is there any further public comment? jeff, were you going to comment? >> no. >> okay. clarify the issue. well, i just wanted to comment. i do believe there is a [speaker not understood] forecast from the parent company u.s. concrete improving and obviously went through a tough time. i think it is still correct we would give support where the family wishes to sell and sell to a buyer. but we do want to just note that obviously the industry can go up and down in cycles and hopefully will not affect the ongoings of the lease transfer of this transaction going forward because it's still to be proven exactly in terms of coming out of the cycle and the recession that we've experienced. so, just to be on record on that and to note that, i think it's important for us to recognize that. but not to hold up the transaction in terms of the transfer of the lease. so, all in favor. >> aye. >> resolution number 12-82 has

passed. >> item 10 a, information 58 update on status of port infrastructure where tenant relocation and other port obligations under the lease disposition agreement in preparation for the 34th america's cup event in 2012 and 2013. >> madam president, madam vice president, commissioners, good afternoon. i'm daly dunham with the port's special projects crew. i'm here for two item. the first is the america's cup periodic update by agreement, i'll not be presenting on that, but i'm here joined by other staff to answer any questions that you have. and after that the dry dock, but first the america's cup. >> i guess it's god news when you have nothing to present, keeps us on track. >> it's great.

[laughter] >> i've been waiting to give this next presentation two years. >> is there any public comment? commissioners, any questions? the report, i think, is self-explanatory. we appreciate it. thank you very much. >> item 10 b, request authorization to enter into an agreement with the united states navy for the navy to provide services to the port to prepare dry dock no. 1 for demolition and disposal. >> i'm here before you to ask your approval of the resolution, which would authorize executive director moyer to enter into a memorandum of understanding between united states navy and the port to allow the navy to execute the first phase of the dry dock disposal project. so, first, very brief bit of history on the dry dock. it was constructed in 1942 for the world war ii shipbuilding

and ship prepare effort. it was in use for over 50 years, finally due to excessive wear and tear declared unfit for service in 1999. as a bit of visual history, the photo in the background was taken shortly after in 2003 when the dry dock broke loose of its moorings and landed on treasure island. the picture you see there is dry dock number 1 inside of dry dock number 2, being lifted out of the water to be serviced. >> can you talk [speaker not understood], this is how far. >> where is it located now? >> yes. >> it has been at pier 50 adjacent to the maintenance shed for about eight weeks now. we needed to relocate it from pier 80 free up that space for america's cup activity there. >> thank you. >> over the years beginning in 1999, port staff have attempted

to divest ourselves of this asset. starting off with putting it up for auction and we were offered $75,000. that didn't wind up working out. successive attempts had bids coming back tell us we needed to pay them to take it off their hands and that price tag continued to grow over time. having worked on this project for a couple years now, my personal take on it that it is a deceivingly complicated thing to get rid of. there are hazardous materials in it. there are very few facilities that can take it. it's not ocean worthy, it can't go out past the bay bridge. more complicated than it looks. so, in 2009 we asked for help from leader nancy pelosi's office. and we were fortunate enough to be given a congressionally directed appropriation, we don't say earmark any more, to assist us with disposal.

and over the last couple of years as we've put together a full project, we have set aside port capital funds to pay for the balance. so, what is the project? no matter how we slice it, it is going to go in multiple phases. we've been working with the navy's primary general contractor for demolition and disposal on the west coast to evaluate different ways we can approach this project. and they came back to us with an analysis and study that had four options, two of which were prohibitively expensive so we took them off the table right away. the two that are left, both have the same first phase. whichever way we go, it starts off the same. so, that's why i'm here hoping to get the project moving while we figure out the rest of that. phase 1, by removing of the end sections which are removable by design, the dry dock was built so that it could -- dry dock

itself lift itself up out of the water. so, one of the early stumbling blocks with this project was by far the most economical way to do it was in a graving dock, which is essentially a concrete back it up. -- tub. you can fill the water in, drain it out, have everything contained and save space. the only one that is nearby is at mayor island and it's too narrow. so, this solution of the project involves taking the end sections off and turning them sideways. when you turn them sideways they fit. this would get through about a million and a half of the $3 million we have available in federal funds and would be completely totally funded. -- federally fund. from there it diverges into five different optionses which staff are still evaluating. either phase ii will involve taking down the wing walls as shown here, or remediating some of the hazardous materials and

