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 through an

infrastructure financing district. specifically we would capture net increases in property tax on the site and with the city's approval bond against that to fund (inaudible) investments to the tune of 5 or 6 million dollars. we've done some considerable outreach and effort with the consultant and the developer and the community to identify public realm needs for the site. if you have been down there you will see the stated condition is poor. some of the work i will mention next and show you examples of is critical to the project and allow the public to get to the site safely. this work includes sidewalks around the siting, street lights and ada access improvements. it's important to know the ifd approvals are subject to the board's vote. quickly, some graphics that

show some conditions on site, some accessibility items would be addressed including cracked and incorrectly sloped sidewalks. there will be some patching of sidewalks and intersection improvements to improve the flow to the site and flow to the project for vehicles, trucks, pedestrians and bicycles. we would use some of the funds to patch sidewalks again and to make sure that all the sites are accessible. again, some detail that the port staff put together again with the help of our consultant to identify the total costs of these improvements and to show you how they would be phased in over time to match the taxing inflows from the ifd i would briefly like now to kind of review the transaction documents that we discussed last time. the primary, there are two primary documents, the

first is a lease disposition and development agreement. again it delineates the requirements to rehabilitate the site and sets benchmarks for the developer to meet. it requires insurance be in place, identifies the termination fee, the key exhibits to this document are a scope of develop. ment and a schedule of performance that schedules what the developer must meet to keep the project going forward. schematic drawings are attached to this report and available from the secretary and you are being asked to approve those specifically and the development budget. the other primary transaction document is the lease, again a 66 year term is proposed, the uses as described earlier would reactivate office use, reanimate the light industrial spaces of the site, includes

the rent provisions discussed a few moments ago regarding minimum rent, percentage rente equity repayment, and there's a participation and transfer proceeds down the road. the final transaction document is an ena amendment. obviously there's an ena already approved for this project with orton development, inc.. we are now asking you to extend that term to allow sufficient time to gain all approvals. the term otherwise would expire june 20th. we had hoped to get all this done before june 20th but we anticipate a little more time to get through the board process especially considering the budget process we happen to coincide with. we would ask for december 31st of this year.

as mentioned since the last time i was before you, we have been working with the developer and i wanted to highlight a few of those being with you, the first being sublease oversight. the port retains oversight in all of its leases. we have negotiated in this sake for tenants greater than 100,000 square feet that the port has a right to review and approve those subleases. specifically at building 113, the initial major tenants for that site the port has requested and wants approval rights for. that's important when we get down to uses, the next bullet point. one of our goals for this project from the beginning has been to ensure it maintains a light industrial feel, light industrial use. and we believe the port's oversight especially

in building 113 will help ensure that that happens. with regard to required public access, we have been working with orton and the community to make sure we have enforcible rules that dictate clearly how the public access space will be accessed, how and when it will be open and what uses can occur there and we believe through the last few weeks we've come to a satisfactory result to clarify signage requirements to identify where this public access is and confirming the effort to maximize that access, especially through the atrium of 113. so here's our schedule looking forward. today is may 13th and we're asking for your approval of the actions mentioned at the beginning of my presentation. following which, assuming your approval, we would proceed to

the seismic loan committee review which informs the capital planning committee process in may and june of this year and with those approvals going to the board budget and finance committee, the board budget analyst, and with a recommendation from that body moving to the full board for approval. assuming all that goes according to plan and again as mentioned, recognizing we are entering the budget season for the city, we anticipate executing the lease and issuing the port building permits once the lde requirements are met and the loan conditions are fulfilled in august of this year with construction starting this summer and after 18 months or so of construction activity, occupancy occurring in spring of 2016. commissioners, as i believe you are aware, this project has many benefits to the port. it rehabilitates and reuses six

historic structures that are largely vacant today and have been largely vacant for many years. but for a project of this size and scope and capabilities of this developer, these buildings face a very uncertain future. the project creates new public spaces, as mentioned, which we believe will animate the site on a daily basis. importantly, the project eliminates from our capital plan 110 million dollars of unfunded costs once we are able to get this space improved and generating uses and generating tax revenue. we can look to the developer to maintain them for the next 56 years. and through those uses create 50 to 60 million dollars of assessed value that can be bonded against to derive funding for the port and of course as mentioned and shown on the graphs earlier, it improves the port's cash flow. and to touch on a few other

