here. you are making the vendor responsible for getting the parking lots to pay you rent. how much up front cost to the port? do you think that is going? how much do you think that it will be over all? >> that is where we are assessing right now, commissioner. we are looking at, i am meeting with our deputy director of maintenance and the port investment will be in the infrastructure, the 1 sea wall lot does not have electricity to even power the lights. that need to be on the lot. so we are, i think, that the port could, make an investment and in these lots will be the investment that will be beyond the typical tenant responsibility and so, anything up into the lot, is what we hope to have and i don't think that it is a huge sum of money, but it is, some investment but there will be a return on it, we feel. >> and yeah, and ran don, and

the concern, and of the lbes, and what, but the vendors, that are in interviewed and are going to bring in a proposal, and they have already been vetted by the human resources and than any other city contract, they have to prove that they will have an lbe, right? >> that is part of the minimum bid of qualifications, right. >> thank you. >> this is outside of 14 b and so it is a port requirement that the response ants come with an lbe partner and so it will go through the same process of a professional services contract or a construction contract where the contracts monitoring division will review that they have met the percentage as part of a minimum qualification to review the proposal. >> that is what i thought.

>> and on the five year contract that makes a lot of sense. >> and it does worry me a little bit about the amount of security that the vendor has to put down, and in the form of cash, or a cashier's check, non-refundable. that takes the small guy or the small business guy out of it? and i think that i am talking about one year's rent or something? it is significant, and i think that warrants a closer look to see if we can reduce that. >> what are the requirements of the city parking contract as well as in the private sector? >> currently, they vary widely, but what our current arrangement is the rent either in cash or as a letter of credit. >> i think that maybe six months will be. >> it is six and what we have talked about is six months. >> i thought it was one year. >> no six months, and i think

that what the qualifications other than putting down the six months and that may be something that have you know the over all financial condition of whoever is bidding, and i am wondering, if we have giving out the questions of whether we should have consolidation or whether we should. and i am wondering whether we should look to see not to open it up in terms of not saying that we would insist on one operator. but let it be more open in terms of the response from the market and then, try to decide, if, you know, we are going to satisfy some of the conditions that we need. to make this viable for the court, in other words, to be more flexible, rather than insist upon consolidation, with one operator. >> in terms of flexibility the current lease is restrictive and is difficult to be flexible.

in terms of how many operators, our experience now is with two, and we are recommending one, because we think that there will be benefits to that. we think that it is an over all, it enables the operator to be, there is the other side of it is can the operator be financially, viable, what happens if we have multiple operators and from the cases and the three wall and, 322-1, and that operator then could be out of business, per se. and within, before the lease expires. >> but, all of them could be out of business before the lease expires, that is part of the contract, right? >> that is in the contract. yes. true. >> we are not anticipating that. but, we, since we know of this project, and that was our thought, and it was how to make it incentivized for both parties and how to craft the agreement for both parties and that is what we feel this provide. >> time does not unless prevent

financial issues and so putting all of your eggs in one basket as all sorts of risks as well as if you diversify. >> right, that is a good point. >> yes. >> and it is what i understand, you are saying and i guess, how do we address, the issue? and in terms of the bed, it sounds like we are going to get one operator and they are going to bid on each of these separately and if the two come off line, does it just get adjusted accordingly? and they are all made well aware that they may not get, at least one if not two of these sites? that will be clearly outlined and this is why we have broke them out and if one comes up and we will have the opportunity to make the adjustment in the lease without a lot of back and forth. >> so, for example, you know, going back to the qualifications, i don't see anything, in writing here that you may have already, it is

implied. are we talks about operating parking lots for x, period and experienced track record, and i mean this is not here but i think that it gets to the issue, because right now what i am hearing is if they are of size, then we feel comfortable, if we were to bid it out to individual operators we are saying that we are going to take a huge risk and i think that the question is whether we are qualified to operate to begin with and what their experience, already is in the market. and >> that is the piece that i was going to finish up with. >> and we have the bitter qualifications and, those are outlined on page 8 of your report. >> and five? >> yes. so there is a certain, number of spaces, 1,000 parking space and there is i certain revenue associated with it and a certain time period and so that is the number one and number

