot view of what the city owns and leases. So our portfolio citywide contains approximately 44 million square feet of buildings and land, thats not including rec park holdings. That is within the city limits, so it does not extra territorial land which is significant outside the city and county of San Francisco. Of that, we lease from private properties only 4 . Of our portfolio. This has been an issue that is concern of the board of supervisors as we brought leases forward as to what is the constitution of our portfolio. This really tells the big story. Were at 4 . We had a discussion with many of our peer organizations across the country. We found an average range when you look at aggregate portfolio, there is a lot of land in the portfolios nationwide, they range from 14 . New york city, austin, texas, right at 4 . So we feel were in line with the peer cities in terms of how much is leased and how much is owned. To try to address that concern that the board has raised, are we at the right mix . We believe we are. Now well dive deeper. How do we break down the 1. 8 million square feet . 55 of it is leased for office uses. 45 is leased for other types of use. That could everything from supportive housing, ground leases and building leases, clinic uses, other special public uses. So less than half of the office use leases lie in the civic center, so were drilling down from the overall portfolio to the office portfolio. And now were going to take a deep dive into the civic center where the heart and bulk of our offi Office Leasing takes place. How do we define civic centre . This is a map we felt best depicted our assets in the civic center that revolve around city hall as the point of government. And those units that need proximity to city hall need to be within this radius. Beyond this radius doesnt feel or act like its in civic center. Thats a sense of how we defined it. So now lets take a look at a snapshot today and how were moving this portfolio in the future. How do we move that needle from 19 leased today, to an even lower percentage, which is our goal. First thing i want to mention, we took a look at peer city organizations, those who could slice the data to this level. Most could not produce this kind of data in this presentation. Most just dont have the information, but for those that do, two really good examples as a method of comparison, the city of san diego. Their Downtown CoreOffice Holdings are 64 owned and 36 leased. Again were at 19 today. The state of california sacramento area, office portfolio, which is huge, at 16 million square feet is actually split 5050 owned and leased. Again, i think we look very favorable to those two organizations. Claudia, my assistant director who played a great role in putting this presentation together, take calls monthly from other organizations across the country asking us how we do what we do. Thats an indicator were the best practice here in a number of factors as to how we manage the real estate portfolio. So how do we move that number from 19 down to 15 by 2022 . Were going to tackle it by touching six different departments and their lease holds throughout the civic center, who have lease expirations that lie between summer 2020 and 2021 and affect lease space. As we move closer to those dates of termination, well give you more details as to the locations. The specifics of each. One of them will be before you today. The next item, which is why we asked to have the presentation before that. Because it ties in nicely with how this is all part of a grander strategy to reduce our lease hold footprint. The dph Environmental Health item. One of the ways we can also move that needle down in our lease hold is to consolidate around service functions. So, i think the most famous of those at this point for all of you, would be the new permitting center as 49 south van ness. Something weve been calling project chess over the last several years. As you can see by the photos, its under construction im pleased to say with the final product shown on the right of the screen to be delivered in mid 2020. So we aggregate around permitting. That provides certain economy scale efficiencies in our portfolio and allows us to increase density in buildings and get out of leases. Beyond that, were looking at hub based planning for both fiscal uses at 1155 market, being the hub for that in the future. As we restack our various buildings and portfolio when the new building comes online, thats the permitting center and then a hub around Family Services at 1650 mission, from which the Planning Department will vacate and we will back phil that with uses complementary to the Human Services uses there and across the street. Create twoing hubs, well have greater efficiencies, not only our own internal operations but how we serve the public as well. What lies ahead . So, responding to various audits and report was the budget and legislative analyst, and others, you will see the real estate action plan framed a little more in detail in the capital plan going forward, were working handinhand with heather and brian at Capital Planning committee as we dovetail the real estate plan with the Capital Investment plan. You will see soon transfers of assets from the successor to the redevelopment agency, ocii, so those will be individual board items that will be teed up in the spring and summer coming ahead. Youve already seen the hall of justice administrative exit plan brought before you conceptually with one approved lease at 350 rhode island, youll see in the next 60 days, two additional actual leases, approved, but now you have the leases for brannen and bryant shown on the slide. That will enable us to move our add minute functions out of the hall. Thats temporary. To come back to a site that is a new hall of justice. And then of course, youre going to see our involvement of meeting the real estate