3924958 - Appropriation - Certificates of Participation to the General Services Agency to Fund Hall of Justice Relocation Project - $16,000,000 - FY2018-2019 - Comm Pkt 050119

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Completed by:--=L..:..;,.;in=da=-=-W.:...::o;...:...;n=g ______ Date /}pri I ~, 2olfl Completed by: Linda Wong Date ________ _ FILE NO. 190416 ORDINANCE NO. R0#19022 SA#70-22
[Appropriation  -Certificates of Participation to the General Services Agency to Fund Hall of Justice Relocation Project- $16,000,000- FY2018-2019] Ordinance appropriating $16,000,000 of Certificates of Participation to the General Services Agency to purchase the property located at 814-820 Bryant Street and 470-Gth Street and to fund the Hall of Justice Relocation Project with related demolition, site preparation, and other acquisition costs in FY2018-2019. Note: Unchanged Code text and uncodified text are in plain Arial font. Additions to Codes are in single-underline italics Times New Roman font. Deletions to Codes are in strikethrough italics Times NerF Roman font. Board amendment additions are in double-underlined Arial font. Board amendment deletions are in strikethrough Arial font. Asterisks (* * * *) indicate the omission of unchanged Code subsections or parts of tables. Be it ordained by the People of the City and County of San Francisco: Section 1. The sources of funding outlined below are herein appropriated in the General Services Agency for Fiscal Year 2018-2019. Commercial Paper may be used as a funding source in the interim, prior to sale of the Certificates of Participation. Sources Fund I Project & Activity I Department ID Authority 3811228875 1 0001289/ CPXCF COP 820 20886 ADRE Capital Bryant St I ADM Real lmprovements/ADRE Estate Division 0 Bryant Acquisition Mayor Breed; Supervisors Haney, Peskin BOARD OF SUPERVISORS Account Description 141 Proceeds from Proceeds fr Certificates of Certificates of Participation Participation Amount
$16,000,000 Page 1 Total Sources $16,000,000 Section 2. The uses of funding outlined below are herein appropriated in the General Services Agency to fund the purchase of the property located at 814-820 Bryant Street and 0 6th Street and the related demolition, site preparation, and other acquisition costs. Uses Fund/
Project & Activity I Department ID Authority 381/228875 10001289 & 0016/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition 381/228875 1 01289 & 0016/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition Mayor Breed;  Supervisors Haney, Peskin BOARD OF SUPERVISORS Account Description Amount Purchase of $11 ,520,000 Bldgs,Struct&lmprv Property Proj-Budget 6070 Demolition, Site $480,000 Programmatic Preparation, Projects-Budget Other Acquisition Costs Page 2 Fund/ Project & Activity I Department ID Authority 381/228875 001289 & 0016/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition 381/  228875 001289 & 0016/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition 381/  228875 001289 & 0016/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 0 Bryant Acquisition Mayor Breed;  Supervisors Haney, Peskin BOARD OF SUPERVISORS Account Description Amount 1130 CSA 0.2%
$24,000 GF-CON-Internal Controller's Audit Audit Fund 3110 Debt Service
$1,233,237 Bond Issuance Reserve Fund Cost  -Unamortized Capital Interest $1,337,138 Bond Issuance Fund Cost-Unamortized Page 3 Fund/  Project & Activity I Department ID Authority 381/228875 10001289 & 0016/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition 381/228875 001289 & 0016/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition 381/228875 001289 & 0016/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition Total Uses Mayor Breed;  Supervisors Haney, Peskin BOARD OF SUPERVISORS Account Description Amount 3110 Cost of Issuance $807,525 Bond Issuance Cost-Unamortized 3110 Underwriter's $133,100 Bond Issuance Discount Cost-Unamortized 3110 Reserve for $465,000 Bond Issuance Market Cost-Unamortized Uncertainty
$16,000,000 Page 4 Section 3. The uses of funding outlined above for $16,000,000 are herein placed on Controller's Reserve pending sales of Certificates of Participation. Section 4. The Controller is authorized to record transfers between funds and adjust the accounting treatment of sources and uses appropriated in this Ordinance as necessary to conform with Generally Accepted Accounting Principles and other laws. APPROVED AS TO FORM:
DENNIS J. HERRERA, City Attorney By: 07ev~
BUCK DELVENTHAL Deputy City Attorney Mayor Breed; Supervisors Haney, Peskin BOARD OF SUPERVISORS Page 5 BUDGET AND FINANCE SUB-COMMITIEE MEETING MAY 1,2019 Items 4 and 5 Department:
Files
-0416 and 19-0420 Real Estate Division Legislative Objectives.

