discussion on something i will be introducing a resolution on today which is the disappearance of the 43 students in mexico but it's my pleasure to honor and welcome the renown mexican poet and activist here. i want to acknowledge him for his outstanding contributions to poetry, to international literature, environmentalism and human rights across the world. he has been elected twice president of the international pen which he is now president emeritus. in 1985 he cofounded and chaired group los see an and a group of writers that included. [speaking spanish] . the group has called for the protection of the environment in mexico, latin america and the rest of the world. his most recent novel pictures mexico's current reality of violence, corruption and impunity and indifference and he's served as the ambassador to the netherlands and to switzerland and in paris. in 2000 he organized and presided over the earth in the year 2000 a joint international pen symposium of writers and scientifics and alliance for sustainable development. as a pioneer of mexican society he played a crucial role in raising environmental awareness and public participation for solving environmental problems as well as defending freedom of expression about these matters. he will be the featured speaker tonight with the recipients of the foundation fullo ships. as i noted in the public dialogue on the human rights crisis currently occurring in mexico. for those interested the forum is taking place between seven to 9:00 p.m. at the mission culture center on 2868 mission. of note he has had a long history of friendship and contributions with poets of the [inaudible] generation of san francisco. he and laura [inaudible] are good friends and city lights and published many of his books. we have not only one of the greatest poets in mexico but truly one of the greatest poets in the world so it is truly my honor to welcome him and on behalf of the city and county of san francisco and the board of supervisors specifically to give him a certificate of honor so welcome to san francisco. >> thank you so much. [applause] mexico is passing through its worse crisis since the mexican revolution. the disappearance and [inaudible] of the 43 students from mexico four months ago is a reflection of the penetration of organized crime in the political life of the country. there is also a crisis of human rights and enormous need for justice. we expect to form mexicans -- [inaudible] in san francisco looking for human rights in mexico in this crisis and i hope it's a concern of the san francisco and the united states and come in this moment we are very appreciative. also we appreciate the support of the san francisco in this matter. i am very grateful to you. thank you very much. >> thank you. it's an honor to have you here. >> thank you. [applause] >> thank you and welcome to san francisco. the second accommodation will be given by yours truly. today i am excited to bring to the podium russell prichard. come on up russell. russell has been an institution in the hayes valley community. i will wait until you get up there russell. how are you? >> hi. fine thank you. >> good. not only has russell been an institution in the hayes valley community he has the most beautiful piercing blue eyes that you ever would want to see. on sunday january 25 of this year after 24 years russell closed his store vilno home interiors in the hayes valley and he helped with the central freeway, cofounded the hayes valley block party. he help create formula retail regulations to help small businesses and promoted arts projects including a very special one that he and madeline worked on for patricia's green. i don't think we would have these incredible art installations there if it weren't for you and the work that you and madeline did to make that possible. he cofounded the hay's valley merchant association and member of the neighborhood association and co-founder of the hayes valley art coalition. and after closure of his incredible store with wonderful amazing unique furniture russell will be working with [inaudible] community center i know on tennis programs as well as the african-american art and cultural complex to create men shorship programs connecting the merchants with the young people in the community. we are so sorry to see you close your store but we know we're not losing you to the community. he remain a institution and selfless champion for the neighborhood and the city and on behalf of the city and county of san francisco it's truly an honor to commend you for the many years of service to the hayes valley community and to the city and county of san francisco. thank you russell. [applause] >> thank you very much supervisor breed, other supervisors. i actually feel grateful and blessed to have been a part of the transformation of hayes valley. moving here as someone who didn't know hay street from rodeo drive from union street in new york from 1990 i couldn't imagine us taking -- especially the 400 -- 500 block of hayes street from the shadow of the central freeway to what it's transformed to today. i am pleased and honored to be a small part of that role for hayes valley. i absolutely enjoyed being a small business owner in san francisco working with the city on legislation for retail and other things to protect the small business community which is extremely important to me as a former merchant. pardon me. this is emotional. this is my first official day of retirement so after 24 years and two months it's crazy to think i won't be going to my store six days a week but i am looking forward to continuing my role in the neighborhood with the arts coalition consulting with merchant's organization to ensure the strength and growth and working with the african-american cultural center to fully put in place a youth mentoring program and hopefully teach some kids tennis so thank you. [applause] >> okay. and thank you and thank you to all the members that came out from the hayes valley community to support russell. thank you all so much for being here. mr. clerk can we please move to item 12. >> item 12 is an ordinance to appropriate april $203,000 to the public works operating budget for waste stations in 2014-15. >> >> supervisor avalos. >> actually the author thor is at jury duty and would like to continue this item today. >> there is a motion to continue this item. seconded by supervisor farrell. without objection it's continued to lawrt on in the meeting. item number 13. >> this is resolution for early buy out of baysubway airport not to exceed 1.2 million between the sub way and the commission. >> okay. roll call vote. >> on item 13. supervisor breed. >> aye. >> supervisor campos. >> aye. >> supervisor christensen. >> aye. >> supervisor cohen. >> aye. >> supervisor farrell. >> aye. >> supervisor mar. >> aye. >> supervisor