drydock was put there originally. i will circle back at the next meeting and have a more detail for you in terms of how we can look at that more distinctly. >> [speaker not understood] it is articulated responsibilities for steps that need to be taken. in term of which party is going to have the responsibility for adjusting for that. >> bae has all the responsibility. [laughter] >> okay. >> [inaudible]. [laughter] >> but we will come back to you and we will talk some more and have some more specifics for you at the next meeting. >> thank you. >> move on to the next item. thank you all very much for the presentations and, jim, thanks for coming. >> item 12 a, request approval of an amended and restated exclusive negotiation agreement between the port of san francisco and seawall lot 337 associates, llc for the lease and development of seawall lot 337 and pier 48 bounded by china basin channel, third street, mission rock street, and san francisco bay and adjacent to at&t park.

>> thank you, amy, and good afternoon, president katz, fellow commissioner. my name is phil williamson, senior project manager of the port development group. here this afternoon before you with an e & a amendment which i will in a little bit of detail and will be available afterwards to answer questions for you along with other members of our project team. since executing a two-phase exclusive negotiation agreement in september of 2010 for the development of seawall lot 337, also known as parking lot a and adjacent pier 48, [speaker not understood] llc, the port and the city staff have negotiated a nonbinding term sheet with pro poed financial term for the lease and development of the site. last year along with the board the supervisor [speaker not understood] unanimously endorsed the term sheet which included phase 1 as the e & a. a described in the term sheet, the port and developer have proposed a mixed use

neighborhood for seawall lot 337 with appropriate height and density to create a vibrant walkable neighborhood with new parks and public open spaces, commercial space residential space. this past june the voters of san francisco passed proposition b whereby development of port property exceeding existing height limits now requires voter approval. in addition to the typical regulatory approvals we're familiar with on port projects. this unanticipated requirement necessitates an extension of the e & a along with [speaker not understood] of the e & a. i'll list those now. acknowledgment developer has acknowledged phase 1 benchmarks a they have. revise [speaker not understood] in accordance with the expected approval steps. acknowledging that phase 2 of the e & a will expire the earlier of december 31st, 2019, or 12 full months after developer obtains voter approval of the proposed height limit.

revising the definition of outside transaction costs to include project management services of two full-time port and city staff. and addressing the port's right [speaker not understood] date certain going forward. staff recommend your approval of the amended and restated exclusive negotiation agreement as described in phase staff report and resolution and as mentionedth project team is available should you have any questions or comments for us. thank you. >> so moved. >> second. >> public comment? good afternoon, commissioners. corrin woods. not speaking on behalf of sea wag because we haven't talked about it, but i think it's

totally appropriate to approve the extension of the ena. we need to let the dust settle on prop b. hopefully resolve the legal issue that are under consideration now by the state. and i want to say one more thing. i think in your resolution, one of the things it says is that the development agreement should be in the best interests of the port and not materially increase the obligations or liabilities of the port or materially decrease the public benefits occurring to the port or the city, fulfilling the expectations of the port that the development will, in fact, do what we all plan for it to do when they talked about developing this empty lot. this is going to be very tough.

to have the port get the kind of return that it's going to need with this prop b limitation, and i think this is something that you all are going to have to really look at. [speaker not understood]. because i think the financial issues are going to be enormous for the port if you're going to spin-off any kind of harbor fund revenues in a development that's constrained by nimbiism. we will continue to work, seawall will continue to work with the giants on this project. we hope it will go forward in a way that's a benefit both to the neighborhood -- my neighborhood, i live there -- and to the port. and i just want to point out one thing. the second amendment item 5 which says it's done isn't

done. there may have been an agreement in principle to include what was mission bay park p-20 apart of the seawall lot 337 project, but as far as i know, and i think i should know -- somebody should have told us -- this still needs required authorizations from state land commission, the legislature, the successor agency, the oversight board, the supervisors and other city agencies. to the best of my knowledge, that hasn't happened. to the successor agency's knowledge, that hasn't happened. so, i think that needs to be put back as an item that has to be done. we what page? page 3 number 5. >> the top. >> ah. >> under the second amendment? under the second amendment. extend the site to include p-20 and the approximately .58 acre

marginal worth. the p-20 part is subject to the mission bay plan. there are a lot of approvals that need to be done and that should go back on the to-do list. thank you. >> thank you. is there any other public comment? seeing none, public comment is closed. so, before we ask question, could you address that point? >> let me read number 5 [speaker not understood]. item 5 for the second amendment in the staff report reads, expand the site to include p-20 in the approximately .58 acre marginal wharf [speaker not understood]. regarding p-20, then it says done. so, with regard to the giants and/or the mission rock development, it's been done as far as -- >> ending the sitev. >> that the site is there and