• File 19-0420 is a resolution authorizing

(1) the Director of Real Estate Division to acquire real property located at 4-820 Bryant Street and 470 6th Street from Wen-Chiao Wayne Lin and Mei-Huei Grace Lin, and Tony Chih-Tung Lin and Jenny Chun-Hsing Lin for the purchase price of $11,520,000; and (2) issuance of $16,000,000 in Certificates of Participation ..

• File 19-0416 is an ordinance appropriating $16,000,000 of Certificates of Participation pay for the purchase of 814-820 Bryant Street and 470-6th Street, including debt issuance costs and demolition of an existing structure. l<ey Points

• In January 2016, the Board of Supervisors verbally urged the Real Estate Division to begin negotiating the acquisition of the four adjacent properties at: (1) 450 6th Street, (2) 444 6th Street, (3) 470 6th Street, and (4) 814-820 Bryant Streetfor the Hall of Justice Relocation Project. In June 2016, the Board of Supervisors approved the acquisition of one of the four lots, the property at 450 6th Street, for $2A03,333. Fiscal Impact

• In January 2019, the Real Estate Division contracted with Runde and Partners to conduct an appraisal of the 814-820 Bryant Street and 470 6th Street properties, in accordance with Administrative Code 23.3, which determined the market value is consistent with the proposed negotiated price. The appraisal review is in process.

• The costs to purchase the property, including transaction costs and demolition of an existing building, are approximately $12,000,000. In addition, the City's estimated costs to issue the certificates of participation are $3,535,000, including the audit fee, debt service reserve fund, capitalized interest and fees, and cost of issuance and underwriter's discount.
$465,000 would be reserved for market uncertainty. e The anticipated incremental debt service associated with the delivery and execution of the Certificates of Participation complies with the City's .Policy of limiting General Fund debt service payments at or below 3.25 percent of General Fund Discretionary Revenue. Policy Consideration e A specific plan for construction of a new facility has not yet been approved.  The Real Estate Division stated that no jail is contemplated to be constructed on this property.  The proposed Capital Plan, pending before the Board of Supervisors, provides for the issuance of certificates of participation for the demolition of the Bryant Street wing of the Hall of Justice slated for FY 2024-25.  Planning for the replacement building has not yet begun, but is expected to consolidate criminal justice functions currently in leased spaces. Recommendation

