advertise all the planned improvements, it will not be financially or make a good financial sense to invest these types of dollars. getting the restaurant open within the next six months would create an estimated 40 to 50jobgs, -- 50 jobs, plus the construction jobs it will create. this restaurant will activate that portion of the waterfront that is in need of investment and will bring benefit to the community to have the facility and area improve for public enjoyment. mr. osborn has offered to extend his improvements to aqua vista park, which the port may not get from other bidders. mr. osborn will also improve public access for completing the visitor dock that was always intended for that location that has been approved. if you approve this request today, court staff will begin

negotiations with golden bear, including market data that the new transaction would bring market rents and be in keeping with port retail leasing policy, which allows for extended terms if a tenant is making a significant investment in the property. at that time, you will have the option of approval. the transaction will also require board of supervisors approval. thank you for your consideration and i am available for questions. mr. osborn regrets that he cannot be here today, but he has invited other representatives to speak for him. >> so moved. >> second. >> public comment. we have john, then topher. >> good evening, members of the

commission. i am john. i have been fortunate to have had a relationship with peter osborn since the development of momo's restaurant. we have begun the conceptual design work for mission rock. we are at a point now where we have taken that conceptual design and distributed it to those who are distributing it to the subcontractors. we are compiling the estimate that susan has referred to. what i can say is that peter has been a tremendous asset to king street. he has a passion for san francisco. he is a tremendous restaurateur. he has conveyed to all of us his commitment to san francisco into this particular area, despite the notice today that sales forces have outgrown their campus before they have broken ground.

that has not deterred his spirit to participate in developing mission bay to a greater extent. i am here for any questions you might have or technical issues you are curious about. i will turn it over to topher, a member of the community and someone we will be working with as we develop our "vista park -- aqua vista park. >> wait for her to call you, please. >> topher delaney. >> this one is yes, yes, yes. we have been terrorized by this kelly mission rock for the last nine years and i am so thrilled to have this guy here. i just ms. -- met him. he is a responsible restaurant eur. he is going to help us out.

he has a wonderful restaurant that is run like a grown-up. that is really fabulous. we are thrilled to have him. i hope you will give him whatever this guy needs to come in. he is going to run a good ship and it will be a good reflection on the port. it is going to be fabulous for the community. that is it. three cheers for the sky. >> thank you. -- for this guy. >> thank you. >> good evening, commissioners. i am the managing partner at water bar. just down the street. i am the newly elected president of the golden gate restaurant association board of directors and i am late for dinner service right now.

i have known pete osborn for little over 10 years. he is a wonderful human being. you are not going to find a more dedicated and passionate restaurateur. a super-smart businessman and someone who is committed to san francisco. i will recommend that you approve this measure as a fellow waterfront restauranteur. we are all there scratching, fighting every day to fill our seats. even with pete as a new waterfront restaurateur, i welcome the new addition to the area. thank you. >> public comment? questions? >> i just want to add, i have known mr. osborn personally through being a soccer mom and dad together a few years ago. i want to reiterate what

everybody said. we are fortunate that somebody of that caliber are rows -- arose to take a look at this. i think it would be a wonderful addition and solves problems that residents have been complaining about for a long time. >> i think mr. osborn is a great restaurateur. still, i guess my concern with this one is that we welcome him to the neighborhood, we welcome him to take over kellies mission rock -- kelly's mission rock, it has been a problem since mr. kelly passed, and there are 11 years left on the lease. i want to understand what his vision was when he purchased

the lease out of bankruptcy for that 11 years verses what he needs -- what, 20 years on the lease? we have teatro, investing $4 million and wanting a 10-year option. this has 10 years and did -- and is investing $1 million. he says better is not sufficient time to advertise. what does support staff think? have we done market research on the area and what that property will bear? and there are developments. it is a prime piece of property. >> it will be part of our negotiation and research. i have reached out to the association. we are going to use some of our economic development analysis consultants based on what he is

