see something like little man, holy man -- this is like general hospital [speaker not understood] it will cause serious funding problems for city hall. >> thank you. trying to achieve a high state of excellence in principles to affect others -- the statement that -- would you guarantee that for certain people without so much worry, so they can secure -- and we will be at peace. please listen to my question, without further delay, mr. mayor. thank you. [speaker not understood] . >> thank you.

next speaker. is there anyone else who what's would like to speak about this item? no one to talk about the street encroachment in the bayview? so be it, public comment is disclosed on this item [ gavel ] colleagues would i love to have a motion on this. >> motion with positive recommendation to the full board. >> seconded by supervisor wiener and without further ado this item masses unanimously. madame clerk, cousin please call i. . >> the resolution exemptioning the competitive bidding policy, a real estate transaction between the port and teatro zinzanni. >> who is presenting on this item? anyone? item no. 2, thank you, sir, please come on up. >> thank you, chair cohen and

supervisors wiener and kim. i am the department program manager with the port of san francisco. i am here recommending -- representing the port commission, requesting your consideration of a resolution authorizing the port to enter into negotiations with teatro destinani and their project tzk bredway, llc. to develop and lease portland with a boutique hotel and dinner theater. the resolution requests an exemption from the competitive bidding policy set forth in administrative code section for the potential real estate transaction involving port property as seawall lots. i have a map showing the location of the site.

it's right there at the corner of broadway and embarcadero. and it consists of just those two parcels. teatro zinzanni is a former tenant, beginning in 2011, it operated as a successful venue, combining dinner and theater at pier 27. during this period it welcomed many performing artists and close to a million customers. and frequently partnered with charities. in 2011, the port asked teatro to determinant the lease for pier 27 and vacate the location at pier 27 to accommodate the america's cup and construction of the

[speaker not understood] by state law the port is required to relocate tenants including teatro. after searching widely it became clear that the best location to keep teatro in san francisco was at port site seawall lot 324. a 1.4 acre site at broadway and embarcadero with picture being shown on the screen that currently operates a parking lot. in 2011, teatro conducted extensive outreach to seek comments and address concerns about the site from community groups and stakeholders including the barbary coast neighborhood association, golden gate commons, chinese community development center, telegraph hill dwellers, golden gate tenants association and many others. seawall lot 324 is a permanent

site along the embarcadero. some community groups and stakeholders indicated that they prefer for teatro to develop a project that would be a distinguished gateway between neighborhood -- between the neighborhood and the waterfront and chinatown. the community also requested the site to be developed in a manner consistent with the northeast waterfront historic district in terms of architectural characters, zoning and building massing. to be responsive to the community, and the comments from the community, teatro expanded its project to include a hotel with a theater and public park. prior public planning for this site called for a hotel at the site. teatro has engaged an investment partner and together they have formed a limited

liability corporation called tzk broadway, llc., so that teatro can return to san francisco. the proposed uses as indicated -- in the line use regulations that cover this site. including the port waterfront line use plan. the port previously sought a development partner for a hotel on the site. the site continues to be recognized as ideal for hotel and entertainment using because of its location's attributes. the board of supervisors adopted a music and cultural sustainability policy in code chapter 98 requiring city departments to undertake all means to use city property to retain cultural and entertainment entitis in san francisco. this policy also promotes creative strategies for

theaters. the proposed project meets the policy directives of the administrative code 98. in this requested exemption -- if this requested exemption is approved the port will enter into a exclusive negotiating agreement with the partis and if the partis are able to reach an agreement on deal terms, such terms would be summarized in a term sheet and the term sheet or the proposed lease will be brought back to this board for its consideration and endorsement. authorizing the port to enter negotiations is not an approval of the proposed project. the project still needs to be refined, through the public review process, including ceqa and design review. after the term sheet is endorsed, both the port

commission and the board of supervisors must consider a long-term lease with terms including fair-market considerations for the use of the property. if it is acceptable to the chair, i will now turn my presentation over to teatro's representative to make a few remarks, norman langill -- -- and a person from your development partner. >> thank you. welcome. >> good afternoon, chair cohen and supervisors kim and wiener. i am norm langill, the president and artistic director of zinzanni and brought to san francisco in the year 2000.

