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Except as provided by Sections 4.112, 4.113, 4.114, 4.115, and B3.581 of the Charter and by Sections 2A.173 and 23.36 of this Code, or as otherwise provided by the Charter or this Code, the Director of Property shall have the charge of the Lease of Real Property owned by the City. When the head of any department in charge of Real Property reports to the Director of Property that certain land is not required for the purposes of the department, the Board of Supervisors, by resolution, may authorize the Lease of such Real Property. The Director of Property shall determine the Market Rent of such Lease based on a review of available and relevant data. If the Market Rent of the Lease is more than $45 per square foot per year as base rent, the Director of Property shall obtain an Appraisal for such Lease. If an Appraisal determines the Market Rent of the Lease exceeds $60 per square foot per year as base rent, the Director of Property shall obtain an Appraisal Review for such Appraisal. Any Appraisal or Appraisal Review shall have an effective date of value that is not earlier than nine months before the date legislation for the proposed Lease is submitted to the Board of Supervisors. The Director of Property shall arrange for such Lease to the highest responsible bidder in accordance with Competitive Bidding Procedures and for no less than the Director of Property's opinion of Market Rent if there is no Appraisal, or for no less than the Market Rent stated in the Appraisal if there is an Appraisal, unless the Board of Supervisors has by resolution found that (a) such Competitive Bidding Procedures are impractical or impossible or has authorized other means of award in furtherance of a proper public purpose, or (b) a lesser sum which furthers a proper public purpose. The Director of Property shall collect rents due under such Lease. under such Lease.
When the Public Utilities Commission, the Recreation and Park Commission, the Port Commission, or the Municipal Transportation Agency require approval of the Board of Supervisors to a proposed Lease of Real Property owned by the City, the applicable Commission or Agency shall determine the Market Rent of such Lease based on a review of available and relevant data. If the Market Rent of the Lease is more than $45 per square foot per year as base rent, the applicable Commission or Agency shall, through the Director of Property, obtain an Appraisal of the Market Rent for the Lease unless the Executive Director of the Port determines, for Real Property under Port jurisdiction, that the rental rate for the proposed Lease meets or exceeds the Port Commission's annually adopted parameter rental rate for such Real Property, and such Lease shall be for no less than the Market Rent established in the Appraisal unless (1) the Commission or Agency determines that applying the Market Rent requirement would interfere with its capacity in discharging one of its core functions under the City Charter, (2) the Board of Supervisors has found by resolution that a lesser sum will further a proper public purpose, or (3) the Commission or Agency determines, with Director of Property concurrence, that an independent, appropriately qualified real estate economic expert is better suited than an Appraiser to perform the rental analysis. If an Appraisal determines the Market Rent of the Lease exceeds $60 per square foot per year as base rent, the applicable Commission or Agency shall, through the Director of Property, obtain an Appraisal Review for the Appraisal. Any Appraisal or Appraisal Review shall have an effective date of valuation that is not earlier than nine months before the date legislation for the proposed Lease is submitted to the Board of Supervisors.
(Former Sec. 23.30 redesignated as Sec. 23.48 and amended by Ord. 15-01, File No. 001965, App. 2/2/2001)
CODIFICATION NOTE
1. So in Ord. 10-25.
If any department in charge of City-owned Real Property requests the Director of Property to Lease City-owned Real Property, the Director of Property shall have the authority to enter into the following Leases on behalf of the City as Landlord: (a) on a year-to-year or shorter tenancy, where such Real Property has a fair market rental value of $15,000 or less per month, and (b) where the term of a Lease will not exceed 31 days, including without limitation month-to-month Leases. In addition, where, in the opinion of the Director of Property, the Leasing of such Real Property for landscaping or gardening serves a public purpose, the Director of Property may Lease such Real Property at a nominal rental, on a year-to-year or shorter tenancy, and on such other terms and conditions as the Director of Property may require.
Within 10 days after entering into any Lease under this Section 23.31, the Budget and Finance Committee of the Board of Supervisors shall be notified by the Director of Property as to the terms and conditions of such Leases.