tang. >> aye. >> supervisor wiener. >> aye. >> supervisor yee. >> aye. >> supervisor avalos. >> aye. >> there are 10 aye's. >> okay. this resolution is adopted unanimously. mr. clerk can you call the next item. >> item 14 is establishing the appropriation limits for 2014-15 pursuant to california constitution. >> same house same call. with that this resolution is adopted unanimously. mr. clerk can you please call the next item. >> item 15 is for a lease for third and mission associates located at 167 jessie street for $1 per year base rent. >> same house same call. this is adopted unanimously. next item please. >> item 16 is accept and expend housing related parks program for the community housing development for projects identified in exhibit a for the agreement for the dates listed. >> same house same call. this resolution is adopted unanimously. next item. >> item 17 was recommended without recommendation from the budget and finance committee and real property accusation at 19 1995e vans street for the clai spencer trustee of the william spencer clai spencer living trust for the purchase price as listed. >> supervisor campos. >> thank you madam president i have questions for staff but before that i wanted to ask the budget and legislative analyst to provide a brief overview. i know they expressed concerns and have a recommendation on this item if i may through the chair. >> [inaudible] >> yes, mr. rose. >> madam president and members of board, supervisor campos. briefly supervisors we pointed out that the proposed purchase price of this property of is 36-point 2% more than the appraised prize and that was done in august of 2014 of 11 million plus and for that plane and looking at the comparable sales provided to us even if you average out the lowest comparable sale that was provided to the real estate division by the appraiser retained by the real estate division there would be at least an $800,000 differentiable. that is that price would exceed the price being paid. i would point out mr.up dike subsequently reported to the budget and finance committee and orally advised the committee about subsequent comparable sales and certainly the board can and should consider his comments. our recommendation though as i stated we consider this to be a policy matter. we do recommend -- we have a specific recommendation that you request the director of real estate to include language in future purchase option agreements and appraisals and other due diligence procedures prior to negotiating and agreeing to specified purchase prices for the city. and in that context regarding our recommendation mr. up dike did testify he was going to incorporate our recommendation in future amendments to the administrative code for the board of supervisors' consideration. >> if i may madam chair through the chair mr. rose did the department of real estate give you the additional appraisals that they're referencing in terms of the properties they have been looked at? >> to my knowledge they did not. that was done orally to the committee on the last hearing of the committee held. we have not looked at any subsequent data. >> okay. thank you. thank you madam president. if i may through the chair to mr. updike. i have a fundamental problem with this item because what you have here is you have a proposal for the city originally to pay $16 million. now the amount is down to 15.$4 million to buy a property that our own appraisal through the process that we completed noted is worth 11.3 million. in other words we will be paying more than $4 million more of taxpayers money than the appraisal that we requested shows. i just don't think that we should be engaging in that kind of a transaction where we are using taxpayer money to over pay for a property to the tune of $4 million, and so can you explain to us what happened here? how is it that we got to this point? because on its face this just looks horrible. >> thank you supervisor campos. through the chair john uplike director of real estate. i appreciate the ability to clarify where we stand on this item today. i would take issue with the potential that we're over paying so as the budget analyst noted there is more recent data that we believe speaks to current value so if i may go over that data, provide that to you and provide you background on process as to the complications when there is a lease with a purchase option and the difficulties at arriving at a price if i think that will address your questions if i may? >> supervisor campos. >> yes. i mean -- yes madam president. any additional information they have is welcome. >> and i will be brief. thank you very much. o on the overhead now a list of what we believe are some relevant sales that occurred after the completion of the appraisal. appraisals are one person's person of value and by nature a look back worried on the status of the. >> backward on the status of the market. >> >> so they're somewhat limited and not being prospective but being retrospective. in this case we found two what we thought were comparable sales. one on alabama street and one on 16th street on a price per square foot basis -- thank you very much. we believe support this purchase price at -- depending how you look at the acquisition. this is 2 acres of land and 1 acre of building on the 2 acres of land at $175 per square foot of land or 375 per square foot of building so that is a metric used in the marketplace. i think further and this was provided to the budget analyst as part of the review of this is the overall industrial market report in q 1- 2014 and the latest available data there isn't a lot of data because there isn't a lot of industry market in real estate. they tend to be for other purposes so that data suggested this price as one year prior to today was $337 a square foot. the acquisition before you is 10% over that amount and that is one year later than the average data so we think the data supports the price. if could speak to process briefly. the challenge that we have when we try to strike a purchase option price in the future subject to the voters decision on a general obligation bond is that the negotiations occurred in late 2012. the agreement was struck in early 2013 and came before this board in the summer of 2013. in 2012 both the buyer the city, and the sell are, in this case the trust, had to really guess what the market would be if indeed the voters approved a bond and this matter came before the board for closing in 2015. we had to estimate either the rise or the fall of the market where each party had to take risk so we felt we did that that was supported by market activity. i believe this data suggests it d we do have one report that says one value. i would proffer to you that if we got another report it might provide a different value. it is just one person's opinion of value and i don't know