that's -- as far expanding the site and planning how the site is going to work and the infrastructure, we want to have the ability to do that so that we can plan comprehensively. the footnote states we have a lot of work to do. corrin is right, there is a lot of work to do before we legally [speaker not understood]. >> [speaker not understood], it refer to the fact that p-20 is just included in the project, not that all the approvals and not that the planning for it ha been done? >> right. your prior approval to the site is with all these caveats. >> yes, lots to do. i'll start on my right. commissioner brandon? that be you. >> can you just briefly summarize what the new phase 2

benchmarks are? >> the benchmarks largely stay the same. with this e & a accomplish and the benchmark accomplish, it allows for some additional time to get to a ballot in the future. we don't have a clear confirmed ballot date yet so the benchmarks do, [speaker not understood] the height limit adoption which is the ballot measure. so, putting that out there with the most accomplished dates of december of 2018 it allows all the ceqa approvals and the full entitled project accomplished. so, what we've really done in the benchmarks is really add the capacity to expand into the various election windows going forward. >> so, what what the original benchmark?

>> 2016. >> okay. and is there a fee associated with this extension? >> no, the fees for extension are the same. they're $50,000 per extensions. again, we don't know how much time we'll need yet because we haven't figured out yet. we're working on figuring out an appropriate ballot to [speaker not understood] for. but the fees still exist as they did before. >> and when is the next fee applicable? >> i believe the first fee would be at the first -- i want to say 2018, but i'm not positive. i need to check my notes on that. >> i think we already received one paid fee. >> yes, there is still one more extension. >> [speaker not understood], but i will do that. [laughter] >> wasn't me.

>> [speaker not understood]? >> i'm in support of moving this forward along as we work out all our [speaker not understood]. >> yes. thank you, commissioner. >> [speaker not understood] taking the time to make sure we get everything right, get the full community support. so, thank you for the [speaker not understood]. next item. so, all in favor of the resolution number 1416 say aye. >> aye. >> owe poed? resolution 14 60 carries. ~ opposed >> thank you. item 12 b., informational presentation on lease no. l-15892 between the port of san francisco and tmg pier 38 partners, a california limited liability company for premise located at pier 38 in the

central waterfront on the embarcadaro at delancey street with an initial term of 25 years plus two five-year extension options granted at the sole discretion of the port. >> good afternoon. my name is john [speaker not understood] with planning development. i want to give you just a brief overview to give you a sense of what the flavor of the development is going to look like and outline of the business terms. first and foremost, pier 38 has been vacant since october 2011. the port issued an rfp for the pier 38 bulkhead in november 2012. the goal of the rfps was to repair and retenant the bulkhead building, defined as the bulk had had building -- defined as a portion of the shed. with the intent of bringing it back into economic use, ~ creating a waterfront amenity, and providing ongoing revenue

to the port. the rfp, by virtue of just being the bulkhead did not extend to the entirety of pier 38, the rfp acknowledged the proposed project would be relatively small in scale, but would require substantial investment to rehab the building in order to amortize the capital investment. we knew from the outset this would be a very challenging project. the port received two responses to the rfp. both responses proposed a similar use program and lease term. both responses proposed a 20-25 year lease term and this is unlike other lease improvements that can be performed within a ten-year interim lease framework. and it's also different from doing the entire pier structure which would necessitate a pier sigh mike upgrade of the pier which would require substantial

investment and a 66-year term. ~ seismic so in between this is a kind of unique and hybrid project and we just made this project particularly challenging. ~ and which has made in december 2013 nearly a year ago, the port awarded abopportunity to tmg pier 38 partners which is a partnership between tmg as well as with premiere structures which is an lbe. port staff believes that tmg as a master lease developer will bring a high quality development project as well as high-quality tenancies. the port has submitted a staff report for your review that outlines potential project. we would love to get your feedback on that. in a moment i'd like to introduce tmg representatives, describe the project. their program to repair the

bulkhead, their strategy to retenant the bulkhead with office and retail uses as well as a program to enhance public access and maritime uses that will inevitably complement the new -- relatively new brannan street wharf. depending on your input and direction, port staff intends to complete negotiation and lease documentation and bring it back to you for your consideration as early as december 16th if possible. that is dependent upon the determination of environmental review. and in conjunction with that, we will have and we have had conversations with bcdc and the state land staff with regards to maximum public feasible access as well as with trust consistency. so, let me introduce you first to michael [speaker not

