manned parking lot and available only when there are no cruise bookings or other events scheduled. however, this percentage may have to be renegotiated as noted in the staff report based on the outcome of discussions/negotiations with bcdi regarding a permit amendment to allow such parking within the ground transportation area. in the event that bcdc determines that the parking capacity is reduced or eliminated, this would reduce the income to the port and the port's ability to forward the project. as shown be in exhibit e in your staff report, the port developed a base case financial scenario representing a break even scenario where generally port revenue equals port costs. the base case assumes revenue generated from 82 cruise calls,

projected events and parking usage assuming or pending a bcdc permit amendment. variances from the base case or this break even scenario shows the projected income lost to the port as shown in exhibit e, low calls, that is, less than 82 calls per year will result in a net loss to the port. likewise, high calls or over 82 calls a year will generate greater revenue to the port. so, in conclusion, port staff will present to the port commission consideration of this management agreement as early as may 27th. we believe that this agreement represents a balanced approach of generating revenue while setting aside the needs of the terminal operation. and we'll conclude a 20 year

adventure to deliver a new cruise terminal to the city and county of san francisco. port commission approval is crucial in that it will allow metro to begin the transition from primary operations at pier 35 to the new terminal at pier 27. again, pier 27 will be a modern facility that meets industry standards such as a mobile gang way and it will take time for that transition to occur. so to assure that by the first cruise ship call in late september we've got everything in working order. the mobile gang way, the shoreside power, every aspect of the new cruise terminal. but such approval is also critical for event operations as well. once the agreement is done this will allow metro to directly book events and start to implement their marketing program to attract and sustain

event users. that concludes my report. i am also supported here with peter daly and elaine forbes and also steven from metro and we are available to answer any questions. >> thank you. is there nub comment? seeing none, commissioners? >> thank you for a very -- well, a great presentation. i'm really excited about the new cruise terminal and all the new cruise calls we're going to have coming to san francisco once this is completed. i really want to thank stefano, veronica and metro for being so diligent and putting together your local business participation plan. i think

it's a model that others can easily follow so i really want to thank you for taking the time to put that together and i'm really excited about the buy san francisco directory because i know all of our port tenants can use that. so thank you very much. >> john, this is a great presentation. i also personally want to thank stefano, i know i've been that, for a time there were some problems at the old facility and he really stepped up. he listened to the direction of this project. i understand things are going well down at pier 35 now and you are getting ready for pier 27 and it's good to see we have personnel down there situated out and everybody is excited. felipe is here from local 10, i had talked to melvin mccade he

asked me to talk to you and thank you so we can have is the best facilities in the united states and we are working together with the port, metro and the iow so thank you very much. >> thank you, john, for all your hard work. thank all the staff that worked on this. great this is finally moving forward, it's going to be very exciting. thank you. >> thank you also for a great report. atz you know i've been briefd a little bit so i am familiar with the details. i just had one question to clarify and i'm not sure if i had the answer to this one. you know you have different scenarios mommy has put together and we talked through the cruise calls and things like that and understand what the margin is on that. but on the events, and i

wanted to understand how the rates for private events will be set and how the port will be involved or not involved with the rates set for the events and how do we participate through, i guess, through stefano and also the event operators. i want to understand again how that works for the port. >> pier 27 will have its own rate and there are different components within the cruise terminal. if they take the entire terminal facility we, metro has come up and propoed to us that their rate would be $35,000 for a single day, 50 percent for load in, load out of that cost. so depending on some events are only for a single day, other events are for multiple days. however, if it's a smaller

event then the rate will be lower, the total rate, if they are only taking it to second floor, i couldn't tell you off the top of my head what that rate would be. >> my question would be, let me rephrase it so you know where it's coming from. we have to work with the cruise ships over a longer schedule so we know what to plan for in the next couple years. the one variable right now is to figure out the private events which is brand new for us and brand new for metro and brand new for hartman studios. on the events side, if there's more events and depending on what the market is, what is the, our ability to look at that and assess that with metro and hartman and if the market

can bear more weight how we share in that and is that something we will review on a regular basis. i'm talking about figuring out flexibility in the agreement that allows us to participate on the upside and obviously if the event doesn't happen then obviously there's some -- but i'm more interested in trying to understand the up side. >> it is set in terms of what the percentage of the event would be to the port. we would get 50 percent of any event revenue. the rate itself of the facility whether it's pier 35 or all were a portion of pier tuition, we will work with metro to determine that market rate. >> does the agreement have some sort of review process how often we will be looking at that?