project benefits, i would like to congratulate our development partner for establishing a healthy productive relationship with the contract monitoring division of the city and working with them to agree upon certain lde goals for this project, including 17 percent for project work. i should also note that the loan, the seismic loan that is being sought, also carries its own local hire requirements which the developer will meet, which the developer has to meet. and the project provides permanent jobs, 400 to 500 jobs, when it's completely filled and occupied. during the construction period approximately 250 jobs, full-time equivalent jobs would be created on site. we believe this activation will animate the neighborhood, there's a new subway coming, the central subway, which will benefit from these new riders. the t line

itself already would benefit from these new users and the project creates new space to support the cities and the dog patch neighborhoods thriving manufacturing and industrial uses. in conclusion, commissioners, i would like to thank you for your time, first of all, and your help in moving this project forward over the last several years. today's action by you is a major step forward in returning the pier 70 site to the community. significant historic rehabilitation here will preserve and enliven pier 70 with activity uses and vitality and create vitality to the larger pier 70 area. the reimagined historic core will be enjoyed by working and visitors to the port's working waterfront. staff's recommendation today, commissioners, is to approve the second amendment to the ena, adopt the findings under

ceqa and the mitigation and monitoring program, approve the transaction documents, approve the schematic drawings, direct staff to seek approval of the public financing tools, specifically the seismic loan and the ifd and with that i'd like to again thank you and thank port staff, many port staff from johnson stern to byon rhetts, jamie has been on the team and working hard on financial analysis, many others. this has been a cast of thousands to move this project thousand and we're very pleased to present it to you today. with that we're available to answer any questions. >> so moved. >> second. >> don't forget, kathleen -- public comment, our first speaker is toby levine,

followed by colin woods. >> i see you must have seen on my note that i had to leave at 5.15. i sort of hoped to escape but i guess that's not going to happen. thank you very much for moving this project along this far. as you probably know, there are several of us who have been working on pier 70 and particularly the historic buildings since probably 10 years ago. so this is a big step and i know if there are supporters of the historic buildings here, they are going to be thrilled once you make your vote and we are thrilled. one small thing i would like to say about orton, and that is that they are very, very

accommodating when problems arise or little glitches occur they are always very happy to move in and try to straighten things out and then just move on, which is the right way to be, i think. so i urge you to support all these documents today. thank you. >> thank you. karen. >> good afternoon, commissioners, karen woods, with toby cotere of the central advisory group, we've worked on this project for many years. we're very excited to move forward on this project. as toby alluded to, we came up with a minor glitch and orton and the port staff stepped forward. we're very concerned

to maximize public access and the agreement that we've heard from orton today is that it will evolve as security and safety issues are resolved, as the buildings are tenanted, and we're looking forward as the community to working with the port and with orton to maximize that public access, to make sure that the atrium and the plaza are true connectors to the rest of the pier 70 site, and we urge you to approve these and let us begin. >> thank you. >> hi, commissioner, kate suffus, representing sf made, our city's manufacturing sector representative. we're very

excited to see this project move forward. we often look with jealousy at places like new york that have the brooklyn navy yard which has been such a tremendous asset to provide expansion space for their manufacturing sector. since sf made has been engaged for the last 4 years we are blessed to work with over 540 local manufacturers all producing in the city limits of san francisco. it's been growing every year. we added 10 percent, more than 10 percent net new jobs year over year. our main challenge right now, the main limit to the growth of manufacturing, is actually now space. so we really see pier 70 specifically historic pier 70, as a tremendous opportunity to have expansion space for both manufacturers of a small scale but frankly those larger buildings are some of the very few we have left for more significant expansion opportunities. and so i will just add today i'm in support of your moving forward with this. i would