• Approve the proposed resolution and proposed ordinance pending (a) the receipt of the appraisal review, and (b) the approval of the Ten-Year Capital Plan for FY 2020-20 through FY 2029-30 the Board of Supervisors on I 30, 2019. SAN FRANCISCO BOARD OF SUPERVISORS BUDGET AND LEGISLATIVE ANALYST BUDGET AND FINANCE SUB-COMMITIEE MEETING MAY 1, 2019
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City Charter Section 9.105 states that amendments to the Annual Appropriation Ordinance are subject to Board of Supervisors approval by ordinance after the Controller certifies the availability of funds. City Charter Section 9.118(b)  states that any contract entered into by a department, board or commission that (1) has a term of more than ten years, (2) requires expenditures of $10 million or more, or (3) requires a modification of more than $500,000 is subject to Board of Supervisors approval. City Charter Section 9.118(e)  states that the Board of Supervisors has the power to borrow money by the issuance of tax anticipation notes, temporary notes, commercial paper, or any other short-term debt instruments in the manner provided by state law or City ordinance. The Hall of Justice, located at 850 Bryant Street, was constructed in 1958 and is seismically deficient. Due to aging infrastructure, the Hall of Justice has serious health, safety, and working condition problems, requiring significant renovation and capital investment. As a result, replacing the Hall of Justice, including County Jails No. 3 and No.4, has been a high priority in the City's Ten-Year Capital Plan since 2006. However, in late 2015, the Board of Supervisors rejected legislation to (a) accept a State grant to construct a new jail, (b) issue $215,000,000 Certificates of Participation and commercial paper to fund the balance of the costs, and (c)
purchase four adjacent properti~s to locate the new jail facility. Instead, on January 12, 2016, the Board of Supervisors approved a resolution (File 15-1286)
urging the Director of the Department of Public Health and the Sheriff to convene a working group to re-envision the jail replacement project at the Hall of Justice.  The resolution also stated that the Board of Supervisors verbally urged the Real Estate Division to begin negotiating the acquisition of the four adjacent properties at: (1) 450 6th Street, (2) 444 6th Street, (3) 470 th Street, and (4) 814-820 Bryant Street, and that the Board of Supervisors would soon consider legislation approving these acquisitions. In June 2016, the Board of Supervisors approved the acquisition of one of the four lots, the property at 450 6th Street, for $2,403,333  (File 16-0645). In April 2017, the Board of Supervisors adopted the FY 2018-27 Ten-Year Capital Plan. The Capital Plan calls for $308 million in certificates of participation for the Hall of Justice Relocation Project to relocate the District Attorney's Office, Adult Probation Department, Police Department Investigations Unit, Medical Examiner, and other administrative offices from the Hall of Justice. s!!i.-2;--:t;;';"' -0 "" "' ""'~~A~~~ ="" -~ "' ~ "'~--~ -""10-:::: w '""'~ ::?' ~"""" _-~-= ">""""""::~~"" ~"' _-~ ~ _-:_ _DEm;tXIUS-0EA~R0R0SEilU;EGISI.:Art":I0N-------~--------------- ---__ -~~ ____ -----____ _ :~~~--~~""=~-== ~~:;:-==-~~~~~~--~;¢-~--~=--~~ ~ ~-~~~----~ -~ ~-~~~=~= -~-~-~-~=~-'"' -~~ --~~-~~~-File 19-0420: the proposed resolution would authorize the Director of Real Estate Division to acquire real property located at 814-820 Bryant Street and 470 6th Street from Wen-Chiao SAN FRANCISCO BOARD OF SUPERVISORS BUDGET AND LEGISLATIVE ANALYST BUDGET AND FINANCE SUB-COMMITIEE MEETING MAY 1, 2019 Wayne Lin and Mei-Huei Grace Lin, as to an undivided 60 percent interest, and Tony Chih-Tung Lin and Jenny Chun-Hsing Lin, as to an undivided 40 percent interest, to facilitate the replacement of the Hall of Justice known as the Justice Facilities Improvement Program, for the purchase price of $11,520,000. These are two of the four properties recommended for purchase by the Board of Supervisors, as noted in File 15-1286. In addition, the proposed resolution would authorize the Controller to cause the execution and delivery of taxable or tax-exempt certificates of participation representing an aggregate principal amount not to exceed $16,000,000 to finance the costs of the acquisition of the property, including demolition and related site preparation costs. The proposed resolution would authorize the Controller to issue the City's commercial paper notes in anticipation of the execution and delivery of the Certificates of Participation. Finally, the proposed resolution would adopt findings that the conveyance is consistent with the City's General Plan and Eight Priority Policies of City Planning Coe Section 101.1, and authorize the Controller and the Director of Property to execute such documents and take necessary actions in furtherance of this resolution. File 19-0416: the proposed ordinance would appropriate $16,000,000 of Certificates of Participation to the General Services Agency to purchase the. property located at 814-820 Bryant Street and 470-6th Street and to fund the Hall of Justice Relocation Project with related demolition, site preparation and other acquisition costs in FY 2018-2019. Existing and Proposed Use of Property The proposed properties at 814-820 Bryant Street and 470 6th Street are two of the four properties listed above in the planned acquisition, located adjacent to the Hall of Justice as shown in the map below. SAN FRANCISCO BOARD OF SUPERVISORS BUDGET AND LEGISLATIVE ANALYST BUDGET AND FINANCE SUB-COMMITIEE MEETING MAY 1, 2019 The properties are approximately 24,000 square feet and include a vacant single story wood frame quick-service restaurant facility of approximately 2,899 feet. The Real Estate Division continues to negotiate for the fourth of the four parcels identified in File 15-1286, but a project adjacent to the existing Hall of Justice could move forward without purchasing the final parcel. Environmental and Planning Code Provisions On July 21, 2015, the Board of Supervisors approved the Final Mitigated Negative Declaration for the jail replacement project (File 15-0701). On April 11, 2019, the Planning Department verified that the proposed acquisition of 814-820 Bryant Street and 470 6th Street is consistent with the City's General Plan and the eight priority policies in Section 101.1 of the Planning Code. The proposed resolution would incorporate the Planning Department's findings regarding consistency with the City's General Plan and the Planning Code.
