it sounds like from the letters that he runs his business with his family well and i moved to approve with conditions. >>: the support of all the restaurant owners and business owners in the area as well as an overwhelming number of residents who have signed the petition makes a lot of sense. it makes it viable and allows them to continue. i am supportive. >> commissioner sugaya: the staff that this is already an eating establishment and does not increase the number of eating establishments. but it is not an eating establishment. we approved an accessory use to a bookstore with limited

seating. how the staff can find that this place is not in violation is beyond me. all you have to do is look at the repairs packet and the photos. there is not one book in the entire store at least in this photo. there are on the first floor five tables when the conditional use says two. it's limited to 15 seats; there are more seats than 15. how the staff does not consider this is in violation is beyond me. i cannot see how we can consider this without them first issued an nov and go through the process. also the north beach neighborhood commercial district, section 7221 of the code specifically says,

special controls are necessary because in over concentration a food service establishments limits retail sales and personal services in an area that needs them to thrive the neighborhood. needs to maintain neighborhood retail sales and personal services to maintain residential livability. additional eating and drinking establishments are prohibited in spaces occupied by neighborhood services involved in retail sales. i take that to mean that an accessory use is not the primary use of that space in this establishment has been in violation of that for years. is the same case faced in the poor house, retail sales with wine tasting. when they opened or shortly

after they open it became the bar. thinking back and said you have to modify the conditions of approval and let us operate as we have been in violation for years. i can't support this particular thing. i think there are also other issues where there are potential conflicts between what supervisor wiener's ncd legislation put forth in what is currently in the north beach neighborhood commercial district. one piece of language from the ncd for north beach special use district says that restaurants and limited restaurants are defined in sections etc., etc., and they be permitted as conditional use on the first story is in addition to criteria the commission finds that the limited restaurant

does not occupy the space that is currently her last occupied by basic neighborhood sales or service. the basic need here was a bookstore. >> commissioner moore: in 2007, this project came in front of us early in my time in the commission and at that time there was a lot of opposition. ms. -- was representing the current owner; i am very interested in supporting a small business but also seeing the possible configuration or shift from one specialization into slightly associated other i ultimately supported the vcu in front of a the time. the specifics of that cu really

spoke that it would be allowed to serve espresso, before that they were not allowed, espresso and associated, croissants, whatever, and continue as a place where people could come by read italian periodicals, not necessarily be as much in the bookstore but have the ability to have an espresso sit down and read. i was happy because i supported it only to go there five months later % at the time i was taking italian classes in north beach % and realize the bum of the things i thought were supposed to be there, were there. it had not realized any of the things which we had approved although there was big pressure on the economics of success.

from then on it took more the appearance of the failure which we see -- to market. i'm currently very concerned that extending another cu and hoping for success is indeed what i wanted to. >> president fong: commissioner antonini. >> commissioner antonini: if you read the findings from the staff report, it mentions and i was here in 2007 conditions of approval stated that if the bookstore were no longer able to operate initial use authorization would be required for a small self-service restaurant which is where we are today. restaurant legislation ordinance 004712, which actually took things commonly called accessory use

and turn them into limited use restaurants. more in compliance through the legislation, that is an issue for the staff to decide. that is where i see the transition occurring. i am in favor of it. >>: commissioner wu. >> commissioner wu: could you address the question of the number of tables in violation? >>: since 2007 there have been three complaints filed, over the course of several years, not back to back. in each of the investigations the complaint was not valid. that is what we have to rely on, the enforcement staff

responding to complaints and informing us whether or not this business is in violation or not. there was a limit -- to the number of tables. the one thing that i know makes this more challenging is that retail coffee shops, part of the definition of retail restaurant was a constraint on square footage and a constraint on the number of tables and chairs. that whole definition became a limited restaurant definition. what was in the condition of approval was reitarting what the code parameters were for restaurants at the time and even more so restricting the square footage to 350 square feet.