i'm here to speak on behalf of the sole-source resolution so teatro zinzanni can return to san francisco. our team includes our supporting partners, daris anderson and jay wallace, the architect will be in charge of the project and teatro ally jamison and also in the room are many supporters, neighbors and past employees and local artiests who make teatro zinzanni a unique part of san francisco's curtal life. i'm going to reduce my speech, because the gentleman before we covered a lot of points. >> we appreciate that, to get it to the vote. [laughter ] >> right. that is true. when we started to pursue the

project we soon found our plans to rebuild the site as was five times more expensive than we originally planed and not only that, it was impossible to finance and meet the standards of the neighborhood or to match the revenue requirements of the port. it's a fact that theatres could not generate enough revenue per square foot that you could get with private development. so we needed help and the only solution was to develop a multi-using cremate concept for the site, in which it would support the cost of construction and teatro zinzanni's lease. a multi-year contract has been used successful in the you united states and around the world. and the art series hotels in

melbourne, australia. i asked daris arnoldson to partner with us to develop a financially feasible multi-year plan to meet the recommendations of the neighborhood, the lease terms of the port and support teatro zinzanni's unique cultural position. it includes housing for our after artists and the hotel, restaurant and lounge, serving as our lobby and open public park, backstage areas, built into the area and office space and our teatro zinzanni tent, which we'll put in a glass gazebo much like in a hotel and it will be entirely glass to the backstage quarters in the show will be completely transparent to people walking along the emweekend,

embarcadero. this combination made it possible to return with a 66-year lease. i want to thank the neighborhood groups we met with over the last two years who demonstrated their support for the project and a willingness to stay with us during the next design phase and barbary coast neighborhood association, telegraph hill dwellers, chinatown community development, north beach neighborhoods, hotel neighbors, top of the broadway cbg and port of san francisco. i was surprised in the community meetings there was actually great ideas that came out of it. and it was a useful process and we want to continue. it the four suggestions that we heard that we stuck to was stay at 40'. we awakened the corner of broadway and embarcadero so that it serves as a gateway up

to north beach and chinatown. develop a plan for parking and balance with the transit-first policy. and to comply with all the public policies on the waterfront, which all encourage a theater, hotel, green space, and retail. just as another side note, quickly, that particular location is very important to us, because it was the site of the clark's point wharf that brought the 49ers ashore and, in fact the first city gate. in 1839 the rose circus came to san francisco, where the production of "othello" including elizabethan language and horseback juggling in order to sell it. montgomery street a year later, the first professional theater opened, the national theater,

which was a french vaudeville company that came to san francisco. in this district is where san francisco theatrical traditions began, a tradition that is widely unique, progressive and often wonderfully whacky tradition and will continue to inspire teatro zinzanni every night. thank you, i would like to introduce annie jamieson, chief operating offer the teatro zinzanni. >> i'm going to shorten myself as well, since time is of the essence. the most important thing for you to know is that we have really developed a multitude of relationships with neighbor, vendors, corporations, artists and we became a destination entertainment experience and a

part of the fabric of san francisco's artistiac community. we employ hundreds of bay area citizens with waiters, chefs, bartenders, costume mickers, technical staff, artists, sales people and administrators who all added to the vibrant life of the waterfront. we entertained over 2,000 separate corporate companies and created many, many special and spectacular moments of celebration for our customers. since we closed in 2011 it's been anizing receive a vast number of ongoing and daily requests from the public, asking us when we will return to san francisco? phone calls, social media and letters including one message from a fan who wrote "i'm counting the minutes until our beloved teatro zinzanni is once again with us in san francisco." you one more holiday season, new year's, birthday or romantic night without you is one too many. our goal in this hiatus has

been to keep in touch with our audience and the community, remaining hopeful that we would see the day when we would announce our return. now we have a plan. this unique partnership with kenwood and teatro zinzanni creates a unique business model where one hand feeds the other. together we'll steer business to the surrounding community. a marriage between business and culture. a new way of art and business to flourish, i'm supporting the packet of letters and local san francisco supporters. the energy behind this venture is palpible. it's time to return to san francisco. thank you. >> thank you very much [

