not that cbs -- not that cvs is a dishonest company, but anyway -- there was a statement made that there was a cooperative gesture between trader joe's and cvs. could i learn a little bit more about what that cooperative venture is? bringing these two things together at the same time? or is it just put together by the two groups and you brought it in? >> we have been marketing this property since 2006. to comment on the grocery stores, we actually marketed this property and had 13 serious targets. commissioner sugaya: i just want to know -- is there an agreement between the organizations? >> there is an agreement to finance the cost of renovating

the shell. all of the upgrades. there are paying for that portion of the building. commissioner sugaya: there is no agreement on sales or any of the products? >> no. president olague: i see the city attorney has returned. >> i apologize for the delay. the situation is that there is a bit of a difference between the actual law and the practice of the abc. that is where we are having a little disagreement. basically, where all is conditionally permitted by the city, in districts where it is conditionally permitted, the abc has practiced strong indifference to the conditions opposed as a condition of approval. that has been the practice.

in this case, the of all use, as i understand it, is principally permitted. it is not clear whether, if you put a condition on just the alcohol in this particular case, not what the conditional use is required for, whether the abc would continue that practice of deference. what we would recommend in this instance, and we can research it further, perhaps staff can talk with abc or the city attorney can look more into this, would be a motion of intent on this issue and we can come back to the condition with a more definite answer. within our experience, it is an issue where the ball all -- where the alcohol is presently

permitted and the issue has not come off. what commissioner miguel was referring to was where they were not conditionally permitted. that is below wall where abc has given -- has differed from the city on these issues. i apologize for the delay. thank you for your patience. >> just before you came back, there was a question raised at the commission as to whether we could restrict the hours of sales for liquor by condition. what -- would the same answer applies to that? >> yes, the same answer would apply if it was an area where the of all use was conditionally rated -- where the alcohol use was principally permitted. i would look more into that issue before you impose a condition.

>> pardon my brow beating or beating a dead horse or however you want to put it -- in effect, what you're saying is because of the zoning in this area, it is a non-issue for this commission. to try and formulate a condition of approval is beyond our legal ability. >> that is the issue of like to look into further. there is no question that the commission could strongly urge the board to request the abc to limit the hours of operation or the permit. there is no question you can do that. whether you can put an end -- a legally enforceable condition on this particular conditional use permit, i cannot answer to that. vice president miguel: thank you very much. i would like to offer an

amendment to the motion that we include request to the board that they limit -- that they do not allow liquor license and if they do, that day severely restrict the hours. it is just going to have to be a recommendation. president olague: and that would have to be included in the motion, right? vice president miguel: that is an amendment to the motion. is there a second? >> could you rephrase that for everybody's benefit?

>> my understanding is that commissioner miguel is asking for an amendment to the motion that this commission urges the board to not allow the liquor license. at cvs. if they do, that they strongly restrict it. the hours of sales. and basically, the modification that you allowed earlier per the city attorney's recommendation is not allowed. >> we have no control over that period >> i would accept that amendment. president olague: there is a modification to the motion on the floor. commissioner sugaya: the other

way to do is go back to eliminating the hours for the entire store. but i do not think this commission will do that. in any case, i object to it because i do not think we have control over it. there are saying there is only going to be 50 linear feet on one side and 20 on the other side when there are 5000 lineal feet there now. we have no control over the of all that will go in there once they start the operation. if they are successful, you cannot tell me they're going to limit it to what is there now. i am not saying you are dishonest or anything, but if it is market driven, and we have no control, of course they're going to increase the amount of liquor there. i buy liquor at walgreen's once and awhile -- once in a while

and the square feet has increased a lot. there was one license but now we are going to have two in an area where there was one and we have denied liquor permits within a block of this site previously. it just does not seem like a good planning move. i do not think it is necessary or desirable. commissioner antonini: i am going to oppose this motion. while i want to see this approved, it is important to approve it, i would like to go back to the motion i made earlier where i made an amendment which would ask intend to approve limiting the hours of all sales -- of alcohol sales.

if the motion were to fail, i would make another motion to do that. if not, then whatever is approved and will be approved. commissioner borden: one of the things we talked about, and i do not want to belabor the point, but this concept of liquor license -- of their liquor license being a replacement for a bad liquor license. i do not know if we want to make a statement about that in our motion. >> i would not entertain that. president olague: basically, the motion that we have on the floor is just that we are encouraging the supervisors to continue to -- can you clarify it for me? >> to make it clear, the board of supervisors ultimately

advises the abc about what conditions we can request to put on a particular licence. your recommendation would be that the board can make that request when the application comes before the board. president olague: because it is not within our purview to limit the at -- to limit the hours of all sales -- of alcohol sales because it is a principally permitted use. it is not a conditional use. it prevents us from weighing in. >> that is as far as i can advise you this evening. obviously, i will get to this further. but i have not had this issue come up in the past. >> as i understand it, he recommend they don't make it a

condition of approval at this point but you urge the board to urge the abc not to grant the license. president olague: yes. sort of a soft -- ms. herbert i am looking at you and wondering what you are thinking. >> you are urging the board to request that the abc not grant the liquor license to cvs. president olague: correct. that is all we are doing. >> that was a part of the motion. if they do this, they limit the hours of the sales. >> there is one action you are saying on the c.u. and one action you are saying where there would be correspondence to the boan a separate process which was the application for the liquor license and. president olague: right.