going to invest and to get investors, they are going to want to know that there is some term to their investment. it is the end of 11 years. 11 years is chewed up. if you were to invest in business, you would want to know that they would be there beyond 11 years. the difference i see in this and teatro is that this is a restaurant. it is going to be a restaurant. we have to make sure that what is paid by whatever operator is in there is the best that thet port can get in today's market. >> i agree. >> that will be part of our negotiation. what i am asking you today is to be able to negotiate with that

tenant that is already occupying the space. that he will want to invest his money and other investor money. that the return will be as good to them as it is to the port and that is what the goal is of war will bring that back. there has been a request of terms, and it is the base rate of the current rate on annual adjustment. i guess when you say you can look at it in terms of market rent and other things, and this is a new lease, not just taking over the existing lease end extending it, i think it is afford to understand between the old and new. and given there will be an investment in higher value in terms of what their restaurant will be, and we also understand

the economics of mr. osborn's projections. if you're going to pay the existing rent of two percent, that does not sound like a good deal for us. i understand he is investing. we want to picture we understand the economics of the deal, and he is asking for further extension over time, so police is very valuable. -- so the lease is very valuable. we want to make sure we understand the return on the investment and what the poor is. i am not clear yet on what the balance is. >> we will bring that back to you. if that enat the end we had to t out, we would lose close to a billion dollars in revenue because we would have to go

through the new process of bidding a new owner. since he is already there, there is of value to have a tenant on site paying rent. >> you lose a million dollars though. i would disagree with that. >> if he vacated the property and we have to go through the process we are going through now without somebody in the building, then we would lose that. >> we have to remember 10 years from now what the neighborhood will look like. we understand that. we're projecting there are lots of activities. it's great to have that investment. it will be more valuable 10 years from now than it is today. >> i would offer what we're asking for today is the ability to negotiate. you can see notes, and you will be stuck with the least you have.

>> i do not think we are saying do not enter into negotiations, we just want to make sure we're giving direction on making sure the least comes back with what we think are beneficial to the port. that is what i am saying. >> that is our intention, to make sure through market analysis that what he is requesting an not -- is not necessarily what will be the final lease that we present to you. we're just committing to use that through an using educated information in the marketplace, looking at the future value of the lease, looking at the current value of the lease and property, we are going to take that into consideration as we design the deal we would bring back to you for approval. >> hopefully we would see the

performance of how he expects for restaurant will do. >> i actually have that with me today. and until we start negotiating with him, i did not know how much information i could share. in we would want to see it n we negotiate a lease terms. take a that was part of our due diligence that we see his pro forma. we have a lot of that information that helped us make our decision to come and ask you to go forward. >> he could have been bought out and told 202until 2023? we get not only the base rent but a percentage --

>> it is based rand vs percentage. -- base rent vs percentage. we could consider that. >> i thought it looked pretty good. [laughter] >> it is currently 11 years. he is asking for an extra 10 years? >> correct. >> if he would assume the current lease as is, that is what he is requesting, an extension of the lease? >> correct. usually in the other percentage of rent transactions it is based grant verses percentage. its 7% of the gross revenue is 50,000 a month, then that would exceed the base rent of 20,000 that would be set at the beginning of the lease. >> take the terms that are

proposed as both. >> these are all proposals. >> what i am getting at is this is a unique situation where that if the properties improved over the initial 10 years we would see increase revenue potentially as a result or not? >> no, because we would be stuck with the current term that does not have the up side of the percentage. >> obviously this place has about you in terms of the 375 paid out of bankruptcy, because i do not think there is much improvement in the building that was worth very much? >> not really. actually the bankruptcy judge, which is very unusual, went down and visited the location so that the trustee had gone back to borrow more money, it was just

making a bigger and bigger hole, so this did it did the port a huge favor, up -- so this bid did the port a huge favor because we would of been stuck with an underperforming tenant before and would not have gotten the benefit of the improvements that he is offering. >> how much was originally invested in this please? -- in this lease? >> i do not know appear yw. >>those original improvements he just -- talk about depreciating. they are probably more than appreciated. unfortunately the last tenant did not keep up the restaurant. >> if i did drive up by it today just to take a look.