two, is really, describing the exactly what we are expecting these operators to provide and which is, pretty significant. pro form as and business plan and capitol and operating budgets and the record with the other parking contractors, and demonstrate a customer service level and then we also have the credit standards that we will be applying to that and there is a financial responsibility and the experience questionnaire and the application and so it is pretty, it is going to be a pretty detailed process for a better. and then further, three, it does allow and very much a documented level of local business enterprise out reach and it must include the enterprise as a partner who will participate in the business or the managing of the lots and so the operator will then partner up with who they felt was, you know,

advantageous to securing the bid. and so we make this a secure element even though it is outside of the city contracting requirements and so show that this an important component and we put it in to encourage the partnership basis and it could be managing a lot and independently. >> does partner mean, 50/50, 60/40? >> there are all kinds of partnership levels. >> but i mean, what will we base this on? i mean, how would you score a partner? with no minimum... >> so we are looking at the operator to provide that. and manage that piece of it commissioner. that is something that we think is important in the qualifications and it is in the qualifications and it will be evaluated as such. >> but, how? >> how will it be evaluated? do you get more points for a

larger percentage? >> no, this is a bid. so there is not any points associated. >> so it is all about the highest bidder. >> meeting these qualifications. so it is a qualified bid. so there has and there is a standard in there that we have to go through and if that does not make it and even may be the highest bid but if they don't meet the minimum bid qualifications we go to the next bidder and so it will behoof the operator to be >> the bidder must show a documented level and how do you show the level in terms of out reach and even more so and then an lbe, shall be found as a

partner not against the design and so there is no priority given to a bidder with all things being equal one has greater lbe participation, do they not get any added thought to that or an a develop israeling definition of having an lbe is it five percent or 50 percent? >> you have the partner, with a lot of experience and the qualification number three allows them supposedly on the local, business, the lbe to out reach and they bring in a partner. and so, what is to prevent having a master sort of lessee and then, they bid out in turn to somebody else and so then you have a middle man in between, and then the lbe comes

in to operate the actual individual lot. and so, i am not sure that is the most, you know, we may not care on our side, but then that is not the most efficient way and how do we know that that sublessee and i am using that term and that is not what you are using, ends up not being as qualified to operate the lot or, i am just saying... and i see risk in that as well in terms of how this is structured. >> all right. and so this is a very interesting conversation because as we can attest we have had the same one in house and unfortunately was not able to be part of the conversation that we had with you, commissioner woo ho and here is what i would like to offer. i understand completely, from the step perspective why it is that we want to consolidate the, jay's expressed it very well. but i do feel that we need to how can i say this, prioritize, the opportunities for lbes as

highly as we have prioritized the need to customer service. >> we anticipate that the high bid will be factored in by the added customer service, that we will require as opposed to just, putting in a paying machine and calling it a day and sharing the percentage with the rent and we expect there to be valets and whatever the lot requires and so my thinking is that when we get to, number two, number three, and in the list of qualifications, then, what i would like to propose is that we define, as we have a minimum percentage of rent, and the base rent and we also define a minimum number of spaces to be operated by an lbe and we would then allow the proposal is that we will allow the masser operator to determine where the spaces are as we grow or shrink the portfolio, they can accommodate that way and i would hate to see that an lbe get the lots

that then shrinks rapidly over time and what i think that the advantages are there is that it is erronous to provide the level of insurance that the city requires and also to meet the standards that the city requires and i think that this will create an opportunity where that can be a joint venture, but it would help the lbe participate, where they might not otherwise and meet the financial standards that we need to meet. when we did this last time, we hired the firms that had the best financial standards and we watched the balance sheets decline with the market place and we hope to not repeat that again, but there is no guarantee. that will be my proposal. >> they will also have to have and need to be bonded. >> they have to provide, yeah, but it is the different types of bonds but depending on the kind of improvement, they will have to provide the construction type of bonds and

they will have to provide the property and liability insurance. >> right. >> and if they used automobiles, automobile insurance and worker's compensation and things like that. >> and i guess... in terms of what you are suggesting, i am not quite clear on it as far as just been changed in the language in section three here so that rather than having an lbe partner in either the managing maintenance or the security becomes an operator of a certain number of spaces? >> there is no reason why it could not be all three, but i was trying to come up with a floor on the operating side if that is the commission's interest. and i gathered from the discussion, that it was not, we wanted more than just an lbe security guard and an maint innocence provider but we wanted to provide the opportunity, operating a lot that was my proposal >> so they could bid more than the floor, but we have a floor for the minimum base rent and

