for construction contract number 2727, and adoption of the 2010 port building code. . commissioner brandon: moved. commissioner crowley: second. commissioner brandon: all in favor. they have been approved. >> item 6, request approval of new form license landing rights agreement, including new rate structure and fees, authorize the executive director to enter into the licenses substantially in the form of the form license with ferry and excursion operators, and authorize the executive director to make additions, amendments, or other modifications to the form license. >> have the holidays. -- happy holidays. san francisco is the leading passenger port in california. 6 million people get on or off.

6 million. that is an amazing number. we operate secure and maintain two major facilities. first, the downtown ferry terminal to my left and to your right. and then the china basin ferry terminal. golden gate ferry also operates here. it's not minister or maintained. we are not involved in those. the ferry building is the hub. we work closely with the san francisco water emergency transit authority as they implement an emergency water transportation system management

plan for the bay area. and we continue to adopt a transition plan to facilitate the transfer of existing transportation ferry services within the bay region to their management. we have a couple different layers. we have the state agency and then we have the port. the item in front of you today, we briefed the port commission in may on this. it has kind of been a longstanding item. this item does essentially two things. first, it updates are legal agreement, which is the document that the operators signed. they have not been updated since 1995. this updated license includes city of san francisco requirements, federal requirements, and insurance. we have given this agreement to

current operators. upon your approval, we will have them sign this before they can use our facilities starting next month. secondly, this action in front of you will result in a new rate structure for ferries and excursion. we have not changed our rates in some time. the reality is that the port provides a substantial subsidy each year. in fiscal year 2008-2009, each downtown ferry passenger was subsidized in the mouth of 23 cents. -- in the amount of 23 cents. it resulted in several hundred thousand dollars. in light of the continued shortfall, staff recommends increasing ferry rates at the downtown ferry terminal by 50%, effective at the first of the year, and an additional 50% on january 1, 2012.

at the china basin terminal, the shortfall was more pronounced due to lower passenger volumes and seasonal usage of the terminal. our recommendation for regularly scheduled ferry landings effective april 1 to coincide with the baseball season. this implemented $25 per landing fee per vessel, and 25 cents per passenger fee. and then it went up another 25 cents. so there was a total of 50 cents. these combined rate increases will reduce but not eliminate the port's shortfall. it gets cars off the road. is more environmentally friendly for people to get in and out of san francisco. it is part of our mission, hence the subsidy. we are working closely with other possible funding sources

to see if we can further reduce this. this action today will be a step in the right direction for the port to update our agreements and bring our rates up to a reasonable level. i want to thank denise turner, our market research specialist at the port staff, who really did all the hard work on this. with that, we will answer any questions that you might have. commissioner brandon: moved. commissioner crowley: second. commissioner brandon: any public comment on this item? commissioners, all in favor? resolution 10-77 has been approved. >> item 6b, request approval to apply to the foreign-trade zones board, on behalf of valero

energy corporation, to establish a foreign trade zone subzone at valero's benicia, california petroleum refinery. >> good afternoon. i would of course maritime staff. i'm here to rest your approval to allow the port to apply to the foreign trade zones board to benefit their refinery. as you may recall, commissioner lazarus and commissioner brandon, we came to you for your authorization. it included a new strategy for developing foreign trade zone business, which essentially was to take the foreign trade zone designation to the cargo, rather than bringing it to a fixed site. as a result of the commission meeting, the court has submitted to the foreign trade zones board

in application for reorganizing our foreign trade zone, as well as applying for the new alternative site framework program, which will essentially allow the foreign trade zone to set up a general-purpose zone in a much more streamlined process. our application has subsequently been approved. about one month ago, we received word that our application has been approved. now we have a streamlined process for setting up new sub zones where it makes strategic and economic sense. the port is also setting up a web page that basically outlines the features and benefits of the foreign trade zone. we have also been working closely with the mayor's office to develop a marketing strategy with them and also to set up a link from their web site whertor

web page. we intend to work more closely with san francisco international airport, and other areas that are within our geographic scope to see where we can benefit using our foreign trade zone benefit. foreign trade zones were established by u.s. congress in 1934 to expedite and encourage foreign commerce while promoting manufacturing in the u.s. and creating u.s. jobs. in 1948, the port of san francisco received a foreign- trade zones grant is 42 establish, operate, and maintain a foreign-trade zones. allowed establishment of special purpose sub-zone, such as oil refineries. the port has established others. for example, we have one

covering the chevron refinery in richmond, california. since the early 1990's, the foreign-trade zones board has approved over 90 sites. we have now been approached by valero energy corp. to set up a sub-zone so they can take advantage of the foreign-trade zone benefits for that location. james is visiting from houston. he is working with valero and representing valero today. he can answer any questions that you might have pertaining to a resolution. the united states remains dependent on imports of petroleum products, primarily crude oil. foreign-trade zone status will allow them to improve net margins and put them in a better position to retain jobs and compete with imports of

