time it looked like it was really a very stretch goal but it's very close to reality. i think eventually we'll throw out another target, right, and hopefully reach that. my guess is that even with base case economic scenarios you may do better than what you think on the revenue side and hopefully you will throw more down to the surplus side so we can have more funds available for capital and that we can keep our operating costs in line. so i think that's really positive. the other question is, you know, at some point, not in your presentation but it does remind me to understand what's happening with 23 and 29 and how we can move that on stream. so with the 19-23-29 is that on deck at some point monique to come back and tell us. >> you got to see today that we have substructure issues at 29 so, no, it's not due to come back yet but we are working on it internally. >> is that one way to move

things faster is some of those piers? >> hunh-unh. 23 was in elaines numbers. >> in terms of understanding the plans behind it other than just the numbers what you are hoping to do with it. >> we got thrown a curve ball with those substructure issues so we're still struggling with that. >> what i would like to say is that david did submit a pile remove project and it scored well, but the time related to the permit and what our pile

driving crew could accomplish made us push it to the following capital budget. he did submit that project and it did score well, but we couldn't see the ability to get it done with the permitting issues and the capacity of our pile driving plans. >> but even if it's in the capital plan doesn't mean it has to be completed this year, right? >> no, but we were looking for projects that needed money next year. what we have in line for pile removal will be exhausted next year should we get a satisfactory resolution to the pile driving so we funded more in next budget year it wouldn't be utilized. we were looking for projects that could utilize funds next year. >> i totally appreciate that but i would love to see those funds. >> elaina, in terms of the pop up that we heard about today and there's also the pier 337, so are any of those numbers contemplated? >> i will let megan respond to that. the pop up for 337 is included in the base and i'll let her go into more detail. >> yes, we assumed the pop up would generate approximately $300,000 starting in fiscal

year 17-18. and that would be 50-50 parking and shared revenue from sales receipts. then for forest city and orton at pier 70, the forecast actually shows lost revenue from the assumption that there are a couple tenants who we wouldn't just relocate to other port sites. so for the most part it looks like staff are working to relocate so we won't actually lose revenue at those locations. >> for your forecast for base case were you using revenue or was it just projecting out the ones less than 5 years and actually doing a lease by lease analysis? >> we're starting to work with a model that allows us to see when leases will come to completion. so it was really just for new leases that we were projecting would be starting, though, that we built in. as far as leases that

would be expiring and then assuming a higher rent that would definitely be the next phase for analysis. we weren't able to get to that level. >> at the moment i would say we are rel atively conservative rather than seeing these leases coming off stream. >> my understanding from prior analysis out in the real estate division, the difference between current rents and raising all facilities up to parameter rents i believe had $100,000 or so difference. unfortunately it was fairly small. >> thank you. >> i'd like to say i really appreciate the presentation. it was very thorough, very easy to understand, and i also support my fellow commissioners about the proposed increase. i guess i'm a person that caution

is kind of foreign to my character, so i think we just move on. i think also what really hits it me you framed it up very well at the end, that you are going to invest in the southern waterfront, which i think is very important, support the maritime industry, but also to improve the port's financial position and i will savor the moment now for the things you have accomplished. i know we have to look into the future but sometimes you have to take your time, for what we've done, look at the goals you have accomplished, we have done it bit by bit staying the course. i am supportive. plus it's going to give us what we need to get done at the port. we're still out there, we had the setback with the warriors and of course with forest city but we will work through that and you laid out some other things. i still think we're in the game, i think we're improving and you guys continue to

exceed, you still continue to amaze me because it seems like we're making the best out of what we have and you are making it go a long ways so i really appreciate that. please keep up the good work and clearly you have my support, thank you. >> concur with the comments of my colleagues. again, i appreciate taking the opportunity to have the surplus funds used to protect us in the future going forward and

putting that to, those funds to good use in terms of the return on that investment. one thing i know in terms of looking at the projects that were submitted for funding at some point are there any projects on there that also would have generated some, a significant return that we didn't include in the 7 that we would want to take a look at going forward? >> yes, we have a couple. pier 29 substructure is among the leading unfunded requests, and that project has a very good revenue generation. the issue with it was just right under neath the 7 projects relative to the scoring and there was also a timing issue, potentially. also the belt line building which is the small build not guilty front of the cruise ship terminal at pier 27, there was a good project submitted to do leasing improvements, to get an elevator into that facility to do ada improvements to the restroom, that is a revenue generator and that was just under the scoring. in terms of others, track upgrades, there were several maritime improvements to pier 89-92-96 that were dependent on the business case and we're

waiting for some other approvals that are going to come through before we better understand the business case. so those were the main ones. >> elaine, just a quick question. how much in terms of your scoring mechanism, what weight is put on return on investment or revenue generation? >> what we do is look at the payback period and wie look at the 10 year financial benefit and basically the top score is 30 points out of the hundred. but if there is a huge payback and we give every 250,000 dollars in the 10 year period one point, so if it exceeds the maximum number of 20, we continue to give points for that return on investment with the understanding that that return on investment goes directly back into the capital program. so it's really

