source of payment. the p.u.c. was veryby 2017 to c5 million as a project to rebate. we envisioned that the m s cents per kilowatt hour will continue until all project costs are advertised. to the extent that that lease term as iranian and there is a need to continue paying back this project, then a sense would continue. the san francisco public utilities commission and would install utility-grade meter to measure the actual act. electricity use so we can pass around that force and charge. working met elaine, we estimate that the capital outlay for the project would be approximately

six planform million dollars. that covers the capital cost, and debt service reserve, and a p the long-term debt solution is some months off. mayor lee and supervisor: have introduced a supplemental appropriation ordinance that the board of supervisors that would reappropriate some money from the back land project, part of the 2010 revenue bonds project. it has been designed. it is ready to go to construction this summer. the proposal here would be to

borrow funds on a temporary basis from that project until the long-term debt proceeds are available. elaine has been working with the controller's office to fashion that proposal, which would be certificates of participation. the real advantage to that, while it would be repaid by harbor funds, the city has an excellent credit, and an issuance will result in very low projected interest rates on the project. $780,000 a year is what we estimate. based on the four cents per kilowatt hour, we estimate an 8.3 -- $8.3 million revenue

source. we think support will likely recover 75% of the total project cost, but it could be all of the project cost. now, i would like to turn it over to kathleen. >> in my role as project manager, i've been working with maritime with how we sustain repair within the master plan while we are doing everything else. this lease has been going since 1987. this whole site was least repair -- lease repair. there has been a whole series of amendments over time. there are 20 buildings, two dry docks. this lease runs through december 2017. we did a real significant amendment in 2007 and partnered

with old princess cruises and bae to upgrade the dry dock to be able to lift large cruise ships and invest $5 million. it was notable and challenging lease amendment. there have been some housekeeping issues on the lease. they now pay us rent at 3.3% of the revenue. there is still a rent credit paying out. it is how they're getting back some of the funds from the dry dock upgrade. the annual minimum guarantee will increase in january of 2013. in general, even with the rent credits, the rent has been above the guarantee.

this gives you a sense that if we took this slide back even farther into the 1990's, it really was hit. they were able to grow their revenues, the slow-down in 2006- 2007 is when they have the upgrades, and they had a strong growth rate. we hope that continues to succeed. what we're looking to do in this lease amendment is any number of things. the main one is executing that letter of intent. brad has walked through those terms. we are establishing one of the more successful partnership things we did last summer, dredge so ships could get in to the dry dock. we had agreement then of how we would share costs with future dredging. it was in the plan where we were

hoping to move it on to the schedule, responsibilities being part of the channel. we will work together to do that. then we are realigning the premises. i try not to do slides. i am sure you cannot read this. this is one of those. this is the premise boundaries now. these here and here are all what we call the reversionary. they are to revert back to the port in december of this year. this building is actively being used. some of this area is exactly behind the buildings we agreed to go into negotiations with. what we are doing, and this is a better sense of it, right now, it is this area. there is not a whole lot going on. they are not using all of it or asking them to do it.

this is to retain all of it, the parts they're using and not, and to keep it under secure, and what we're doing is establishing the area here, which is behind this historic building. we would give them one year notice. that can work within the plan we can do with the developer. area b sticks into 20th street. there is a small area c that is part of the ongoing operations and parking lot. this block in the corner, above the park, that as a license area we have month to month. that is a bad scale representation. the rest of the drawing is my power. . -- power point. we could get it back with a one- year notice. this is on the periphery, changing the adjustments. we are not getting any reduction in rent. it comes from what happens from

the dry docks. we need to be able to get these historic buildings without necessarily having to go through the security measures. we will put provisions in that we can realign lines to access the historic building. those are the other amendment pieces we had been planning to bring to you this year that we have managed to move along with the power negotiations. i will go back to brad with the next slide here. >> if the commission authorizes staff to go forward today, we would move next to the board of supervisors, the two ordinances that we mentioned earlier at the budget and finance committee of the board of supervisors. we are awaiting budget analysts report on those items. i hope for a favorable outcome.

if the board approves the temporary borrowing from the project, we would have to come back to the port commission to get appropriation authority for the project. kathleen and the team would negotiate the lease amendment and execute that amendment pursuant to your direction. we would hope that the project would get constructed in the spring-summer time frame and operational by september of this year. i am available for question and answer. thank you. >> anyone would like to comment? terry shore?