prepping what remains for transfer to a third-party for disposal. * this phase ii looking out here, after the wing walls are removed, the remaining, what is essentially a flat barge at that point, would be cut down the center line in the ballast tank there so it is clean and doesn't contain the sediments that we have to dispose of. but would cut it right down the middle and once it's been bisected it does fit into the grading docks of mayor island. so, what about the flow of funding? it's been a little bit tricky figuring out how to handle this in the city. at no time will the port touch the money. it is a federal funding to assist us, but it only goes through federal agencies. the director of appropriations wound up with the department of defense. department of defense hoe the

administering agency that does community projects, typically not this large, but they do do this kind of thing on the scale. once we got to this point, oea had a decision about how they -- who was going to execute it for them. and they tried hard to get mayor to take t. they talked to the coast guard. they looked at another agency that could grant it to the port directly and let us go out to bud. and after nine months, nobody wanted it. * bid we were fortunate to find a partner in the end in the united states navy. the salvage aerv of the navy which sits in naval sea systems command. it may be referred to in the staff report sue salve, supervisor for all salvage operations of the navy. the navy, then, in order to execute these funds has a previously competitively bid contract with titan salvage for all salvage work on the west coast of the americas.

that has been titan to salvage. nav sea has worked with options for how to get it done and where it goes subcontract wise. phase 1, the part all the other options have in common goes with the sections removed this way [speaker not understood]. the previous slides illustrated. phases 2 and 3 get a bit more complicated because we have the option of trying to keep some continuity of contracting and just jump onto the navy's general type salvage and let them work with all the subcontractors. that brings with it some pass through costs. this has a particularly high administrative cost because it is designed for salvage work for ship wreck and there are a lot of unknowns with that. alternately, we may choose to go with one of the three subcontractors listed there in the box or a combination of

those to ultimately dispose. [speaker not understood] is a company that runs heavy lift vessels that are currently -- currently have a program with a newly certified shipyard in china to take up all the oil rigs, that take them there to be remediated and recycled. they will have a heavy lift vessel in port in february and it is truly just luck if we avail ourselves of the option to catch them here. to have them steam all the way here would add $3 million to the price tag. that is really a target of opportunity. in the previous slides, the slide that showed bisecting the remaining mid section to put in adr, there are two ways to do that, allied defense recycling, the maritime ship recycler. we could use bae our own tenant to do that. up next the dry dock, they are a sophisticated and dynamite ship repair operation,

demolition is historic for them. the economics don't work out quite well. so, we are looking at that option. the third -- fourth, the fifth option, the tbd mark there, it's still on the table where we, through the mayor and part of the project, asked the navy rather to expend all of its funds in the most productive way they can. and at the end put it in a form can easily be returned to us and we go out to bid. these other options here top wise 80 aepre, nav sea, the navy would start to fund them before they're out of the $3 million. we would be forced to go to a sole source contracting vehicle for those. so, i didn't mean to get too much into the wave there. it gets complicated in phase ii and 3. that is the the subject of the resolution that is before you. so, the purpose of the m-o-u is

my favorite shout out, by the way, just a side-view. the m-o-u nav sea and titan salvage dry dock number one to begin phase 1 of the work. it gives them something to point to, lest the coast guard a excuse them of stealing it when they toe it to pier 50 of the shipyard. that is also the vehicle that is going to contain the release of liability which is important piece of this. the navy will not proceed without it because salvage operations are inherently risky and if, you know, salvages sometimes sink during tow and they won't be held responsible for that. so, the resolution -- the m-o-u that we would be signing -- sorry, the resolution rather gives us based authority with the [speaker not understood] manager and he gave us [speaker not understood] about that.

lastly, the m-o-u or the resolution that is before you, the m-o-u would not obligate the port to spend anything. this is all on the navy, but they can't move forward without it. so, what's next? and i should note that as we execute this m-o-u, the navy, titan salvage, their towing subcontractors, are allred i to build. they stated a preference for beginning this process by the end of october. for the tow up to mayor island they want to beat the weather. it is conceivable after a decade on the waterfront it could be gone in a couple weeks. that's what i'm personally excited about. the next couple of steps. in the next week or two, as soon as we have two pieces of information back from titan salvage, the general contractor, we will have everything we need to have staff get together on this and make the evaluation as to what

the -- which of the four or five options we recommend for the final disposal of the dry dock. and whichever way we go, whether it's through grabbing onto the titan salvage general contractor, one of the subs, we will be back before you requesting authorization for a contract to complete the rest of the work, which will -- only once we hit phases 2 and 3 will involve port funds. that's why we'll be back. that's it. >> so moved. >> second. >> any public comment? commissioners, questions? >> [speaker not understood]. [laughter] >> in terms of the bisecting and retaining the mid section, how, i guess water worthy as opposed to sea worthy, may be