30-70-70 to everything, port mission, safety, health, code violation, et cetera, but if it's just such a great investment like the back lands project we will continue to grow the criteria to show the weight of the revenue. >> so about 30 points out of a hundred. >> yes. >> then you have the rest is obviously public safety compliance issues. >> maritime mission, bringing the public to the waterfront, yes. >> then i guess a statement of the obvious but some of these we looked at other sources of potential revenues to get those funded? >> we do. we do. one project, one process we go through is to find all other funding sources. so there's two things we do in the scoring criteria. if it's leveraged we move it to the top, depending on the ratio of leverage, and we look to see are these

revenue bond projects, as our bonding can capacity improvings are these things we would want to issue debt for and we of course always look for grant opportunities for any of these projects. >> one thing struck me in terms of the sewer upgrade project, wouldn't that be something that would partially fall to dpw >> that's a long-standing question. >> thought i'd ask. >> we continue to work with our other sister agencies relative to moving our infrastructure into their portfolio but of course we would have to have an accepted city street and the infrastructure would have to meet their requirements, et cetera. >> thank y

3 4 f1.

>> we did approve a third concrete batching lease that ultimately had to be terminated through litigation. after that litigation, we issued an rfp for a batch be opportunity at this site in 2007. it was for either

concrete batching, asphalt batching or both. had strong support from the southern waterfront advisory group. we were just headed into the economic downturn at that period in time and we had a lot of people come on the site tour and to the pre conference but ultimately got no responses to that . so the proprosed rfq/p objectives, we want a high quality operator , we want to increase shipping at the pier 94 berth, well designed industrial facilities that can improve the character of the area, quality and affordable supply of asphalt and concrete for city projects. we want to minimize unnecessary truck trips. that's a basic premise of having these batching facilities so close to our berths is that we avoid truck trips for the handling of material needd for batching. this opportunity provides a

chance for the city to really realize some very important environmental policies. right now we're not able to get asphalt with a high amount of reclaimed asphalt product. the hope is that we could get up to 50 percent recycled content in asphalt from a new facility like this. of course provide employment, contracting opportunities to the 3 4 f1 minimize

impacts, environmental impacts and health impacts to the operation. this is a maritime leasing opportunity so the tenant would have a maritime commitment built into their lease expressed in the form of tons shipped over port annually and of course be compliant with the southern waterfront benefit policy. the schedule is, sf public works is looking to manage a competitive solicitation that results in selection of an operator by august subject of course to your approval for entering exclusive negotiations. we haven't attempted to estimate the length of time for that exclusive negotiations but sometime within a year we would be back to the port commission with approval of a lease. so that closes my presentation but i'd like to answer any questions that you have.

>> public comment? seeing none, public comment is closed. commissioner woo ho. >> brad i guess you mentioned your already two existing tenants that have this, i guess this ability to do concrete batching. so they are not able to currently meet the city's needs; is that correct?, and that's why we're thinking we need to get the third? >> yes, i think it's fair to say that both of those plants are operating at capacity today in the construction market that we have today. my understanding is that concrete is being imported to the city from outside the city because we don't have enough production capacity within the city. the idea of having a third plant is something that we had baked into our southern waterfront

supplemental environmental impact report so we had assumed a third contract batching lease which we tried to perfect with the lease at this site before. so we do believe that there is enough market --. >> to support this and it sounds like this would be, their primary customer would just be the city and dpw projects? >> so dpw and other city departments have a big need for asphalt and non-structural concrete for road projects. the city has less of a need for structural concrete except when it's building a big city building like 525 golden gate, the puc building would have been a prime example. the big demand that we're seeing on the horizon is really with the shipyard. hunters point shipyard is going online going gang busters. they need to build new streets, they need