>> good evening, commissioners and court staff. i am a project director. we are in marine conservation group based in the bay area. they have been engaged in following activities of the port for a number of years and have sat on several advisory committees. we recall the great success of pier 27 and the project to install power for cruise ships. i am here this evening to urge you to support this proposal by the staff. this is a little different type of shoreside power. the ships will not be picking up passengers, but they will be in for repair. the benefits are significant. they are outlined in the excellent staff report.

for year 2013, the project will save more than 10,000 tons of greenhouse gases. 285 tons of air pollution. those are big numbers. they offset the decommissioning of pier 27. i commend the staff and puc and everyone involved in making this happen. it has been a challenging project. the only thing i would like to raise is something to consider to look at is the reconditioning of pier 27. i realize with all that is coming on with the america's cup that right now, the shoreside power is going to be reconnected in the second half of 2014. i am sure everyone is doing everything they can to hook it up before then so that the full benefits will be seen as soon as possible. in the long-term big picture, we will have two projects along the

waterfront for the future to protect the air and water of san francisco bay and the resident. thank you very much. >> thank you. commissioners come any comment? >> i was going to ask -- i was confused in the beginning, thinking we were moving all this equipment down. ultimately, we would have two installations. >> that is correct. the pier 27 shoreside power facility is being decommissioned by our cruise terminal general contractor. that will be stored. it will be reconnected in phase two of the cruise terminal project. while this is in mitigation of the cruise terminal and the america's cup event, it is a legacy benefit. it is going to continue to operate and improve our quality

of the shipyard for as long as it is operating. >> also a question about the financing. i am a little confused about what appears to be short-term borrowing of $5.7 million. i don't understand. do you have all the money in the bank in order to start it? >> that is a very good question. we are working with you to develop a schedule of payments that will be necessary for the project. when we finalize that discussion, i think we will see less borrowing from the back plans project. there is a need to pay an initial deposit to the contractor to get work started on the new equipment that is being designed for pier 70. that will be an obligation. we hope not to use the full 5.7

from the back plans project, only what is necessary to get started and carry us through the time when the long-term debt proceeds are available to carry us through to completion. >> i don't have a problem with it. i think it is a clever solution. i don't understand why you needed the full amount at once. now i understand. thank you. >> i want to welcome you to the microphone. >> i should have brought a coat. thank you. i continue to be impressed with the port staff and a forward thinking we have come up with here. we continue to talk about the environmental benefits to putting in power at pier 70. kathleen mentioned it. you saw what is happening with the revenue this is creating.

from a funding standpoint that you are not seeing here, this will allow us to bring in more work. year-over-year, since 2008, when i came, last year's numbers were 20% higher in revenue than they were in 2008. that translates to a union jobs and a lot of union guys last year, over 2010, 2011, we ran almost 30% more man hours. what the short power will do for us is allow us to power up ships we cannot power up right now. we will see the alan shepard coming in in april. we will have the power set up for that. that is a huge contract. it will continue to push their revenues up. those translates directly into the port of san francisco.

additional funding coming to the port on that. that part of working with the port has paid off. we are able to bring in additional ships. i am very impressed working with the port in the way their forward-thinking and moving forward but the project. i look forward to putting them into place and keeping the moving forward. thank you very much. >> madam chair, commissioners, i want to commend the staff for a job well done. i come from the puc, where the environment is first and foremost on the plate. being on here and having the system in places saving all of us a great deal of time and energy and atmosphere. it is a big concern with greenhouse gases. i want to commend staff and thank you for being here and being a partner with the city

and county of san francisco. >> thank you. i want to thank staff for being so innovative in coming up with great ideas. i also want to thank you for being such a good tenant and such a good neighbor. our relationship has not always been that way. i want to thank you for making it a win-win all the time. thank you. >> we have a motion on the table. all in favor? resolution number 1219 is approved. >> informational presentation regarding sole-source retail lease between the port of san francisco and -- is located in the northwest corner of embarcadero and broadway. >> i am the leasing manager here to give you a brief presentation

on the possibility of a retail lease between the port and -- it is a cabaret performance held in a 1920's tent during a five course dinner. about 300 guests attended each performance. the initial lease commenced on -- in october of 1999. the initial lease was really treated and it came to us as a special event, not a restaurant. fortunately for everyone, it ran for 11 years, sold-out shows. the original lease was changed three times and they have been on hold-over status since 2005,

primarily because of the potential development in that area. teatro zinzanni paid rent to the port. in addition, the port, since we control because parking, we received additional terms on the parking, adding $200,000, adding to our parking for that area. we also have increased patronage in local restaurants before and after performances. due to the construction of the cruise terminal, the port -- it was necessary for the port to relocate tenants, including teatro zinzanni in the area. they executed a mutual termination agreement and the effective date of that agreement was january 17, 2012. at that time, they vacated the site, and the site is currently

vacant. as a part of that agreement, they agreed to work in good faith to complete a new lease for a new site. the site we mutually agree on is on the embarcadero and broadway. it is currently used as a parking lot. the site is on c2 and falls within the north waterfront historic districts. the actual project -- >> can you help him? >> the actual project consists of interconnected temporary structures, including the historic tent, and a number of modular structures.

