unit is working on it. l >> okay, thank you. >> since the fire started. >> anything else? >> i just want to say thank you to the men and women in your department for being courageous and giving the circumstances and letting the fire out within a timely manner. so, thank you. thank you guys for that. >> thank you, we appreciate that. >> i have a question for you when you have a chance. so, just clarifying are we confident there's no significant impact on just the general timeline of surrounding projects? >> talking to all the different developers, they're going along as quickly as they can. no one has shown -- minor repairs may add a little bit of time, but again, more on the weeks than any significant lengths. no one is talking about having to delay development. >> and do we know he the new timeline going forward for bre or is that -- >> we're still in the assessment stage. >> gotcha. >> you've got insurance and all

the rest of it. they'd like to get out there tomorrow if could be. they're going to be going as quickly as they can. we'll have more information in about a week or two. >> gotcha. awesome, thank you so much. >> um-hm. >> any other questions? i had actually a question for chief postel. i was out of town when this happened, so, i don't -- wasn't able to read all of the media on it. but were there workers on-site at the time? >> my understanding is all the workers were gone home about an hour prior to the fire being first detected. >> one quick question while you're up here. sorry about that. you mentioned the water supply issue. and i wanted to just bring that up, just from a policy standpoint and kind of an oversight standpoint. is that something that we can do moving forward? i know we have, you know, on all our sites upwards of, you

know, hundreds of homes to build and i want to make sure that we do what we can to kind of avoid this because, again, homes are close together in mission bay. homes will be close together in hunters -- the shipyard and transbay terminal. is that something we can do as a commission or direct staff or what do you kind of see -- >> through the chair, commissioner ellington, each of these broad area plans, whether in mission bay, transbay, or hunters point or in city-wide projects like park merced or treasure island, these new major emerging areas, they do provide for, at least in mission bay and areas under your jurisdiction, and you heard chief postel talk about it, this awss system, exitery water supply system, which is processed through the infrastructure plans that the board and the city approved, initially to adopt the plan, that there would be these back up and redundant systems. in addition to regular domestic

supply plus this awss and then in some cases additional back up, assistant chief p ostel -- >> the city may or may on be aware, there's two separate water system. ~ you have the domestic water supply system which is what your normal fire hydrants work off of. after the 1906 earthquake, san francisco is the only city in the nation that i'm aware of, we have a gravity-fed -- we call it a high pressure system, water supply system. and we have tanks at twin peaks, ashbury, and jones street, and we have two different zones in upper and lower zone. this is gravity filled, fed, it's a graded system so in the event of an earthquake we can isolate breaks and still continue to use it. and what the fire department through the puc now that they have ownership of this system, we've been expanding the system into south of market area, china basin, a lot of west of

twin peaks area. so, my understanding is that we are under the current esa bond expanding this high pressure system as we call it, and there's also a second esa bond that's coming on the ballot i believe in june that is going to address this further. so, from our perspective, this is an invaluable tool. any -- almost any great era arm fire we have, we go to the cititionv item, we'll begin to use it ~. if you see this, it's the large fire hydrants that stand on the corner. essentially each one of those fire hydrants is a fire engine to us. we can operate independent of having an engine. so, in the event of an earthquake or large fire like this, we can get large volumes of water and a lot of pressure out of that system and it's a tool that's unique to san francisco, but i've used it dozens and dozens of times in my career and it's invaluable. >> thank you. >> thank you very much. >> i just have --

>> commissioner singh? >> any one, you know. in a building of this magnitude and nobody leave behind any what see the building, what's going on? >> you know, i can't speak to the fire investigation outside of this. that's not my area of expertise. we have our own fire investigation unit and they work with the police department and they're working to determine what may have caused the fire. as far as security issues with the contractor and while we may or may not have had people on-site, again, that's not our area of expertise. >> okay, thank you. >> thank you again. madam secretary, please call the next item. >> the next item of business is regular agenda item 5b, conditionally approving the transfer of operations of pearl's deluxe burgers, llc to the owner of the property located at 1001 market street and 4 sixth street, consistent with the terms of a facade and tenant improvement loan agreement approved under the six on sixth economic revitalization program; former south of market redevelopment

