to build a sea can't wall along portions of the shoreline to protect against potential [inaudible] center of the site presents some pretty significant structural /kpal /hrepbgs and additional uncertainty until the developer gets into the ground and starts building it's hard to know /kpabgtsly what is going to be there and what challenges they'll face. so as a result we're [inaudible]. basically an overview of what the project will entail -- the terms sheet is calling for up to 3.5

million square feet of gross leasable area, that includes the rehabilitation of the historic building. that's up to 2.2 million square feet of commercial office, as well as 270 thousand up to 470 thousand square feet of a really unique retail and cultural use concept that's real write at the core of the project being proposed for city's calling it re tale /eupbl ing innovation and art. these are maker spaces that we see around dog patch and booming throughout the city as

well as incubation spaces. the idea is that for that space to start going /p in early in the project and creating a sense of place and activity, unique character that adds value and attracts commercial users. people are going to want to live and work in this place and we're projecting that allows value. in terms of residential, the term seat is calling for 950 units, primarily rental units. and one of the things that we are going to be exploring throughout the environment review process is opportunities to respond flex /pwhreu to changes in market conditions, which could include increasing the amount of residential and then decreasing the amount of

commercial space accordingly to stay within that square foot envelope. the term sheets sets maximum parking ratios that would correspond with up to 2500 parking spaces, but also contemplates how we can reduce parking spaces for pier 70. entitlement costs arest also

build it only when it's absolutely necessary. these costs are based on a lot of hard work that [inaudible] city has done and are also in the process of being analyzed by port engineering staff. they're wrapping up their assessment and we will provide their analysis in the staff report for the may 28 action item. and then continue to analyze and refine these costs

through the environmental review period up until the final transaction documents. the site of pier 70 looking forward into the future at hao it might be inundated as sea level rises in raising the elevation of the entire site. as cow can see we've been working on this for a long time beginning in 2007 and we're happy to be nearing the home stretch during the next two or three years and then hoping to begin development in 2016. one thing i would draw your attention to on that second timeline is how we have the project, visioning it split into a series of development

phases and what that allows us to do is pair infrastructure development with building development and it prevents the project from having to spend more money on infrastructure that it absolutely needs to. helping the port's return and making sure that we're really responsible with the resources that everyone is bringing to the /taebl. this is a phasing diagram. the project phasing is something that we would like to leave with some flexibility again to be able to respond to changing market con -- conditions. this is how we're

envisions the site, really developing the core, waiting to build those parking structures until that capitol expenditure is necessary. the term sheet also includes discussion of zoning. right now the site is zoning m 2. our plan is to create a special use district in collaboration with the planning department that incorporates the land uses that we're proposing /afrpbd that would include design controls and occur in tandem with the water front [inaudible] use plan. in terms of affordable housing the project will meet city inclusionary housing requirements and is also exploring using low income

housing tax credits to exceed the city's tax credits. we'd like to maximize that to 20 percent. we are also working with sfmta to participate in the water front transportation assessment and that will inform the transportation /tkphapbld manage /-pl plan that we'll evolve and discuss specific transportation interventions to make sure the site is well served by transit and that its users take advantage of transit opportunities. part of that is exploring subway turn around at 20th street. we are working

harold on the fiscal feasibility report. we're finding there is significant benefit to the city on the same scale of [inaudible]. in terms of specific job creation, the de/sreler is looking at creating job opportunities forest city has reached a

project labor agreement. so i will turn it back to brad to review the term sheet. >> thank you emily. 'em so i'll take a quick spin through the terms and if i go too fast, let me know. we are looking at illinois and 20th street. we're really looking for forest city to /kraoe /kwraet a new mixed use neighborhood and it's quite and undertaking. the transaction

documents [inaudible] the special use december /treubgt will be accompanied by a development agreement that will be a statutory agreement under the city's stray ten i's code and one of the functions of that is to lock in the exactions that will be required to fund different public benefits at a fixed point in time. and finally there will be a public exchange agreement pursuant to ab 418 which i'll talk about in a bit. this is the site map, the area that emily has previously described in the southeast corner, describes the water front site.

emily talked a little bit about phasing. each phase will include development parcels and necessary streets, infrastructure and open space. public benefits are going to be distributed evenly across the /tpaess so the public can afford to deliver those benefits and the dea will set forth a schedule for delivered that horizontal infrastructure and benefits by phase, which could believe sunt to delay if there's a forced e vent, some natural disaster or something of that nature or a very bad real estate market. so the

project is not through, it's statutory and regulatory plan amendments. emily talked about the special use december /treubgt for the water front site. that would include the 20th and illinois property. the master developer is going to invest developer capitol in

infrashuckture and streets and open space and they'll receive a cumulative return of 18 percent on that. i talked about the illinois and 20th street parcel. the term sheet actually contemplates that the port would dispose of this right after project entitlement /ao*et /-r by lease or sale to generate early proceeds in the parcel and the benefit of this parcel is its right along illinois /sraoet so it can connect to the /kp*esing infrastructure and it's a way that we can pay for the entitlement costs and avoid developer return tolling or accruing unnecessarily. so these are the illinois street parcels. you can see that they stretch up as far north as

street and 18th street right near the cranial cove park project that david is working on. there are a few parcels that are behind the 20th street historic buildings and then the 20th and illinois street and the ho down yard parcels at the southern edge you can see there. and it's gouge to be helping the port analyze these parcels. so let's get to the financial terms of the agreement. the port is going to receive a variety of one time and ongoing revenues. the essential structure is that forest city needs to make an 18 percent return, but after that we would split the remaining