(Added as Sec. 23.22; amended by Ord. 323-86, App. 8/8/86; Ord. 284-90, App. 7/24/90; redesignated and amended by Ord. 15-01, File No. 001965, App. 2/2/2001; amended by Ord. 103-16
, File No. 160361, App. 6/24/2016, Eff. 7/24/2016)
(Former Sec. 23.31 redesignated as Sec. 23.50 and amended by Ord. 15-01, File No. 001965, App. 2/2/2001)
Any commission, board or department that, under the Charter or this Code, is given exclusive power to Lease Real Property under its control and management may submit any proposed Lease to the Director of Property for review and advisory recommendations and may request the Director of Property to determine fair market rental rates to aid and assist in negotiating, extending or renewing such Leases. It is the City's policy that all commissions, boards and departments that negotiate and administer such Leases submit all proposed Leases which have a term, including extension options, of five years or more, or which would produce more than $500,000 in revenue over such term, to the Director of Property for review and advisory recommendations before final approval of any such Lease and, as to such Leases, request the Director of Property to determine fair market rental rates to aid and assist in negotiating, extending or renewing such Leases. The purpose of this policy is to achieve greater consistency and coordination in the City's Leasing practices, to increase the financial return to the City from its Leases and to avoid unnecessary duplication of effort and expense in the Leasing of City Real Property.
(Added as Sec. 23.23 by Ord. 323-86, App. 8/8/86; redesignated and amended by Ord. 15-01, File No. 001965, App. 2/2/2001; amended by Ord. 278-04, File No. 041352, App. 11/18/2004)
(Former Sec. 23.32 redesignated as Sec. 23.51 and amended by Ord. 15-01, File No. 001965, App. 2/2/2001)
To the extent that any ordinance, Code provision, or Charter provision gives the City, or any of its commissions, boards, or departments, power to award Leases without competitive bidding, it shall be City policy that, notwithstanding such power, all such Leases that are expected to produce more than $2,500 per month in revenue be awarded in accordance with Competitive Bidding Procedures, unless such Competitive Bidding Procedures are impractical or impossible. It shall also be City policy that any and all Leases awarded without following the Competitive Bid Procedures shall be in an amount not less than the fair market value of the leased property. If any City department wishes to award a Lease of City-owned property for less than fair market value, it shall make a finding of the public purpose to be served by such Lease, and such Lease and finding shall be subject to the prior approval of the Mayor and the department head, as well as the applicable commission. If there is no commission approval, then such Lease and finding shall also be subject to the prior approval of the Board of Supervisors. The Lease shall also require that the tenant will use the leased premises in accordance with the stated public purpose for the entire lease term. The provisions of this Section 23.33 shall be applied subject to Administrative Code Chapter 21B.3(b) 1
and shall not apply to any leases awarded pursuant to Administrative Code Chapter 23A.
(Added as Sec. 23.24 by Ord. 323-86, App. 8/8/86; redesignated and amended by Ord. 15-01, File No. 001965, App. 2/2/2001; amended by Ord. 278-04, File No. 041352, App. 11/18/2004; Ord. 10-25, File No. 250040, App. 2/12/2025, Eff. 3/15/2025)
(Former Sec. 23.33 redesignated as Sec. 23.52 and amended by Ord. 15-01, File No. 001965, App. 2/2/2001)
CODIFICATION NOTE
Each commission, board and department that is empowered by the Charter, City ordinance, this Code or State statute to Lease City-owned Real Property shall, within 10 days after the close of each quarter of a fiscal year ("fiscal quarter"), file with the Budget Analyst for the Board of Supervisors and post on the commission, board or department website a written report of all Leases of City-owned Real Property awarded during the preceding fiscal quarter which were less than fair market value or which were not submitted for approval by the Board of Supervisors.
The report shall contain the following information for each Lease:
1. Tenant's name.
2. Term of the Lease, including any extension options.
3. Rental amount, including, any percentage rent and rent escalation or adjustment provisions, and, if applicable, the finding of public purpose for why the rent was set at less than fair market value.