>> if we sit down every x period to determine if the market has changed, we're getting excited because we think the market's changed, they are saying the market hasn't changed, but at least we have a conversation to talk about it. >> i think you're right. i think it's to our mutual benefit that the rates change with the market. >> we don't want to be locked into something that is saying we're only going to look into this once a year. it should be more market driven. >> john, if i'm right i think when we agreed to this recently, this is a 10 year lease, right, with a 5 year option? >> correct. >> probably i should ask this of stefano stefano, this is the first time metro ever did something like special events.

what is your vision, i know you got to get in there and start planning things, but what is your vision you see for special events? i think the commissioner had some good questions but what do you cecuming down the line, what's your goal to accomplish there. >> good afternoon, commissioners. the special event is exciting new component. one of the reasons we decided to hire harmon as a partner is this track record, their success in the bay area in that region, in that area of the business. they are a very successful event planner that has large event capabilities so we are marketing the facilities which in some ways markets itself. there is a lot of excitement in the destination

management company community about the facility. we're going to have an open house, like a grand opening where we invite all these companies from, quite frankly, the entire west coast that will come in, will be invited, will be shown around, we will showcase the place. and then even to your earlier comments on pricing, we will be gauging pretty much on a monthly basis what the market does in the broader bay area with the top venues. this is a top venue on the waterfront of the city in the middle of the best area we could have. so it will be priced up there, $35,000 per day on a full-scale event is pretty much right now the top of the market. and so our vision is expose the facility as much as possible. frequent events where we have open houses with all these companies coming in and really understand the

capability of the place, work with harmon very aggressively and also work with the remainder of the city in the promoting of the place. the early indicators we have received are extremely encouraging. there is a lot of interest in large companies to smaller. the only limit will be that we are trying to bring cruise ships so the two elements are mutually exclusive, of course, so the more cruise ships we will bring in, probably the lesser events we will do. but we also know that in non-peak times of the year for cruise traditionally late fall near christmas and also early winter, there are great opportunities for special events. so we believe we can maximize the facility. >> i would like to encourage

just because i think some of us who have i guess age-eligible children trying to find wedding venues is very difficult. usually when you ask them, well, when are you going to get married, the answer is when we find a venue. that determines the date. so i think we have a possible venue here for people to consider. so just hope that heartman also thinks about marketing it for wedings because it seems to be very top of mind for young people these days. >> absolutely, it will be marketed for high end weddings, i haven't crossed that bridge yet for my own children but i will. what a beautiful place for weddings. the upstairs section, even if we have to partition it, which is something we certainly can do, will be perfect for that. >> thank you for your work. i really just appreciate again

what you did in terms of stepping up and hearing concerns from the commission and recognizing our desire to really be good partners with our local community as a port and you've stepped up and heard us and really come up with, i think, a very elegant solution and so i want to thank you for that. and then since we are talking about what a fabulous event space it is going to be, when are reservations or are reservations already being taken for events on days we don't have the cruise ships coming in? >> at the moment we are not in position to sign a contract with event planners yet because we don't have an agreement in place. we are having a lot of discussions and we haven't really finalized things yet that we're looking forward to being able to do that. >> on the other hand, we have made reservations with a number of different users for late