i wanted to be clear that what we are proving today is the project as it is currently proposed. to request anything more would be outside of our for you, basically. that is it. >> do you want to make a motion of intent and we can come back? president olague: i am good with it. commissioner sugaya, you have something to add? commissioner sugaya: i am going to vote against the motion because these things are bundled together and we cannot seem to separate the two. i do not have a problem with one. that is my frustration at this point. president olague: i do not want to continue to see a vacant space there for. -- there . we have heard from enough of the

neighborhood and my sense is that people who want to see trader joe's there -- that is the sense i get. the cbs issue -- the cvs issue with the liquor license i do not support either. i agree with mr. nolte and i do not support that addition. part of this, again, really speaks to the necessity to have the conversation that we have often talked about here. the one that is the definition of these types of -- the definition, really. they sell some many different kinds of products and they come to us under the guise of pharmacy or this sort of thing but they are selling grocery

items, liquor, all of the rest of it. i know that supervisor mar started a conversation this past week over formula of retail -- formula retail. it is long overdue for us to have that discussion. i think will calendar id for january. the next available calendar. we will discuss it later and work on it. it is a conversation that we need to have. also, i agree with commissioner miguel that it is unfortunate that this did not come back to us as a mixed use project. it would have been nice to have that conversation about work force housing or something that we might have seen there. but under the circumstances, i regret having to support the motion on some level because i do have issues with cvs going in

with the liquor license. i would rather see something go in there. i am going to be supporting the motion here it commissioner antonini. commissioner antonini: i'm going to vote against this form of the motion because i think that it has been presented very clearly that we have two entities who operate independently economically. some beer and wine sales do help to make it feasible for cvs to operate. probably not a huge percentage of their sales, but enough to make it possible for them to operate at that site given the square footage. it is a business decision. we are getting in the way of business decisions for not a valid reason, as far as i can seek. i am very much in favor of the project and i hope it does pass in a different form. we'll see how the vote goes. vice president miguel: i do not

want to continue this too much further but i just want to tell commissioner sugaya that i agree with him and i understand why he is voting against the motion. i brought it up originally -- the fact that they should have separated and we would have prevented -- and we were prevented from considering them separately. i hope i do not see that again in the future. i am agreeing with commissioner olague and that the space has to move ahead. >> i am not like to complicate this but you can vote on one form and not the other. bundling them -- you do not have to vote on the package. you can go separately. -- you can vote separately. commissioner borden: in the tenderloin, they are having a hard time getting a grocery

store. i do not want to belabor the point, but for whatever reason, we do not have a lot of grocery operators. i think the reason you have these two uses is for other reasons. trader joe's model is not for large stores like safeway. they cannot get a grocery retailer. in reality about the size and space of this site that has put us in this situation -- i would caution against bifurcating the two because the issue is the only works by bringing these parties together. it seems to be the case. i think we have the labor the point around what concerns us and we have taken the best measure that we can. but at the end of the day, we do want to see the space filled. the size and scope of the space

-- this seems like the best kind of outcome at this point until late redevelop the project and do something different. commissioner moore: i believe it is perfectly fine to approve this. i believe it the city attorney could provide additional clarification as she was indicating, on these of the matter of two licenses in this particular location. if there is a subdivision of property, there is a whole nother issue. i would entertain approving trader joe's with the intent to look at cvs until the conditions of the -- president olague: at the moment, we have a motion on the floor. commissioner moore: i would like to hear the director clarify that for us. commissioner sugaya: to the

developer, i have one quick question. how long are in your leases to these two entities. >> the primary term of the leases are 15 years. commissioner sugaya: thank you. president olague: we have not had a conversation about a lot of the items that seem to relate to this project. they need to happen. currently, we are operating with a set of rules that -- that is the way it is. i think the rules are pretty clear. let's call the question. >> you have a motion on the floor for approval as proposed with modifications. the board requests abc that they not allow the liquor license for cvs but if they do, that they limit the hours of the sale of liquor. commissioner antonini: aye.

commissioner borden: aye. commissioner fong: aye. commissioner sugaya: no. vice president miguel: aye. commissioner moore: no. president olague: aye. >> that motion passes. you are now on case #10. 340 fremont street. >> good afternoon. the case before you is a performance request at 340 fremont street that would extend the approval period to november 13, 2012. the planning commission originally approved this project in june of 2006 and due to the fact that the extensions must be obtained annually, this product has received three previous

extensions as detailed in the case report. the project proposes to demolish the two buildings on site and construct a 400-foot tall tower with an 85-foot tall podium. up to 32 dwelling units with 40% being 2-bedroom units. a four-level underground garage, half of which would be access to the ballet system. no changes to the original project are proposed. the project sponsor states the infusion of capital will allow the project to a for construction documents in 2012. i will lead the progress on for elaborate on that. the planning department did not receive public comment on this case. the department recommends a -- recommends approval of this with conditions. i am available for any questions. president olague: project sponsor.