project area. discussion and action resolution number 13 2014. madam director. ah thank you, madam secretary. ~ commissioners, the former redevelopment agency had a very active project area in the south of market redevelopment project area. through that work, the former redevelopment agency issued approximately 30 of these tenant improvement loans to model the program as you'll hear from staff. it was known as six on sixth street. it was so successful, the former redevelopment agency made over 30 of those ~ pearl's deluxe burgers was one of the largest if not the largest of a forgivable loan of $400,000. there were specific provisions within that loan that tenant improvement loan consistent with the loan program that did

allow ~ the owner to step in and continue retail operations which was critical. this is a catalytic corner and continues to be a catalytic corner. even though the commission, now stepping into the shoes of the former redevelopment agency, no longer is entering into new projects, you still have the oversight for existing loans and obligations in that area. so, with that i'd like to ask christine ma her a development specialist in our real estate and development services division to prevent this item ~. >> thank you, director bohe and good afternoon, commissioners. back in 2002 the former rehe development commission authorized the six on six program to provide forgivable facade and tenant improvement loans to property and business owners on sixth street in the south of market redevelopment area. as director mentioned, the program was very successful. it attracted more than 30 new businesses to the sixth street

corridor including subway restaurants such as ms. saigon and [speaker not understood] cafe. in 2010 the program was amended to approve higher levels of assistance, specifically for corner and catalyst sites at 6th and mission and sixth and howard street, excuse me. the goal was to revitalize these prominent corner locations and attract appropriate retail tenants. at that time the catalyst site located at sixth and market was extremely deteriorated, having been previously occupied by restaurant that had been shut down by the health department. filling this corner space was a major goal of the 6 on 6 program and the city as a whole. in 2010 the pearl's roux burgers signed a ten-year lease for the retail space at sixth and market and submitted an application under the six on six program for a $400,000 loan. plan improvements included a new kitchen, a new hva system, [speaker not understood], new finishes throughout the entire restaurant and exterior awnings

paint and windows. the redevelopment commission ~ ultimately did approval on the agreement in the amount of $4,000 -- $400,000 that is evidenced by promissory note and secured by a deed of trust against the property which is actually owned by the gall family. pearl's also received at that time a $215,000 loan from the city central market cultural district loan fund. consistent with the program's stated goal of assuring continuous authorizations of the business during the term of the loan, the loan to pearl's is forgivable over five years as long as pearl's does not sell, close, or transfer the business and is not otherwise in default of the terms of the loan agreement. however, this loan agreement is a little bit different in that it allows pearl's to transfer ownership or operation of business to the property owner without triggering repayment of the loan. staff has interpreted this transfer provision to mean that

the property owner must maintain a retail business at the site to [speaker not understood] triggering payment of the loan. [speaker not understood] was notified by pearl's that it was in negotiations to transfer operations to the property owner. under the proposed transfer, the property owner would find a new operator to continuously operate a restaurant business and pearl's would lease all of its furniture, fixtures, any equipment at the property to the new operator. the original promissory note and deed of trust would remain in place with pearl's still liable for any loan repayment required under the loan agreement. the parties have since entered into the transfer agreement to that effect. the property owner has also entered into an operating agreement with dan lou, an experienced operator and partner and the little grill modelest lunch key all successful restaurants located along the mid-market corridor. staff as concluded the proposed transfer does not trigger

repayment of the loan so long as the following conditions are met. one, the new tenant must be a retail restaurant business and shall not be charged a rent that exceeds the six on six program rent control standards. two, during the remaining term of the loan, the property must be continuously operated as a retail restaurant business except for a 30-day period after the closing of pearl's foreign vations. three, during this 30-day closure period, the property must display a sign announcing the name of the new business ~. four, pearl's must enter into a lease of all of its furniture, equipment and fixtures to the new operator and finally pearl's must remain the borrower under the original loan agreement and the promissory note and thus remain liable for repaying the loan if the new restaurant closes before the term of the loan agreement expires. staff believes that approval of the transfer with these conditions meets the original program goal of revitalizing a prime corner location with a

