3924958 - Appropriation - Certificates of Participation to the General Services Agency to Fund Hall of Justice Relocation Project - $16,000,000 - FY2018-2019 - Board Pkt 050719

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Completed by: -=L~in_da~W~o~n~g-----~· Date ~ell~' 2olf1 Completed by_: Linda Wong Date Ol~ 21 2ol'-f iO FILE NO. 190416 ORDINANCE NO. R0#19022 SA#?0-22
[Appropriation -Certificates of Participation to the General Services Agency to Fund Hall of Justice Relocation Project -$16,000,000 -FY2018,.2019]
I 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 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 }fe,v Roman font. Board amendment additions are in double-underlined Arial font. Board amendment deletions are in strikethrough /
la! font. Asterisks (* * *. *) indicate the omission of un_changed Code subsections or parts of tables. I
Be it ordained by the People of the City and County of San Francisco:
Section 1. The sources of funding o.utlined 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/ Project & Activity/ Account Department ID Authority 381/ 228875 10001289/0016 80141 CPXCF COP 820 20886 ADRE Capital Proceeds fr Bryant St/ ADM Real Improvements/AD RE Certificates of Estate Division 820 Bryant Acquisition Participation Mayor Breed; Supervisors Haney, Peskin BOARD OF SUPERVISORS Description Amount Proceeds from $16,000,000 Certificates of Participation 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
· 470 6th Street and the related demolition, site preparation, and other acquisition costs. Uses Fund/. Department ID 381/ 228875 CPXCF COP 820 Bryant St/ ADM Real Estate Division 381/ 228875 CPXCF COP 820 Bryant St/ ADM Real Estate Division Project & Activity /
Authority 001289 & 0016/ ADRE Capital
· Improvements/
ADRE 820 Bryant Acquisition 001289 & 0016/ ADRE Capital Improvements/
ADRE 820 Bryant Acquisition Mayor Breed; Supervisors Haney, Peskin BOARD OF SUPERVISORS Account Description Amount 7000 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 /
Department ID Authority 381/ 228875 10001289 & 0016/
CPXCF COP 820 20886 Bryant St/ ADM Rea.I ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition 381/ 228875. 10001289 & 0016/
CPXCF COP 820 20886 Bryant St/ ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition 381/ 228875 10001289 & 0016/
CPXCF COP 820 . 20886 Bryant St/ ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition Mayor Breed; Supervisors Haney, Peskin BOARD OF SUPERVISORS Account Description Amount 1130 CSA 0.2% $24,000 GF-CON-lnternal Controller's Audit Audit Fund 3110 Debt Service $1,233,237 Bond Issuance Reserve Fund Cost -Unamortized 3110 Capital Interest $1,337,138 Bond Issuance Fund Cost -Unamortized Page 3 Fund/ Project & Activity/
Department ID Authority 381/ 228875 10001289 & 0016/
CPXCF COP 820 20886 Bryant St/ ADM Real ADRE Capital Estate Divi.sion Improvements/
ADRE 820 Bryant Acquisition 381/ 228875 10001289 & 0016/
CPXCF COP 820 20886 Bryant St/ ADM Real ADRE Capital Estate Division Improvements/
ADRE 820 Bryant Acquisition 381/ 228875 10001289 & 0016/
CPXCF COP 820 20886 Bryant St/ 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 : I I I I 20 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: ~Lv~
BUCK DELVENTHAL Deputy City Attorney Mayor Breed; Supervisors Haney; Peskin BOARD OF SUPERVISORS · Page 5 BUDGET AND FINANCE Sus-COMMITTEE MEETING MAYl, 2019
· items 4 and 5 Department:
Files 19-0416 and 19-0420 .Real Estate Division Legisiative Objectiv~s .
., File 19-0420 is a resolution authorizing Cl}'the Director of Real Estate Division to acquire real property located at 814-820 Bryant Street and 470 5th Street from Wen-Chiao Wayne Lin and Mei-Huei Grace Lin, and Tony Chih-Tung Lin and Jenny Chu_n-Hsing Lin for the p11rchase price· of $11, "i?0,000; and ()) iss11;:rnce nf $16,0001000 in f:Prtifir:;:ites of Participation ..
., File 19-0~16 is an ordinance appropriating $16,0001000 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. Key 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 5th Street1 (2) 444 5th Street1 (3) 470 5th Street, and (4) 814-820 BryantStreetfor 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 5th Street, for $2A03,333. Fiscal Impact e In January 2019, the Real Estate Division contracted with Runde and Partners to conduct an appraisal of the 814-820 Bryant .Street and 470 5th Street properties, in accordance with Administrative Code 23.3, which determined the market value is consistent with the proposE:d negotiated price. The.appraisal review is in process. .
.. The costs to purchase the property, including transaction costs and demolition of an existing building1 are approximately $121000,000. In addition, the City's estimated c.osts 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. $455,000 would be reserved for market uncertainty. .
