of the several important decisions that will come before you on waterfront projects. sometimes, people think that the building trade unions will support any jobs that come up because of the construction but this is not the case. if the project is not incriminated to the workers we also like the opportunities where the local community members because of the big part of the what the labors don't increase in in this case, the giants have signed an agreement using the city local hiring policy to make this work.

support the worker families and the workforce we're proud to support in workforce commitment for the last fall will help establish a policy for the waterfront development in san francisco. we appreciate the giants labor support and ask i urge you to approve this >> seeing none other comments the public comments are closed. we have a number of amendments suggested by mr. rose? and so moved the motion to move item 4 we can do that await

opposition. thank you very much >> item 6. resolution improving the outdoor with the channel airport. >> okay. thank you very much mr. clerk this item was continued a number of weeks ago to the call of the chair so everyone could be present. first, we'll have mr. martin up. >> thank you supervisor farrell. this may be the first big disagreement in 33 years. overall this is a very good deal

for the airport and the city. we're reducing advertisements leases down. we received 3 bids last time around we only received one bid. $10 million a year and over the term of the lease $80 million compared to the existing lease which will generate 72 million over and over 12 years. i want to assure the board this very high bid would not have attained this and the bids would have been submitted i believe sixthly less than $10 million a

year. personally made t this bid we're in a very different position then when we last put this bid out to bid. it was about 28 million so our passenger traffic has ripen a lot. we're recording traffic record numbers and we're recording traffic level of 44 million passengers. it took us 12 years to get back to your 19 want 9 peak.

we're particle prone to it because of the competition between other northern cities. we have a very high market share of 71 percent among the 3 bay airports 71 percent compared to a lower market share. we have one of the most competitive shares in the airport environments today. and that will resolve more traffic shifting.

>> could you please repeat that slower? you said it was 51 percent when? >> it was 54 percent in 2003. so in 10 years we've published u picked up 10 percent? it's remarkable. >> it is going to change we have a lot of people who live and work in san jose and oakland who can't to get to cities they want to get to new york and sometime that will shift. we worked on this lease to make sure we honor the city's attorneys policies. we came through with 2 hundred and some plus we have no

billboard and no wraps of our buses so we really are limited attorneys opportunities for the airports. compare that to other arrangements 2 others have over 6 hundred attorneys locations. we have honored the city's policies. as i said i personally made this decision because i revenge we're going to have a low passenger growth. and we will see a drop in passenger traffic. and the opportunity to lock in a minimal opportunity make sense to me. he received a very competitive

bid. one of the birds said their bid was commercially unreasonable. i don't agree but it was a very aggressive bid. i'm pleased with that bid and we've locked in bids to secure our financial future >> sorry you said someone's bid was unreasonable? >> this was the code team to question whether the clear channel bid - said the bid was commercially unreasonable and. >> mr. martin can you talk about one letter you handed back to us i talked about the

passenger we can talk about the macro picture here. obviously there's a discussion about the magazine per passenger. i know i have some data here compared to other airports i want to hear about that. >> the news lease will result in a passenger - it reflects the fact that the third channel was going to take a higher risk on the down side so that's how they weighed that arrest $0.10 and $0.09 and lax is $0.21.

>> i think you hit on it the difference between a mac only and have all the studies that have been done you mentioned some airports phoenix that have massing only. >> no, it was incorrect we corrected that vehicle correspondence to show those have a percent in a magazine. >> i want to give you a chance to further elaborate.

>> but could you talk about the recognition p of what it is meaning to san francisco. >> we don't followhat other airports do we wouldn't have concession things off the chart. we're unique we're maxing out on our airport we need to have oakland to help us with the passengers. so the city's attorneys constraints i thought that that was the best solution >> can you explain in one of your correspondences you talked

about how to foster more attorneys location can you talk about the correlation a little bit. >> it was a nature incentive for the operator of the lesse to try and find more locates and tell the airports to share in the revenue we can find for revenue to continue will i trying to kriep up and pushing into the city's policies to try to limit advertising locations. so this fixes the advertising. >> there was no cap on the old lease. >> okay. >> colleagues any questions?

>> okay. thank you very much mr. martin. mr. rose i believe you had an opinion on this matter >> i don't know why you would say that. mr. chairman you continue this resolution at our meeting of march 16th and i did direct the analysts about the airports whether they required the advertising for limited. you required the budget analysts to provide more information on the percent of the rent and the minimal guarantee and we've included that information. in the professional jgment of the budget and legislative analysts to pay rent to the

airport if the percent rent exceeds the guarantee it's not in the best interest of the city. i'd like to make two more comments. you just harder mr. martin say that concession sales are off the chart quote/unquote. that's precisely supervisors why it's important why every other airport in the country requires a percent of gross if it exceeds the guarantee of the concession off the chart. that's why the general fund has benefited to the tune of a million dollars over the past few years because the revenues has exceeded the minimal guarantee. the other comment is mr. martin