petroleum products. the status will also allow the valero refinery to be better positioned to take advantage of exporting products that are produced in that zone in the future. also, it will allow them to better compete with other refineries that are set up. valero currently has eight other refineries in the u.s. set up within a sub-zone status, out of the 15 they operate in the u.s. foreign-trade zones common benefits trade include -- this s getting a little technical. effectively, it matches the crude oil rate to lower duty rates. another benefit is delaying payment of customs duties of crude oil until the finished

product leaves the subzone, effectively taking advantage of the time value of money. they can accrue savings from customs duties and products produced in the subzone that are subsequently exported. as the u.s. becomes more efficient in its own consumption of petroleum products and as developing countries increased their demand for petroleum products, u.s. refineries could take advantage of increasing exports to those countries. foreign-trade zone status will promote the likelihood of exports. foreign-trade zones board estimates it will take between eight months to 10 months to process the application. with the new designation that we have been designated by the board, we think the process could be shorter. the port's tariff allows for a

$10,000 application fee, which will be accrued from this application. it also allows for a 35 under dollar activation -- $3,500 activation fee and an annual fee. the federal law allows grantees to assess 8 nominal administrative fee to cover subzones. it will be operated pursuant to an operating agreement that will be negotiated with the port. any operating cost or capital crewman's associated with the subzone will be the responsibility of valero. no public funds will be set up to pay for the operation of the subzone. the transfer agreement and the city charter authorize the port of san francisco to operate foreign-trade zones within the port area or of celery to the area. this is auxiliariy.

it uses of vessels that utilize harbor services that are provided by port of san francisco tenants. bay delta maritime is one of their current vendors. the more ships they continue to bring into the bay, the more they will continue to utilize and need the port of san francisco's harbor services which will help benefit the profits of the port. staff recommends that the port approve the resolution that is in front of you of raising application of the foreign-trade zones board to apply on behalf of valero energy corp. to establish a subzone covering their benicia, calif. refinery. commissioner crowley: i move to adopt. commissioner lazarus: second. commissioner brandon: public comment?

>> i do have a question. this does not conflict with the maritime law? >> no, it does not. >> to other regions have these subzones? >> yes, the valero refinery is adjacent to the port of los angeles and is set up as a subzone. >> that has proven to be a good way to go? >> it has. i think the region is benefited by the jobs that have been created at the refinery. commissioner crowley: thank you. no further questions. commissioner brandon: there's no cost to the port? >> there is cost in terms of staff time. that is covered by the administrative cost, the application fee. and then the $10,000 application >> so that would be the

anticipated revenue for the port. >> the anticipated revenue would be $20,000 per year, which is for our foreign trade zone tariff, that is what chevron pays us today. >> by the benefit to the port is what the tenant will be benefiting from? >> yes. it gives our foreign trade zone more visibility. i think the fact that we have some high visibility customers like chevron and valero may help us sell the foreign trade zone benefits to additional users as well. >> are piers 19 and 23 foreign trade zones? >> no. >> so just sub-zoned? >> right. if somebody is looking to set up a sub-zone or a purpose zone

, then we can set these up using this new alternative site framework that the board has set up. we have been approached by a company in san bruno, who is importing semiconductorors through san francisco international airport. they are considering applying for a subzone to cover the distribution of the semiconductorors. that could benefit them and provide economic benefit to the area. >> thank you. >> you're welcome. >> in here i didn't see the term as to how far out this resolution would carry in years? >> we will be separately negotiating a sub-zone operate can't agreement with valero. we are anticipating matching it

similar to what we have with chevron, which is about a five-year term with opportunities for extending for threes three five-year periods. >> thank you. >> all in favor? >> aye. >> resolution 1078 has been approved. >> thank you very much. >> item 7-5, request approval of lease ahn ahn, a california corporation, for a seven-year restaurant lease for premises located at 27890 taylor street. good afternoon commissioners. jeffrey bower, port leasing manager. i am here to ask your approval for the item as read by the commission secretary, which is a seven-year lease with andre -- ahn

sometime ago andre-boudin bakeries approached the pors -- the port, and port staff has analyzed that proposal and determined that they do meet the criteria outlined in the 1993 retail leasing policy. in these discussions we developed lease 814, which offers a seven-year lease. during the period of the term, there is a six-month construction period where no rent is charged. they must start construction by march 1st, 2011.

the initial base rent is the greater of either $8,007 .53 or 9% of gross sales, whichever is greater. there is an annual adjustment of 3.5%. and they can make investment in the amount of $335,000. andre-boudin bakeries is required to provide all completion performance and guarantees. an element in the current lease are the public bathrooms in fisherman's wharf, which have been in discussion for a long time. they are the only public bathroom facilities outside of the j.d. decoe can i cossack -- kiosk. they provide an important amenity, and they allow

tourists to extend bhamp visits. they want to apply a credit to andre-boudin bakeries of up to $20,000 off the base rent. at that point they will provide jantorial services at a predetermined level. they under that running a bub path room at fisherman's wharf that gets 15 million visitors a year, and they have indemnified andre-boudin bakeries. however, it is only after they have competely exhausted their insurance. in no event will any claim that the port pays exceed $100,000 and in one year exceed $300,000. the lease does require andre-boudin bakeries to maintain a inter13 million excess liability policy -- a

