>> we are on item number 11. approval of a leaf -- it lease with ortega family enterprises, doing business as stow lake boathouse. >> good evening, commissioners. perhaps more appropriately, good

night. the item before you is the stow lake boat house with ortega family enterprises, doing business as stow lake boathouse, llc. in 1991, the city entered into a 15-year lease agreement with the stow lake boathouse corporation. that expired in 2006. the incumbent has been operating the boat house on a month-to- month basis. we twice issued an rfp. we also did that in 2008 and 2009. the department was not able to enter into a long-term lease with an operator for the operation of the stow lake boathouse. on december 17, 2009, the commission approved an rfq

package soliciting an entity to operate and perform improvements to the stow lake boathouse. the commission directed staff to undertake a community outreach process and to incorporate certain amendments into the rfq. both of those actions staff undertook before publishing the rfq. on april 5 of 2010, the department received three timely responses to the rfq that was 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