we could have a floor for what the participation looks like as an operator. >> and i think that will be helpful. at least we define it, and we like to look at worse case scenario, and if we put something in here that addresses, and i think that got for your question, of, you know, in the end it is a high bid, and it is high bid award. and so how do you insure that you are not taking the highest bid that has zero experience and you insure it by having a floor. >> i would think that you would want to add to that is that once we are looking at the qualifications of the bidder or the master operator, and i think that you need to put something in there in terms of quft indications of the lbe as well. and there is a minimum qualification there and the master operator ends up having to guarantee the performance of the lbe and which will be (inaudible) and many of them will not want to do that in terms of an out right guarantee and you have to have a

financial buffer, because, always, we looking at the master operator who is in perfect financial hel and this then they in turn, contract with someone if we don't have any information, or qualifications for the, i guess, the managing operator, and that, operator is not, you know, the port has no knowledge of who that is, and some of the scenarios that you all described as being, to obviously creating problems and it could happen. but, then it becomes the lbe, you know, we are depending upon the lbe to perform and so we have to have something that insures that the lbe can perform. >> maybe the term would be using something along the lines of a joint venture of these lots and they can determine which spaces or how that works but at least have some sort of joint venture, scenario rather than just an out right, you know, otherwise, the operation is just taking a fee off of the top. >> well, our idea was that we

would actually have and it is outlined in number one, the bidder must be engaged in the business and operating public parking lots. >> this could be, but it does not mean that it prevents them from taking a fee off of the top and subleasing it out to somebody else. >> does that work for you jay? >> sure. >> as i understand it, we are looking at a floor as well as a minimum financial qualifications for the lbe? is that what i heard? >> will that work for you commissioner brandon? >> yeah. and i was suggesting exploring using the language along the lines of having a joint venture and that will address the financial concerns because it will have the over all operator that has to meet the financial requirements but i think that what we are trying to do is to figure out ways for lbes which wril have a harder time, and the requirement that the city has in terms of insurance and

other factors. but this might be an opportunity, and create an opportunity for the lbe and maybe that is a joint venture and that will guarantee the financial wherewithal if they are working together as opposed to having a contract. >> excellent. >> and i would suggest, in your bid process, that you are very clear on what the role of the master operator is for the fee. if there is going to be an lbe operator, i mean their roles are clearly defined so as i said this is not just someone who says i am just passing through and passing it on to you and taking a fee off of the cut. what is my ongoing role and responsibility? >> so that is an excellent suggestion and thank you so much. >> so do we let you finish the presentation? >> i think that is wrapping it up. >> we did take this out of order. >> normally we have the public

comment first. >> i would like to move to approve this. >> we need a second. >> second. >> okay. >> any public comment? >> i would like jay to mention all of the amendments that we made so that we are all very clear. >> absolutely. >> the lbe will be required to provide meet minimum financial qualifications, there will be a minimum floor of the level of participation and also have a clear definition of the role of the master operator in their operations of the law. >> and the responsibility and liability. >> and put in the word

liability. >> and so, there are other comments from other commissioners. and well, i think that, the lbe is well, and shepherded and well, supervised by the human rights department and i think that is the part of all city contracts and all have done the contract work with the city and the county of san francisco and they are aware of all that. i think what started out here has been a difficult contract and it is going to be a difficult contract. we will get through it. >> ail in favor? >> aye. >> and resolution number 13-42, has passed. >> thank you. >> item 8 a, informational presentation on the memorandum of understanding what the san francisco mayor's office of housing and community

development regarding affordable housing development at sea wall lot 322-1. >> good afternoon, commissioners, my name is jonathan stern and contrary to advertising i am not presenting this, i would like to introduce you to ricky disani and he has been with the port for less than a year but this is the first presentation that he has made and i want to introduce him and give him a vam p while he has time to get the presentation going and i think that it is good to point out and i am glad that jay brought up this topic in relation to the bid that he is putting together. 322-1, and i wanted to point out since i am anticipating the question, and how this will overlap in terms and we are expected that this process will take, i would say a minimum of three years to get the development ready so if there is overlap between the parking contract that jay just presented and this item it will be minimal and with that i will