needs for housing and homelessness, whether that be to support housing ground leases, continue to see acquisitions for housing as we saw for the mcdonalds in the hait and other interim uses as necessary. Thats a bit of a snapshot of what real estate sees in its work plan in the year ahead. I am happy to answer any questions you might have have the presentation before we move on. Supervisor fewer seeing no question, i believe, thank you very much for the report. I believe we have a report from the budget and legislative analyst on item number 2. Would you like me to present on item 2 before moving to the report . Yes, that would be great. Unless you have questions on the presentation. Supervisor fewer i do have a few. So let me ask. Excuse me if you addressed these before in a previous presentation. But is it our policy to normally try to buy land increase our real estate portfolio . Im sorry . Supervisor fewer is it part of our real estate plan to try to increase our real estate portfolio . Are we looking to buy . We are doing our best to not increase the overall size of the portfolio. I will say that as every organization faces when you execute a move, ive likened it to compressed jello. When you move them from point a to point b, that responds on the move. We often see some movement because of antiquated space, but thats been offset recently with the new ways that frankly our staff wants to work in an open plan, less offices, more collaborative space. That does allow us to increase our density and decrease our space. So hopefully, on the whole, that keeps it static and our effort has been to migrate from leased space into owned space. Which fiscally is the better play for us long term. Supervisor fewer the only reason i ask, some leases come before us for space and those rental agreements are very, very expensive. So i know that while we transition out of old spaces into new spaces such as the hall of justice, that were constantly looking for space to house during transitional times. So this is where im seeing the really expensive leases. That moving the District Attorneys Office out of the hall and justice and then that lease is expensive. I just think that the cost of leasing or renting property is going to really increase. Its not going to decrease. And that it seems as though we have a shortage of space actually when we do these types of transitions. I understand were using our current real estate stock in a very different way, in a more dense way actually to consolidate some of the buildings that were one or two stories before, such as the one on otis, i believe it was an old building, antiquated, not very high. I think. So i can see from the plans for 2020 were going taller and denser, but i ask the question because were facing a lot of leases that are really expensive because we dont have extra space to accommodate while were building. And we know that sometimes it necessitates an urgent move, so were into the leases that are quite frankly, very, very expensive, because we dont have another space for them. This is the reason i ask, are we looking to increase the real estate portfolio . Really over the last five years, weve increased the occupancy rate of the own cityowned portfolio, where its over 99 . There was a time, a decade ago, where we had a lot of vacant space. Thats also not a good best practice. We dont want space lying there fallo, but weve been trying to create some small areas throughout the city, whether its civic center or around the Public Safety hub where we have at least small areas where we can bring folks in to do tenant improvements in the buildings, what we call swing space. But we dont want a lot of that. Its balancing between having ownership right to space we may use in the future and then having it underperform. Its better to be able to spring into a lease if we can. This market has made it difficult, youre certainly correct, its very expensive. Supervisor fewer i know this is about Civic Center Office leases, so i look forward to a conversation, a broader one such as i just spoke to, and theyre cramped for space with all the renovations and remodeling and the new buses they need. Actually, i think my question to them was, why didnt we acquire property for this if we knew we were going to need these larger spaces to accommodate the new electric buses that will need a new facility in which to repair them and operate on them. But the real estate now is so astronomical, i felt like we were a little behind the game. I felt like we should have planned this ten years ago, we would be in a better market. I understand this is office space, i look forward to the conversation about the total real Estate Planning of San Francisco, but as real estate becomes more and more expensive and the city grows and the population is over a million people, i think it is imperative we start planning in the future for these type of things that will come up just from the regular operating expenses, quite frankly, running a very robustty with services. The mta, theyre looking at space now and cant even afford to buy a place and we have electric buses this need the space to be repaired. Can you present item 2 . I forgot we called 1 and 2 together and then if we could have the report on item 2. Happy to do so. Thanks. So item 2 is the renewal of a lease of 27, 826 at fox plaza. This is on the 2nd, 4, 8 and 9th floors. The department of Public Health operates a variety of. The existing lease expires at the end of november this year, with option for renewal for five years. However, given the permit related functions, the anticipated expense of this particular lease in decades to come, we collectively determined a path forward to locate this section of dph in the new permitting building that i just showed you at 49 south van ness when the building is completed. That will be completed in 2020. We had to negotiate a