these structures called the lobby, the kitchen, dressing rooms, a support function areas. the primary entrance would be for vehicle drop-off on embarcadero. the proposed lease would contain certain standardized conditions that are now standard in our retail and restaurant leases. the terminal lease would not exceed 10 years. teatro zinzanni would be required to sign a and approved boilerplate with no substantial changes. the premises would can -- consist of percentage rent. we would participate. the rent would be paid, the greater of the minimum rent or percentage rent that amount to be determined. the lease would provide other standard policies, such as rules and regulations for restaurants, a good neighbor policy as well.

this site on broadway is contemplated in the 34th america's cup and also in the cruise terminal environmental impact report, required under ceqa. the court requires that teatro receive a significant appropriateness from the planning commission. the project must meet the criteria found in the preservation in the preservation of historic architecture. the proposed design for teatro will undergo review by the historic preservation commission. we anticipate that to happen in march, 2012. in compliance with the mitigation measures, the

historic preservation commission will review and must find that the project design complies with article 10 of the planning code and interior standards for historic preservation. this includes addressing the architectural and visual characteristics that define the historic district. the design process is expected to occur through spring. these mitigation measures must be approved with a certificate of appropriateness prior to this commission's approval. teatro will give present -- presentations to surrounding groups. telegraph hill dwellers, for example. this item being a retail lease, port staff, it does not quite fit into the policy, but we think that is the best vehicle

to deal with this type of a lease, which does require competitive bidding. there is a sole source exception if the lease is found to be impractical or impossible to bid. teatro zinzanni requested to enter into a sole source least for the site. the ports reports staff must determine if it is a tenant in good standing, which they are. we would evaluate the most economic and suitable tenant for the site. we will review an audited financial statement and a business plan. i am happy to answer any questions. >> is there any public comment? lynn spaulding? >> hello. i work with san francisco travel association.

i would like to share some facts with you in regards to teatro zinzanni. they have been the premier live performance attraction in the heart of san francisco tours in district, the waterfront. they have brought over 800,000 guests to the nebraska waterfront since opening in 2000. -- to the waterfront since opening in 2000. they have been critical to the economic vitality. they have transformed an unimproved parking area into an internationally renowned tourist and cultural destination. additionally, guests have spent millions of dollars at neighboring businesses as a result of their proximity to the renowned attraction. benefiting businesses, including numerous parking lot, hotels, restaurants, clothing, and souvenir retailers. the unique programming has been a key component to san francisco's reputation as an

international leader in diverse performing arts attractions. we look forward to offering their one-of-a-kind experience along the waterfront soon again. thank you. j >> eff hoyle? -- >> jeff hoyle? >> good evening, commissioners. my name is jeff and i have been a bay area resident for 40 years. i have been a performer for over 30 years, starting with the pickle family circus. i have been with teatro zinzanni for over five years. many of my co-workers have been there for over 10 years. certainly, some of the kitchen staff have been there for that amount of time. over the years of performing and working together, the company developed a bond that greatly enhances the theatrical experience for our guests. teatro zinzanni has an

international reputation as a first-class attraction bringing in artists and performances from north america, south america, europe, asia, and australia. my parents' generation used to talk about dinner and show. teatro zinzanni is a dinner in a show. performers are welcomed into this beautiful tent, which was built in the 1910 is in belgium and imported by the staff of teatro zinzanni. it is an elegant interior with red velvet and stained glass. it is lined with mirrors, producing a kind of alternate reality for the guests that come into the tent. it is a medical setting for dinner and a show. -- a magical setting for dinner and show. over three hours of eating and

entertainment by world-class comedians, singers, dancers, magicians, trapeze artists comic aerialists, jugglers from all over the world, and including a live band. there is also the trademark of audience participation of teatro zinzanni, which is where i come in. i use characters that i come into, outrageous or elegant costumes, and a choose members of the audience to participate in skits. this gives teatro zinzanni some of its uniqueness. the audience is the star. we celebrate them in their ineptness and a deftness -- and adeptness. when i talk to them after the show, they always say, that was so much fun. they are completely entranced. teatro zinzanni is a non-profit organization.

it really takes care of its employees. they provide living wages and health insurance for the 120 performers and non-performance staff. teatro zinzanni is also a dedicated community citizen, donating many hundreds of tickets every year to local charities and fund-raising options, including to my own children school, and helping raise over -- is that? ok. that is where i die. a beautiful young woman rushed up to me in the street. [inaudible] [laughter] >> thank you. norman? >> good evening.