put out by the department. i should add that the commission and prove to -- r commission-- rfq -- commission-approved rfq included various items. as i said, on april 5, we received three timely responses. the selection panel selected ortega family enterprises to operate the stow lake boathouse. on august 19, the commission selected ortega and recommended that staff enter into negotiations with them for the operation of the boathouse. before we get into the lease, a little background on the qualifications of ortega and to jog your memory on why we selected them.

significant experience operating in park locations, including at a national monument, white sands national monument, bandoliers national monument, and others. 22 years of boat rental experience through their partner in this endeavor. they have significant experience with their restaurateur, who has run an american box restaurant. they are tenderloin-based establishments. mr. klein has taken over the discovery cafe at the children's museum. the least you have before you is a 15-year lease. it would commence on march 1 of 2011 and terminate on february

28, of 2026. there would be one potential five-year extension for the operation of the boat rental, food and beverage, and a small retail concession. the minimum rent would be $140,000 per year. the percentage would be $33,000 to -- 33% of boat rental fees, 10% of food and beverage revenue, and 7.5% of retail revenue. the 33% indicates an increase of 2% over the existing rental -- existing percentage rate for boat rental. that is important. the boats are the largest revenue source. to get any increase from the boat revenues and concessions will significantly benefit the city's bottom line. the 10% of food and beverage is a decrease from what we currently get. that is because the economics of

operating a full service restaurant verses a snack bar, where you don't have a lot of labor, you don't have a lot of proper. 75% -- 7.5% of retail. one of the things we are really excited about this lease is that beginning in year five of the lease, which is when we would see some of the improvements i will get into in a moment, the leasee will begin placing 2% of gross revenues into a capital improvement fund. this money would be expended by the lee c. -- leasee, subject to the approval of the city. we have a $1.7 billion deferred maintenance need. i think we can agree that when

we are looking at how we can eliminate those deferred maintenance needs, we should be prioritizing recreation centers, pools, and other facilities in our -- that serve as our most needy populations. this fund is a mechanism by which we ensure that not only after the improvements are complete, but 20 years from now when the lease is complete, that building will be in good condition. we won't be in a condition right now where we have someone on a month-to-month lease and is not making the improvements that perhaps the boathouse deserves. another benefit of the lease along those lines is beginning in year four, they would place 1.5% of all revenues into a personal property fund. this money would not be controlled by the city.

it would be expended at their discretion. it would be dedicated to the purchase of new boats, equipment, furniture, and other personal property equipment at the site. it will result in come at the end of the lease -- it will result in, at the end of the lease, there would be a boat house at the end. the leasee will be required to purchase an all new fleet of 50 rental boats with a minimum investment of $152,000. additionally, they can be directed by department staff to purchase an additional 35 boats upon completion of a formal review. we have set up a process where we will review the demand for boats in three months, six months, and nine months, and see if there is a need for additional votes at the site.

leslie, the capital improvements, which perhaps should have been first. this was the department's and the commission's priority, finding someone who had the dedication to make significant improvements into the boathouse and restore it to its historic potential. the capital improvements, the minimum though you is $233,000. i will get into that in a little bit. they include completely retaining all of the exterior elements of the building, all of the shutters, the historic paint patterns, and all the other a comic elements of the exterior of the boat house -- and all the other elements of the exterior of the boathouse.

improving the kitchen so we can have a full-service, the meals, expended man -- expanded menu offerings that ortega has proposed, and the creation of an informal cafe seating area on the inside. as i said previously, the boating operation would be managed by d ortega's partner in this end of honor, -- this endeavor. there would purchase 50 boats. they would require -- they would be required to follow all applicable laws. there would be regular servicing and maintenance of the boats. upon completion -- upon execution of the lease, we would see a new fleet of boats that goes from looking like this, which is -- which is what we

have, to something like this. the food and beverage service would be managed by the proprietor of american box. we would be retaining the snack bar atmosphere. it is not quite carnival fair, but somewhat akin to that. we would be implementing another level of offerings. we would have sandwiches, salads, soups available, and those offerings would be healthy and sustainable. they would be affordably priced. prices would be between $4.95 and $8.95. they will require -- they will acquire their food from local sources. there would use local suppliers.

the capital improvements -- it is important to note that we are not approving any capital improvement plan right now. there are no design documents in front of you. those designs and capital improvement plans will be subject to future commission approval, as well as the approval of all relevant city entities, including potentially the planning department and historic preservation commission. we have consistently been cleared as to whether or not the stow lake boathouse is a landmark or not. we intend to treat it as a historic resources. exterior elements of the building, the shutters, the distinctive paint patterns, the doors and windows will all be retained. there will be no alteration to the building footprint. the ortega lease reflects that

department priority. they would create an indoor seating area, featuring photographs of stow lake boathouse and furniture of reclaimed materials. there be seating for 30 or 32 people. they would upgrade the existing kitchen so you could prepare the menu offerings described previously. they would create a lounge area with comfortable seating designed as a place for people to get a little bit of respite from the weather at stow lake, or even for community groups to gather and have a discussion about the wildlife at stow lake, or the surrounding environment. additionally, and this is something that was, i think, very well regarded by the selection panel and you commissioners in their proposal , is they propose to install a unisex bathroom in the site.