statsd that the 10 millions was a generous minimal guarantee and he wouldn't have gotten that if he had the gross. supervisors clear channel has paid the airport 9 point that $3 million during poor economical times. we're now in a continual comforted economy with the stock exchange high and in the last seven years is only $7,000 less and with that i would like ms. newman to summarizes our report >> meblz i would just go over

the additional information that we've provided in our updated report. as we had previously noted under the exciting 12 year exciting lease oh, the last few years the clear channel actually paid the airport based on the percent of the gross oh, $5.6 million of additional revenue to the airport. because the airport pace 15 percent of the concession revenues to the cities general fund those additional revenues resulted in over $835,000 additional revenues to the cities general fund because of that percentage of gross. as mr. rose noted as this connu

committee suggested we go back and look at it 83 all the airport leases and advertising contract. based on that we found all airports going do get a percent of gross and the department of public works and the s f mta transportation agency all of their it isably contract are based on both a minimal guarantee and a percent of gross. and i would also note as shown on page 56 of our reports the result of our survey of airports every other airport for their

advertising contract has a guarantee and a percent of gross. i would note of those 28 airports 15 of them contract withhannel. in addition we asked all of those airports what their revenues from those advertising contracts were in the last calendar year in 2012 and of the 2g 8 airports 19 of those airports were 68 percent were paid based on their percentage of gross. i know their paid a minimal guarantee or gross clever is higher. so based on our analysis and information we're preside we're

relating to disapprove the resolution. actually, one other point - one of the issues that mr. martin did bring up several times is under the new lease with clear channel p there would be fewer locations now their 2 hundred and 48 locations under the new locations 1

contract. >> solo that the making never comes into play. there's multiple ways to look at the same thing but i want to make sure i'm not missing anything here and mr. chairman that is correct we didn't pursue that and we only looked at the

few years. it could flip back and forth which it has with san francisco airport. half of the time we've been paid based on the percent of goes >> colleagues do you have any questions. i do want to ask one question. mr. rose mentioned concessions through the roof because of the percentage and i want to give you a chance to respond >> there's a difference retail and beverage we want for expensive items that's all good for us we don't want to have more advertising locations. that's fundamental. the other thing there. >> risk control. we would have seen greater

opportunity on the high-end by potential less revenue on the low end the business decisions are a unique thing that make sense i want to make sure we're doing what's right for us >> i like the fact that the number of advertising locations has gone adopt. have you allotted 278 that's gone down there? we allow 1 hundred and 78 we're pleased it's come in much lower >> right the fact that we're lowering the locates is a good thing. i still don't like the idea but have you allowed up to 3 hundred

you think you would have been getting more. >> they would have they likely would have put in for 3 hundred and that way they're not competing against themselves. and the >> supervisor. >> i was going to thank mr. rose and ms. newman for the great report. like supervisor farrell i support the airports efforts to reduce the aesthetics. i want to say i'm looking at

page 4 7s of the la report which has the chart of the 57 gross revenues. i think mr. roses is reporting to the last year of the gross revenues and the year before the 2011 where the gross revenues are lower and we're reaching a down turn and he we're back up to the level and i wonder if you can explain the trend is we're increasing the revenue and whichever is higher. i'm sorry. >> to be the best benefit for the city by a what you explain

this again >> i should point out that the difficulty for the country were boom years for us we had the fastest growing airports in the world because of the expletive airfa airfare. so we weren't effected the same way as everyone else in the downturn. but we will see a 11 off of the traffic 2013 vs. 2012 we haven't seen a zero increase but the markets are not being opened up and no imply aircraft.

so for that reason the competitive air traffic is not going to grow >> i think ms. newman talked about the new digital advertising. do you know how many clear channels you'll use that will use multiple advertiseers in one place >> it still has to go through the committee and so they wouldn't approval every one of those. has the clear up channel

considers other places that will be determined but the fact that a lot of advertising was reflected from their bids >> but in looking at the 28 other airports it looks like a number of them - i'm trying to remember the page 56 - the advertising was through making and quite a few of the were percentage of growths including - i'm trying to think - lax and a number of the bigger ones could i let us know why we're different from the other ones who made the revenue? >> some of them - part of the reasons is companies tend to

move telephone number on to pay percentage of rent but the minimal guarantee and rent is not going to want to be too aggressive and get locked into paying rent above their revenues they want to protect against that they'll bid lower on the making knowing their have to spend less on the revenues as they decrease over time. >> mr. chairman mr. mortgaging has mentioned at least twice that he would never had received a (1) 000-0000 minimal guarantee had he included the percentage

of gross there's no shred of evidence to prove that. we don't know what the minimal guarantee would have been. and furthermore supervisors they continue to submit a lower percent. supervisors if that were true let's assume it's true think about it mr. mortgaging ton has awarded thousands of leases and including the lazys you've in every single

instance he has as mr. martin now saying i purposely did that to get lower annual guarantees? i don't believe so. and he will talk about the as a matter of fact, is as every other airport in the country has done including j.f.k. and including dallas they've done that with a specific reason and with respect to the advertising locations ms. newman has pointed out a digital