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Supervisors press department on retroactivity of master-lease amendment for Mayfair Hotel
Summary
The committee advanced a retroactive amendment to the Tenderloin Housing Clinic master lease to add the Mayfair Hotel and extend term for a pool of 16 hotels; supervisors questioned why the modification was brought more than a year after the hotel was occupied and asked for improved timing and reporting on future contract changes.
The Budget and Finance Subcommittee forwarded to the full Board a retroactive modification to the Tenderloin Housing Clinic master lease that adds the Mayfair Hotel and extends terms for a portfolio of 16 residential hotels used to house formerly homeless individuals and families. Department representatives said the Mayfair entered occupancy after renovations in February 2011 and that logistical and contracting complexities delayed bringing the formal amendment to the committee.
Supervisor Jane Kim pressed city staff on why the department waited roughly a year after occupancy to present the amendment to the Board. "I was just hoping that you could go into a little bit more detail to explain, the retroactivity of this contract that's being brought before us," Kim said, asking whether the department could bring such contract changes to the Board sooner in future cases.
Dave Crudo, presenting for the department, said the administration intended to remain within previously authorized master-lease authority while the hotel renovations and tenant moves were completed. He said managing a contract portfolio of 16 hotels created shifts across individual hotel budgets and that the department planned to bring amendments more promptly once thresholds were met. "As soon as we reach that $500,000 threshold, we'll bring them right back to you," Crudo said.
The budget analyst reported that the master lease had included a 3 percent annual cost-of-living escalator that was not appropriated for prior fiscal years, resulting in actual master-lease expenditures approximately $2 million less than budget for FY09–10 through FY11–12. The analyst recommended approval of retroactive amendments and a $2 million reduction in the not-to-exceed amount to reconcile past unappropriated COLA increases. Committee members accepted the budget analyst's recommendation and authorized the clerk to make the necessary amendments prior to placement on the full Board agenda.
Next steps: The committee forwarded the amended master-lease item to the Board of Supervisors for final action; the department agreed to try to return to the Board more promptly on future contract modifications and to adhere to reporting thresholds.