does not have a constraint on the number of tables and chairs. >> commissioner wu: for me to concern is wanting to support the business that can have some connection to history, culture, whether italian periodicals or north beach history itself, i don't think though that preserving the use of the bookstore is as viable for this location. i see the issue of over concentration. it is kind of a technicality. this is not adding to the number of restaurants because it was already counted, but i can't see a reason to deny today. i don't think the bookstore can survive on its own. >>: commissioner sugaya. >> commissioner sugaya: there is no bookstore to survive. >>: are you saying that the seating limit, 3 tables in the

mezzanine is no longer applicable? >>: i will refer to the zoning administrator. the table limits establish some of the old code were often included as conditions of approval. when the definition went away by default you inherit the condition that applies to limited restaurants. i will let mr. -- chime in. >>: so the commission- approved set of conditions has been superseded by the zoning changes adopted by the planning commission? >>: in cases where the conditions of approval are more restrictive than the underlying zoning, yes. size limitation remains in effect.

this is why they are here today. to allow greater use of the space. in terms of the north beach specialty district i was involved in both pieces of legislation in 2008, north beach sud and the restaurant legislation. i find the proposal does not conflict with that. i find the restaurant legislation from last year does not conflict with the 2008 sud. we are greatly inspired by the 2008 special use district. the category limited restaurant is a basic neighborhood service. does not allow on premise beer and wine. they cannot add any beer and wine to this location. >>: however before the change

in the legislation, i won't go there. >>: there were complaints. we did at times find them in violation; those violations were corrected. there were three complaints, one in 2007, one in 2008, one in 2010. all have been debated. we have no more recent complaints. >> president fong: commissionermoore. >> commissioner moore: the motion of march 2007 is extremely specific on each level? also very specific about how and where beverages and prepackaged food can be consumed with a specific note that no on-site food preparation would

occur other than connected to beverage preparation. which means you can only have an espresso machine or whatever. i don't care either way but this is not what's happened all the time that this particular establishment has been there. the subtle shift from one to the other is not on the average fingertips user. except when things happen on a bigger scale that is where we become aware. (indiscernible) >>: i believe that they have been in violation at times in the past, serving soup when they were not allowed to serve soup. they did correct the violation. >> president fong: mission commissioner antonini.

>>: no alcohol served; it will promote daytime usage. i'm not saying they're not allowed to open the night but if there is a timely north beach needs more activity it is during the day in it helps to keep the italian culture going at that part of stockton street; the used to be a city press years ago. preserving this even in a modified form is important. i am in support. >>: there is a motion and the second for approval with conditions. >> commissioner antonini: aye >> commissioner borden: aye

>> commissioner moore: no >> commissioner sugaya: no >> commissioner hillis: aye >> commissioner wu: aye. >>: it passes on a vote of 5-2 with commissioners moore and sugaya dissenting. item 12. >>: good afternoon. -- -- the project was to convert 4000 sq. feet of commercial space. and also reskinned the building. the commissioner approved the project in -- 2012.

the charter amendment allowed the reduction of the on-site affordable housing from 15 percent to 12 percent. the projects already entitled but not yet with the first construction permit. the charter amendment also stipulates that the project sponsor must obtain financing within one year of any on-site production approval. in accordance with the charter amendment the project sponsor has submitted a request to amend the conditions of approval to reduce the on-site affordable housing requirement from 15 percent to 12 percent. the 100 van ness avenue has not received its construction permit. (indiscernible) department staff believes that

the project sponsor would be able to obtain financing and start construction within one year with 12 percent on-site approval rate in compliance with the charter. the mayors office also submitted a letter that states that it appears to demonstrate compliance with the charter amendment. the department staff also works with the project sponsor with the design of the building, requiring (indiscernible) to reflect the new residential nature of the building. (indiscernible) the revised design has been included in your materials. to highlight some of the design changes: and number of juliet balconies have been added to express the more residential nature. in addition the mixture of metal panels have been added to add texture. (indiscernible)

staff has not yet reviewed glass samples to verify reflectivity. it is likely to resemble the public utilities commission building located at 525 golden gate avenue. this concludes staff presentation. i will be available for questions. dan -- from the mayors office is also here to address questions. i will turn it over to the project sponsor for further details regarding the reduction request and project financing. thank you. >>: do i have 12 minutes or 5 minutes?