bridge lease that provides the city as much flexibility as possible. So before you today is a lease renewal for a term of three years, with option to terminate any time after the end of november 2019, with 270 days prior notice. We also have two fiveyear renewal options. That is in the event we find ourselves requiring use of this space come 2020 when we relocate this unit to 49 south van ness. Again, maintaining as many options as we can. Since we have a competitive pricing in the marketplace, that may be a useful tool in 2020. Or not. That will be up to the boards discretion. The rental rate is inclusive of storage space. Its supported by an appraisal review. The rate increases by 3 each year, starting september 1, 2019 for the first increase. The increasing rent was anticipated. Its reflected in the report and will be part of dph upcoming budget submission. I want to thank charlie dunn for his excellent work. We had to develop a lease with this optionality, multiple Different Directions without paying a premium in rent and thats been validated by the appraisers. Weve gotten a pretty good deal here, we can leave, we can stay. Landlords dont usually like that. So my thanks to him. Im joined by stephanie curbing if have program questions. Supervisor fewer seeing no comments from my colleague, thank you mr. Updike, i believe there is a report on this item. Good morning, supervisor fewer and supervisor stefani. This lease is an existing lease. It had a fiveyear option to review but the division made a decision to enter into a new 3year lease with additional options because the department of Environmental Services is intended to move into the new cityowned building on south van ness. The cost rent under the new lease is about 64, almost 65 per square foot. This is determined to be market rate by the appraisal in review in conformance to the administrative code. The first year costs are 1. 8 million. If the department stays in the fox plaza lease for the entire three years, it will be 5. 6 million over the threeyear term. Our understanding there is a plan to terminate the lease with notice so that this division can move into the new building and we recommend approval. Supervisor fewer thank you very much. Are there any members of the public who wish to speak on this item . Seeing none, seeing no Public Comment, is there a motion on this item . I believe there is Public Comment on 1 and 2. Supervisor fewer yes, 1 and 2. Public comment is now closed. Id like to make a motion to forward this to the full board. Thats for item 2. And then file the hearing. Supervisor fewer right, file the hearing. Clerk item 1 will be filed and 2 recommended to the full board for hearing. Supervisor fewer thank you very much. Now id like to call item 5 out of order. Mr. Clerk . Clerk ease lieutenantgovernors authorizing the sublease of approximately 1668 square feet at 1563 Mission Street with health right 360, a California Nonprofit Corporation for a five year initial term to commence march 1, 2018, through february 28, 2023. Supervisor fewer thank you. I believe we have claudia goreham from the department of real estate and department of Public Health to present on the item. Good morning, before you is a resolution regarding a sublease by the department of Public Health for office and exam room space from health right 360 in their new building you may have seen located at 1563 mission. The program to be relocated there is the central city older adult program. Its a small Specialty Behavioral Health clinic that serves adults over 60 with moderate to Severe Mental Health issues who live in the tenderloin and south of market areas. The proposed sublease is for approximately 1668 square feet for five years expiring in 2023, with one option for three years at the then 95 fair market rent. That will be subject to board approval. The city does have a first right of purchase should healthright decide to sell the property during the term. Under the lease, the city will be paying 7700 per hospital but total of 93,000 a year. And base rent will escalate at 3 per year, the norm. In addition the city will be responsible for its pro rataa share of operating expenses and utilities that cannot exceed 4. 2 and are estimated to be 2215 per month. And finally there will be tenant improvements that the land will be putting in, up to 38,000 reimbursable by the city. If you have questions about the programming, lisa is here and i can answer questions about the lease. Supervisor fewer thank you very much. Are there any members of the public who wish to speak on the item . Seeing none, comment is closed. Colleagues, a motion on the item . Supervisor stefani id like to make a motion to forward this to the full board with recommendations. Supervisor fewer we can take that without objection . Passed without objection. Back to item number 3. Mr. Clerk . Clerk resolution authorizing the Community CorrectionsPartnership Executive committee to develop funding recommendations for local innovation subaccount funds for Pretrial Services and or transitional reentry housing for justice involved people between ages 18 and 35. Thank you very much. I am happy to be sponsoring this resolution today. The Community Corrections partnership was created in 2009 by state legislation designed to coordinate implementation of evidencebased practices to reduce recidivism in prisons. In 2011, the executive committee of the Community Corrections partnership was established with the goal of further reducing the state prison population and expanding evidence based practices toward that end. The executive committee is under the leadership of the chief probation officer and includes the chief of police, the sheriff, the attorney, presiding judge of the superior court and Public Health representative. This resolution directs the exec five committee to develop spending recommendations for the funds d