to build new housing to meet the mayor's housing goal. we have similar needs at pier 337 so we think this operator will supply city needs, primarily asphalt and non-structural concrete but also sell to the private sector. >> so the site has some infrastructure that could still be repurposed or does it really have to be it's old and has to be --. >> somebody's going to, a new operator is going to have to come in and do some testing on that foundation to see whether or not it needs any improvement but we think there was about a million dollars invested in that foundation so there's added value at the site. >> so this one is probably not in elaine's forecast at this time. so if we were successful in getting a new tenant here, that would be added revenue. >> and based on what we're seeing from the existing concrete batching leases, which are actually smaller than this

lease, but on a per square foot basis if we match the performance of the lower performing of those two batching tenants, we'd be looking at $700,000 a year in new revenue. >> not small change. >> can add that to your high case. >> thank you. >> commissioner adams. >> brad you said minimum shipping requirement. can you elaborate on that issue? would the cargo and stuff be coming in by ship or have to be coming in to the port? >> our two existing concrete batching tenants have maritime commitments as well in their leases. these are really maritime leases. so they each have committed to $175,000 tons per year in minimum shipping activity. one of the tenants handles that shipping activity on their own, the other relies on hanson

for materials. the two primary products that are coming over port is aggregate and sand so it's not all materials that you use for concrete. here we're looking for both an asphalt plant and a concrete batching facility. i will say the concrete is what will create, drive more demand for materials coming over our berths. asphalt has a higher recycled content so more local materials going into the asphalt, but this is definitely a maritime opportunity. >> okay, thank you. >> i know we have had some difficulties in the past in terms of when you put out the rfp, the prior operator that we ended up having troubles with, i assume either they are not in existence or they will not be submitting any kind of proposal? >> i don't know what they will do, but i think that we'll have a veting process for reviewing

proposals and we'll be looking, as an example, at environmental compliance, regulatory compliance, are things that we're scoring on. so we'll have an opportunity to look at the track record of people who are bidding. >> then we should put something in the rfp that allows us to look at the track record. >> our new contracting policy allows us to look at past history with the city. >> did i just open up a can of worms? sorry. >> not a huge can of worms. we are currently allowed to look at prior performance in contracting. the city does not yet have a standard, it doesn't have a system so we can look at prior performance across city agencies. so what they are looking to do before amending chapter 6, which is the code section that governs construction contracts, looking to set up a system like in other counties where we understand how to evaluate

prior performance and we can look at that across city departments. on time, on budget there's a place for the contractor to make comment to that city-wide system but there's actually nothing prohibiting us from looking at prior performance now. so as brad was describing in the rfp we can look at prior environmental compliance, virpb vurpbal program as a scoring criteria. >> so it can be included as scoring criteria. just in case they show up again. >> i had a couple of questions. i mean in terms of the number of bidders, thin there was no response in 2007, would we even anticipate that the other two will say, well, we'll expand our facility. >> let me break that into two. >> and i have one more question after that.

>> we actually had quite a few companies that came and kicked the tires on the lease opportunity. we were beginning to enter that sort of economic downturn at the time. the other problem was that the city had not really figured out a stable funding stream for its street work. there had not yet been a successful go bond for streets, which there now has been. the mayor, i believe, patrick, you can correct me, but i think has dedicated 50 to 60 million dollars annually in the city's general fund budget for street work, which is much higher than it was in 2007. so the city is doing a better job investing in these types of capital projects and creating demand for operators. this is also a concrete batching opportunity so given what's going on in the private market and demand for concrete i think that there will be no shortage of people who are

interested in that aspect of it. and the second part --. >> my second question is are we, since it's going into the rfq and that obviously forms the basis of how any other term sheet gets developed after that, whoever wins it, is it going to be described as an as is property, you take it as is and there's the foundation and you have to do what you have to do and we're going to come back, oh, no, we have to do this and that and we want the port to fund that. >> no, this is private investment. >> so it will be described as an as is. >> yes. and that was the model for the other two batching tenants, they came in and made 100 percent -- there was no rent credits, it was a market rate deal with private investment. >> and then in that you answered the additional part of my question. so you think there will be a significant, we will at least have a good pool of respondents, hopefully, given the change in the economy.

>> as long as megan's worst case doesn't come to pass, i think the answer is yes. then i wanted to answer, i think you were asking could the existing tenants expand operations. they are on smaller sites than this site. they have made, you know, significant improvements to their sites to be able to maximize capacity but i'm not sure that given the footprint of leasing that they have that they are able to significantly expand output from those lease premises. >> but they could >> last question i have in terms of just general timing so once we select a potential tenant there, roughly how long do you think it's going to take for them to get their facility up and running? >> i wish