during the process of completing the eis, before any negotiations are complete. what are the expectations for juggling those agreements in the meantime? >> i'm not entirely sure. you are right. the opera release expires in 2015. police that the horn blowers has with the port expires in 2014. >> the other leases on the other side expire in 2014, 2013. >> i am not sure how it will be handled. we will have to handle it as need be as we go through the site selection process. >> i have the same question. we have leases that are coming due in 2013, 14, 15 -- >> it will be a juggling act, no doubt, and we will work with

real estate division of the port to figure out a strategy, depending on which site seems to be the most likely as you go through the process. >> will we know that in 2013? >> we might, we might not. we will see. >> i think superintendent gene wanted to say something. for the record, all three of the operators we have discussed do have other excursions services. blue and gold has maintained a robust operation at pir 41. that is something that the board will consider coming independent of the mps process. >> i know the dates to not exactly synch up with our process, but they are close. assuming this is an approach that the port and city endorses

and belize is a long-term solution, perhaps there can be a short-term expansion -- extension or maneuvering that we can do to join me make this decision and then everyone can fall into place where we might land. >> we are rather good of juggling our tenants, out of necessity. i imagine i speak for my colleagues when i say we will but to keep the excursions on port property. i think our staff and all of us would like to work with you, should you select one of the sites to make that happen. it makes a lot of sense. >> i totally agree with commissioner katz. i appreciate you coming to us now in the beginning of the process so that we can try to figure out how to work the process so that it is fair and

equitable for everyone. of course, we would love to stay on port property because it has worked so well for many years. because we have these leases to cover, but yet fort mason does not have any on their peter -- piers, it seems like a benefit to them, not us. i still think there needs to be some sort of clarity in terms of what we will do with our existing leases throughout this process, because these are port tenants who have been good tenants. it is something that we need to consider, prior to 2013 and 2014 . >> even though fort mason does not have a ferry operator there, there are people there operating out of pier 3 and other buildings. there is not another unoccupied

space here, so we have to figure it out. look forward to working with you on that. >> thank you. >> item 9a. request approval of memorandum of understanding no. m-15137 between the port and the san francisco police department, to station the san francisco police department marine unit at the hyde street harbor for a term of 60 months. >> good afternoon,

commissioners. senior property manager for the real estate division. i am here today to request your approval for the memorandum 15137 between the port of san francisco and the san francisco police department. and the attached resolution. as way of background, the san francisco police department marine unit has been located at hyde street harbor since 2003. as you can see from your materials, they are out there in what has been known as the blue should building. they also have several birds in the hyde street harbor as well. approximately 2.5 years ago, the

blue shed building was deemed to be in severe does repair and would need to be replaced. an extensive study was undertaken on behalf of a new replacement facility for not only the marine unit but for our harbour office located at the hyde street harbor. this has public facilities as well. that was undertaken by wendy and alan, project managers. as a part of that, the goal was to provide an existing facility to replace the current facility -- new facility to replace the current facility. the problem was financing. to undertake this new structure, the marine unit was an essential piece of this.

through a homeland security grant of approximately $1.8 million, we were able to secure the construction, which the port approved here approximately one year ago for the joint operation security building, the jos building. this was an essential piece to getting this building constructed. the building is located there. this is an example of what is contained in the marine unit. they will occupy roughly half of the facility. the project was started nearly a year ago and we are happy to report that a project was not only completed on time, but within budget. a very nice job to those two.

the grant was secured and and now we have completed the building and we are here to have the mou for approval for the police department to occupy approximately half of the building. here is the new structure. and here is the floor plan on the last page. by approval of this mou, we feel there are significant public benefits to the board as well as to the community. this would enable the completion of the $2 million asset.

we have improve public safety and response time to waterfront incidents. full-time monitoring regulatory agency directly on port property, better coordination of pork, real-time, homeland and statements activities. protection of the legal port assets along the waterfront and also assistance for all special events, fourth of july, fleet week, on go operations of the port, and a new harbor office with public amenities, public access improvements. finally, to enhance and foster the longstanding relationship the port has had with the san francisco police department. for that, i kindly ask for your approval for the terms as proposed in the mou and to proceed ahead with the finalizing of this agreement.