understood] and then amy [speaker not understood] of tmg. they will describe how they will make the pier 38 bulkhead improvements and bring this port asset back to economic use. and then following that jeff bauer of staff will present an overview of lease term. so, i give it to michael. there you are. >> hello, everybody, executive director moore, president katz and commissioners. we are pleased to be back here. john described a little bit of where we are. it's been an interesting couple of years as i think all your projects are. this is a complicated port lease structure so we've been working on it really hard. we think we made great progress and we think we're ready to sign a lease. it's been an effort to try to get the goals of the commission which included things like reactivating the pier, making things happen that were exciting. we appreciate the group before us for winning the world series so that our neighborhood is now

more exciting than its was before. we think that's going to be a big factor going forward. we structured a couple of things to help the port in terms of the substructure and the reserve that were required. we gave a couple of options to the port to terminate the lease with certain penalties. all of which i think was an effort to try to make this meet the port's requirement as well as us to create a financially viable and exciting project. so, we're pleased to be here. as i said, i think we're up to 7-1/2 yard line maybe of getting a document ready for you to sign ~. so, as the one who leaves no introducing, amy notches is going to give you a tour of the project and tell you where we are. >> [speaker not understood] we're at third base and ready to get home. [laughter] >> good afternoon, commissioners. i'm amy naturales. we are, of course, really pleased to be here ~.

we've been working a long time with you and your staff on this project ask we're really please today share with you where we are and hopefully be ready to move forward with you. as we thought about this project, as we've been working on it with you, we've really had a number of goals that have been really informed on negotiation and our planning. one, of course, is to help meet your goal to rehabilitate the pier, to put it back into active use and to make it something that really is a public benefit to the community and to the port. we have been very focused on trying to maximize the use of the port consistent with the occupancy and the sigh mike condition. as john explained, we are not doing the full-size mike upgrade of the pier although we will be doing some substructure repair. as a result we are really limited based on the code to a certain occupancy level which happens to be 634 [speaker not understood] persons in the pier. we have worked very hard along the way to make sure that the project that will work for both bcdc and state land to make sure we have an approvable

project. and finally certainly not least from our point of view, we worked very hard to get the right balance so we have an economically feasible project that balances investment in the bulkhead, financial investment with the opportunity to do leasing that supports that financial investment. we have put together a team that we think is fantastic in addition to our jc partner, premiere structureses. we have fantastic consultants. i think you will recognize many of these names. cathy simon and her team [speaker not understood] of course were the architecture for pier 1. [speaker not understood] fantastic structural engineer that recently did the exploratorium pier. and pier 35 cruise term 23458 project for you. so we feel that we've surrounded this project with the best team that knows how to move this forward. the context of this project really is south beach. as you look at this, you can see pier 38 at the foot of

townsend street, between townsend and [speaker not understood] is in the outline. to the south of us of course is the ballpark. south beach harbor, and to the north of us is the brand-new brannan street wharf and really pier 30 is an important part of that pedestrian experience of these parks and this open space in the public realm. this aerial view of course is helpful. it showed not only the portion of the bulkhead which is on the loft, but that portion behind the bulkhead is the thing we refer to a the me 19 area. it's an area i couldn't say quite why the roof looks different but it does. ~ mezzanine it's the area thats was built out for office to be reused that john was referring to. and you can see the existing [speaker not understood] that exists that was built and is existing now. this is the parcel plan for the project. on the left is the bulkhead in

green. behind it is this mezzanine area which is actually two levels in blue. behind that is the pier and north of it in yellow is the [speaker not understood]. i'd like to break that down in a different way for you really by uses. so, the area outlined in red which is the northern portion of the first floor which faces out onto the embarcadaro, faces the brannan street wharf and into that northboundv abraham [speaker not understood] to be a full service restaurant. so, that's 3500 feet ~ and right a jaytionthv sept to it is an outdoor dining area on the north apron. the bound of the first floor south of the entryway and that entire second floor that you see just below for the purpose of the plan, that's going to be office space. that's about 20,000 square feet of office space. so, in this entire project we have about 23,000 occupiable square feet that is the economic driver for the project.

that's where that 634 imputed people will be under the occupancy code. moving back into what is called parcel c in the memo that you got from the staff, this is the open shed area. that is not part of the permanent occupancy, but we will use it for accessory parking for our tenants and we are -- have been in discussions with the staff and with the port fire marshal about the potential to use it for periodic special events subject to the ability to get a temporary public assembly permit for each event and make sure that it's safe for use and that is what our intention is. to the north of these uses, of course, the north apron that you see outlined there including the marine structure, that's about 11,000 square feet. coming in closer on that, you can see this is our public access plan and can see we'll be having the dining just adjacent to the building and

then the broad public walkway that will connect to the marine facility that will be used for guest docking and water taxi. in addition to the north apron becoming public access which it what under the previous [speaker not understood], for the first time that floating dock will also be public access. will also be dedicated public access, it will be available to the public at all times [speaker not understood]. i think you can possibly see in the plan the public access area will be improved with bench he, with tables, with writing until to make an amenity. it faces the brannan street wharf, we think will be very nice. the investment to support those use he that you've just seen is quite substantial. we'll be doing work to the facade, to the roof and window, all kind of system we'll be doing a great deal of upgrade including two-stop elevator to make the upstairs accessible, making the bathrooms accessible. the project needs a great deal of work.

