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.

>> good morning, everybody. i am the manager -- we will kick it off first with a message from our cities librarian. the director of the san francisco library system. [applause] >> thank you. this is fantastic. good morning to everybody. i am a little jealous. i said, this is not my house. it is your house. welcome to all of you. this is indeed your house. i am a little jealous because i did those of green t-shirts. -- dig those green t-shirt.

we are proud to be part of youth advocacy day. that is where it begins. congratulations to each and every one of you for being here. i cannot say enough about our great librarians. we need your feedback. today is going to be one of those great opportunities to tell us all about what you need and what makes this city a great. have a fantastic day. it is my pleasure to be hosting you. [applause] thank you. >> good morning, everyone. i am so happy to welcome you guys to the third annual youth advocacy day in san francisco.

[applause] i know that we have lots of young people in the audience today. i will ask people to raise your hands and make some noise. right on. how about lincoln? is mission in the house? yes! as i was walking over, i realized we missed the school. [applause] right on. i am so happy that you guys made it through the rain. you got here on time.

so ready to inform all the public officials about what you think needs to happen in the city. a little bit about our department. dcyf funds a whole bunch of programs in the city. we believe that young people's voice is the most important to guide our program development and to lead or this city. as you go through your programs today and learn all about the inner workings of the city and when your meeting with those public officials, make sure you explain to them that not only do you care about education, about transportation, about safety, and about jobs, but that you also have really great ideas to share with them. when you finish today, i expect you to come back with some great

reports about all the things we will change to make your lives and the lives of your siblings and friends and families better. another thing i want to make sure you know, if you like what you were doing today, please connect with some of the young advisers and dcyf staff because we have a number of opportunities for young people to share your voice. we have yet advocacy council -- youth advocacy counsel. are there youth warriors in the room? right on. yay! ok, i want to introduce today

the most important person in the room today. are very -- our very youth from late mayor of san francisco -- youth-friendly mayor of san francisco. [applause] >> good morning. is that how you say good morning? good morning! welcome to your house. it is my pleasure to meet you this morning and to talk with you about what we are doing. some of you i met last year for the first time. i had a chance to explain what i was trying to do as the interim mayor. remember that?

right now, you are looking at somebody who has gone through his first public election for the very first time. i think i told to the last time i ran for public office was i was your age. i ran for senior class president. in high school. i never ran for public office before. just last year, i ran for being your mayor in san francisco. i remember that your progress, you voted me as your mayor. thank you for helping out. [applause] i want to thank dcyf and our school district. libraries have been the center for a lot of their communities. this library was built precisely

for your kind of involvement. thank you for coming from all the different high schools. most of this morning will be for you -- for me to answer your questions about what we are doing. i want to let you know what has been happening in my first term as your mayor. what has been going on in the mayor's office. have by become a professional politician? or am i still be ed lee you thought i would be? i know those schools a little better, but i know balboa, washington, and mission pretty well, too. i did something a little different when i was working in government. when i was working at public works, i ended up having to

clean all the city. the way we did it when it came to the schools was we talked to your principles and tried to get you involved. during those years, we got the saturday clean it teams, where a lot of your cohorts are getting credit for working with us. they are planting trees, like getting the environment going. i hate going to other schools. when the school is well kept, clean, when the neighbors feel that the students are in and out of the school and respecting everybody's right to have a nice place to go to, you feel a lot better. we did that with you as students, with your principals, and many of your teachers. you got credit for it as well.