is the concept to use the shell of a building and redo everything inside or really a tear-down kind of situation? i do not think for a million dollars to tear down? >> the proposed investment is an excess of $2 million. and it is between two and $2.5 million. the 1 million was in reference to the hard construction cost. all of the furniture and equipment that go on top of that. one of the things we have been working with david and the staff has been to make the building a little more transparent, so there is a little more interaction that pedestrians and people in the area have with the shoreline. we are using as much of the existing building as we can, literally getting guttin it. >'s a shell. >> it's a shell. >> any more discussion?

the motion is on the table. all in favor? aye. >> thank you. >> item 13, new business. >> any public comment on new business? hearing none, i move to adjourn. >> thank you. >> public comment? >> anybody? >> nobody? >> we will adjourn in african nation -- recognition of robert ryan today.

gosh of like to call the meeting of the public utilities commission to order. can you please call their role? [roll call] >> vice president torres is

expected and commissioner vietor has an excused absence. >> the meeting in front of you, do you have comments? >> moved and seconded. >> the item passes, any public comment? >> we have to speaker cards for general public comment. >> let's move to that item then. >> anyone that wants to talk to the commission about items that are not on the agenda, this is the time. introduce yourself. >> i continue to have an interest in the west side base.

i have been before you several times in the past couple of years. i hope that this charter shall be made available on your web site and have corresponding rainfall to go on with the chart. we can see the lake level and the corresponding rainfall. i am fortunate to get there for five times a week. i have to report that the lake level is fantastic right now, even though we are in a drought cycle. . the other thing i like to see added to this particular website is the level of hunting. we don't have a clue how much

water is being pumped. i like to see it broken down between the art or for south and north. what is of particular interest to us is the time north, and blend in the water. we want to know how much water is being extracted. this is important for a number of reasons. before we got into recycling water and has been made available to the golf courses, we had a problem with the lake level. now we have a recycling program in place, it has maintained a stable level. if we can put a chart on the web site so we can spend a few

seconds to judge the performance by this department in managing that asset. as i go down to the lake at sunrise, i am reminded that the boat houses still padlocked. this is an asset that has been empty for a number of years, and it is a great asset. what triggered it being here this afternoon -- i will finish real quickly. they showed a gymnasium that have a contest. previous meetings with the public, who have heard an interesting expressed in having the boathouse be made available t++.rving

[chime] thank you. >> i can switch in. >> imf and the san francisco -- i am here to address the waste water and coastal erosion issue. i'd just wanted to give you an update that we have already given to the citizens of advisory committee on waste water, we are working with the san francisco planning and research to try to solve this issue. are you folks familiar with what is going on down there? i have a little presentation if

we can get of, i will try to be fast. basically, when the waste water infrastructure on the west side was renovated in the late '80s and early 90s, when it created a combined sewage overflow storage system to help reduce the amount of combined overflows. it has been a really great system that has kept water clean. we have a little issued out in the south area part of the waste water hole. a few short years later, we had a winters set and the major coastal erosion. you can see it was totally on earth.

here is another view looking north, and winter of 2010, this problem has only gotten worse. the golden gate national recreation area, we are trying to come up with a solution to the city, where can to spur that elway that we can restore our beach as well as protecting infrastructure. there is a promising solution right of the is about to be studied. we also feel that there should be a study of relocating the infrastructure because it may make more sense economically in the long run, particularly when you factor sea level rise. it is going along well and hopefully we can come up with a solution down there.

>> we are very involved with the division in process for ocean beach and i expect their first report will be out in the next month or so. if there is an address, we can have them do a presentation. >> let me switch back. >> by this want to comment very briefly on the news articles about the treasure island hardly a settlement. in a acknowledgement of wrongdoing, it is clear that we had road employees.

to the extent we're getting back what we argue, it is helpful and important. i wanted to recognize the work of the general staff. i think of whole hardware as a global business. i don't believe that their management knew about this issue of any more than the pc management bid. we deal with things as they come and move on. >> additional public comment? we have a variety of communications that have been given to us today. c