the port of san francisco and the shipyard. the dry dock expansion, allowed us to do the cruise ships we now do. the dredging has allowed us to bring in the ships we now do. [speaker not understood] coming through, we're now able to do ships for the navy seal of command that we couldn't do at all. the u.s. government is now actually scheduling ships to the san francisco yard based on the availability of the dry dock. we've had discussions yesterday about when is the richard burt coming in. richard burth is another very large project like the matthew perry, like the alan shepherd. there's only two dry dockses in the pacific basin that can pick them up, one is in guantanamo, one -- guam and one is in san francisco. i have to say thank you to the port of san francisco for the hard work and dedication of the teams there and the vision that they have for the shipyard and for the industry. i mean, monique's cruise, monique's teams are without equal. honest to goodness, it has

really been a meerctionv you are to work with them and i look forward to the things we're moving forward on. the yard, san francisco, we're going to have one of the busiest years the yard has ever had, period, end of story. we're growing in a very tough market and we're growing in a tough market in no small part due to the vision and dedication of port of san francisco. i do appreciate it. and the guys who work at the yard appreciate it. good guys, doing hard work, getting union scale, making money, paying for their families, kids, and i mean, that doesn't happen by accident. that's a lot of hard work and i have to say it's a lot of hard work by the folks and the teamwork put together by the port of san francisco. i do appreciate it. thank you. >> is there any further public comment? i would just like to say congratulations [inaudible]. [laughter] thank you. [speaker not understood]. [laughter] >> is there any other comments or questions from other

commissioners? i think, kim, you may have said it for all of us. congratulations. >> thank you. >> item 8, request approval of a proposal by the blackrock arts foundation to retroactively extend the port commission approved temporary installation of public art located near mission street on the east side of the embarcadaro, on the plaza between the agriculture building and pier 14, by five months until march 7, 2013. >> can i have a motion to move? >> so moved. >> second. >> and the winner is? >> is there any public comment? all in favor? >> aye. >> resolution number 12-8 3 has passed. >> commissioners with your permission, i'm reading item 9a and 9b together. >> yes. >> item 9a is request approval of a second amendment to lease

no. l-15169 -- located at pier 9 to its current lease for use of office space [speaker not understood]. item 9b, request approval of mutual termination agreement with dna direct, a delaware corporation, of lease no. l-14871 located at pier 9, suite 105 at the foot of broadway and the embarcadaro. >> good afternoon, commissioners, jeffery, the port's leasing manager. as you may represent, september 11 i brought in the first audit lease to the commission for approval for about 8500 square feet for their workshop and some associated office. the reason of that space need was they purchased a company, web-based company called instructables.

so, it's a workshop and again associated office. recently they came back to the port, fortunately, with another space need. this time requesting about 18,500 square feet of office space. and to accommodate them, we started negotiations and we've developed a first amendment and second amendment. the second amendment is before you for approval because it does exceed the business parameter sound and the port's leasing policy. the lease provides, again, for about 18,000 square feet, a term of 10 years. there is a minimum guaranteed investment of about $7 million. $3 million will be directed towards core and shell improvements. autodesk will receive a rent credit in the amount that is changed somewhat from your

staff report, about $2.9 million. the port will realize about 55,000 per month before any deductions. if you net everything, what we're getting now, there actually is a net increase in the rent. two of the offices are currently occupied. one is d & a direct. i sought commission approval a few years ago for that lease and now they were just purchased by a larger company. so, they're interested in getting out of their lease. and it was very good timing to approach autodesk to see if they want to include that. so, we've included that into the lease. it does -- it's outside of the commission parameter, so it does require your approval. there's no downside in revenue. autodesk will be paying very

similar rates than that of d & a direct. the other is cab shop properties, smaller tenant. they have about 2000 square feet. we have approached them to relocate them pursuant to the executive director's ability under certain -- under a resolution. so, they have agreed to move to suite 105. the issue there is we are working out some minor details with the amount of the build out of that office space. so, given that i request your approval subject to the board of supervisors for the second amendment. and i also request your approval of the mutual termination agreement between the port and d & a direct. i'm happy to answer any questions. >> so moved. >> second. >> is there any public comment?

