building to commercial use and the south side of 20th street extension of the economy in the area right now and light industrial, arts and recreation and the things that are making that a cool hot new area and we can accommodate that growth. we think this will be jobs for 400 to 500 people. one of the things to recognize this project is important to the port for quite a while. a decade ago we were in contract with other entities to do this and tried to make this project happen. we carry $109 million in the capital plan to do these buildings. we have a project before you today where the orden development group would take the lead and invest their funds and realize this. one of the reasons -- the high level reasons we think this can succeed at this point. one is we brought the capital costs down for a number of reasons

and one is the specialized expertise in saving the buildings. this is a strong market interest. they have shown interest to the capital and put their equity on the table. one of the things the buildings will bring is historic tax credit and equity and low expense equity to the project and we have designed a participation rent structure where the port's income is behind some of the other equity and other investors so that we can bring more of the money to the table and because of those reasons we can do the project now and not wait to invest substantial public money into it as we once thought. overview of the business trends. odi in the term sheet has agreed to invest $14 million of their equity in the project. the port is putting 1.5 million and that is

money we budgeted and planned and we were going to spend money to prop up the buildings because we didn't think we could get to it in time. we put those on hold and we are going to contribute to the full rehab. the participation deal works that the net revenue after paying the debt service and the costs will first flow back to the odi entity to repay the equity that invested and 14% return on that equity. once their equity is repaid we share in the net and the port also has participation in the refinancing and sales proceeds, so we are holding back on our income, but that lets us bring the other less expensive costs to the table. it's our hope to minimize the amount of the 14% capital but we have as a back stop the commitment to have the money there to get the

buildings done. so we have also introduced into the deal a port base. this is the nuance that is different from what the odi team proposed when we talked about this in january and february. in 20 years there is a base rent proposed and $200,000 escalated by cpi and in 20 years it's something like $400,000. at that point odi will pay the greater amount so even if they haven't burned off all of their equity we get the base rent. if we're doing really well and the participation and 50% share the net is above that we get that. the term sheet has provisions that might delay when the base rent comes in if we

find in the next round of due diligence we need it and here is the projection over the three cases what the revenue would be. the base case scenario is what we think now at $58 million project cost what the port's income would be so the yellow arrow shows by this time the equity is paid off and we're getting 600,000-dollar a year of income. the blue arrow -- that's the red line. the blue arrow, that's the point where the 30 year mortgage is paid off and our income would jump. typically people don't last out the 30 year mortgage and refinancing happens but this will sustain us along the way. the other two areas are looking at what if the team had to put up to 14 million, either because the costs were higher or the income was lower than expected and we couldn't bring as much

in, so in those cases after 20 years and where the bigger black arrow kicks in and brings revenue into the port even before all the equity are paid back and if we get the little bumps along the way and escalation in base rent and once the mortgage is paid off and pay off the equity the income jumps and worse case we get some rent in 20 years and base case at 2021 and assuming the construction we're at this point. i wanted to point out the buildings -- we get no income from now and in fact we incur security and maintenance costs. a couple of additional highlights and all of the work is done with the historic buildings and some of the

important buildings and well known standard and allow us to bring tax credit equity to the project. parking for the project is part of the pier 70 wide strategy. in the strategy we believe we can provide that in lots and on the street but in the longer term it's part of the plan. they will work with the shipyard systems because there is still electrical power through there and we need to come up with the best way to align that and keep the lights going and have something new happen and the orden group will collaborate with them and working with the shipyard and the port and all those efforts. our next steps go to the board for the endorsement and the finding that's it's fiscally feasible and a good business deal for the city to move forward with and launch into the next levels of review. we will refine the project and that coordination and further

project review. we hope we're here in january for the lease approval and we hope to get the construction going not long after and that's the overview. i am competing with playoff games and other things so i went quick and i am open to questions and i wanted to thank and congratulate the orden team for their contribution. i think they said this is a difficult but typical odi project. i am clear we're a typical odi counter party and i appreciate their patience in going through and learning the process they have been doing with us. thank you. >> okay. so do i have a motion to approve? >> so moved. >> second. >> public comment? and we have one from corin woods.

>> good afternoon commissioners. i am corin woods. i am a member of the central water front advisory group and have been working on the pier 70 project for 12 or 15 years so far. we have had a lot of discussions with orden development. i think they're really doing a phenomenal job of understanding some of the problems with the historic buildings wanting to get fast moving as fast as possible so they don't crumble and reuses that will activate the 20th street corridor and i urge your support. thank you. >> thank you. commissioners, any comments or questions before we vote? >> i want to thank orden

development and also the staff and others, kathleen. kathleen i know you have worked on this very unique and interesting project and i am certainly excited to see this step in the process come forward and i am very excited what will be coming next and i wanted to thank everybody involved and being creative and get this project moving forward. >> i just want to add -- [inaudible] i think you could see that this term sheet is fairly detailed, i guess, and this is as a result of a lot of conversations and discussions that the staff has had and i think some of the commission in terms of the direction we have given you and we are pleased to see where are at this step today and hopefully this project will move forward. so with that all

