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. item two, approval of minutes for february 28, and march 2,

2012 meeting. >> moved. >> second. >> the motion to move to executive session? any public comment on executive session? if>> reconvene in open session. move that we do not discuss those things discussed in executive session. >> second. >> all in favor? >> aye. >> ok, please be advised the ringing of and use of cell phones and similar electronic devices are prohibited at this meeting. please be advised that the

chair may order the removal of any person responsible for use of a cellphone, pagers, or other similar electronic device. please be advised that a member of the public has up to three minutes to make pertinent public comment on each agenda item unless the agenda adopts a shorter amount on any item. >> good afternoon, commissioners and members of the public, thank you for joining us today. i have one unanticipated item, which is to announce a meet and greet. demolition has begun at pier 27 for the long-awaited crews a terminal. we would like to host of meet and greet with our neighbors, and we have scheduled that for march 20, which is next week at 3:30 p.m. at pier 29.5, right near the job site. that meet and greet will be hosted by the host of san francisco and cars -- in concert

with our partner, department of public works and turner construction. if you would like more information, you can look at our website i assume. we would love to have anybody who would like to come. that concludes my report. 3:30 p.m. >president whoo ho: ok. any public comment? >> 8a authorization to request authorization soliciting contracts for engineering and related professional services in the amount of 1.5 million, totaling $4.5 million. request approval of policy for capital funding expenditures. item eight c, request approval of a 60 month lease, lease #l-

14819, which contains a 60 month extension option between the port, as landlord, and r. buraak storage of limited, as a tenant for approximately 274163 square feet of paid we indicated at 600 amador street of cargo way at third street, which comprises a portion of see what three of record for in such leases also said it to approval by the board of supervisors. president whoo ho: any public comment? any questions? resolutions 12.21, 22 and 23 have been approved.

>> 9a, verbal information presentation on the development and it is position agreement and related actions to implement the 34th america's cup project involving use and appears nine, 19, 19.523, 27-29, and 29.5 and adjacent water areas. >> good afternoon. brad benson, working on the team representing the america's cup project. since we last spoke to you, a lot has happened. you have seen this play out in the paper with the america's cup project. we regret we did not have an opportunity to get a written report to you today, but we wanted to provide a verbal report to the commission about where things stand with america's cup planning, and where we expect things to go

over the next several weeks. as you know, on february 27, the america's cup authority and mayor lee announced the event will continue as planned in 2012-2013, but with the proposed move of the team industrial bases to tpier 80. as you will recall, the world series events planned in 2012, we're looking to pier 80 as the site to host team bases. the development portion of the deal that we have been working on over the past year will not proceed, and as a result, we expect more discreet investment in the waterfronts, and we are not looking to development agreements to repay that investment. instead, the port would undertake the required improvements to pier 27-29

complex, which would continue to be the america's cup village and the main viewing area. those improvements would include the pier 29 at substructure, which needs repairs. pier 29 and wa end wall will neo be finished off. certain storm water improvements to the site, and other regulatory requirements. as you will recall, a number of public access and removal projects up and down the waterfront. the revised deal, the port would undertake the costs . we are looking at the space planned for the event. the proposal to move it to 80. the moves it to the waterfront that is a little less accessible. staff has been looking at

whether or not we can revise the idea of having the team industrial bases at pierce 30- 32, but with a lesser, more- focused investment at the site. so a little bit of a plant-level view of a program that support staff and engineering group has been working on in consultation with the event authority. it is hard to see the diagram here, but you will see the embarcadero. part of the problem is it does not allow truck access to the site. we think there is a way to build truck access, which you see and purple, on the site out onto the pier, and to improve the deck in a manner that could house up to five team industrial bases at the site with