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Appraisal and Purchase Price In January 2019, the Real Estate Division contracted with Runde and Partners to conduct an appraisal of the 814-820 Bryant Street and 470 6th Street properties, which determined the market value is consistent with the proposed negotiated price, in accordance with Administrative Code 23.3. The appraisal defines market value as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale. According to Mr. Penick, the appraisal review is in process and is not available in time for this report.  The Real Estate Division expects the report in time for the Budget and Finance Committee hearing on May 1, 2019. Uses of certificates of participation The. City would pay approximately $12,000,000 for the total project cost, including $11,520,000 for site acquisition, as shown in Table 1 below. In addition, the City's estimated costs to issue the certificates of participation are $3,535,000, including the audit fee, debt service reserve fund, capitalized interest and fees, and cost of issuance and underwriter's discount. $465,000 would be reserved for market uncertainty. SAN FRANCISCO BOARD OF SUPERVISORS ~-BUDGET AND LEGISLATIVE ANALYST BUDGET AND FINANCE SUB-COMMITTEE MEETING MAY 1, 2019 Table 2: Uses of $16 million in Certificates of Participation Site Acquisition Title Insurance Title Endorsement, Escrow Fees and Other Fees Demolition and Site Preparation Subtotal Estimated Project Cost (rounded)
Audit Fee Debt Service Reserve Fund Capitalized Interest and Fees Cost of Issuance and Underwriter's Discount Subtotal Costs of Issuance (rounded)
Total Estimated Costs (rounded)
Reserve for Market Uncertainty Total Not to Exceed (rounded)
The project is expected to be completed in the summer of 2020. City's Debt Policy
$11,520,000
,605
,161 1,234
,000,000
,000
,233,237
,337,138 0,625
,535,000
,535,000. 5,000
$16,000,000 The current plan of finance anticipates utilizing the City's commercial paper program, which was approved by the Board of Supervisors in March 2009 (File 09-0197) and March 2010 (File
-0269) to finance certain project costs, including preliminary design, planning, and permitting. Of the City's total commercial paper program of $250 million authorized by the Board of Supervisors in May 2016 (File 16-0427),  $141.5 million is currently unencumbered. The City's policy is to limit General Fund debt service at or below 3.25 percent of discretionary General Fund revenues.  The anticipated incremental debt service associated with the delivery and execution of the Certificates of Participation complies with the City's policy of limiting General Fund debt service payments at or below
.25 percent of General Fund Discretionary Revenue, as set forth and maintained in the City's Capital Plan. A specific plan for construction of a new facility on 814-820 Bryant Street and 470 6th Street has not yet been approved.  The Real Estate Division stated that no jail is contemplated to be constructed on this property.  The property is to be developed as an administrative building as part of the future Hall of Justice complex;  and the Real Estate Division anticipates that the departments that were in the old Hall of Justice, including but not limited to the Police Investigations Unit and the Adult Probation Department, will be moved into the new facility on these two parcels and the previously-purchased parcel. According to Ms. Heather Green, Capital Planning Director, the proposed Capital Plan, pending before the Board of Supervisors, provides for the issuance of certificates of participation for the demolition of the Bryant Street wing of the Hall of Justice slated for FY 2024-25. According to Ms. Green, planning for the SAN FRANCISCO BOARD OF SUPERVISORS BUDGET AND LEGISLATIVE ANALYST BUDGET AND FINANCE SUB-COMMITIEE MEETING MAY 1, 2019 replacement building has not yet begun, but is expected to consolidate criminal justice functions currently in leased spaces. Approve the proposed resolution and proposed ordinance pending
(.a) the receipt of the appraisal review, and
(b) the approval of the Ten-Year Capital Plan for FY 2020-20 through FY 29-30 by the Board of Supervisors on April 30, 2019. SAN FRANCISCO BOARD OF SUPERVISORS BUDGET AND LEGISLATIVE ANALYST OFFICE OF THE MAYOR SAN FRANCISCO LONDON N. BREED MAYOR TO:
FROM:
RE:
DATE:
Angela Calvillo, Clerk of the Board of Supervisors Sophia Kittler Appropriation of $16,000,000 of Certificates of Participation to the General Services Agency to fund Hall of Justice (HOJ)  Relocation Project-FY 18-19
/16/2019 Ordinance appropriating $16,000,000 of Certificates of Participation to the General Services Agency to purchase the property located at 814-820 Bryant Street and 470 6th Street and fund the related demolition, site preparation and other acquisition costs in Fiscal Year 2018-19. Please note that Supervisors Haney and Peskin are co-sponsors of this legislation. Should you have any questions, please contact Sophia Kittler at 415-554-6153. OR. CARL TON B. GOODLETT PLACE, ROOM 200 SAN FRANCISCO, CALIFORNIA 94102-4681 TELEPHONE: (415) 554-6141