., The anticipated increme.ntal. 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 Genera[ Fund Discretionary Reven_ue. Policy Consideration e A speciflc plan for construction of a new facil°ity has not yet been approved. The Real Estate Division st~ted that no jail i;; 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 ofthe appraisal review, and (b) the approval ofthe Ten-Year Capital Plan for FY 202.0-20 through FY 2029-30 by the Board of Supervisors on April 301 2019. SAN FRANCISCO BOARD OF SUPERVISORS BUDGET AND LEGISLATIVE ANA°LYST BUDGET AND FINAN<;:E SUBsCOMMITTEE fVJEETING MAY 1, 2019 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 Qffunds. City C.harter Section 9.118{b) states that any contract entered into tiy 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 rnnstructed. 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 invest~ent. 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 Supervis,ors rejected legislation to (a) accep~ a State grant to construct a new jail, (b) issue $215,000,000 Certificates of Participation and comi:nercial paper to fund the balanc.e 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)
·urgirig the Director of the Department of Public Health and the Sheriff to convene a working group to re-envis.ion 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 pr~perties at:.(1) 450 5th Street, (2) 444 5th Street, (3}470
.5th Street, and (4) 814-820 Bryant Street, and that.the Board of Supervisors would soon consider I egislation approving thes~ acquisitions. In June 2016, the Board of Supervisors approved the acquisition of one ofthe four lots, the
-property at 450 5th 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. _ 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 5th Street from Wen~Chiao SAN FRANCISCO BOAR.D OF SUPERVISORS BUDGET AND.LEGISLATIVE ANALYST BUDGET AND FINANCE SUB-COMMITT~E 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 replaeement of the Hall of Justice known as the Justice Facilities Improvement Program, for the purchase price of $111520,000. These are two of the four properties recommended for purchase by the Soard of Supervisors, as noted in File 15-1286. ln addition, the proposed resolution would authorize the Controller to caµse 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 Citls 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 Citis 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 5th 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-COM.MITTEE MEETING MAY1, 2019
(
The pro.perties are approximately 24,000 square feet and include a vacant.single .story wood frame quick-service restaurant fadlity 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 _witho~t purch~sing the final parce'L . Environmental and Planning Code Provisions _ On July 21, 2015, the Board of Supervisors approved the Final Mitigated Negative Declaration
· for the jail replacement proj'ect {File 15-0701). On April 11, 2019, the Pl;;inning Department verified that the proposed acquisition of 814-820 ~ryant Street and 470 5th 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. Appraisal and Purchase Price . . In January 2019, the Real Estate Division con~racted with Runde and Partners to ·conduct an appraisal of the 814-820 Bryant· sfreet 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 certifi.cates 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 estimat~d costs to issue the certificates of participation are $3,535,000, including the audit fee, deb~ service reserve fund, capitalized interest and fees,. and cost of issuance and underwriter's.discount. $4651000 . . . would be reserved for market uncertainty. SAN FRANCISCO BOARD OF SUPERVISORS -BUDGET AND LEGISLATIVE ANALYST BUDGET AND FINANCE SUB-COMMITTEE MEETING MAY1, 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 lssuan~e (rounded)
Total Estimated Co.sts (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
· 1,233,237
,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 cJnticipated incrernenlcJl debl :,ervice d:,Sociated 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, 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 5th 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 Just.ice 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 con·solida.te 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. SUPERVISOR_S 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 Sl)pervisors Haney and Peskin are co-sponsors of this legislation. Should you have any questions, please contact Sophia Kittler at 415-554-6153. DR. CARL TON 8. GOODLETI PLACE, ROOM 200 SAN FRANCISCO, CALIFORNIA 94102-4681 TELEPHONE: (415) 554-6141 E ,A
. Review today's action:

• Appropriation -Certificates of Participation to the General Services Agency to Fund Hall of. Justice Relocation Proiect -$16,000,000 -F.Y201 8-20·19 Acquisition of Real Property ~ $11,520,000 and Related Site Demolition and Preparation
-814-820 · Bryant Street and 470-6th Street Ba·ckground Review -exif pl_an ·
Next steps·
. . '  . tO N tO Approval of the Cert1fic·ates of Participation for the HOJ. Exit Proiect: McDonalds Site Ac Seeking approval for authorization of not to exceed
$16,000,000 (12,000,000 for acquisition, transfer cost and site preparation for demolition) in COP to assist in the acquisition of 4-820 Bryant Street and 470· 6th Street. Site acquisition for future reconsolidation of iustice functions downtown. r­N t.D
·Acquisition of 814-820 Bryant and 470 .6th Street for.future reconsolidation of iustice functions d-owntown Ill Longstanding priority of the Capital Plan Fl! City has identified five separate ·1ots: (Lot Nos. 009, 012, 0·14, 043 and ·045), all within Assessor's Block No. 37 59 (Program Site)· as necessary to acquire in order.to facilitote the replacement of the Hall of Justice through relocation of certain as-yet identified elements of existing occupancy Ill December 15, 2015 -Verbal Direction from BOS given to .Real Estate Division to begin negotiations ·with property owners to acquire sites i!I City acquired 450 6th Street, Assessor's Lot No~ 43 on Block 37 59 in 201 6 for
$2.4 million co N tD J IN EXIT APPR Fits with the Proposed FY2020~29 Capita.I Plan, part of the COPs in FY20 for HOJ _ Exit ·Proiects
) N (D Certificates of Participation (C ot-to-Exceed. $16 mil·lion Estimated_ Sources:
Par Amount Estimated Uses:
Project Fund CSA Audit Fee (0.2% of project fund) . . Total Project Fund Deposits:
Debt Service Reserve Fund Capitalized lnterest/CP Interest & Fees Costs of Issuance Underwriter's Discount Total Delivery Expenses Total Estimated Uses Reserve for Market Uncertainty
~aximum Not~to~Exceed Par Amount Ps)
· $15,535,000
$1210001000
$241000
$1 210241000
$ l 12331238
$1 /3371138
$8071525
$133, 1 00
$9401625
$15,535,000
$465,000
. $16,00Q,OOO I C) er) c.o TIMI F IS IS CRITI Negotiations have been off· and on for 1 8 months · ·
Sellers are at a decision point of selling to City or pursuing other options mffl Mayor Breed, along with co-sponsors, Supervisors Haney and Peskin introduced legislation (4/16 /1 9)
ll Annual debt payments to be appropriated as part of
. the budget process
. Target purchase date May 2019 ·
,-Cl? c.o