>> good afternoon, president olague and commissioners. my name is ezra mercy. i am representing my company jackson pacific. i am going to make some brief comments today. i am not going to use of all of the time. in support of our application. i would like to touch on four key areas. our project sponsorship, economic background, are scheduled for 2012, and some more general comments about the rincon hill plan. jackson pacific and artstone are the sponsors for the approved residential high-rise. there has been no change in the

ownership of this site since its first planning commission approval in 2006. the same project sponsor that was committed to the site and the project remains in place and we look forward to moving forward with construction as soon as possible. we are now requesting a one-year extension to the entitlement and our actions to date we believe show our commitment to the project and to the rincon hill plan despite the impact on 340 fremont street of the global recession. artstone is making a major new financial commitment to the project. we are in the process of assembling the project team. we plan to complete and design documents during the year 2012 and be ready for construction. we remain very positive about the potential for 340 fremont street and the rincon hill neighborhood.

economic background -- the approval process represented a 24-month effort by our design team working closely with south of the planning department. by late 2007, we had invested approximately $4 million in soft costs plus land acquisition of $18.5 million. until 2007, during the bubble, construction costs were escalating over 10% per year, far outpacing rental apartments. in 2008, the u.s. and the global recession began, putting millions of people out of work he had virtually shutting off construction financing. like virtually all major developments in san francisco and throughout the united states, 340 fremont was put on hold until economic

many developers and investors, both jackson pacific and artstone remain very engaged in the san francisco residential market. in 2010, my company, jackson pacific, completed construction of one hawthorn and entering the process of selling out the remaining inventory. one hawthorn was the last high-rise condominium to be built in san francisco. artstone acquired several major residential sites including most recently dagette place at the foot of patrero him in anticipation of development and increasing the supply of rental housing in san francisco. unlike the run-up to the housing bubble, when project financing was heavily biased toward ownership housing, with all the mortgage bubbles that we're still living through, we believe that the current recovery, slower but more sustainable, represents a basic shift in demand toward rental housing. and we are placing a

substantial new investment behind that belief. 2012 schedule, the u.s. and the bay area for sale housing markets have endured a major recession that's not yet over. i've already said that. however, the rental housing market is showing signs of strength which if sustained should be great enough to allow financing and construction of new downtown high-rise rental projects. those with the best location and strong sponsorship. in anticipation of this more promising environment, artstone has authorized up to $4 million of additional capital investment in 340 fremont street and we intend to use this investment to complete design and construction documents during 2012. and then be ready for project financing and construction start. with this investment, and our own steady work, and a consistent, stable rental financing market, we expect to be ready to start construction

approximately 12 months from today. the rincon hill plan, the ideas behind the rincon hill plan, high-rise, high density housing located downtown near jobs, near transit, and near amenities. were the right idea when the plan was created and even more so, they continue to be the right ideas today. with the -- with a bit of patience all the projects within the rincon hill plan will be completed. the residential buildings, the public realm improvements, and the closely linked affordable housing investment. and this will be visionary substantial san francisco planning success. we are requesting the commission to grant 340 fremont, the proposed one-year approval extension. rincon hill is a long-term plan, the project ownership represents just the type of sponsor that can best help the city realize the vision for rincon hill. both jackson pacific and

artstone have an excellent track record in san francisco and we are committed to moving forward at the earliest possible time. that concludes my comments. i'm available for any questions you may have. and rick juarez from artstone is also available for any questions you might have. thank you. president olague: thank you. i would like to open it up for public comment at this time. >> one minute. wow. sue hester. i have as much to -- on this project as they do. we have been asking at the community level the department to do a dashboard showing. what type of housing is being proposed, pardon me, approved by the department, and constructed by price level? we've been asking for it for four or five years. peter cohen and i particularly have been diligent on this. we've been asking it so that

you would have something to look at that shows what are we building, how does it meet our housing needs, and we keep being shined on by staff. it always is going to be a project that we're going to deal with in the next year, the next six months, whatever. but we don't have it. and more is the shame because rincon hill is one of the areas where it needs attention. what is being built in rincon hill? what is being approved in rincon hill? is huge. it's a huge chunk of what you're doing. and where is it skewed? skewed toward very high end housing. rental housing, we're glad is being proposed in this project. but what are the price points? who is this going to be marketed to? it's very different if it's rental housing for people that are of moderate means and another thing to aim to a really high price point. i don't know how to get the attention of the planning department unless the commission instructs it. i listen to the entire