that should be the be all end all for the decision making process. >> let let me just say i think you should have done another report because it's one thing to come here and provide information orally and as the budget and legislative analyst noted the additional information you provided was orally given to them. they haven't verified the numbers. i don't know what the definition of comparable is so as a matter of process i don't think this is how you want to do business. even if everything you're saying is correct the fact that we're on the fly hearing there are additional numbers to me i don't feel comfortable using taxpayer money to potentially over pay. i don't think any taxpayer approved anything that would lead to over payment of anywhere from $800,000 to $4 million, but let me ask you a question because one of the fund fund concerns that i have with is this. that you did the appraisal. >> >> in august of 2014 as i understand it. is that correct? >> that's correct. >> the lease that you signed where you agreed to purchase the property for the amount of $16 million begins in august of 2013; right? >> that is correct. >> so before you agreed to pay a specific amount for a property why wouldn't you do the appraisal before you actually agreed to a number? why was it that the appraisal was not conducted until a year after the lease went into effect? in other words, if i was going to buy a house before i actually agreed to pay a specific amount for that house i would actually try to ascertain what the value of a comparable property would be. i wouldn't do the appraisal of that house a year after i agreed to pay a specific amount, so how does that work? >> through the chair if i may the difference is when you're buying that house you're committing to buy that house immediately. this is a purchase option right of an indeterminate period so take a look at the lease agreement we had the ability to strike the option anytime before the year 2017 if we so chose to extend the date of that option rate. the difficultly was the board had not yet approved the bond obligation measure so the date of that bond item was uncertain at that time and so this is a prospective look two years in advance of the discussions as to value, so while an appraisal might be informative with value at that time it might not necessarily driven the purchase price agreed to between the prospective buyer and seller two, three, four years hence. that's the challenge and these are very rare. i want to point out that purchase options -- we had two in the last 10 years. this is the second one and they only come forward to this board in this odd circumstance of a general obligation bond measure and the process of the voters determining if the project moves forward so we determine if we have a right to move forward on it. >> so could i -- did you do any kind of analysis before you agreed to pay $16 million for a property as to what the actual value might be? >> most certainly. our job in the real estate division is act really as your broker, as your consultant to know the market -- every aspect of the market whether residential, commercial, industrial so we felt in this case this number was going to be reflective of value and was reflective of all for the parcel 2 acres of land and what are the alternatives in the marketplace at that time? this remains the least expensive option today. >> with [inaudible] >> why didn't you sign an appraisal before the lease at that time? >> we ordinance early wouldn't do that because it only informs the value of the parcel at that time and that's not the form much agreement we're reaching. we trying to estimate it prospectively a number of years hence. >> i have to say though that i think at least doing an appraisal gives a sense or a baseline when you're talking about that kind of money, and low and behold you agree to an maiment that a subsequent appraisal shows might be worth $4 million less. that's problematic. now i asked the city administrator which ultimately oversees this department -- i don't know if she's here, because i do have a problem with this kind of a transaction where we are agreeing to pay for a number that in the end turn turns out to -- it's not like it's somebody's own appraisal. it's the city's appraisal that was conducted and over pay by a certain time. i don't know if the city administrator is here. >> i don't think due to a number of commitments she is unable to attend but i stand by what mr. rose indicated and we will address in the future code amendment best we can and due to the nature of the agreements and improve our diligence and i believe if we did an appraisal it would have likely supported the conclusion today. we don't have that in front of us and i realize that and you're acting a bit on faith. however that's i didn't am here to provide you with my expertise as to my definition of value. that's my vob and i take that seriously and we have looked at from a number of different angles. >> no one questions that. but we're not acting on faith but in the faises of a report that shows we're over paying. one thing you said it doesn't happen very often has it happened before? >> in a decade we have done two of these. this is the second of two. the prior process was the same as this process and the appraisal was done as a diligence item before it came before the board like this process and the appraisal received was within 5% of the actual exercise price. it was appraised 5% less than the amount approved by the board. >> so in this case you did the appraisal differ you agreed to the amount? >> no sir. it was done later and the only way to do these complex transactions. >> i know my colleagues have questions and i appreciate the information but i will not be supporting this item. i don't think we should approach these transactions this way. i wouldn't do it with my money. i would not buy a property at a price that my own appraisal says is $4 million more than it's worth and i don't think that we should be doing that with taxpayers money either. >> thank you. supervisor christensen. >> i certainly appreciate supervisor campos' concern about this. i don't think any of us want to over pay for anything and i was a little taken back by these numbers. i do recognize also that finding comps for unique properties can be difficult. have small properties so it's difficult to find -- repair uses in the city and finding them unavailable and considering moving different services to outside of the city of san francisco which isn't a place for our business community in the city or for the workers who tend those facilities so i am pleased there is a 2-acre site somewhere in the city that can house city services. i guess the concern about the 4 million is somewhat balanced by the question i would like to

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