thank you. >> thank you. >> so moved. second. is there any public comment on this item? all in favor? aye. resolution 1251 has been approved. >> item 9b. informational presentation on the proposed fiscal year 2012-13 monthly rental rate schedule, monthly parking stall rates, and special event and filming rates. >> and good afternoon, commissioners. i am the port's leasing manager. i am here to give you an informational presentation, no action required, on the 2012- 2013 rental rate schedule. in 1993, this commission delegated to the authority to the executive director to negotiate licenses and mou's if those documents met certain

business parameters, such as rental rates being consistent with the schedules approved by the commission. the tenant would sign a boiler plate lease. port staff provides this commission with a monthly report of that activity. in the early 2012, the first quarter, the market has continued to improve, asking rents have strengthened. on track to improve through 2012. demand for the waterfront has increased steadily in the last quarter. over last 12 months, port staff has executed 70 agreements. $5 billion annualized to the port, compared to last year, annualized increase of 3.2. a few less leases, but we did larger leases.

the current vacancy rate is 10.1%. somewhat lower than the city's average vacancy rate, which is 11%. regarding warehouse and industrial market, the city's industrial markets stood at a vacancy rate of 8.75% in the first quarter. the port's vacancy rate for warehouse and industrial is 5%. combine office and warehouse averages is 3.2%. following a review of the commercially available data and our recent leasing activity, we are proposing to make certain changes in the monthly schedule. some of the highlights are increasing the office rates at pier 26, 28, and terry francois,

and allowing the tenant credit. we have contract with a third party as we do typically, a consulting, reviewing our results. that is underway at this time. we anticipate it will be complete by my return in july, by july 10 meeting. other areas, parking. we are experiencing quite a high vacancy rate. however, we have added 97 spaces. revenue to date is $478,000, which is up $87,000 over the same period last year. we are preparing to make no changes in the monthly parking rates. finally, filming and special events. we would request the fee waiver for fleet week paand proposed fe

reductions for the fishing gear swap meet and delancey streets lot sales at 30-32. >> thank you. >> is there any public comment on this item? >> i just have one question. the monthly report that is supposed to come to the commission? i have not seen that in a long time. hopefully, we can get back on track to sending it to us on a monthly basis. >> i am surprised. i will look into that. >> on the last page, exhibit f, under the vacancy rates, there are some that seem to have extraordinarily high vacancy rates. wonder what the differences between those that have no

vacancy? for example, ceasar chavez, ag building, pier 35, 26, 28. >> they were occupied by hbo for the production of a movie. that was about a 12-month run of pretty high occupancy. we are -- we have another movie coming down in the pipeline that will take a large portion. it is a woody allen movie. his production company will be taking a substantial portion of that. the agriculture building -- we're in the beginning stages of negotiations with, i would call them a fortune 450 tenet, to

potentially take over the entire building. we are offering minimal terms, maybe 12 months, month to month, because of leader not then want to pay someone. the other, 26, 28, we had a bit of a change with the america's cup. at first, we thought those facilities would be included, so we stopped leasing. some of the tense practically moved out. the office at pier 35, that is a tough one. it is a very nice office. that will add probably another dollar to the per square footage monthly. we have a number of leases in the pipeline that i will be back

to you in july with. we have had a little bit of a growth spurt here, if you will. >> in the statistics, office market statistics, my understanding is rent has been rising rapidly. do these figures account for that increase, or is this the existing? >> they do account for that. this is through the first three quarters. those are office rates. particularly private landlords are able to offer ti credits, which are not shown. if you back that out, they are

not quite as high. >> thank you. we look forward to seeing you in july. >> item 10. informational presentation regarding the dissolution of the san francisco redevelopment agency as it relates to port property in the south beach area, recommended budget changes and consideration of a proposal to increase berth rates to reduce the operating deficit of the south beach harbor adjacent to pier 40. >> good afternoon, commissioners.

eventually, he will get the screen to show some pretty pictures. south beach marina, south beach harborage area is a beautiful part of san francisco. the harbor itself is a full- service marina consisting of 700 slips, concrete talks, recreational and commercial guest talks, at the pier for the shed, maritime center, and south beach park. i think you know where it is located between pier 40 and it at&t ballpark near the embarcadero. the bay area's premier destination arena. there are 700 slips, home to the south beach and yacht calleclub.

