3924958 - Appropriation - Certificates of Participation to the General Services Agency to Fund Hall of Justice Relocation Project - $16,000,000 - FY2018-2019 - Board Pkt 051419

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Completed by:--=L"-'-'in=d=a..!...W"-"o'-'-'n=g------'-· Date @pr1l ~~ 2ol'1 Completed by: Linda Wong Date lh~ 2 2ot'1 FILE NO.  190416 ORDINANCE NO. R0#19022 SA#70-22
[Appropriation -Certificates of Participation to the General SeNiQes Agency to Fund Hall of Justice Relocation Project-$16,000,000- FY201B,.2019]. ' 3 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 fu11d the Hall of Justice Relocation Project with related demolition, site preparation,' and other acquisition costs in FY2018-2019. iO Note:
Unchanged Code text and uncodified text are in plain Aria! font. Additions to Codes are in single-underline italics Times New Roman font. Deletions to Codes are in strikethrough italics Timcs,"	e,vRomanfont. Board amendment additions are in double-underlined Aria! font. Board amendment deletions are in strikethrough 1
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subsections or parts of tables. I 13 Be it ordained by the People of the City and County of San Francisco: Section 1 . The sources of funding o.utlined be.low are herein appropriated in the General SeNices Agency for Fiscal Year 201.8-2019.  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 381/228875 10001289/0016 CPXCF COP 820 ADRE Capital Bryant St I ADM Real Improvements/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 ·  470 6th Street and the related demolition, site preparation, and other acquisition costs. Uses Fund/. Project & Activity I Department ID Authority 381/228875 1 01289 & 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 Demolition, Site  $480,000 Programmatic Preparation, Projects-Budget Other Acquisition Costs Page 2 . Fund/  Project & Activity I Department ID Authority 3811228875 1 ooo1289 & oo16/
CPXCF COP 820 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 0 Bryant Acquisition 3811228875. 10001289 & 0016/
CPXCF COP 820 20886 Bryant St I ADM Real ADRE Capital Estate Division Improvements/
ADRE 0 Bryant Acquisition 3811228875 10001289 & 0016/
CPXCF COP 820 . 20886 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 3110 Capital Interest $1,337,138 Bond Issuance Fund Cost  -Unamortized Page 3 Fund/ Project & Activity I Department ID Authority 381/228875 1 0001289 & 0016/
CPXCF COP 0 . Bryant St I ADM Real ADRE Capital Estate Divi.sion Improvements/
ADRE 0 Bryant Acquisition 381/228875 001289 & 0016/
CPXCF COP 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 Total Uses Mayor Breed;  Supervisors Haney, Peskin BOARD OF SUPERVISORS Account Description Amount 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. I I 20 I
), APPROVED AS TO FORM:
DENNIS J. HERRERA, City Attorney By:
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BUCK DELVENTHAL Deputy City Attorney Mayor Breed; Supervisors Haney; Peskin BOARD OF SUPERVISORS  · Page 5 BUDGET AND FINANCE SUB-COMMITIEE MEETING MAY1,2019
·Items 4 and 5 Files
-0416 and 19-0420 Legisiative Objectiv~s.
" File 19-0420 is a resolution authorizing (1Phe Director of Real Estate Division to acquire real property located at 814-820 Bryant Street and 470 6th Street from Wen-Chiao Wayne Lin and Mei-Huei Grace Lin, and Tony Chih-Tung Lin and Jen~y Chun-Hsing Lin for the purchase price. of $11,520,000; and (2) issuance of $16,000;000 in Certificates of Participation ..
" File 19-0~16 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. Key Points  .
.. In January :2016, the Board of Supervisors verbally urged the Real Estate Division to begin negotiating the acquisition of the foL!r adjacent properties at: (:1) 4SO 6th Street, (2) 444 6th Street, (3) 470 6th Street, and (4) 814-820 BryantStreet'for 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 $2A0~,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 determin12d the market value is consistent with the proposed negotiated price.  The.appraisal review is in process. .