2014, which includes sales force, linked in, san francisco maritime museum, and electronic art. so once the agreement is signed they can, metro can actually book the event. so right now they have the reservation. these users know that these dates are reserved for them but we can actually solidify that when the management agreement is executed. >> how many notice do they, cruise ships people give you when they are coming to san francisco? >> that is a very good question. traditionally we book cruise ship calls between 18 months in have an and 12 months. so the 12 month threshold will be a bit of a threshold when it comes to in consultation of course with the port marketing department and all these things we do together, but we will try to say 12 months where we can --

so they will book an event knowing there will not be a cruise ship to a certain day and things of this nature. if it's a certain time of year where we know it may be sensitive we may consult with some of the larger lines, for example princess cruises, things of this nature, but a year threshold tends to be the time frame. >> we also have an alternative terminal in it was booked that particular date, right? >> yes, sir, if it was something, emergency call or last-minute call, we have two berths available at pier 35 which will come in extremely handy. >> thank you. >> you're welcome. >> thank you. guess we'll see you back at our next meeting. call the next item, please. >> just really quick, my name is felipe reilly, one of the representatives for the longshore man's union, thank

you, commissioners, for having us here this afternoon. i wanted to speak briefly about pier 27 and the whole cruise terminal situation. i know that our membership at local 10 is very excited about this new pier. we have had the opportunity to work, in its previous state we worked at 30-32 and pier 35 for many years and dealing with the challenges i will say in the conditions of some of the places have been extreme. this is going to be a great opportunity for all of us. we are really excited about this and wanted to thank metropolitan for, like louis said, stepping up and really helping with this whole situation and hopefully that we can have a long, very long positive relationship out of this. thank you very much. >> thank you. i had called public comment on

this item, right? i'll call it again in case anyone else wants to speak. oh, you missed it. thank you. thank you for your comments. please call the next item. >> item 12 a, request approval of the second amendment to xluesive negotiation agreement with orton development, inc., a california corporation, to extend the term of the ena until december 31, 2014 in connection with the rehapblation and redevelopment of the six 20th street historic buildings located on or near 20th and illinois streets at pier 70. request adaups of the california environmental quality act findings and mitigation monitoring and reporting program and approval of, 1, lease disposition and development agreement, 2, lease no. l-15814 for a term of 66 years, both with orton development, inc., or its

affiliate, historic pier 70, llc, a california limited liability company and, 3, schematic drawings all in connection with the lease, rehabilitation and redevelopment of the six 20th street historic buildings located on or near 20th and illinois streets of pier 70. this action constitutes the approval action for the project for the purposes of ceqa, pursuant to section 31.0 4-h of the san francisco administrative code. >> good afternoon, commissioners, madam vice president, i think with that introduction i can sit down and you can vote on the item. thank you, amy, for that. as alluded to in the length of that title we have a lot to present to you today. fortunately you have seen some of it recently at the last meeting. i provided some information the bulk of which is in this report as well. my goal is to highlight for you new information to help you

make your decision today. today i wanted to highlight the things we will be talking about at the pier 70 site. we will be asking you to adopt findings under ceqa, to adopt the monitoring mitigation program, to approve schematic drawings and approve the ema agreement. you will see on this slide the premises, historical photo of the premises. building 101 is the building closest to us on the corner of 20th and illinois street and in the background you see the historic core of the pier 70 area. this project will rehabilitation and reuse historic maritime buildings as a gateway entrance to pier 70 and the other projects in the pier 70 area. the office buildings will return to office use and i want to point out a small error in the staff report

where we identified a prior office use at building 104. we identified the prior use there as pdr when in fact it was previously it was a prel office building. we also envision for this site the power house at building 102 to become a restaurant or other commercial use, industrial use to become arts or (inaudible) and you will hear later more about the atrium specifically and things we have accomplished since our last meeting to address public access at that location. as part of the ceqa process, as i mentioned last time when i was before you in april, the project impacts are addressed fully in the eastern neighborhood final eir and the project is exempt from environmental review. and rather than going through the

full eir, it qualifies for a community plan exemption which identifies mitigation and improvement measures and avoids significant negative effects on the project on the community. happy to report that on may 7 the city planning department approved the cpe and also the corresponding mitigation measures that i will address next. on to the mitigation monitoring and reporting program. the port in partnership with odi, our development partner, shares responsibility for implementing certain monitoring measures that are in the mmrp as it is