south beach is also home to the bay area association of disabled and sailors. it is an all volunteer volunteer organization providing assistance to all sailors and families and those interested in the bay area. baads is a wonderful program. the redevelopment commission who had authority over this can talk about the transition, have supported free berthing to that. we fully support that practice. south beach harbor was built in 1986 by the san francisco redevelopment agency, leased from the port. it was financed through $24 million in revenue bonds, $8

million in california department of boating and waterways loans. there was a subsequent $10 million improvement program including the construction of the carper building, new commercial just docks, completion of the promenade, disabled access to run the harbor, and other facilities for disabled and youth. that was completed in 2006. there was another improvement planned, phase two, which would include structural repairs to the substructure of pier 40, completion of another public access walkway on the south side of peter 40, replacement of the south and west facade, new restrooms for the tenants and visitors. most of these improvements are mandated by bay conservation and development commission, as a requisite of the permit to approve the construction of the

harbor. these mandated improvements are due to be completed in 2017. the estimated cost for these improvements in 2004 was about $6.2 million. we estimate now the cost has exceeded $10 million in today's dollars. so there is a large capital outlay that is coming relatively soon. i mentioned south beach harbor, 700 slips, fully occupied. it has a life about 50 years. it is about halfway through its useful life. 200 parking places right now. as you all know, the supreme court ruling eventually closed down all of the rebel the agency from california. the south beach harbor was considered by that.

the city then took back control of the redevelopment agency properties, the transition plan was put together, and it was deemed the port should assume management control of the old redevelopment area, the herein near south beach harbor, affected 2012. that means that we are responsible for all fiscal and regulatory obligations and property management responsibility for the port property. that includes the $13.5 million debt that is still outstanding from the prior construction. there is more detail about the debt and refunding bonds that were done relatively recently. south beach harbor is about 25 years old.

it is in good shape, has been well taken care of. we would like to continue to make sure it looks that way, going forward. we believe is the jewel of the waterfront. unfortunately, no capital plan in place right now. it operates on a day to day basis. the port, in the capital planning process -- the funding process needs to be identified. the bcdc requirement of $10 million these to be funded. the port will take over day-to- day management of the properties, including south beach harbor, delancey street, steamed pork point, rencontre park, about 12 other tenants in the area, if you other spaces. the port will take over management of the arena. we will maintain the 8.6

equivalent positions at south beach harbor. the maritime division of the port will manage them with help from all the other divisions, including maintenance. i want to stop for a second to introduce one of the harbour masters at south beach, tim walters, who has done a terrific job out there. he wanted to say a few words to the commission about this transition. >> thank you, peter. commissioners, executive director moyer, my name is james walter. i want to give you some background on me so that you get to know where i came from, about me. i have two college degrees, at a bachelor's, double major in political science and history, and a master's degree in international management, business management. i have been in upper senior level management for well over

30 years. i have been harbor master at south beach since december 2007. prior to that, i was marina manager at an 850-slip herbert. prior to that, i was the general manager of a 300-room hotel in waikiki, honolulu, hawaii. i did that for nearly 20 years. those two industries may sound very different, but they are almost identical. both are pleasure industries. there is a high degree of customer service. there is a high degree of maintenance, especially in appearance and functionality. they are both transient businesses. it takes knowledge of specific regulations and laws that are designed -- that regulate those industries specifically.

i feel like i have been doing this for a long time. peter gave you a good overview of south beach harbor, and over 700-slip harbor with over 200 guest docks and charter use. the facility is distinguished by a couple of things. it is a destination harbor. that is the nomenclature of the industry. that means a harbor that has attractions, activities, transportation located in the place people want to be. certainly, that would be the heart of san francisco. variety of dining choices, entertainment. it has a world-class sports venue, which is the only one i know of. many things to attract people to the harbor. and quality is one thing as well. it has been run really well

during my time and before my time. our staff, which has shrunk a little bit, is totally committed to maintaining a level of quality and service we have done. the port has joined with that. i am pleased with that. all of this is proof of the demand in the port. we have a witness for every single slip size. the weight ranges from a eight yearsto 12 years. i do not think there is any harbour in northern california with that kind of demand. it is also a city attraction, i am sure one that you want to keep that way. but the facility can not last at this level forever without some planning for the long term. it needs to be a replacement schedule for the portions of the dock.

there are some would alamance. we do need a capital improvement fund to do that. -- wood elements. i was asked to put that together a few years ago. amy lee, the executive director of the sentences for redevelopment agency, and i did that. i worked with the engineer to do that. we saw the extent of the long- term expense. i do not need to rush into this. this is a long-term process that has to be done over a long period of time never invest less. she then asked to do every survey, which i did. the results come in my opinion, show that we were under market, and therefore, it needed to be looked at. at that point in time, redevelopment was a source