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. there is the ability, as the lease provides, for lease credits. total rent 50% of the total rent may be applied for is rent credits. for base building and [speaker not understood] only, there are no credits for tenant improvements. there is also an additional 25% sinking fund. we haven't totally worked out how we're going to address this issue, but there is an additional 25% credit that will be used towardses additional --

additional substructure repairs. there is a -- port has the right for an early termination. this is unusual. and the lease encourages local business enterprises, climate change. we anticipate the term of the lease, that this will not be impacted in the short term of the lease, 25 -- potentially 35 years lease. there is a street deposit that is due, $50,000, and there is all performance in contractor guarantees for completion of the project. and that concludes my report. >> public comment? the first person i have is john

cain from [speaker not understood]. is he still here? hi commissioners. monique. my name is john cain owner of [speaker not understood] restaurant pier 28-1/2, one of the closest restaurants to this project and i'm here to strongly support this project. i think the restaurant is a great idea there. i'm from the school of restaurants more is better. i think the more people that come down there, especially during that window of two-hour before the game, two-hour after the game is a great opportunity for more people to feel comfortable walking down towards bart or any other form of public transit to get to the game. and then the special events opportunities here is great for the whole neighborhood i think. our biggest weekend ever were this last world series, this past fleet week and with

america's cup last year. and i think this is an opportunity for those kind of events to bring greater impact into the neighborhood. i strongly support the plan and urge you to approve it. thank you. >> any other public comment? seeing none, public comment is closed. commissioner murphy, i know you need to leave shortly, so, have you ask questions first. >> what is this escalation mean on this spreadsheet? 170,750? i know what it means in real estate terms, but -- >> is that the cpi you're referring to, the escalation? the minimum rent, the base rent, there is an escalation. it's every five years. we do a cpi. the minimum is 10%, the maximum

adjustment would be 20%. >> and the hard cost? >> yes. >> sorry, it's confusing. it's in the cover of construction hard costs, you're referring to rental payments? i'm not sure whether those are -- >> just the construction page. >> what page is that? >> project exhibit b. >> i am not reading that part of the lease permit. >> commissioner, i'm going to jump in and try to help. i think i know what we're talking about. this is on exhibit b. when we do projections of costs, when we do the initial projection of costs, we do a projected escalation based on when we think construction will start, based on where we think construction costs are going. however, the actual initial improvements cost which form

the rent credit amount will be based on actual costs. so, our escalation estimate may be high, it may below. this is just an estimate for now since these -- we had planned construction out there doing this estimating probably six months ago. we're not going to start for a few months. this is just an estimate. the actual costs will be based on the actual contract and the costs will be verified by your staff. >> there's no de-escalation, no? >> we would you all like to see some de-escalation construction. ~ >> we typically plan about a 15% annualized escalation and construction cost. >> thank you. >> commissioner brandon? >> is there any percentage rent on this lease? >> yes, 15%. the rent is calculated 15% of net effective income.

>> what is that -- base or 15%? >> the greater of. >> the greater of. >> the greater of. we're guaranteed $25,000. on the up side, we participate the greater amount of 25,000 or 15%. >> is there a [speaker not understood] on this project? >> there is [speaker not understood] respond? >> not yet, but there will be. >> when we bring this project back to you, there will be a cmd goal. >> okay, thank you. >> assuming we go through with the approval process, this is informational, and the final approval, what is the timeline for when we will see tenants in this building? >> we would hope to have tenants in the building next fall. it depend on our ability.

we have to get the lease approved, state land wrapped up, bcdc approval. we have to get our permits. so, as you all know, that takes time, but we would hope that by next fall we would have tenants in place. >> and are you in negotiation with some prospective tenants now or you're waiting? >> we are in discussions now. >> and at what point would you be able to disclose so we have a sense whatv kind of tenants are coming in? >> i think after those leases are signed. >> prospective lessees you would have a lease first before they could conclude anything with you. >> i just want to clarify [speaker not understood] on the cmd growth. the lease doesn't have a cmd goal under the administrative code, but the port commission does and that is correct, we are discussing that. your feedback discussion begin

at the bought many of page 6 of the staff report. so, i just want to clarify. the city's official contract monitoring division, cmd will not be setting the goal, but the port staff will be negotiating a goal. is that responsive commissioner? >> thank you. i had a couple questions with respect to some of the improvements around the apron. so, it was highlighted that there would be some improvements and extending out public access along the apron area there that there would be some impacts potentially improvements on substructure. was that contemplated initially in the area or would that -- >> [speaker not understood]. >> that's what i'm getting at, just substructure costs and responsibility for that area. >> the area that you see in yellow is the area that had substructure repairs done by the prior tenants which is why

that is the limit of repairs for us. we believe that we have inspected it. we believe it is generally sound. there will be repairs to it, but it is structurally appropriate. going beyond that it will be virtually impossible without doing a full-size mike upgrade. this area is reusable and we believe will support the use very well. ~ full seismic one of the questions i had in terms of the expansion into the area c, i guess it was termed, and the inside of the shed for sort of potential events, that sort of thing, have we determined -- so, that would be some additional fund whether there would be a split on the revenue generated from those events or how that would work? >> any revenue that we earn from that would also become part of your 15% participation. so, if we do -- if it goes well and we are earning revenue, you will be as well.

