many areas of the bay and the regulatory agency does the permitting for that project. >> back to the terms. the term of the proposed agreement is 40 years with two year reduced rent construction period that was typical of the port projects that involve major construction and one year of renewable it's 66 years that's the temerity for the transbay cable project here we've divided it 20/20 periods. based on the appraisals with the department of real estate and we have a gentleman here representing the real estate department. came up with a rental site based on the value of upland property

but discounted by 50 percent because it's submerged property and not worth as much and calculate the prepaid rent of $15 million. so that's a nice rented payment to the port. for the 26 year option period there would be a new appraisal process recommended by the budget analysis. getting back to the hoe down yards. the ports only goal with the hoe down is the use and in complication with the other city departments. we saw an opportunity to change the use through the rezoning effort and maybe generate some net land precedes that could be used. the port is getting a healthy

rent and actually, the department of real estate will have a transferable option either for the city or to transfer to a private developer. to build whatever residential port commercial use on the site. we have a fixed industrial land value that's set by the process of $8.3 million that's the purpose of pg&e pg&e will have to find another place to conduct the operations. and we've done this revised this slide shows on estimated net land value of 4 to $7 million. we've received some revised stimulates we've been work with the city for the hoe down yard and the net land of the purchase

price might be more like lifting millions in the dog patch area. i can share some follow-up >> whatever use it is it's still called the hoe down yard. >> we'll welcome that. >> sorry i did have is a question but i can't remember what it was exactly. so forest hill is not necessarily to receive the hoe down yard >> what's that. >> who would receive it. >> we think this option will rest under the current structure of the agreement the option is available to the department of real estate. >> so before we've talked about the office of economic workforce development now you're saying - >> yes. so the department of

real estate is involved in the real estate transactions so in the amended resolution we've changed did option from o e w d to the department of real estate. they'll see the 10 year option or could transfer it to a third party they'll probably go through land estimates and to make that decision there's a structure they could go through a competitive process to find a buyer before they exercise the option. so they could have private money to pay pg&e this fixed purpose price and the net precedes will go to the patrar hill under the resolution. we're hopeful that that traction could generate more than lifting

millions but your lowest sichlts is the under lifting millions. so the switchyard that's hard to think about the hoe down yard to reconfigure that. is there a way to build a screen around the facility or to fully enclose it. under the term sheet the city will have the option of selecting it's preferred approach and pg&e will have to useless reasonable efforts to get the funding to fund that enclosure and construct it within 5 years.

we that this is the be substantial benefit to the neighborhood doing something about this open air switchyard as more and more conductions around the hill an open air swatch yard will have a negative impact on the neighborhood so we want to see improvement in this ear. there's a component of the term sheet that's thinking about what if the cu c didn't provide the funding for the enclosure he could may be able not fund it. one option would be using potential i p u funds from the hoe down yard as a source. so - >> is that the costs for enclosure and we don't have a

conceptual design for enclosure but i'll defer to pg&e they might know better but i think probable for a screen in the 10 to $15 million range for a full enclosure putting a g s building probably 50 to $70 million that's a big undertaking but before you today that's a big project. so projects well along through the c p u process they're looking for construction now in the areas that don't involve port property and in 2015

construction in the submerged areas of the port and hopefully have a project operable in 2015. our request today, if did you endorse the term sheet the board follows suit we'll negotiate the actual licensed agreement and be book in 3 months with a binding agreement reflecting those terms. if you have any questions, i'll be happy to answer them that you may have. >> i'll have questions after harvey. >> i have a question about the apparels of the hoe down yard one is 9.9 million and the other is kwiebtd lover at the