$13 million excess liability policy. we feel confident in that. it was approved by the port's risk manager, so we feel confident there. if i can speak to the retail leasing policy. there are four criteria. tenants must be in good standing. tenant is committed to making a significant investment in port property, and they have a term that is insufficient to allow them to amortize this improvement. it is in the best economic interests of the port, and the tenant has a good record of non-discrimination in hiring and retail practices. we have determined that andre-boudin bakeries does meet the criteria in the leasing policy. andre-boudin bakeries is a ten and in good standing. they are on a month-to-month term, and this current lack of term does not allow them to execute their business plan,

which entails them making a significance investment into port property. in exchange for this investment, the port will offer a sole source business opportunity. there are no other represent credits outside of the six-month construction period that the port is offering. there are substantial and quantity final benefits to direct negotiations with andre-boudin bakeries. they have good will in the community. they are willing to make a significant investment during a predetermined time period. they also have been successful in the restaurant-rich fisherman's wharf and of course committed to nondiscrimination in hiring and its retail practices. the existing lease again is month to month. the monthly rent is $2501 .36. the new proposed lease is a

225% increase in the base rent. port staff also anticipates a corresponding increase in the sales given the level of investment that they are making. staff is requesting that the commission adopt the resolution for the lease for a term of seven yoirs between the port andre andre-boudin. happy to answer questions. >> so moved. >> second. >> any public comment on this item? commissioners? >> i have one question. how did we happen to go four years on month to month? one of those? >> one of those. yes, one of those. [laughter] >> they were maybe not in line. i can say that these negotiations do take time.

my city attorney and i have been working with andre-boudin bakeries for maybe about seven or eight months. >> we have had this item ready for a couple of months now, but we didn't have a quorum for it. >> the bathroom took quite a long discussion. >> what type of credit were we giving them for the bathroom? >> well, we were not. the way that it was is the triangle parking lot, when it was run by the fisherman's wharf merchant's association, if we can go back in time, there was a cost that was deducted from the moneys made that went to the bathroom maintenance. it was inconsistent. there were a lot of mixed reviews, and we got a lot of complaints about that. that was about a $60,000

deduction. we are not only giving them a credit but saving the $60,000. andre-boudin bakeries is going to step up and manage the bathroom and maintain it properly. >> who is managing the bathroom now? >> well, they are because we have transitioned from the triangle of the fisherman's wharf to the new operator central, and in that interim time we have museumly agreed that they would maintain the bathroom at their cost. the utilities, which may seem minor they will pick up, and that does add up. that is another $30,000 or $40,000 that the port will save just in water and sewer. every little bit helps. >> thank you. >> all in favor? >> iowa. >> resolution 10-76 has been approved. >> thank you. >> eight 8-a, informational

presentation on proposed embarcadero promenade design cry terry use, establishing specific criteria that can be used by the port to create a consistent design approach for this corridor and access way to the port's pier facilities. >> good afternoon, commissioners. i am dan with the port's planning and development division. i have a short power point presentation. we'll wait a moment for that to get going.

>> a balancing act. i guess commissioners are used to that though. again, i am dan with the port's planning and development division. it is my pleasure to be here to talk about the embarcadero promenade design criteria. it is a design to improve what is becoming the most popular space in the city. the promenade is the continue was waterfront walkway along --

i am technically challenged. one hand over here. the promenade is the continue was waterfront walkway along the port's northern waterfront on the base side of the embarcadero. it was designed, started in the mid 1980's and constructed between 1993 and 2000. as part of the waterfront transportation project, a $700 million public effort by city, state and federal aiming says that replaced the embarcadero freeway and beltline railroad with an urban boulevard. the promenade extends from third street of the at&t ballpark at its south end, and with the upcoming edition of the pier 43 promenade project, bidding approved earlier in this meeting, to the entry at pier 45 at its norton end, it provides over 16 acres of public space and is within the

embarcadero waterfront national register historic district, which is made up of numerous wharfs, see walls and bulk heads. that is south of the china basin channel. for the past 150 years, the embarcadero has provided access to the port's marry time -- mari time pearce and businesses. the promenade continues to provide access to pearce and also to the newer public orbited uses. as such, the promenade is not designated as a city sidewalk only fore streans. it is a multiuse pathway for maritime functions, recreation, and bicycle transportation. since its construction, the promenade's popularity has created a need for a tune-up or created a need for a tune-up or a conferencive approach to