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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, intluding the audit fee, debt service reserve fund, capitalized interest and fees, and cost of issuance and underwriter's discount. $465,000would 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 Genera'!  Fund Discretionary Revenue. Policy Consideration
.. A specific plan for construction of a new facility has not yet been approved. The Real Estate Division st~ted that no jail is cont!2mplated 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 of the Ten-Year Capital Plan for FY 2020-20 through i=Y 2029-30 b the Board of Supervisors on April 30, 2019. SAN FRANCISCO BOARD OF SUPERVISORS BUDGET AND LEGISLATIVE ANALYST BUDGET AND FINAN~E SUB-COMMITTEE MEETING MAY1, 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 of funds. City C.harter 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 exp~nditures of $10 million or more, or (3)  requires a modification of more than $500)JOO 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 co.nstructed. in 1958 and is seismically deficient.  Due to aging infrastr~cture, the Hall of Justice has serious health, safety, and working condition problems, requiring significant rehcivation 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 Supervis.ors rejected legislation to (a) accept a State grant to construct a new jail, (b) issue $215,000,000 Certificates of Participation and comlflercial paper to fun.d 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-envisjon 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 6th Street, {2) 444 6th Street, {3)470
·6th Street, and {4) 814-820 Bryant Street, and that. the Board of Supervisors would soon consider legislation approving thes~ 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.  . ·
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 \0fen~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 replacement of the Hall of Justice known as the Justice Facilities Improvement Program1 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. ln addition, the proposed resolution would authorize the Controller to ca\Jse 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 sfte 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 a\Jthorize 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
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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
. th . The proposed properties at 814-820 Bryant Street and 470 6 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 MAY 11:2.019 The properties are approximately 241000 square feet and include a vacant.  single .story wood frame quick-service restaurant facility of approximately 21899 feet. The Real Estate Division continues to negotiate for the fourth of the four parcels identified in File 15-12861 but a project adjac~nt 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 proJect {File 15-0701). On April 11, 2019, the Pl~nning Department verified that the proposed acquisition of 814-820 !3ryant 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 Ci.tys General Plan and the Planning Code. Appraisal and Purchase Price In January 20191 the Real Estate Division contracted with Runde and Partners to 'conduct an appraisal of the 814-820 Bryant· St.reet 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
, 2019. Uses of certificates of participation The. City would pay approximately $12,000,000 for the total project cost, including$l115201000 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 feel 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 -BUDGETAND 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 lssuan~e (rounded)
Total Estimated Costs (rounded)
Reserve for Market Uncertainty Total"~ot to Exceed t .... '"' ....... .-l.-.rl \IUUIIUC:UJ The project is expected to be completed in the summer of 2020. City's Debt Policy
$11,520,000
,605
,161 1,2.34
,000,000
,000
.
,233,237
,337)38 0,625
,535,000
,535,000. 5,000
<!:1 h noo onn 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 cbmmer~ial 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 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 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 administrativebuilding 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-COMMITTEE 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. SUPERVISORS BUDGET AND LEGISLATIVE ANALYST OFFICE OF THE MAYOR SAN FRANCISCO
. LONDON N. BREED MAYOR TO: Angela Calvillo, Clerk of the Board of Supervisors FROM: Sophia Kittler ·
RE:  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 DATE: 4/16/2019 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. GOODLETT PLACE, ROOM 200 SAN FRANCISCO, CALIFORNIA 941 02-4681 TELEPHONE: (415) 554-6141 :.·
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. Review t.oday's action:
~~ Appropriation -Certificates of Participation to the General Services Agency to Fund Hall of.  Justice Relocation Proiect -$1 6,000,000 -
· FY201 8-20·19
~~ Acquisition of Real Property -. $1 -1,5201000 and Related Site Demolition and Preparation
-814-820 ·Bryant Street and 470-6th Street Background Review
-ex if pl_an ·
Next steps·
N o::t pproval of fhe Certiific·ates of Particip~ation J. Exit Proi~ect: McDonalds Site Ac Seeking approval for authorization of not to exceed
$1 610001000 ( 12,0001()00 for acquisition1 transfer cost and site preparation for demolition) in COP to assist in the acquisition of 4-820 Bryant St-reet and 470· 6th Street. Site acquisition for future reconsolidation of iustice functions downtown.
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Acquisition of 814-820 Bryant and 470.6th Street for.future reconsolidation of iust·ice functions d-owntown J:l Longstanding priority of the Capital Plan
!:l City has identified five separate ·lots: (Lot Nos. 9 I 012, o·14, 043 and ·045)~ all within Assessor1s 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
:a December 15, 2015-Verbal Direction from BOS given to .Real Estate Division to begin negotiations ·with property owners to acquire sites El City acquired 450 6th Street, Assessor1s Lot No. 43 on Block 37 59 in 201 6 for
$2.4 million
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J IN EXIT Fits with the ProposecJ FY2020-29 Capital Plan,. part of the COPs in f=Y20 for HOJ. Exit ·Proiects L() -=:t Certificates of Participation (COPs)
Not-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
. $15,535,000
$12/000/000
$241000
$12/024/000
$1/233/238
$1,337/138
$8071525
$133/1 00
$940/625
$15,535,000
$465,000 I MaximumNot~to-Exceed Par Amount . $16,000,000 I c.o o;t'
TIM I IST.I IS CRITI Negotiations have been ~off· and on for 1 8 months ·
Sel.lers are at a decision point of.selling to City or pursuing other optio.ns
~ Mayor Breed1 along with co-sponsors, Supervisors
.. Haney and Peskin introduced legislation (4/16/19)
El Annual debt payn1ents to be appropriated as part of
. the budget process·
Target purchase datte May 2019 ·
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