vibrant neighborhood serving business. that concludes my presentation. thank you. >> thank you, ms. maher. do we have any speaker cards? >> uh-huh, one speaker card from tracy ebber line. ~ hi, good afternoon, commissioners. tracy ebber line from the central market community benefit district. and prior to that i was with urban solutions for eight years and worked with the former agency staff to transform the space into a resource for the community. and i wanted to today just express my confidence in the new operators of this space. we couldn't have asked for a better team, both tenant and landlord really know he the community. they have operated three successful businesses in the community for at least a decade that i have been working on sixth street and [speaker not understood] the job of

providing a [speaker not understood] that's incredibly community surveying with a rare accessible price point. so, i think this new operator is just a really advantageous transfer for the community. thank you. >> thank you. >> i have no other cards. >> yes, questions by the commissioners? >> yes he, do we know what type of restaurant is moving in? i don't think that was in the [speaker not understood]. >> my understanding is it's actually going to be another burger restaurant. >> gotcha. got it okay. and i guess my next question he is you talked a little bit about -- >> and apparently the owner is here if you would like to -- >> oh, sure. >> -- step up. so, we can introduce the owner, john. i'm really excited about the fact that pearl's only did lunch and a limited dinner. the new operator are going to do breakfast, lunch and dinner.

the breakfast has been missing in the community for a long time. especially with construction workers in the area knocking on the door, can we get breakfast here? i'm going to introduce john chow. hi, my name is john. i currently own middle grid l. it's on 1400 market street, so, i do kind of understand what's going on on mid-market ~. i really did want to go into the space because i believe it needs like a cafe that's where friends could kind of come together and just meet. there isn't really space there that has that. so, i created our menu already. so, we have a full breakfast menu and we have a full lunch menu. >> nice. >> so, i'm focusing more on the breakfast and lunch. ~ and i have other sources of

catering and whatever, just like make up the money if we don't make it, you know, with the space there because it is limited with -- just like [speaker not understood] construction going, there's not there yet, but i do believe it's going to be there in the next maybe five years, so. >> awesome. >> thank you. >> any questions? >> i have a question. >> commissioner singh. >> [speaker not understood] the owner of the deluxe burger, is he here? ~ where is the owner of the deluxe burger, is he here? good afternoon, my name is silvia yee. >> [speaker not understood]. my name is silvia yee and my husband and i own pearl's roux burger. ~ bluxome burger. deluxe burger. >> i remember that. you have another store. we have one on post.

>> that is your second. what is the reason you are leaving? you know, we he -- it's very bitter sweet ~. i still believe in the revitalization of that area. i think our problem was that we were just a little bit too early with all the changes that are about to happen. we are more of a gourmet high-end burger restaurant and all we do are burgers and sandwiches. we don't serve breakfast. our menu is limited. and, so, we did a good lunch business, but the dinner business, because we didn't have a variety in the menu because we specialize in burgers, and then also the foot traffic right there at nighttime just wasn't enough to sustain the business. so, we have lost a lot of money every month and both my personal finances and the other business was basically carrying market street. we have come to the crossroads

at the beginning of this year, the end of last year, we were thinking of every way we could still stay there and try to, you know, change our business model, add breakfast, what have you, but we're so far in the weeds financially that the risk is just too high for us right now. but we still believe in the area. my heart's still in that area. as you know my story, i am from san francisco, born and bred, and sixth street is near and dear to my heart. so, we wanted this transfer to still keep the spirit of what the redevelopment agency and what the revitalization effort wanted to do, which is to put a vibrant business on a catalyst corner in a blight which was once a blighted building on sixth and market. and, so, we worked very hard with the landlord and with this potential new operator that wants to come in to make sure

that a business was going to go in that could continue being open and keeping that corner alive and continue business attraction and continue building up that neighborhood. >> i remember i was at the restaurant at the opening and [speaker not understood]. how what the 400,000 spent for? where did you spend the 400,000? it was 100% spent on the construction. we had to gut the place. it wasn't just a cosmetic fix. we actually put in walls, took down walls, added flooring to cover up -- there was a lot of structural things that we did as well as build out a new kitchen, build out a whole new dining floor, add two bathrooms. so, 100% of that plus other funds were used for the construction. so, all the money that was intended to be used from