4. Location of Leased Real Property.
5. If unimproved Real Property, dimensions and area of Real Property.
6. If improved Real Property, description of improvements and floor area of Leased space.
7. Use to be made of premises by the tenant.
The Budget Analyst shall review each report and may report his or her comments and recommendations to the Board of Supervisors, as the Budget Analyst deems appropriate.
(Added as Sec. 23.25 by Ord. 323-86, App. 8/8/86; redesignated and amended by Ord. 15-01, File No. 001965, App. 2/2/2001; amended by Ord. 278-04, File No. 041352, App. 11/18/2004)
(Former Sec. 23.34 redesignated as Sec. 23.53 and amended by Ord. 15-01, File No. 001965, App. 2/2/2001)
Notwithstanding any other provision in this Chapter, where the City Acquires Real Property which at the time of Acquisition is under a Lease to a tenant from the previous owner, the Director of Property may, subject to the approval by resolution of the Board of Supervisors, upon expiration of such Lease, negotiate at a fair market rental a new Lease for such Real Property with the same tenant on a term designated by the Board of Supervisors, until such time as required for the purposes of the department in charge of such Real Property.
(Added by Ord. 15-01, File No. 001965, App. 2/2/2001)
(Former Sec. 23.35 redesignated as Sec. 23.54 and amended by Ord. 15-01, File No. 001965, App. 2/2/2001)
In addition to the delegation of authority set forth in Sections 4.112, 4.113, 4.114, 4.115, and B3.581 of the Charter and by Section 2A.173 of this Code, (i) pursuant to Charter Section 4.113, the Recreation and Parks Commission shall have the power to Lease Real Property under its jurisdiction subject to approval by the Board of Supervisors as required by Charter Section 9.118 and any other applicable provision of the Charter or this Code, and (ii) pursuant to Charter Section 4.112, the Public Utilities Commission shall have exclusive power to Lease Real Property under its jurisdiction, subject to approval by the Board of Supervisors as required by Charter Section 9.118 and any other applicable provision of the Charter or this Code.
(Added by Ord. 15-01, File No. 001965, App. 2/2/2001)
(Former Sec. 23.35 redesignated as Sec. 23.55 and amended by Ord. 15-01, File No. 001965, App. 2/2/2001)
The Real Estate Department is authorized and directed to collect all rents due under Leases of City-owned Real Property, except as otherwise provided in the Charter or this Code. All moneys received by the Real Estate Department in payment of rents shall be deposited in the proper funds to the credit of the various departments having control of the City-owned Leased Real Property.
(Added by Ord. 15-01, File No. 001965, App. 2/2/2001)
(Former Sec. 23.37 redesignated as Sec. 23.56 and amended by Ord. 15-01, File No. 001965, App. 2/2/2001)
All agreements permitting the use for private gain Real Property situated in the City and County of San Francisco and owned by the City, including any agency thereof, shall contain a clear and unequivocal understanding that a possessory interest subject to taxation may be created and that the party with the right to use such Real Property shall pay any and all possessory interest taxes levied upon his or her interest therein pursuant to an assessment made by the Assessor. However, the Board of Supervisors may by resolution specifically authorize and approve to be included in such agreement a provision for the City's assumption of the payment of such possessory interest taxes, in whole or in part, or for an offset against revenues otherwise due and payable to the City under such agreement in an amount equal to all or a portion of such possessory interest taxes.
Such agreement shall also provide that the holder of such interest shall, upon request, furnish the information required in Section 23.39 of this Code to the City within 30 days of any transaction that is subject to the reporting requirements of such Section.
Within 60 days after execution of an agreement pertaining to the use of City Real Property as described above, the agency executing such agreement on behalf of the City shall forward or cause the holder of such interest to forward, a copy of the agreement to the Assessor of the City and County of San Francisco, as required in Section 23.39 below.
As used in this section and in Section 23.39 below, the term "agreement" shall mean any written contract, instrument or other document permitting the possession, occupancy or use of City Real Property including, but not limited to, Leases, concession agreements, franchise agreements and management agreements.
(Added by Ord. 15-01, File No. 001965, App. 2/2/2001)
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