all in favor? >> aye. >> resolution number 12-79 and resolution 12-08 have passed. >> item 9c, request approval of direct negotiations and lease no. l-15199 with the black coalition on aids, a not-for-profit corporation, for approximately 7,369 square feet of a freestanding building and approximately 4,235 square feet of paved land located at 601 cesar chavez street for use as offices, a restaurant and other services relating to bca's mission, for a term of 60 months, with one 36-month term extension option at port's sole discretion. >> commissioners, jeffery bower, port leasing manager, seeking your approval as read by the commission secretary. the black coalition and aids, bca is dedicate today reducing

the health disparities in the black community, particularly the spread of hiv and aids. bac was founded in 1986 with the idea of promoting health education advocacy services in the black community. in september 2012, bca made an unsolicited offer to the port to lease 601 cesar chavez for the relocation of their administrative offices and other activities related to bca's mission. and possibly develop a restaurant and cafe. on april 12 -- i'm sorry, on april 10, 2012, this commission authorized staff to put out an rfp or request for public offering for a restaurant renovation and operator. the port, we did extensive advertising, extensive outreach, and we received no offers. the building has been vacant for seven years.

i have shown the building myself during that time. and we have received no offers. under the report's resale policy, it does require a competitive bid. if it's retail, which their proposed restaurant would follow in line with that. however, there is an exception that the policy provides for, for direct negotiations if port staff determines that a public offering would be impractical and impossible. we feel that the seven years that the property sat vacant and the fact that we did a public offering with extensive outreach, our conclusion is it is impractical and we would request your permission to do a sole source direct negotiation with bca for the premises. * some of the terms, the building, it's about 7 369 square feet, freestanding

building. there is an adjacent paved yard of about 4200 square feet. and then about 17 parking spaces that are in front of the building and were always dedicated with the restaurant and in the rfp. so, we feel that it's proper to include those. the term would be -- i'm sorry, five years. there would be one option to extend at the port's sole discretion. the monthly rent would be 3,43 1 prior to any deductions for rent credit. there is an annual increase of 2.5%. regarding the restaurant or cafe, the port would receive 6% of revenues received from cafe sales. there is a small rent credit that's part of the lease. the port or the building has been vacant for seven years. it did sustain some damage

during the move out of the previous tenant, so, we would like to request that. they will provide all the requisite insurance. now, down the line there may be some request for some clinical services, you know, maybe a blood draw station, which is in line with, with their mission and also with the zoning of the building. so, at this point i would request that you approve the sole source agreement with the black coalition on aids. >> so moved. >> second. >> is there any public comment? i have one question. the tenant improvement, they wish to put in 40,000? >> yes. >> that would be subject i guess for the building inspectors to make sure everything -- because the building is vacant so long. >> yes. >> to bring it up to code. if there should be some requirement discovered in that

process, how is that going to be handled? >> that's a very good question. we have done a pre-inspection of the building and fortunately it was a prefab building. so, it was a butler building in relation to the former tenant. and the building permit was approved and it meets a-d-a, you know, all the codes are met in the building. i've reconfirmed that. their architect that they have has reconfirmed that. so, what we see is their $40,000 really repairs from a vanity missing to a toilet seat or a mirror that was damaged, a broken window, very minor issues. >> okay. so, we don't see any other -- [inaudible]. >> you know, the main thing would be a-d-a, and it's an elevation. so, there is no -- the majority of the building is elevation. the mezzanine is under 33%, which means there's no requirement for an elevator.