in favor? >> aye. >> aye. >> resolution number -- sorry, i have to go back. resolution 1278 has been approved. and i see mr. orden and james madison in the back. congratulations. thank you. >> item 9d informational presentation regarding the sfpuc recycled water project and identification of port properties as potential sites. >> good afternoon commissioners. brad benson special projects manager. i am here representing port that is working on this project. byron rhett is helping me out and we have representing the san francisco public utilities commission today

donna palassos and others. essentially the public utilities commission is in the process of diversing the public water supply and looking at recycled water at fulfilling some of the city's water needs and have approached the port at looking at a number of port sites that could potentially where they could build a recycled water plant on the east side of the city. they're looking at other sites as well and barbara is here to give a policy overview of the project, some of the siting considerations, the process -- the public participation process they're in right now and i will talk about next steps so thank you barbara. >> thank you. i am barbara palassos and a project manager with the sfpuc and i am here here'd to give you a

introduction about this project of the i will talk about the water portfolio and the water program we're implementing here in san francisco. provide more details for the east side project. the sites we are considering and this project that we think is part of this project being successful and moving forward. as you know we provide drinking water to 2.6 million people in the bay area and includes all of san francisco and the 27 wholesale agencies outside of the city. the water is conveyed through pipelines and tunnels and we have several treatment plants. to make the system reliable and less vulnerable to earthquakes we are implementing our water system improvement programs and projects to upgrade this compl

system. in 2008 this was certified by the san francisco planning commission. as part of this program eir approval the sf puc limited to water deliveries to the current level of 265 million-gallons a day and for the city of san francisco this meant developing 10,000-gallons a day of alternate water supplies here in the city. to meet this goal we're pursuing additional water conservation measures to reduce demands on drinking water and developing new sources of supply including groundwater which would be used to augment the drinking water supply and recycled water used for non drinking uses and irrigation and toilet flushing. in san francisco we're moving forward with the implementation of our program. we have three projects here in the city. we have the harding park project and the

reservoir and pump station that is used to pump water produced by daly city and we have the next water project and produce 1.6 million-gallons of recycled water for golden gate park and presidio park and the golf course and we have a project to deliver 2 million-gallons a day of recycled water. so again just to circle back as to why we're doing recycled water. recycled water lets us devote drinking water for the highest purpose which is drinking, and using recycled water for irrigation and toilet flushing just makes sense . the city of san francisco is devoted to this

project and began in 1991 with the recycling ordinance and had large developments have this type of pipe for this. it was endorsed again in 2009 with the park amendments which called for maximizing water use efficiency and using non portable water on park properties. recycled water is reliable and drowft proof and we believe it's an investment in the city's future. the recycled water is highly treated wastewater. it goes through several steps to make it safe and for irrigation and non drinking uses. under a typical process wastewater is treated at the wastewater treatment plant which on this side of the city is the southeast plant and

under go primary and secondary treatment. the product is called secondary and discharged into the bay. we take a side stream of that and treat it. you may have heard the term scaffolding plant and treatment plant and take it directly from the sewer and include all of the treatment steps to produce the recycled water including the first two steps that happen at the southeast plant. you may have heard gray water. gray water and recycled water is not the same thing. gray water is from laundry machines and others and has soap but considered safe enough for plants and residents can install a gray water system for their own on site use. so

zooming in on the east side as part of the early planning work we look for potential customers and estimate the demands for non drinking water. the highest demand customers are shown here in dark purple and in the eastern part of the city and in the most part within the recycled water ordinance zone which is designated by the red line, so in essence these are customers that have or will be dual pump d in accordance with the ordinance and we identified them as the priority customers. now that we know who we're planning on serving the next step in the process is look at potential sites for the facilities. for the siting evaluation we looking at parcels at least an acre in size, currently vacant and no buildings or structures, again close to the priority customers

and mine myself pipelines through the city streets and close to the source of water to be treated. we eliminated parcels that are current or open future space or parks and we contacted property owners to confirm availability or the potential to go with development plans so these are the five sites identified and include three port properties listed here. the state owned parcel here and sfpuc own griffith's pump station. the next step in our planning process is to conduct what we call alternative analysis and the goal here is to identify preferred alternative to advance conceptual engineering and environmental review. alternates will be developed for the five sites,

and we will consider the concept of decentralized treatment which would basically require two facilities, one in north and one in the south that would serve all of the customers we have identified. centralized treatment which would have one facility that would serve all of the customers and we would also consider different treatment options. basically we would look at treatment that would take it from the southeast plant and filter that and produce the recycled water and we would look at treatment that would treat wastewater directly from the sewer or plant . the alternatives would be evaluated using environmental social and technical criteria along with costs and again the goal is to identify preferred project or a preferred alternative that we can move forward, and if the results of the analysis indicate that a port site should be considered as the preferred