revenues /skwrepbl /raeted by the project -- 45 percent to forest city and 50 percent to the port. 55 percent of prepaid ground or land sales above what is required to pay developer return would come to the port. and we are also looking to appoint in time probably in phase four of the project where the developer reached an 18 percent return for the whole project and after that point in time the remaining leases would be annual ground rent leases where the port would get 85 percent of the ground rent. all of the parcels will be appraised and the fair market value will be

established that way. there's also a port participation component and this we have not had in our other deals, but in addition to the fair market value that i just described, in year 30 each of the development leases would start paying the port 1.5 percent of the modified gross revenues generated by the project. that would exclude a few parcels, /kopbld min yums would have been sold off, that historic buildings and place making uses as well as district parking are not sunt to that. that amount of gross participation goes up to 2.5 percent in years 60. emily mentioned that any time there's a refinancing the developer is taking capitol out of their lease, the port would get [inaudible] out of the net

proceeds out of financing. if there are sales of ground leases or fee parcels, we would get 1.5 percent of those proceeds and a 1.5 percent transfer fee on each condominium sale over time. and then finally -- and this is a very sick /tpheuf cant portion of the early revenue of the project, we have a lot of tax increment generated by this development and a lots of capitol needs that are not just in the water front site. the port would get 9 percent [inaudible] that are in the bae shipyard lease. so the master developer build the improvements that we've described. we're looking at a variety of sources of funding to repay developer equity. we

have community facilities districts that's basically where's there's a special tax that is levied on the parcels above the /pwaeuls property tax or in advance of the base property tax. you can issue pawns against those special taxes. ifd proceeds and that's basically the growth in property tax or [inaudible] interest tax created by the private investment in the property and the port would form an ifd district that may include sub areas through the water front site. and we're really trying to max /phaoeutz the amount of ifd proceeds that can repay these publicly owned pieces of infrastructure and parks so that we don't have to rely as much on portland value to make those payments. we'd

issue /pwopbldz, collect those proceeds on a pay go basis and finally with the developer, we'd form maintenance districts so we can maintain it appropriately. so emily talked about the seven or so acres of open space. the parkings would be port owned. the developer would program and manage those parks subject to port approval and bcdc approval where it's required with maintenance provided by special taxes. and we're still in the process of thinking of how to best finance the district parking facilities -- the three that emily mentioned. we have a per /tpered option, which would be to use public financing sources. the operating income from the garage, the parking

fees that people would pay. and the port would own and manage the facilities. there might also be a special tax on the office buildings that would have dedicated spaces in those garages, but we're keeping options open for you to consider as the process unfolds. so we are also looking apt a potential developer equity contribution to the garages with some /rurpbl on that equity repaid by port project proceeds. so this gives you a sense of some of the open spaces that forest city is looking at. they've been very /kraoe yehtive about how they're designing different rooms and different /spaoerpb experiences for people who are going to use the water front site. the market square is nestled in the historic buildings. there's this long commons area between the place

making uses and some of the ground retail around the park. and then slip aways park in the southeast corner of the site and the paint area leading up to the ship repair yard. if i could also say on top of the district parking facilities there is a plan sort of public /oeup space that may include recreational space that would be open to the public. so the master developer would have option rights to each of the development parcels. we would go through this appraisal process to establish a fair market value at the moment in time when the developer is taking down the lease so that we're sure that the value that the project in the port is getting is a real fair market value. we would only propose to you to sell those parcels

needed for residential parcel condominiums. we'd have a different structure for the historic buildings. the place making parcels and the district parking structures as i've discussed before and those would be further defined in the dea. now, there's a chance the master developer chooses not to take one of the parcels. then we would go to a public offing process where we would actually hold an auction and we would use that fair market value as a floor. that way we're sure that if our city's not ready to develop we can go to the private par /ket and bring

those resources to the site. /theupbl i'll close in terms of the proposed terms with the place making parcels and historic rehab. buildings 12 and 21 will be conveyed under 99 year ground leases problem write not through this appraisal process. we're tending to think that these buildings are not going to generate enough revenue to yield a positive value to them. that there's probably some need for infrastructure financing proceeds to help with the rehabilitation of these buildings. forest city would likely get historic tax credits as one source to help pay for the rehab, but we need to work on how to make these buildings financially feasible. they would be under 99 year leases. the thought with the place making parcels e 1 a and e 1d

right nec to the part -- it's just on the north side of the commons is where those buildings are -- is that they're not going to generate enough cash to pay for themselves so we would convey the land on which the master developer would build those buildings for no rent. the port would not be responsible for subsidizing the buildings. we might look at csd or ifd to help make those buildings financially feasible. and we're going to need to keep some flexibility in mind with these if for some reason the place making uses don't work we need to have some back up flexible zoning for these sites. so these are the areas for place making and historic rehab in the land use plan.

and we're going to be coming back to you on the 28th with a much more detailed financial analysis. today's purpose is to ex/phraupb the terms and get initial public comment. on a preliminary basis, the great thing about the plan is the port doesn't have all of the resources to fund all of this and our development partner is able to be bring equity and to pay for these improvements and to make this site developable. on a reimbursement basis they get their cost back, plus an 18 percent return and then we're looking at sharing revenues beyond a reasonable doubt that. we've got some pretty distinct funding resources. we've got prepaid sources early in the project, changing to annual ground leases late in the

project, and /th-pb ifd as the major sources to pay for improvements. we /ao*f got diversified port revenues. we're looking at participation in a number of forms. the /phaeupbl sources -- i /woepb go over each -- is the 55 percent port share after the developer gets the 18 percent return. we've got these modified gross receipts come /poe innocents happening in the years of the project and the nine percent of the ifd. also we're looking apt /sug /tpheuf cant parking revenues in those facilities /-fpt pier 70 overall represents a big chunk of the port's /tepbl year capitol liability and will contribute to other pier