that was not a requirement. that is something they proposed, seeing there were a lot of seniors who use the facility. they felt it would be appropriate to have that on site. to get into the floor plan a little bit, in the lower left- hand corner, you can see the snack bar is retained. it will look very much as it does now. in the upper left-hand corner of the diagram, there's the kitchen, which is in the same footprint of what it is now. it has an upgrade to the kitchen equipment. they can prepare the food described. the major element of the capital plan would be transforming the existing boat maintenance repair facility into an indoor seating area. as you can see here, six tables for people to cover gate, have a bite to eat, or perhaps enjoy a

little bit of respite from the weather and talk about the nature of the surrounding environment. the bottom right-hand corner, you would have lounge area with comfortable seating, a bookshelf with reading materials related to stow lake and the history of golden gate park. you have the bathroom and a janitor's closet. in order to make room for placing the indoor cafe in the existing boat facility area, the existing -- the facility repair area would be moved to the basement of the building, where we currently have the bicycle rental facility, which is part of a separate project and is being moved to another location in golden gate park. those boats, when they do need repair, which we expect a new fleet of boats will need significantly -- they will need

significantly less frequent repair than the existing fleet, they would be carted at off-peak times by an electric utility vehicle with a trailer. we would see, upon the completion of the capital improvements, we would see the historic snack bar go from looking like this to this, really retaining all of the elements of the snack bar. no real change in the exterior. you can see the opportunity of a community message board, which is a long-cherished opportunity for members of that community to post notifications about nature walks and other wildlife opportunities in the stow lake area. ortega has committed to allowing those nature groups that use the area to continue to allow them to distribute their material on site.

we would see the existing code maintenance repair area go from looking like this to a space that is activated where people can really enjoy the interior of the stow lake boat house -- stow lake boathouse. its history has been off-limits to the public. it has been a look-but-don't- touch environment. in implementing the capital improvements, ortega proposed to meet all local, state, and federal historic preservation standards in implementing the renovation to perform the renovation to standards, which would be our first park concession. there would be a lead-certified property. there are facilities, but no concession properties. the renovation project meets

high environmental standards. they would utilize the repurchased materials as much as possible. -- the repurposed materials as much as possible. they would retain all the historic elements of the building exterior. additionally, ortega proposed a comprehensive environmental management program. it would include working with audubon internationals to certify the sanctuary, implementation of ios environmental management systems, a year-one refuse diversion goal of 81%. perhaps that is a time a bit of information considering the previous item. and development of an environmental education program -- all of this would work to green standards. they have committed to certify

the concession of the green restaurant. as i mentioned earlier, ortega is very committed to the community and interested in working with the existing major groups and education groups that frequent stow lake to continue to provide the educational opportunities both for san franciscans and visitors, and particularly for our youth. ortega proposed to work with naturalists. there will be walks around the lake. there will educate people about the nesting habits of the blue heron. stow lake is the only known nesting site of the blue heron in san francisco. they would offer demonstrations to these groups and organizations so that they could, in addition to the nature walks, they could bring people into a comfortable environment for expanded discussion about

what they would have just seen on their walk. there would partner with the unified school district to provide region to promote educational awareness and provide reduced cost field trip opportunities. the benefits to the city of the ortega lease, obviously, first and foremost, the nearly quarter million dollars in capital improvements we would see up front into the boat house -- taking stow lake boathouse of the ledger and to the list of places we do not need to worry about. there will be a dedicated capital maintenance fund so that in your 12 or 13 of the lease, we will have a building in great condition, as well as in year one of the lease. the personal property fund, the

equipment matches the condition of the building. the purchase of an all new fleet of boats, a rejuvenated experience for users, and rent of $200,000 in year one of the lease. i'll also wanted to talk a little bit about the projected benefits to the local economy of the ortega lease. in addition to the sizable and significant benefits to the city, there are numerous benefits to local economy of the lease. those include the fact that ortega will be working with a local architect and a local construction company. they will be using a local manufacturer to produce all of their furniture on-site. management and staff, pursuant to the expanded food service

menu, comes a need for a larger staff. ortega proposes that they will roughly double the current staffing levels to support the increased food service. all of the staff will be hired locally and pursuant to the city's ordinance. frank kline as a restaurateur, as is the executive checf. in addition, with the commitment to purchase all of the food supply from within 100 miles, comes a direct benefit to the providers. this is a list of some of the local food manufacturers and farmers that ortega will be partnering with to deliver the expanded food service. one of the things i wanted to point out, the comparison between the existing lease and