$6 million plus how do you determine the value average them. >> there's the update appraisal process where you adhere a third appraisal and compare it but the value came in much higher so averaging seems to be the right way to go nicole. >> i'm trying to think about the current market and when the apparels were done in 2011 and another one in september no, it looks like it was done in. >> 2012. >> it looks like the market is changing. >> it cuts both ways so the and

we made a conscious choice we're asking pg&e to fix the price in the hoe down yard hopeful that price will be lower and hopefully it will go to the annexation project and there's a balance to strike. >> and virile remediation is part of the appraisal costs. >> we did factor that in i don't think i answered on arsenic about the site but virtually the entire port is effected by the virile contamination from former industrial uses and certainly in

the pier 70 on the site there's a serious contamination but the hoe down yard has arsenic contamination unless you raise the lease all i can build build is office uses but we talked to our virile staff at the port and we think it's not a hard lift to lift the deed restriction and build whatever you want to on the site. >> colleagues, any further questions. okay mr. rose your report please. >> mr. chair and members of the commission on page 23 of the report as mr. benson indicated

under the proposed alone for pg&e they will repay rent in a initial 40 year term 15 million plus. and under the proposed term sheet the office of economic workforce development will have the option as you know, we have the recommendation to change it to the real estate did that they can purpose the hoe down yard and that will be estimated to cost $8 million plus for approximately one hundred and thirty thousand square feet plus. so our recommendation supervisors is on packages 25 and 26 of our report and as mr. benson has stated we we've reviewed the legislation on the report that's the legislation that was submitted to you and

the port has incorporated our suggestions. on page 26 i'll read you our last recommendations. we recommended you endorse the prerogatives as amended from the port to construct and operate the 2 hundred plus cable under the bay we we consider the option to purchase the hoe down yard to be a policy measure for the board of supervisors because the policy provides for the intention of the lease to a private investment and we also consider endorsement of proposed sheet to screen the pa traffic switchyard as a policy motivator for the board of supervisors because the screen maybe purchased by the future and we'll be happy to respond to any

questions >> mr. rose we've gotten amendments. >> yes. we've rectified those and exactly mr. chair. >> colleagues, any questions for mr. rose? okay. why - >> mr. rose i mentioned in our report the only time we've used public land for private purposes is under our redevelopment agency; is that correct. >> as far as we know the city becomes a broker or is involved in a real estate we know of no other tax where we'll be purposing property and transferring it to a private party for that private party to do whatever other than the redevelopment agency which is actually a quasi city

department. >> and so what other elements are in policing place here other than the hoe down yard purposing property and partisanships passing it on there are there any elements that make that more likely a somewhere. >> why - i did not know the answer to that question. >> and could this be done with any piece of private property that the city might want to become the broker for and could we see a precedent set for this happening, you know, you know - and i believe the city city attorney's office is it is legal

and the city could do it for other properties. >> it would be in the real estate business basically. >> that's my understanding. >> okay. thank you. >> supervisor mar. >> i was going to ask mr. rose you pointed out that the recommendation or at least the second and third recommendations have risks to them and i'm wondering if i got talk about those risks and what ways we can protect the city from the risks. >> actually, we have made recommendations to the extent to make sure that the city's costs would be minimized. so our recommendation that have incorporated do that. with regard to the recommendation on was hoe down yard we've made that a policy

matter because the city would be involved a real estate broker. with respect to the screen the reason why we're saying that's a policy matter is because the cost for this project is not yet been identified or finalized. it's the intent as we understand it pg&e would go to the state and ask that those costs be incorporated for rate pairs to pay. however, it's clearly not certain that the state would approve or permit pg&e to not at that particular time the cost of this screening into the kate's rates. so the other alternative would have an infrastructure financing district and with that i kind of infrastructure we consider that to be a policy matter for the board that's why we didn't

recommend approval straight out >> why don't we wait to see wasn't the state decided what the puc decides. it's my understanding the board has the full discrimination r discretion to continue any of those 3 items even though their in the one resolution. that you can look at those matters differently and certainly supervisor avalos if you want to wait for pg&e to get the results whether or not the state would permit the financing to the rate pairs that's an option for the board. and hi >> and the benefit that's public that we see the proceeds go towards our public housing projects. >> yes. the only caution there

are no guarantees eir with respect and i respect mr. benson's numbers there are no guarantees that the city is going to wind up getting more than the purpose price. i'm not saying he won't there's no guarantees >> and also the private benefit side that would be greater with the public benefits would be. >> that's possible. >> mr. benson if you want to comment on any of those questions. >> insure. briefly on the redevelopment issue. the redevelopment laws have been repealed in the state of california and it provides tools for the relighted areas you could conceive of them making the transmission from industrial