>> so, is there a construction period or a period where -- >> pardon me if i didn't mention that. there's a six-month rent abatement period for purposes of doing these repairs, yeah. >> okay. so, that's why it says that the 750 will be deducted [inaudible]. >> correct. what we're proposing is a rent abatement of six months for the purpose of repairs, getting the building back up. again, it's been dormant for seven years. so, there's some system testings. you know, it was a bar. it was a club. they will reconfigure it to suit their needs. so, we think that their offer of six months plus this modest rent credit is fair for the port. >> i'm just going to ask a little more detailed question to be sure. so, if there is any clinical use given this is perhaps not what this facility was used in

the past, that we've already confirmed that they wouldn't be any further so the building standards or whatever, because it will be used as a clinic. >> yes, correct. we've had a c-e-q-a evaluation under the california environmental quality act. so, there's no change of use. we understand their clinical procedures, which actually they out source, in this case, to the black nurses association. they will provide the space. it's very minimal. it would be yourself going to pacific medical center and, you know, for a blood test for something. so, yeah, they'll have to meet all the codes and regulations. i have to say if the building does lend itself to this type of use and not a restaurant because it is so large. so, we think it's a nice fit. >> i have no further questions. any other questions or other comments? all in favor? >> aye.

>> okay, resolution number 12-81 has passed. >> thank you for your time. >> item 9d, request consent to the transfer of (i) lease no. l-12507 for premises located at wharf 92 and (ii) lease no. l-13438 for premises located at seawall lot 344, in connection with the purchase of 100% of the equity interests of bode concrete llc and bode gravel company by central concrete supply company, inc., a wholly-owned subsidiary of u.s. concrete, inc.. >> madam president, commissioners, [speaker not understood]. item 9d is a consent to transfer to port leases in which bode gravel company is the current port tenant.

lease no. l-12507 and premises at seawall, 344. as you well know, the gravel company is an iconic number in san francisco. bode has been here since 1915 and waterfront for 10 year. the business is a production and distribution of ready mix concrete and other construction material to the local construction industry. it is sad for me to now say that the owners of bode now desire to sell their interest in bode and bode concrete llc to central concrete supply company, which is a wholly-owned subsidiary of u.s. concrete. under the terms of the aforementioned leases, 50% or greater interest in the tenant. in this particular case, the owners of bode will be transferring 100% of their equity interest to central and

as such the train action requires consent from the port commission. port staff has completed its due diligence regarding the transaction and operations of both central and u.s. concrete. and the credit worthiness of both consolidatesv ha been thoroughly reviewed by the port's finance manager. additionally, port environmental staff have also completed a review of the environmental regulatory compliance of both central and u.s. concrete and found operations to be compliant. including a progressive environmental and safety record that promotes sustainability, which is evidenced by numerous awards in that area. with that, port staff recommends that the port commission consent to the transfer of the two port leases to central concrete supply company in connection with central's purchase of 100% of the equity interest in bode and bode concrete llc.

that concludes my formal presentation. i have port staff here from finance and from environmental to answer any questions. i also have representative portman from bode and jeff davis from central concrete supply. >> so moved. >> second. >> is there any public comment? any questions, commissioners? >> you have a comment. >> sorry. >> you have to go to the mic. [speaker not understood] local 10. i just have some concern because when this facility went in about ten years ago, there was comments that they were not going to be unloading and loading vessels there. and in the meantime, that has taken place. so, i just wanted to question that, when they originally went into this facility it was just going to be a concrete plant.

but now they're receiving both materials off of barges. so, i'm concerned about that part of the operation and if that's going to continue and the jurisdiction on that, so. >> public comment, please. yes. >> you have to come to the mic, please. thank you. it's been a long time since i've been up here. i would like to second his shirt and say "go giants." i think you got it confused with the cement plant next door which is understandable. we don't unload any material. we're a big supporter of long shore man's operation at pier 94, [speaker not understood]. i think we're their biggest customer and we don't unload any barges on our site. i don't even know if it's permitted. original lease mission valley was unloading sand barges there and they've ceased doing that.

>> you can't come back. i was mixed up. [laughter] >> thank you. 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.