notice the sale of its assets, including the lease. it was presented with the opportunity for over-bids. mr. osbourne took possession per the court order on january 3, 2012. the existing lease will expire march 132013. -- march 13, 2013. once the sale closes, the back rent of just under $95,000 will be paid to the port. they're entering into a new

lease that will extend the existing term by 10 years to derive the following benefits to both parties. a new lease will provide the maximum investment into a facility that has been long neglected, which includes not having a properly operating kitchen. the property most recently had fallen into being used as a nightclub anbar only. mr. osborn's projections show there will be $1 million in construction in improvements and another $1.5 million. a new lease will allow the implementation of updated laws and ordinances to include card check and ada requirements. a new lease will enhance the current terms by providing increased revenue opportunities through sharing in 7% of gross revenues. a new lease will allow him to

attract investors needed to make this a successful venture. he has a proven track record with three other restaurants in the area. without the ability to 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.

>> [roll call] >> just as a reminder, we would ask that you turn off all the electronic sounding devices that may go off during the proceedings. if you are having any secondary conversations, we would ask that you take those outside so we can proceed as efficiently as possible. if you want to speak on an item palace filled out a blue card. anyone speaking will have three minutes on each item unless announced otherwise by the president of the commission. please address your comments to the items being heard. if it is general public comment you wish to speak on, that is item four, and then continued on item 11. please address your comments to the commission during public comment on items in order to allow equal time for the

commission or staff to respond. with that, commissioner. >> i will agree -- be brief in my president's report. on tuesday february 28, basically from 6:00 until 8:00 p.m. in the green room of the veterans building on van ness avenue, there will be sunshine and ethics training for city officials. while it may sound routine, it is an important issue, particularly for commissions like rec and park. i want to encourage senior staff and fellow commissioners to attend. with that, let's proceed with the agenda. i have a couple of commissioners

want to comment. >> i just want to report to the commission one of our longtime patrons of our parks, member of the portsmouth board, louis passed away. i would request that when we adjourned, we do so in her memory. >> i am on the committee for the community opportunity fund. we have had our first meeting on that. for those of you that would like to apply for those funds, please contact our planning department. thank you. >> is there any public comment on the president's report? item 3 is general manager's report.

>> good morning, managers. spring program registration begins on march 3. summer day camp registration begins on march 17. we ask everyone to log on to our website to browse our catalog of classes for the entire family. to that end, we have some exciting data from the superintendent of recreation which shows in the fall and winter, recreation programming registration continues in a cigna been upward trend. we increased registration from fall 2010-2011 by 15%. our warning of scholarships also continues an upward trend. we are pleased with what is quickly becoming the recreation program of choice in san

francisco. this saturday we have a benefit for a summer camp program for kids in the autumn spectrum. the world renowned pianist and parent and a quartet will be playing. log on to our website to purchase tickets. if you're interested in testing your metal and some of the top pingpong players in the city, join us for the third annual open table tennis tournaments. you can also download the entry form on our website. spring extravaganza. i do believe pitchers and catchers report in a few days. our quarterly family friendly event will be held on april 7, including games, and annual rib cut off between the police and

fire department staff. a more somber announcement. we were informed on january 28 that dolores park suffered a severe bout of vandalism. the club house was packed, two tractors were damaged, lights were busted. the damage cost was estimated at more than $27,000. then on monday, we were informed the park was similarly vandalized again. we are working with a contractor to extend security hours from 6:00 p.m. until 6:00 a.m. during the final phase of the plague on construction and they're working with the police department to coordinate additional controlpa. in addition, we will be applying anti-graffiti on all

services in the park. we ask the public to be vigilant and report any activity to the police. damage like this threatens to delay the completion of this incredible capital project, philanthropy, that inflates the cost of maintenance. it is a burden cleaning up after people bad behavior. we continue to ask you to be vigilant and support and patience. more positively, district bond meetings continue. based on the success of the 2008 bond, approved by 76% of san francisco voters and has resulted in $185 million in capital improvement projects, our staff has begun meeting to solicit feedback on priorities for another bond proposal for the november 2012 ballot, including neighborhood parks

sites and possible programs similar to the community opportunity program that you just mentioned, commissioner. the public is more than welcome to view our schedule of the upcoming meetings on line and attend, or send feedback to us at rpd.bondfeedback@sfgov.org. at last month's commission meeting we recognized and honored raquel miller. she is our resident boxing instructor turned olympic hopeful. she is currently in spokane, washington fighting her way through the first-ever women's olympic boxing trials. we are happy to report that the dream is still alive. after an opening