>>: being that this is the first time we are hearing this particular item we'll allow for 12 minutes. >>: we don't have any 12 minutes. >>: guys with the have there? >>: i'll try to do very fast. >>: it is up to the chair to determine if you need the full 15 or a reduced amount. >>: he's going to show the rendering of what we are hoping to build.

i am actually really pleased to be before you know. this means prop c has passed. >>: could you state your name for the record. >>: my name is oz ericson i am the chairman of (indiscernible) - a little background. i worked on prop a, an earlier housing proposal bond. i was the only major developer to work on it. i raised money for it; i pushed it. it did not pass. it was not accepted by the real estate industry. and was not promoted. it did not pass. with prop c there was a big ten approach at the first meeting there were

50-60 people from all walks of life, it provides 60 million dollars a year for affordable housing and affects market rate housing. the requirement for planning approval it to demonstrate to the planning commission that the proposed reduction will enable the project to obtain financing and commence construction within the one-year period following the money commission approval. that is the actual language from the proposition. in your package i included a number of documents that relates to the fact that we have financing. the fact is a financing package that we prepared in july right after this had gone to the board, based on the proposition.

i have to say here that we started out in 2011 with the project budget that was 90 million dollars. i will hand this out to you. that is where we started. right now we have a project budget with plant which is 111 million dollars, a huge increase. excuse me i give you something of mine. ( laughter) we have had a huge increase in our budget. proposition c is becoming increasingly important for us. the first thing we have is the financing memo

which shows that we went out with a 12 percent affordable. 48 affordable units and 351. based on that financing we got some proposals from lenders the most .serious one was prudential. -- -0

what we have is we have something, the formal appraisal that prudential authorized had that as part of their basis. next, we went and got it formal commitment from prudential on december fourteenth; we got a 90-day locked rate. right now we have a 142 million dollar with a lock that expires on march 14. it is expressly conditioned on getting prop c approval. the next document is a letter from -- and material consideration of pmc underwriting the loan is inclusion of affordable housing. key assumption is the 12%

affordable. boy, am i nervous. sorry. finally, with regards to prudential there is the actual construction loan agreement. i have not included the whole thing. page 59 of that expressly once again says that this loan is absolutely conditional on the prop c approval. finally, in your package we hav e the plant letter. we are prepared to execute the contract next week with plant, based on 111 million construction cost. the letter from -- states plant has finalized the contract and

stand ready to sign to begin the renovation work. we basically-to the best of my ability we have proven that we have a financing available and the financing is contingent on getting the approval. the question comes up, what happens if we don't get the approval? i'm handing this out if you don't mind. this is a letter from prudential, from today, expressly states that if we don't get approval we don't get this loan. language says, pmcc will not fund this loan unless the company approvedthe reduction of the inclusionary housing. that is where we are as far as potential goes.

we don't have a construction loan we don't get the approval. if we get the approval we have a construction loan which has been totally negotiated, ready to execute. stepping back from this thing a little bit, when we were contacted by nabf well over to the years ago they issued a request for ideas basically about the project. we got extraordinarily involved. in fact, we submit it on our own dime a 700-page proposal to analyze the building. will look at this building from every possible way that you could look at it. one of the big ways that we looked at it was keeping it as an office building. it had been vacant since aaa moved out.

our analysis on the office was that basically this would be a 29 dollar a foot analysis, based on talking with many of the office users and with talking with brokers and developers. here is a statement that we did all this. sorry for the % and by the way here is the plant budget which shows the 111 million dollar construction cost. what is happening the last year is that construction costs have gone up 21 million on this thing. rents have gone up somewhat. it has made up for most of the difference but even with the prop c approval

we are just barely good profit. these big institutions use return on cost parameters; napf uses a 6% return. even with this approval we are down to 5.8% which is risky for a construction project. we have to go back to napf to get approval under the new construction budget. we got approval on monday night after putting four million dollars of cash in the deal. please convey to them that the 12 percent requirement was a key component in both equity and debt