San Francisco leases need full disclosure of costs

Last year, San Francisco officials decided to make city buildings more environmentally friendly. Mayor Ed Lee introduced legislation requiring any facilities leased by The City to meet LEED Gold requirements. The entire Board of Supervisors approved the plan.

The potential downside of this legislation became apparent when The City negotiated new facility leases for Muni and the Department of the Environment. Both deals attracted scrutiny from supervisors for their respective price tags. And it turns out that both leases include the cost of upgrades designed to help the facilities meet LEED Gold requirements.

Making municipal buildings environmentally friendly is a worthy goal. New city-owned buildings should be constructed in the most environmentally friendly manner. Upfront investment in the newest construction technology can help lower future energy costs and decrease The City’s carbon footprint.

But the wisdom of applying such a policy to leased buildings is far less clear. One issue stems from a lack of clarity about how much it costs The City to upgrade leased facilities to meet these requirements. Such costs are typically folded into the overall price of the lease, making it difficult to suss out the details.

City officials should reconsider whether The City and County should be on the hook to rehab every building it leases. At the very least, the costs of such environmental upgrades should be considered separately from the price of the lease, so officials will have a clear understanding of what this requirement is costing The City.

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