known. so on the mitigation and monitoring program, if you'd give me a second to indulge me i'll double check that i have the right presentation. i apologize again for the delay here and i will hurry through this presentation as quickly as possible. the measures that the port has agreed to help implement and monitor include a traffic signal installation at the corner of 20th and illinois street, citing of noise generating uses, pedestrian

street which i will touch on more, pedestrian road way improvements, limit peak hour truck movements through the site, develop a construction management plan and adopt a transportation management plan. as mentioned the last time we were before you, the project benefits from ab 418 which was passed several years ago to allow non-trust uses on this site to finance the rehabilitation of these dilapidated buildings. ab 418 requires ample public access be required as part of a project and state land staff has had an opportunity to review and advise staff and supports the project as presented. i would like to delve into the project costs summary and i want to point out that the

costs that we discussed with you last time have increased specifically due to a recalculation of an impact fee, the transportation impact development fee. so the number that we show you today is 76 million dollars. the number we showed you back in april was 74 million dollars. here we identify the sources and uses of the funds for the project and you will notice the port capital remains constant at 1.75 million dollars, which is 1 1/2 million of port capital funds and a small grant from the state. the seismic loan is 20 million, historic tax credit generates up to 14 million dollars and private debt equity is increased in this presentation to 41 million dollars. again, that addresses the transit impact development fee. and you'll see the uses here identified as 56 million

dollars in hard costs, soft costs of 14 million dollars, and financing costs of 6 million dollars. one of the financing tools that we will use for this site comes through 1992 general obligation bond identified as seismic safety loan program. this is a program again that is available specifically to address seismic needs for unreinforced masonry buildings, which this site has 2, building 103 and 104. it provides lower-cost financing, replaces higher cost developer equity and does not have an impact on the city's general fund and again is secured by lease hold to the developer. touching on developer financial capacity, this is a very important part of our work

over the last several weeks and i'm happy to report to you of the 35 to 40 million dollar letter of intent the project has secured by a major bank, secured by a personal guarantee by edward orton, the port consulted and contracted with a third party to review mr. orton's cash flow and cash equivalent assets and is able to report through our consultant that there is ample assets to fund the maximum $14 million equity contribution on behalf of the developer and also to satisfy the liquidity requirements of the bank loan mentioned above. so quickly to summarize financial terms, odi will invest up to $14 million of equity, minimum equity contribution is $5 million,

approximately or the port will participate in the deal structure according to the following waterfall of events, beginning with repayment to odi of their equity and a 14 percent return on that equity. that is something you've heard before. the next item i'd like to poupbt out is a new item that we were able to negotiate over the last several weeks. following odi equity repayment, the port's capital in return would also be repaid and following that the port and odi would share net revenues at a 50-50 clip. should odi out perform the performer, meaning should the port participation rent be exceeded based on what the performer shows, we have created a bonus incentive for odi to participate for a limited period of time for 20 years at a 20 percent rate. next i'd like to show you --

going to show this in a graphic format. you will see on this slide the construction period and a repayment period as discussed for odi's equity, then you will see in the blue color at the bottom, beginning in 2024 the port's equity repayment. on top of that participation rent based on the pro forma and beginning in 2034 that's when the base rent begins, a minimum required base rent. it's important to know here that i mentioned a bonus to odi if they outperform. the wlak line beginning in 2024 is on top of the participation rent through 2044, i believe, is the maximum period of bonus available to odi should they do very well on this site. as far as the summary of the

financing for the port, beginning in 2024, as you see here, these items are in a recapture, these items kind of capture the graph on an annual basis the port would receive $298,000 of equity repayment for a 10 year period and also $122,000 in participation rent is projected. in 2034 the port's minimum base rent would dmik at $240,000 per year and participation rent is anticipated to be $692,000 per year. so looking at the total 66-year term of this lease, total port revenues are $212 million dollars, which if you take a net present value of that becomes $12 million in today's dollars. a few moments ago i mentioned that some of the work we would be doing on site would be funded