the proposed ortega lease. in the existing lease, we have a term of 15 years. in the proposed lease, 15 years with a five-year option. in the current lease, we have a minimum rent of $110,000. i should note that that $110,000 does not include bike rentals, which are no longer going to be a part of the stow lake boathouse. we wanted to separate them out so we had a true apples to apples comparison. $120,000 for the current lease for the minimum rent. the proposed ortega lis, a minimum of $140,000. the boat rentals are the largest slice of the revenue pie. it would go from 31% of to 33% of revenues. the food and beverage percentages would go from 21% of to 10%. as i said, that reflects the

fact that we're implementing a full menu. the industry standard for a cafe or restaurant in terms of their percentage rent is about 6% to 7%. this is aggressive rent we have negotiated. we are confident we will see some revenue come out of that. particularly in the fact that we will go from a situation where people might have been purchasing an average ticket of just a few dollars to perhaps, since they're buying a sandwich and a drink, perhaps we will say a $5 average ticket. we will see growth in that. we project those revenues staying flat. the percentage of gross retail revenues actually goes from 21%. i realize that although the current concessionaire does not operate a retail concession, in negotiating the lease, city staff and the current

concessionaire did agree that he should pay 21% of gross retail revenues to the department. that has never come to fruition, since the retail section is not operating. the new value of the capital improvements, not applicable in the existing lease, would be $233,000. the ongoing, dedicated maintenance budget would be 2% of bloggers revenues. the ongoing -- 2% of gross revenues. at the end of the day, in comparing year one ortega revenues to 2009-2010 actual revenue from the current concessionaire, we would see the number increased from $153,000 up to just over $200,000.

it is an increase of roughly 33%. the comparison of the last five years of revenue vs. projected revenue for the first five years of the or take a lease shows $748,000 for the currently send just over $1 million for the ortega lease. the average annual rent for the last five years of the current lease, $149,000. the projected average annual rent for the first five years of the ortega least, $212,000. that is a difference of about $60,000 per year. i prefer to measure things. that is about one gardener that would be retained in the park system. throughout this process, the department has undertaken a significant and extensive community outreach effort that,

prior to the issuance of the rfq, that has included multiple community meetings, meetings with previous bidders, meetings with the state of the stow lake boathouse coalition, meeting with supervisor mar, conversations in e-mails with over 70 individuals and organizations, posing as rfq on the website, -- posting the rfq on the website, and there is more information in your packet. there has been a significant amount of outreach. in the interest of brevity, i did not include all of it in my presentation. during these lease negotiations, staff has implemented and following -- and follow the following policies, a community meeting held on november 3 in the county fair

building, a meeting held november 8 in the county fair building, meeting with the leader of sf nature, meeting with the planning association of richmond, meeting with eric maar and carmen chu, alerting all interested parties and notifying individuals with -- notifying individuals online, and posting the notice of this meeting at the stow lake boathouse in four separate locations. i should say that we did have a problem with them notification falling down on a couple of occasions. we had to go back up and replace it on two occasions. in addition to the department community outreach, there has been a lot of press attention to this.

on august 17 -- i won't go through all of these. we have had articles in "the examiner," "the chronicle," postings on local blogs, an article in the community newspaper "the marina times," an article in "the richmond review ," and these articles have been naturally occurring as recently as this sunday. today, we had two articles touching upon this. a little more media coverage. next steps, upon commission approval of this lease, the next step would be for the staff to take this item to the board of supervisors. in working with the office of

supervise mar, he agreed to sponsor this legislation. we are thankful to him in that effort. we appreciate his sponsorship of this item. additionally, there is an informational item before the historic preservation commission on december 15. staff will be attending that hearing. that hearing will be addressing -- there has been a nomination from the community to nominate the stow lake boathouse as a landmark. this is an informational hearing to determine the appropriateness of that. staff will be present at that hearing and will be expressing the significance we have held over the last few years to treating the boathouse as a

historic resources, to working with the historic preservation commission, which, glenn beck overcome all the documentation show our commitment to working with historic preservation in ensuring that any proposed improvements at the site reflect the historic nature of the building, and additionally, approval of any capital improvements will be subject to the approval of this body and the appropriate regulatory bodies including potentially the planning commission and the historic preservation commission. i would like to show a list of some of the supporters and opponents of this project. with that, i make myself available for any questions.

>> i met with some community members earlier in the week. the issue that was outstanding for me was the issue of insurance. it did not show up in some of the documents. could you comment on that? >> in inserting language into the lease, that his language that is not inserted by departments that. the city retains a team of risk managers that review each proposed contract and determine the appropriate insurance levels and the appropriate policy types. in working with the city's office of risk-management, they determined that as this lease is for small boats, pedal boats, rental boats, there is not a watercraft liability insurance -- it is not necessary. the general comprehensive insurance limits are sufficient. we