use it's a hard transition to make. we've used the negotiate with peblg to use the license to gain some benefits for the city in the surrounding areas. i don't think this creates a precedence nate's there's not the use of eminent domain. this is a deal so i don't think there's many opportunities for the city to negotiate the acquisition absent the redevelopment tool that's going away. the purpose of opposition to acquire the hoe down yard that's an option not an obligation of the city. it exists for 10 years and the state will have to make a policy decision there are going to be

net precedes that will serve the project and if there are not net precedes or a purpose the city doesn't have to exercise the option >> i find it hard to see we make a purpose without a line of suit suitors who want to purchase the property. >> and this is where having the option and for 10 years gives the process time to unfold. we'll go through the rezoning area with the city and pg&e will get the authorization to actually dispose of the hoe down yard and we'll have new zoning on the site and the department of real estate can see if there's a line of suitors owe

see if they want to exercise the option. and when it's rezoned to residential use it's value will go up because of residential and commercial property is worth more than industrial property >> i find it hard to look at. we were actually careful not to build in any option for effort city to acquire the property. we gave them the opportunity for the hoe down yard but no preferred access to acquire the property. so if you're worried the option to purchase that's not our thinking. our thinking is a competitive process to dispose the parcel to a third party >> mr. benson real quick in

terms of what i understood this to be around hoe down yard i want to paraphrase it's a blight that that he don't like it and approvals to come they want to see this, you know, at least change. >> that's the only comment we received at the port commission joe showed up and corrin and talked about the benefits of getting rid of this used to have a broader revitalization of the ear. >> i completely understand supervisor avalos concerns i want to make sure we identify the fact that the neighbors as well are very adamant this is parrot of a broader structure of

the area. >> i have a question about the broader part of san francisco what other parts have the runtcy we're trying to get for this part of the city. how many other places that have such a redundancy and what - >> that's definitely a pg&e question. >> good morning, supervisors the way the system works is most customers have multiple circuits that serve them we're going to add a new line so there's redundancy to avoid a minus one situation where we're one line down like caesar's chavez that will mean that a construction

accident or it would cause a construction accident. >> great there was a decision about a 7 day outage so this is the line is it useful or you would have a disaster that is discussions in the graft we saw in a 7 day outage. >> yeah. like an earthquake that would cause a current line to be number one fundamental and we'll have a third line to continue downtown outage. >> when it comes to we're looking at the future of electricity generation in california and i would say in san francisco and that's part of california. we want to look at how we can do

generations that could involve people having solar and going to the grid and having reserve metering. are we pitting in a line that will enable us to think about the future of generation that pg&e motive not agree with. are we build our capacity with this line that will enable other entities to put on their own private of production or other means to deal with a type of grid >> those transitions are open access we don't discriminate based on the entities anyone can use those lines. >> and if there's the port

would have solar panels and going to the grid they have the opportunity to do that. >> broadly yes nothing being built curling would exempt them from using the lines. >> any future questions colleagues. okay staff or budget analyst. public comment. seeing none, public comment is closed. >> so colleagues i'm comfortable supporting the new underwater line as well as kind of uncomfortable with the hoe down line but would like to see what the california commission saying how rates can be passed

on with the construction of the what were the - the section of the building around or the wall around the yard the other yard. >> a quick question do you have a cost estimate a and b if we were to delay the other item on the sheet that that matters. >> i'll let the city attorney address that issue as well but nothing in this term sheet for the license agreement binds the city for any particular action with respect to that screening so theirs not a commitment for the city funds there's no commitment it be built all this option does it allow the city to say we prefer i design an

enclosure for that or come up with a screen around it they have to come up with the design and it has to go through a city process and it will get built there's an idea of a back up bring an i f d proposal to the board but it does not bind the city it is a discretionary decision so this sets up a process by which pg&e has to design the city's preferred design and how it's going to be funded. it could be funded through the rate process or the board cocoa decide if we enclose that switchyard the land precedes

have been prioritized through pr d and we're coming to you early in the process of the process but we recommend you keep our options open >> mr. city attorney any other - >> did that city attorney john. in terms of your options going forward. basically, the port came to you with a term sheet that represents a package deal that's on preliminaryly negotiated they're coming to you with a package the parties sat down and fingered the process. i don't think it make sense preservedly to split it in a half because the port is