Budget committee recommends leases at 200 Paul Street, adds six‑month reporting requirement

The Budget and Finance Committee voted to recommend two resolutions authorizing licenses for Department of Technology space and services at 200 Paul Street, forwarding the items to the full Board of Supervisors as amended.

Chair Carmen Chu and two supervisors considered competing priorities: the higher monthly cost of the new facility, the seismic and redundancy improvements it provides, and the citywide consolidation goals advanced by the Central Office for Information Technology (COIT). The committee added an amendment requiring DT to report to the Board of Supervisors every six months on progress and documented efficiencies from consolidation.

John Walton, director of the Department of Technology, told the panel the city moved servers out of 1 Market Plaza after seismic concerns and longtime infrastructure deterioration. "The 1 Market Plaza Building is in a liquefaction zone," Walton said, and described 200 Paul as a safer location that was retrofitted after 1974 and is "ranked at a tier 2 plus" for reliability. He said the department had procured 200 Paul through a competitive process and that the move addresses recurring outages and single‑site risk.

Budget analyst Harvey Rose outlined the fiscal impact in the committee report. He said the department currently pays $91,002.26 per month for 1 Market Plaza and that the proposed licenses would increase costs by $70,308 per month (a 77.1 percent increase), producing an annual increased cost of $843,696. Rose also recommended treating approval as a policy matter due to the cost change and urged the six‑month reporting amendment to document consolidation progress and cost savings.

Committee members pressed DT and the controller's office on alternatives. Monique Smuta of the Controller's Office summarized a 20‑year analysis that compared renovating 1 Market Plaza (estimated then at more than $17 million) with leasing at 200 Paul (initial tenant improvements estimated earlier at about $1 million) and developing a future city‑owned facility (estimated in analysis at about $11.8 million). Smuta said amortized multiyear costs favored a city‑owned site if upfront financing were available, but that funding had not been identified.

Supervisor Jane Kim questioned procurement timing and the short RFQ period used in the earlier phase of the project; DT staff said the initial services contract was done through the city's computer store and that the real‑estate licenses are now before the board because they are no longer solely service agreements. John Opdycke, acting director of real estate, said the city negotiated with the landlord and submitted a completed lease package after concluding those talks.

Walton said the city's network demand has grown sharply and that recent outages reflect capacity constraints: "We are currently ... at a 150% of our current bandwidth capacity," he said, adding the department recorded three significant network failures in the last year totaling about seven hours of downtime.

Supervisor (recorded in the committee minutes under varying spellings; recorded vote used "Mercarini") moved to forward the amended legislation. The committee took the six‑month reporting amendment without objection and then voted on the recommendation as amended. The recorded vote was: Mercarini, aye; Kim, no; Chu, aye. The chair announced the motion passes and the items will be recommended to the full board as amended.

The full Board of Supervisors will consider final approval of the licenses to occupy space at 200 Paul Street.