redevelopment was used in the space towards construction. >> what is another 600,000 needed to fix it up, cnd? the new owner, why another 600,000 he's going to spend to fix it up? what does it need to fix if you already fixed? what they're going to use -- spend it now? [inaudible]. >> oh, i'm sorry. so, your question is -- >> you need 600 more thousand, there fixing, right? >> no, there is originally $600,000 granted a loan for this project which was the renovations that silvia was just talking about, but there's no new money at this point. >> in this transfer, was any government money involved? >> what was the question? >> corporate money, they have to pay to the operator some money? >> private money. >> i think commissioner sing was asking if there was any

private investment -- >> yes, they did invest some of their own [inaudible] as well. >> so, why should we forgive this 400,000? >> should we -- >> why should [speaker not understood]. >> why should we forgive the money? >> yes. >> well, we're not forgiving it now. what we're recommending is that we follow the program guidelines which states that if the business -- this business or another one that's operated by the property owner in the same manner, if it remains in operation for four years, [speaker not understood] is forgiven[speaker not understood]. that was the same for all -- any loan we would have done at the time. >> i don't know. you know, i think we should not forgive this money. is there -- >> through the chair, commissioner singh, the sixth on sixth street, former guidelines the former redevelopment commission

approved allowed for a forgivable loan structure provided the business stay in operation for a certain period of time. this particular loan agreement, because there was security against the property owner -- as security in the event of a default on that loan, allowed the property owner to step in and continue those retail operations. >> [speaker not understood]. >> just to clarify, we're not forgiving anything. it's transferring to the property owner. and if the business closes, then [speaker not understood] has to be repaid. >> i understand. >> okay. >> if it's transferred, the money is due. >> not under the provisions of the loan agreement. they're allowed to transfer the business to the property owner and that cancels the repayment provision. but the repayment provision will still apply if the new tenant closes or if the space is closed at all before the loan is forgiven, which christine said take 4 or 5

years. they still have a couple years to go before the loan is forgiven. if you new business by the poet owner closes, they'd still have to repay the loan. so, we're not for giving anything. we're allowing them to transfer the business to the property owner, which is allowed by the loan agreement. ~ forgiving it's not ideal. i understand what you're saying. it's not ideal. >> it's not. that's what i said. >> a good way -- a good way that i've thought about this, i think which might help, what what the purpose of the investment of the redevelopment agency at the time in this space. it wasn't necessarily for pearl's. it was to take a space that was abandoned, useless, not contributing anything to the neighborhood, and return it into an actual marketable space that could be a retail space. now, pearl's was the initial tenant and pearl's is on the hook for the loan. but the fact that now a different business other than pearl's is going to be there actually means that our loan was a success, right? we're still keeping the space

occupied, which at the end of the day is the goal of the program. i would love for pearl's to still be there and pearl's is still on the hook if the space closes again. but pearl's can't continue. so, they're using the provision in their loan agreement that they're allowed to transfer the business to the property owner. >> is there any money involved by transferring [speaker not understood] got some money? >> no, in fact, the property owner is taking less rent from the new tenant than they were getting from pearl's. and that's a reinquiredthv of our program. the property owner is not allowed to raise the rent beyond the inflation adjustment during the first five years of the loan. so, we have controls in the program to make sure that the property owner doesn't benefit inordinately from the agency's investment. the purpose was to get a retail space there. now, it's not going to be pearl's any more. it's going to be this other business, but hopefully they'll still -- hopefully they'll be more successful than pearl's

was. that's why we're here because pearl's wasn't able to do it. >> can i ask a question? is the second business able to benefit from the improvements to the premises? >> yes. >> operational benefits? in other words, are they adding any more improvements, tenant improvements? >> my understanding is they are making some minor renovations to the space, but they're basically benefiting from the improvements that pearl's did. so, the pace is going to be essentially the same. ~ space they're changing the signage. they're using the equipment that pearl's put in with their own funds. they're using a lot of the things, almost everything that we paid for. some minor changes, but -- and that's why in the approval we're proposing to grant them a 30-daytime period to make those renovations. so, the business can be closed while they're sort of retrofitting for the new business. >> is there a need -- what was kind of the rationale behind not adding the new business to