alternative, we would of course return to the port commission for port concurrence before we move forward. public involvement has been a critical part of our project. we've put in a lot of effort to make sure that the public is informed of the project and the sites we're considering. we have been talking to the public about this projected since summer of 2011 and we continue to outreach with open house sessions that we held last november. we also held workshops in january and march of this year and this year we also started using a new tool to reach more people and we're calling that digital outreach and basically ipad based survey we're using on one and one interviews on the streets and at special events and there is an online version of this

survey. this digital outreach has helped us connect with hundreds of people about the project, and again our objectives for setting up this tool were to provide information and increase awareness about the project, to gather input and hear concerns that people have on the proposed sites and we wanted feedback from the community on what the priority should be when developing a project of this nature. folks were asked about the importance of minimizing environmental impacts, minimizing project costs, designing the facility to fit in with the surroundings and providing community and recreational space as part of the project. to date we actively communicated with over 630 people on the project. no site has been found to be completely unfavorable and at the same time no site is a

definitive proposal. we think that this is good because at this point it suggests we could likely make any of the sites work from a public perception or public acceptance standpoint. and in terms of priorities most people rated the issues we presented to them as somewhat important to important. the public did assign more importance to minimizing environmental impact and slightly less on providing recreational space or amenity near the project. we have a second round of interviews on the way and have an event this week and joining in with the southeast community health fair. we will have a set up there for people to learn more about the project and provide feedback. in terms of schedule our project team is working on developing

those project alternatives including preliminary layouts for each site, the goal of which is to develop and have that recommended alternative early next year in january. we do plan to circle back with the public to let them know the conclusion of the process, and again if one of the recommended -- if the recommended alternative -- or one of the recommended alternative it is include a port process we would come back to you before. in terms of the schedule this is our timeline. we are looking to go to construction around 2018. that concludes my presentation. >> thank you. >> thank you barbara and if the commission has any questions i would yield the mic to you, but

just in terms of port staff next steps. both the lot and portions of pier 70 are under exclusive negotiating agreements. 337 with the giants team and mission rock llc and pier 70 with horton development incorporated in california. we would -- we've already broached this topic with both of these groups. we would continue to have that dialogue with our development partners to see whether or not a facility such as this would work into the development plans for those sites and make sense from a feasibility perspective, a cost perspective, a engineering perspective. with respect to

the pier's areas and the preliminary port staff feedback is disfavor that site compared to the other two sites, but we want to respect the puc's process foresting sites and will bring it back to the commission for consideration. >> >> and we look forward to seeing the results of the public process so really appreciate the work of the staff on the project. >> okay. public comment? corin woods before we take comments or questions from commissioners. >> good afternoon commissioners. i am wearing a different hat here. i chair the mission bay citizens advisory committee for what was the redevelopment agency. now, to be known as -- i think the office of community infrastructure and investment.

that's tentative. we had purple typing in mission bay since the beginning of the project and have been waiting for recycled water to run through those pipes and we have been participating in as much as we could in the process of moving forward the recycled water plan. public outreach has been spotty. the online survey -- i can't get to. the opportunity to go to the bay view health fair is a tremendous opportunity to find out what is going on, but it has not been widely advertised. nor has there been real discussion about the cost comparison of doing

the treatment near the southeast plant and piping it back out versus doing the treatment near sea wall lot 337 or pier 70 or mission bay where we're going to be using the recycled water, and having to do less piping once you get it. there's a lot of questions. i don't know how this would fit in with sea wall lot 337 or pier 70 if you need a acre of land. i really want this to happen as soon as we can get it because obviously using recycled water for irrigation and other non portable uses is a critical part of reducing using hetch hetchy water for non portable uses but i think there is still a lot of questions. please ask them. thank you.

>> thank you. other public comment? commissioners questions? comments? >> i am in favor of the project moving forward. brad benson answered the question i was going to ask with respect to what we have in place on those two sites. i'm not sure -- did you provide a bit more of a timeline in term of what decisions are made, how much more public outreach might take place? and any other major steps? >> so the timeline for decisions would be approximately march or april when we have a preferred alternative that we would like to have hopefully endorsed by the port commission if it involves a port property, and

if not by our commission -- in either case the puc and want their endorsement of the alternative before we move forward with environmental review and conceptual engineering so that's the time frame. >> i guess i was getting at more opportunities for public outreach and have the public weigh in and even if you wouldn't mind investigating the issue whether it's been difficult for people to get access to the online survey. >> we only know of one person that had an issue and internet explorer -- i'm not technical but it was that issue and i thought it was resolved but we can try and address ms. wood's issues. >> in brief it's an old version of internet explorer and doesn't allow access to the site is my guess. >> we thought it was