turn it over to rickky. >> good evening, president ho and vice president kimberly, and commissioners. my name is ricky disani and i am a developer with the planning and the development and the port. and i am going to quickly give either of you my presentation to indicate the extent of that presentation, and number one is the objective of this presentation. is and the main objectivity of this presentation. and we will propose them and will use the affordable housing and all of the steps in between, and all of the funding to help to develop the pier 70. and everything else is to provide a rationale as to what

we are doing. in my presentation, cover, my presentation will cover the challenges that we are facing, with respect to the pier 70. the high cost, the use of restrictions and then the complexity of the various issues that need to be addressed before we can start construction or move forward with the development. >> and this strategies that the staff have thought about, in terms of addressing those challenges. and implementations of those strategies and which includes, collaboration with the mayors of the community housing and development and which we are going to refer to here as the housing office. >> one of the key challenges that in the port is the

development cost of the water front properties. and the expensive tile that will need to be included because most of this water front sites are on fill soil and so as a result they will need very deep pile that usually, you know, deeper than any other sights, to make those projects withstand that quick in terms of seismic safety. also, many of the majority of the pier 70 is (inaudible) and that is going it require a high cost of rehab, you know, that to make them work. and of course, the complex regulatory environment in terms of the bodies and that need to

be in the project as well as the environmental costs and of course f, the public benefit and mainly the public that has access of improvement that need to be provided and when you look at the development and the components of the pirer 70, there is the impact fee that is equally to the high, development costs. i will show you a picture of the current conditions of the building on pier 70, the structures and buildings that kind of lend rationale to the cost of developing pier 70. this picture does not indicate

as to whether the housing job housing linkage property credit that i talked about does not indicate how this is going to be allocated, those will be allocated on the project by project specific basis, and when we do get to that point. and of using, of using the job housing, credit. and in terms of these strategies that staff, assuming to address this challenges, back in 2011, staff disclosed with a port commission some of these strategies and one of them involves, listening to the port in-line sight and no longer needed for the trust purposes for the affordable housing and using the proceeds from the listing and you know the dispossession of those to offset the cost that i just

discussed. and the developing affordable houptsing on the port property, this is will not be the first time that the precedents and the delancy street project and i believe that it is 177 housing units with the grounds and space. and i know that one is a steamboat point affordable housing that was done and this was done through a master lease with the formally development agency. >> and so what we are proposing here, will be introducing the third affordable housing and one of the port properties. and in that strategy, that staff, was looking at in terms of looking at the assets that a port have and how could we exploit bringing those to the high sxeft so one of the strategies was developing affordable housing on the sea

wall lot, 322-1, and using the proceeds from that to offset the development costs on pier 70 and as you almost would be aware, pier 70 is anticipated to have between 2.2 million square feet to 3 million square feet of commercial space. and so provide in the hand of the development. and there is significant costs associated with that, and particularly with the impact fee that will need to be paid. and so part of the proceed, from sea wall 322-1 will be used to effect that in terms of making the project (inaudible). and as indicated in the staff, memorandum, part of this strategy, led staff to pursue

both state and local legislation to give thiserization to what we are proposing to be done. the rationale includes the that the site that we are proposing to be used for the affordable housing and are no longer needed for (inaudible) purposes and the rationale for those are explained in the staff memorandum. on the specifics of this site, this site is located on, and at broad way and front and valao treat and it is currently for the lease in the surface backing and i believe that according to the previous presentation, the monday, revenue, that the port is generating is now, i believe, 48,000 dollars and it will be more, in the staff report. and which is for me now to be

576,000 annually and it has a capacity for 151 self-park spaces and maybe 225. and with the valet parking. this is another invitation of where this site is located is directly in front of pier 9. and it is between broad way and valeo and front streets. and this site will consider the site to be ideal. and given all of the sea wall lots. and that are on the section of the water front. and the site, is currently, flat, and it is paved as indicated in the previous presentation and it is available for surface