like to see us all stay closely focused, keep our eye on the ball of getting new manufacturers as well as we can into those spaces. i think we can just scratching the beginning of closer collaboration with the orton team. i welcome that and look forward to that and i hope that we will, when we look back on this, see a vibrant mix of uses but especially that we successfully tenant some manufacturers into this space if we want to get those jobs numbers that we're saying are one of the goals of this project. the manufacturing sector is one of the more powerful ways to do that and still have industrial space. thank you very much. >> catherine hooper. >> commissioners and monique, you normally hear me in front of you talking about fleet week

or cruise ships and as i sat listening to this presentation, it occurred to me i am a daughter of that area. my grand father worked for bethlehem bridge and helped build the golden gate bridge. my father worked for bethlehem steel and this is a historic area. aside from the responsibility we all have to make this a profitable lucrative area, to maintain the historic area is really important. bethlehem steel put me through college, they took care of my family and i'm really excited we're going to take care of this area. thank you for all your votes. >> is there any further public comment? seeing none, commissioners? >> thank you and i thank you phil and onathan and byon for

all your hard work. i want to say we've made a lot of progress which is represented in this presentation so thank you very much. i did have a couple questions just to make sure i had all the questions right. question no. 1 is we do have return of port equity, which is great, and you do mention the rate of return. has that rate of return been agreed upon at this point? >> commissioner, that's a good question. i'm sorry i failed to mention that. the rate of return is capped at 7 percent for the port but it's based on -- jonathan can probably answer this better than i can, but based on our tax flow revenue rate. 7 percent is the cap. >> my second question relates to you mentioned on one slide the ifd costs of 5 to 6 million and i guess in terms of the uses of the fund now with 76 million i wasn't sure whether the public improvements, are

they separate from the 76 million and then that leads to my second question on this relative to while we expect once the ifd is in place that we will be able to get the revenue off that to repay, but obviously you have to make the improvements up front. so where do we stand in terms of how that will be funded. >> the ifd, public realm expenditure, is separate. the second part of your question, i believe we identify a need to find some bridge funding to implement some of these measures. i can pull this chart if it helps you to see the numbers, but until the tax flows begin, once the tenants are occupied --. >> we just couldn't read all that fine print. >> i apologize, jonathan stern

with planning department. to answer your question, we program about 6 million with inflation on expenditures in the public realm in the first 10 to 12 years of the project. up front if you will go back to that chart you will see that many of the things, many of the numbers you can't read are in the first column. that's because they are relatively minor sidewalk and ada improvements that will have to happen immediately for the project to open. we have, other than tax increment we do have a minor contribution that's currently programmed into the port capital budge eltd of about $400,000, there's a hundred to two hundred thousand of developer contribution which they have agreed to front to the project and we need a combination of ifd funds and other port funds to the order of $150,000 to do those early projects. at that point we have a little more luxury to complete

projects as ifd projects come in. those include redoing all the street lighting, repairing some of the other shoring building 40, building 105, other areas that makes the area safer so we can safely have pedestrians in the public realm and the biggest ticket item is to remove the electrical from 102 to make that usable. so we have programmed that in year by year on the chart you can't read. >> what you're saying, and i'm sorry i couldn't read the chart, outside these initial funding sources we have identified, the ifd will kick in, we don't have to wait for all the improvements to be made before the ifd funding comes into play. is that what you're saying? >> we can do the early projects we have to do then we have the luxury of waiting for funds to come in from the tax increment to complete the final projects. >> but the tax increment is based on the value so how does

that get assessed when the value hasn't been created yet? >> in creating this plan of finance with the ifd, we met with the san francisco city assessor, we talked about what the overall valuation was likely to be and how we expected that to come in. what they have said they do, technically is they, when they receive a final lease like this, they say, they would do their first estimate, when this comes to us as a completed project it will be worth $50 million and will be built over two years and they will ramp up and create a tax program payment plan. we thought the minor amount of money we needed in the early years of about $150,000, conservatively we thought it would be there. >> we are self-funding this and that won't be a problem going forward. >> about $33,000 we might have

to borrow from someone else. >> $33,000 we can find. my next question is related to the graph you presented. i wanted to make sure that i understood that odi expects to be repaid on their equity by 22, and our equity would be repaid by looks like 2032, i'm just trying to make sure i'm reading the graph correctly. >> the port's repayment period is 10 years. >> then the participation, the red bars is where we're spliting both with orton and ourselves, correct? it's not just our portion, correct? >> that's correct. >> now i need to make sure i understand the black line, which is the bonus, the 20 percent bonus for the developer. it stops, i guess, in year 36 and that comes out