the question. are there risks attended to that? we have to then lose some sort of boyancy, would it be likely they wouldn't stay in place or guaranteed they wouldn't sink while part of it sits there? >> part of the reason why this project has taken so long to close out is because we have gone through three rounds of having titan salvage and the navy come up with a suite of options for us. and we look at them and say, these are alter i believe, let's go back to the drawing board. they're all too expensive and they're all too risky. we went through a second round of that. and after that there have been, you know -- because we've taken our time with this, wanting to get it right and not spend millions of dollars more than we need to, we lucked into a great project manager at titan salvage who is a naval architect by training. and, so, they have been very sophisticated work on the boyancy and the sections and what is going to happen to them. it is one of the risk factors

we will take into consideration in phase ii, you know, whether the bisecting work is done at mayor island so it doesn't have to go anywhere or it's done at bae, which means those pieces would then have to be towed back out. it adds an additional piece of risk. so, you know, coming up with the final recommendation on this really is a weighing of risk/reward. the cheapest alternatives, and they're significantly cheaper, you know, appear to be the riskiest, the most expensive, the least risk. so, it's really going to be a policy decision, you know, for staff recommendation to consider. >> one question. would it pursue transferring it to dry dock number 1 to dock wise, we would still have to bisect the front and back off of it, or give them the entire dry dock without going through

phase 1, i guess, so is phase 1 required to get the money from or get the federal funds? >> if only the vessel that were coming into port for dock wise were a little bit bigger, we would be able to proceed more directly in that way. but it is smaller which makes it cheaper. it also mostly just happens to be here. but we do need to remove the end section so it can fit. and that particular vessel is going to be here. >> and then we would be taking on the liability during transport, if anything would happen, is that what i understood, we had to release everyone else from liability? >> yes. and, you know, the folks that are executing this project, the salvage arm of the navy, their general contractor, there are expert folks we're going to find in the country to do this. whether they did it or whether we did it ourselves, we're in about as good a hands as we're going to get.

one piece that is -- in terms of alleviating risk, one piece that is still outstanding and we don't expect there to be any problem, but is titan salvage, we were waiting for them to return to us insurance certificates which the city and the port insured on their policy to get the extra bit of risk release. >> if i could interject as well, [speaker not understood] we own today. we had it thrown away once and it cost us almost a million dollars to bring it home. and we have to go out every storm and either folks or machines out there to de-water it so it won't sink. that's how we got comfortable. if he we owned that risk, it would be lovely to transfer it to somebody else. we haven't found anybody to do that, so, hope that helps. >> and the navy wouldn't take it. [laughter] >> we're stuck. >> any further questions or comments? i don't have any.

it's a complicated project. i guess you're just asking us to go ahead with the first phase and it sounds like we should proceed with that and we'll wait to hear from you what is the next two phases need to be. >> we'll make a recommendation to executive director moyer with briefings questions if you're interested and how we figure out the trade-offs. we'll ultimately come to you to approve a contract vehicle one form or another to extend the port funds to finish it off. >> okay. all those in favor? >> aye. >> okay, resolution 12 -84 has passed. >> item 11, new business. >> any new business, commissioner adams requested to bring forward more items showcasing maritime properties and the jobs associated with those operations. do i have that correctly, commissioner? >> yes. >> thank you. anything else? from any other commissioners? >> i wonder if we can get an update at some point on the status of the blue greenway and

see how plans are proceeding on that. >> that is such a great time to request [speaker not understood], anxious and waiting to come forward as part of that, also bring forward the recent solicitation for the art for the [speaker not understood]. that's on the calendar for early part of the year, but i'll double-check. in any event, yes. >> i also [speaker not understood] do a presentation before the election so we can see how well we're doing with our [inaudible]. >> that would have been great, wouldn't it? >> we did make that recommendation. >> we did? that got lost in translation. [laughter] >> one item, i know that we've talked about that there will be some impact on what the transportation, everything with the arena, but having just experienced the embarcadaro myself on sunday where there was nothing going on, i'm just wondering whether there is ways to get what's interim steps can be -- described in terms of

transportation and alleviation. we know that is a big issue going forward. * i can talk to you separately about it. i just think we need to understand exactly what's going on in the studies and whether there should be any input from us, just even before we add onto with the arena and everything else going on. >> certainly. i've been working with the head of the mta and asking that we address some interim steps before we finish all the planning that would go along with the new project. i'll ask him and see if we can get more information made publicly at the commission. >> thank you. >> is there any public comment on new business? is there public comment in general? hearing none, can i have a motion to adjourn? >> so moved. >> second. >> okay, all in favor aye. >> aye. >> thank you. [adjourned]