applause ] >> i have a quick question, how many presentations do we have on this item? >> i'm the last. >> okay. thank you. >> madame chair and other supervisors, my name is darus anderson with kenwood investments. i just want to say on behalf of the investment group, we couldn't be more excited about working with tz and everybody that they are involved with. when norm called over two years ago, and said that they had come to a roadblock in moving forward we jumped at the opportunity having had many great nights in the theater and knowing it was a cultural asset that many san franciscans, as well as thousands of people around the bay area got to enjoy. and so we are fully committed to the project from today until completion. and i also want to say on behalf of the kenwood, we're very excited that we have signed a deal with local 2 and we look forward to working with the union as we progress on the project. thank you. >> thank you.

excellent news. thank you, mr. anderson. there is a couple of questions that we have to direct to the port. supervisor kim? >> thank you. first of all, i just want to say that i absolutely support the details of the project before us. i appreciate the community outreach that occurred and i also appreciate teatro's patience through this process of displacement. you know as we go through the planning process to rebuild, and i think that seawall lot 323-324 will attract more tourists and residents to the site and make sure that we are supporting nightlife, entertainment and the arts. finally, even though it's not the purview of our board, appreciate that kenwood signed

agreements with local 2. the question i have and this is really for the port and i know it's very much in the beginning of the process before, the negotiations begin. it's always this -- it's a policy choice to do a sole-source waiver and not to public rfp process. historically, at least on this board, i know the board has always pushed back on sole-source contracts and i have certainly always pushed back on sole-source contracts. i think there has to be a real legitimate reason for us not to do an rfp. i guess my question for the port is, i like the proposal. i think that it's a modest proposal that would support the building the teatro. i like that it's a modest hotel and i like that there is going to be ten units that are reserved for artists. i think that is incredibly important. i guess my question is why can't we rfp out this proposal?

a proposal that includes the rebuilding of teatro's theater, with hotel and these ten rooms? i can only imagine when it comes back to the budge committee, harvey rose's report saying that we don't know if it's the best deal for the city because it wasn't publicly rfp'd out? >> good afternoon, brad benson, director of special projects with the port and here with ricky in support of the project. this question about competitive bids is something that we grappled with as well at the staff-level. you know, throughout the process we have been focused on relocating teatro on port property. we have the experience with the america's cup of dislocationing a lot of very good port tenants. we are able to relocate the large majority of those to other areas of the port property at the time.

but with teatro, they really needed to be in the northern waterfront. they needed a longer-term lease at a new location that can't be entered at 27 because the new terminal construction. so that has been our goal. i think it was really teatro through the public process and understanding that people didn't want to go with the same form of the facility as it existed before, which was the tent structure. that people really wanted a permanent facility at seawall lot 324 and prior plus planning had indicated a neighborhood desire for a hotel use at the site. teatro went out and they went with a very capable developer with hotel experience with a pre-existing relationship. that is an important component of a partnership like this. so if the port did go down the path that you are talking about, supervisor kim, we do normally a request for quality

qualifications and we would be looking for somebody who is qualified to negotiate a deal. we think kenwood is qualified to build a hotel and i think that construct would be looking at sort of a forced marriage between teatro and that developer. you know, it's anybody's guess whether or not that could work? on balance, looking at it, looking at the community's support for the project and looking at the experience at-hand in this relationship, between teatro and kenwood, i think what we thought was appropriate and the commission thought it was appropriate for us to bring the waiver request to you. this approach is going to be a much faster approach, and we have other means available to us to get to a fair-market value deal, which we would intend to bring back to you. so i think that is our response. >> can you guaranty that we'll be getting the best deal, that

we would have if we had gone through a competitive bid rfp process? >> through the process, the port is going to look at comparable leases for hotels. >> my question is could you guarantee to the board that you couldn't have gotten a better deal through a competitive rfq process? >> so if we did a competitive process for a project like this, normally we would do a request for qualifications. >> right, rfq. >> so it's hard it say in terms of a deal, which approach would yield the better deal? what the financial terms of this deal are going to be determined by looking at other hotel leases. for instance in at the port of san diego, they do a lot of leasing for hotels, and we can look at appraisals for the subject property to determine a fair-market value. so there are other ways to get to a fair-market value deal through the negotiation. >> is that a requirement,