of the red bar? >> when the port's pro forma percentage rents is exceeded, there's a delta above that, 20 percent of that is incentive bonus to odi for beating projections. >> right. but does it come out of the red bar? so, no, it comes out of the other --. >> it comes out of the overage of the port's percentage. >> i'll make two clarifications to that answer. phil is correct but there's two things about this chart i wanted to point out. one is we said the numbers in the april 22nd and unfortunately in the staff report don't include the larger soft costs that phil identified earlier and that does have an implication on the repayment of both orton and port equity. this shows orton equity being fully repaid in 2024 and port

equity starting to be repaided in 2024 through 33, i believe. just to clarify the red areas of this chart represent only the port half of expected sharable revenues, ie, our participation rent, our 50 percent participation rent. so anything above that would be subject to abonus before we begin started to split 50-50. so these numbers shown under the black line represent about 7.5 million dollars of participation rent, about 10 million dollars total with our equity repayment in the first 20 years. if those numbers are exceeded the overage would be subject to a 20 percent bonus for the developer. >> so when the black line stops, which is in year 2036 or whatever, 25, i would have thought the red bars would have gone up faster. because now you don't have the bonus. >> this is the pro forma that essentially sets the bonus. this is our conservative pro

forma. this shows the entire amount of the split. if we are lucky and/orton is as good a developer as they have been telling us, we will have more revenue and there will be revenue above that black line but right now our pro forma we're showing to the banks and the loan committee and we are showing to the port commission today is a conservative pro forma, granted and shows the full split with no overage. >> but you understand my logic of saying once the black bar splits the red line should be going up. >> there's no red bar and so it will be going up. >> okay, i think that's the extent of my questions. >> well, mine is -- hats off to the developer for being on hock for $40 million. i'm sure he knows what he's doing, from

somebody that's put up their own money in projects down through the years, so i know what that's like. i think this is going to be a great project. i'm really excited about it. i've lived in san francisco for 43 years now and i've driven over in that area thousands of times and you look at this eyesore and you say when are they going to do something down there? finally when you get our director and all the staff, i don't know than and yourself, finally negotiate a deal here that works good for everyone. and we're finally almost there. you know the lady that spoke a few minutes ago about bethlehem steel raising her family, educating her, whatever, it's my understanding that we're going to be using steel made in america. is that correct?

there's going to be a lot of steel in there. somewhere along the line i heard that. i'm hoping that's the case. so first occupancy it says 2016. do we have prospective tenant for 2016? which building is that? >> if you really at the last meeting james madison from orton development --. >> a bank or something. >> (inaudible) of the pacific, building 115 and 116. >> right. the other thing that i know there's nobody here in opposition to this. everybody is so supportive of seeing pier 70 something happening over there. just to start with these old buildings and bring them back to their

former beauty is incredible. i'm supportive of moving forward. >> thank you, commissioner. i'd like to say about nobody speaking in opposition here today, i think thanks goes to orton for their public outreach which has been very vigorous on this project, working with trina and toby and others to make sure the community needs are addressed. >> thank you, phil, and jonathan for a wonderful presentation. i think commissioner woo ho has asked most of the questions i would have asked. i want to thank orton development, eddy and james for doing community outreach and working with the community to bring this project along and the fact that we're going to be able to save these historic resources and buildings and create jobs and, in the process, get a little

money in return i think is absolutely wonderful. so i just want to thank all of you, the whole team, for bringing this to us and looking forward to the ground breaking. >> i want to really thank the port staff, jonathan, byron, you guys were great and to eddy, i want to thank you guys because you listened to us at the last port commission meeting and we told you to get the ball rolling. eddy, you listened to me, i told you not to punt the ball and you did a quarterback sneak. the citizens of san francisco will gain from this project and this will be a win. i'm really excited to see this project from the beginning to the end so thank you very much. >> all my questions have been answered. i, too, want to pile on the thanks to everyone