we -- all of the work that we do will be consistent with the secretary of the interior standards for historic buildings. of course this is an historic [speaker not understood] i believe one of the oldest piers on the waterfront. as you can see, our initial improvement costs are in excess of $7 million. this is in addition to costs their things like tenant improvements, commissions, total project cost is in excess of $10 million. that will be our investment in this. so, i'd like to show you what some of that money is going to look like from the outside. so, this is a picture actually taken from the brannan street wharf which shows the north facade of the pier actually adjacent to the public, to the future public access way. as you can see, it's not in very good shape. some of the [speaker not understood] has actually been removed. it's really in pretty rough shape. >> where it says condemned? >> condemned, exactly. we've been scrubbing the paint. this is a close up of some of

those openings. you can see that it's not really a credit to the brannan street wharf or to the condition of the waterfront. therefore, our intention is to repair that facade and put glazing into those very large, very gracious openings. we will do appropriate historic treatment which is actually to rollup the rollup doors where they still exist and protect them while creating a grazed opening and allows light in and see into the historic structure and will look i think really nice. this is similar images of windows, the new window. actually this is pier 1. in contrast, the openings in pier 38 are much larger, will be much more dramatic. this is the front facade, the west facade, the entry to the building. it retains virtually all of its historic feature, but you'll notice that the front of it is

now just closed off with a very unattractive chain link fence. our intention is to put a glass rollup door in there that will allow light to come in as well as cleaning up and repairing the facade. this is the current state of that north apron. this picture was actually taken from inside a locked gate which now presently closeses that public access off so that the public cannot enter it. as you can see, not only do you have the messed up looking rollup doors on the west facade, the [speaker not understood] is in very poor shape. it would not be comfortable, particularly for someone who has a disability problem. ~ deck the railing is in poor shape. it is not looking too well. we intend to do a full level of public upgrade to that area really to help integrate it into that waterfront promenade into the brannan street wharf. we will be upgrading the

railing. we'll be putting new decking in, lighting, new benches. we will have an outdoor even area adjacent to the restaurant which we think will liven it -- >> you're going to upgrade as far back as that gate there. >> that is correct. the rest of it has not been structurally repaired and really cannot be used. this is really more closer view of what those infill windows will look like as you're standing on that public access area and give you a sense of the ability to see in and have a different experience of the pier. finally this is kind of the view right now. you can see what is supposed to be the public access area, the north side, the left side of the front facade there. and here's a rendered idea of what that would look like with restaurant activity on the lower north side. office use above. and this very improved public

access area on the north side of the pier that you see there. moving forward, i think as john alluded, we have been making i think excellent progress getting this project ready for your approval. we have had actually excellent discussions with the state lands commission staff just last week in which they seemed very enthusiastic about the project, about the uses, about the public access elements and the lease terms that were discussed with them. we've had multiple meetings with bcdc staff to develop that public access plan that you see and we believe that they are prepared to recommend that that go forward. we are working through the ceqa review that really is based on historic resource he evaluation report and we are trying to finalize the lease terms with your very hard working staff. once we get the lease approved, which we would hope, including the board of supervisors will be early in 2015, we will start to work on pulling our permits. once we pull our construction

permits, the construction period for those initial improvements is about six months. so, i thank you very much for listening and we are very happy to tell you anything in addition about the project or answer any questions you may have about the transaction. thank you. >> commissioners, good evening, jeffery bauer, port leasing manager. i thought we had concluded our lease negotiations. >> [speaker not understood]. >> okay. the lease provides for a term of 25 years. there is a 12-month construction [speaker not understood] period in which no rent is paid. that can be extended under certain condition for another 12 months. there are two five-year extension options and the lease provides for a market rate adjustment. and by point of just to clarify

the title in the staff report, those options would be exercised if there was a need to further amortize any substructure improvements. that was one of the challenges of this lease. you have a small footprint. you have a large investment and a short-term to try to amortize those improvements. the lease also provide for a cpi every five years. there is a floor no less than 10%, no more than 20%. the rent is equal to the greater amount of the base rent or 15% of effective gross income. an effective note, if you would care to know, i can discuss that. the lease provides for a 15% net proceeds on the sale or transfer. there is a minimum, as amy said, minimum investment of $7.2 million.