fair-market deal versus the best deal? >> we're striving -- >> i'm sure we'll get a fair-market deal, but my question is can you guarantee that we'll getting the best deal not going through the competitive bid process? >> no, i cannot guarantee to you this path will yield a better deal than a bid deal, because we haven't done the bid. >> right. >> so i have nothing to compare it to. >> that is my difficult with what is before us today. and while we are early in the process, i feel like it's better to insert ourselves today than when this comes to budget committee and then the report comes out -- we don't know if this is the best deal for the city or not, because we didn't get to examine any other proposals? i actually really like the partners involved with kenwood, so it's not about any individuals involved in this. i'm certain if we -- i'm

pretty sure if we had an rfq, they would rise to the top of the list of bidders and i appreciate all the work that they did in advance of coming to committee. but i just believe as a board, where we act as the safeguard for our public properties, that we want to be able to tell our constituents we were able to get the best deal moving forward from our public site. and i know it's an unusual situation. i'm not sure if there are other situations similar to, this where we already know what one of the partners will be, teatro, which i support. i mean, we displaced them from pier 27 and so i believe it's our obligation to find them another site. and i also agree that it makes sense for them to have a development partner in order to do that. i just feel uncomfortable with a sole source waiver early on, not being able to guarantee this is the best deal moving forward. >> is that it?

>> i'm sorry, one more question. the initial negotiations talked about a 10-15-year lease before it became a larger project. where do you anticipate the number of-years for this lease to look like? >> typically for new development on a ground lease we would do a 66-year lease. that is what is allowed under the burton act and that would be a time that would be sufficient to amortization the amount of investment here. >> right. so again, even makes me more concerned about doing a full bid for such a long-term lease. it's not 10 or 15-years, but a 66-year lease. thank you. >> thank you. >> supervisor wiener, any comments? >> question for mr. benson. i know you touched on this before, but if this were not sole-sourced, how would the process proceed? what would we

see here? >> we have never done something like supervisor kim is suggesting. in the absence of any prospective tenant, normally for a development project like this, we would have a concept, say a hotel and entertainment use. developed through the community process. then we would do a request for qualifications and we would be looking for a development partner who has the experience and financial capacity to develop the site. and then we would go through a negotiation, where we establish fair-market value for the sites, looking at comps and using apraisals and other similar mechanisms that are standard for a real estate negotiation. and then bring that through the public approval process through the budget analyst for their review. we very infrequently do an actual rfp, where we're bidding price, and particularly we don't usually use an rfp for a development project.

where costs are short of unknown at the outset of the process, the developers haven't had a chance to do due diligence, costs could escalate over the course of the negotiations, the public could demand more public benefits. all of these things affect fair-market value, which is why we typically don't do an rfp on price this. would be odd in that we would be saying to prospective development partners that there is an anchor tenant that you must make a long-term financial arrangement with. >> that was my -- really, i understand and respect supervisor kim's view on this and frequently we would all be of unanimous mind on that, but this seems like a unique situation, finding this new location for teatro zinzanni and to go through that is not your normal type of deal,

because as you said, we are saying this is the tenant. so i think this is a fairly unique situation and i'm prepared to support this. >> thank you very much. >> can i ask another follow-up question? did you propose to teatro they find a development partner on their own before coming to you with the final proposal? >> i think teatro had this pre-existing relationship, and they reached out, understanding what the community was looking for in terms of a boutique hotel and came to the port with that proposed partnership. >> thank you very much. we're going to go to public comment at this time. >> thank you. >> thank you, mr. benson. mr. yip, before you start, i have a stack of cards and we're going to go through the cards first. okay, public comment is now open. [ gavel ] i'm going call the list of names and please line up to the right of the chamber. just as a reminder, every speak

has two minutes and there will be a soft bell, indicating 30 seconds before your time is up. [ reading speakers' names ] >> thank you, supervisors. cm louis, hotel and restaurant workers union 2. i appreciate and you are quite right to ask the tough questions about a sole-source. you are going to hear in public comment the reasons that this project is quite exceptional. i just want to put this from our perspective: what is most critical here? as you know for almost two decades, the city has required to developers on their lands to protect the fiduciary interest of the city through labor piece agreements.