the loan agreement starting now? >> yeah, that's a good question. pearl's is on the loan agreement. they're still the guarantor for the loan. the property owner, as director mentioned, has provided collateral for that loan. so, those two entities are still responsible ~. now, it's true there is a new tenant in there. right. but i don't think it would be feasible to get a tenant if that was sort of one of the requirements for signing a lease that you had to take on, be a guarantor for a $400,000 loan. >> but essentially it's saying the loan will be forgivenif they're in business for i think they have three more years? >> i think the way to interpret it is the loan will be forgivenassuming there's continuous operations in the space for that amount of time ~. the property owner and pearl's are still on the hook to make sure that happens. >> i guess the only reason i'm asking this question is if pearl's is out of business and/or closing their location and the new restaurant comes in and for some reason in a year

they find that they're not able to operate, will pearl's have kind of the financial wherewithal to repay the loan? >> we don't know that, but if they don't, the property owner has put the building up as collateral. so, that would be the next place we would go to try to recover the funds. >> that's what i was getting at. >> i have a question. >> commissioner mondejar. >> yes, so, this is a great deal for the new owner, the new restaurant, am i correct? >> the new he restaurant that's moving in ~? they're paying market rent. they're not getting discount on the rent. they're paying market rent for the space. >> market rent, but i thought you said the building owner cannot increase rent. is that the market -- is that the market rate rent? >> yeah, that's a good point. obviously pearl's wasn't making it at the rent they were charging before. so -- >> you said -- >> close to market. >> they have reduced the rent to allow this new business to move in? >> they're collecting less total rent because the pearl's

lease had a provision where there was a participation payment from the [speaker not understood]. i don't believe that's part of the new operating agreement. >> so, they're paying rent and they're benefiting from that -- from the improvements -- >> the new tenant? >> yeah, the new tenant. >> yeah, i mean, in a way. but also sixth street is benefiting from the fact there is a tenant willing to occupy the space even though the last business went out of business there. >> oh,there were other businesses that closed over there? >> no, just pearl as. >> just pearl's. that's what i'm saying. this new tenant is paying rent and benefiting from the improvements that pearl's ~ put in from the 400,000 and from the personal investments that they've made for their -- for that particular facility, right? >> yes, i think that's correct, yeah. >> okay. and is, so, pearl's really is at a loss here ~. so, they're leaving and just cutting their losses. >> yeah, i don't think they would leave unless they didn't have any other choice. like you said, they have put a lot of time and money into the space.

>> any more questions? >> no. >> i'm sorry, just really quickly. i'm amy cohn with the economic and work force development. [speaker not understood]. i just wanted to say that the transfer here, even though it's a little bit confusing, is the best possible outcome for everyone. and you can see that by the fact that the owners of pearl's, the landlord, and the new owners are all in the room and they all worked with mike and with director bohe and everyone else on this staff to ensure smooth transition. and that's really, you know, this is rocky stuff. central market is rocky. there's a lot of really great things happening, but it's also been hard from the retail perspective. so, i really wanted to thank pearl's and thank you all for helping get them in, and thank everyone who is part of this

for helping transition to the next operator. i think it will be really good for everyone involved. thank you. >> thank you. >> can i ask one more? are you saying that the gall family is here? the building owner? oh, okay. over there. so, they basically are in the hook here, right? pearl's has to make sure that the new owners make a profit, at least make a living so that the business continues and also for the tenant, the building owners to make sure that they don't end up -- their building doesn't get attached to the loan. >> right. as commissioner ellington pointed out, the building owner is on the hook here, too. their building is collateral for the loan. so, if the loan comes due and pearl's can't pay it, the building owner will be on the hook for it. and that's the reason why we have the building on the loan, is because at the time we

entered into the loan, we had concerns whether or not pearl's would be able to repay it if it came due. >> i think the staff's interpretation of the continuous business operations is correct and i move that we approve. >> thank you. there is a motion. is there a second? >> i'll second. >> commission members, please announce your vote when i call your name. commissioner ellington? >> yes. >> commissioner mondejar? >> yes. >> commissioner singh? >> yes. >> chair johnson is absent. acting chair rosales? >> yes. >> madam chair, the vote is 4 ayes, one absent. >> thank you. >> good luck, everyone. >> yes. >> madam secretary, please call the next item. but i'd like to announce that i'm going to take a short break for about half an hour and i think