>> would that be the separate from -- >> yes, it goes into the whole thing. >> i think i got the sense of it so far. excited to see this project moving forward. and i think as is pointed out, it's an area that is becoming more and more lively. it's a great time to see it getting back up on line, so to speak. so commissioners? next item. >> thank you very much for presentation. >> thank you very much. >> item 13 architects request approval of fiscal year 2014-15 executive director salary. >> good evening, port commissioners, elaine forbes, [speaker not understood]. set the salary and working conditions for the current

fiscal fy 2014 and 15. the port's executive director position is somewhat unusual in that it's not represented by a union agreement. an mou, nor is it covered by a labor contract as with department head of the [speaker not understood]. the charter grants this body exclusive authority to set the compensation of the port director and the charter also provide that the executive director's compensation will not exceed prevailing salaries paid to others who are in similar positionses in comparable maritime employment. in prior years we have provided you with a salary survey, port directors of major west ports. and entered as departments similar within the city and county of san francisco. we recommend consistent with past practices that the benefits and working conditions for our executive director be in accordance with the municipal executives association and the mou,

memorandum of understanding. most city department head are represented by nea. to the salary survey, we surveyed eight ports and really looked specifically at five of those which are sea ports. they have a salary, $272,000 as of november 5th of this year. and it ranges between 225 in stockton to 350,000 in long beach. the other salary is 279,000, nearly 280,000, 2 19 for public works [speaker not understood]. our director salary is lower than the average of other sea ports by 2143 2 and lower than the average of similar department head in the city and county of san francisco ~ by $29,000. as a matter of practice, you

typically set our executive director's increase consistent with mea. this year, all mea represented staff have a 3% increase effective october 11th. that is really equivalent to a 2.07% increase for the current fiscal year. we do recommend that you increase our exec ~ executive director's salary. you have the authority to increase the executive director salary in the range of other ceqa directors. you can set the salary for budget year fy 2015-16 since the mea m-o-u is set for next year. the resolution is currently crafted is just for the current year. we also recommend that the benefits and working conditions for the current year be the same as our mea m-o-u provide. and i'm here to answer any questions.

thank you. >> so moved. >> second. >> is there public comment? seeing none, public comment is closed. i think in looking at the numbers here and the restrictions that have been placed on salaries the last several years and that our executive director salary is significantly out of sync with other sea ports and department heads, i'd like to explore increasing that recommended salary number to something a bit higher in the range of 2 62,000, which would be not quite 4,000 over what was recommended ~ in the staff report. commissioner, if you have any thoughts. >> could you translate that into a percentage, overall percentage? ~ from her current salary?

>> i can do it in my head. [laughter] >> it's $12000 over my current salary, which would be about 5%. >> and i guess elaine, just so we under from a forecasting standpoint, i think the preference of the commission is not to do [speaker not understood] increase at this time even though we know the budget process allow us to do that. so, we just want to under if we were to increase more than the current percentage that you recommend according to the mea guidelines, that would not push us into having to do something less next year. you know what i'm saying? >> it would not. the port has a certain level of salary savings. i mean, we certainly budget by

position and then we have vacancies and attrition and it takes sometime to hire. so, we always have a little bit more salary allocated than we have physically budgeted. not every employee is pulling on their salary every day. so, we can certainly afford a slightly larger increase. >> we would want to hear next year because of the budget, we have an issue now that -- >> no. >> so, we need to just make sure we under the consequences of the actions we take now. >> absolutely. our salary saving is in the hundred thousand dollar range. >> even if the budget cycle gets reforecasted or forecast? >> it did you. we do what's considered administrative. so, if there are changes in health benefit costs or retirement costs they'll get more through the system. usually that hits our fund balance if it's bad, or to the good.

but for change of this magnitude, we wouldn't need to adjust the budget because we have enough flexibility in our salary line. >> okay. >> and it's 5%. >> so, it's 5%, okay. >> so, i guess we need to amend the motion, then, to amend it to -- i think it's best to put it in percentage terms, not in dollar terms, but percentage and dollar terms. and if it's 5%, it's an increase of $12,000 over the current. and the resolution does read today that it is just for this current fiscal year, correct? >> correct. >> and that we are saying that we want to continue to do an annual review on the future basis so that we're not necessarily in a multiple year increase at this time. subject to annual review. and it would not necessarily be in keeping with mea requirements that would be for

subsequent salary refuse. ~ reviews. it would still be in the commission's discretion. >> mea has an increase in 2.5% in october. we would recommend 3.25% increase on the similar adjusted base and the commission could then decide if it is within their discretion to accept that recommendation or modify it. >> thank you. >> so, based on the amended motion? >> i second. >> all in favor? >> aye. >> kraft nabiscotionv. [laughter] ~ congratulations >> thank you. thank you very much. >> we shall all of your hard work and dedication and turning back a lot of items that could have been utilized when we were in a budget crunch. so, thank you. >> thank you. i appreciate it very much. >> item 14, new business.

>> any new business? >> may i ask -- we talked about it not necessarily, but i imagine -- what's happening with pier 29-1/2? the bulkhead or whatever or is that something -- >> it's not agendized so i can't answer you, but i can put it on a future calendar to discuss. the short answer is nothing at the moment. >> okay. can we put it on a future calendar? >> sure. >> seeing no other new business, we can adjourn in memoriam, in memory of jeff salter and tarantino. motion? >> second. >> moved. >> in favor? >> aye. >> meeting is adjourned. [your]