joining us. incredible morning. this number will continue to grow, again i'm not permitted to go after a particular number, but it will grow. and when the word comes out and comes forward from this meeting to many other employers who are anxiously waiting to announce their commitment we'll share that with you. incredible support for our youth this morning. i thank you for these committed on behalf of all of our youth. no matter where they are at. i'm going to spread the great word that our city is ready to do our part in helping everybody be successful in this city. congratulations. thanks for helping to continue to make this city successful for everyone. appreciate you very much. have a great day and go flop. >> [ applause ]

>> >> ahead, amy. >> roll call. commissioner adams, here. commissioner brandon here. commissioner ho here. approval of minutes, for the april 28th meeting >> second >> all those in favor, say aye >>-a- >> opposed? so moved. anyone here to comment on the closed session? so moved. >> okay. >> all those in favor? >> aye. >> so we're in closed session

>> okay, council sell regarding existing litigation. >> is there a motion to reconvene >> i move to reconvene in open session, >> all in favor? >> (multiple voices): aye. >> i move to disclose agenda item five a, the closed session, voted 4-0, to approve the existing litigation described in agenda item four a one a, between the part and andrea wirum as trustee of the bankrupty state of peer maritime, recreation center, and not disclose anything else discussed in closed session >> there is a second >> second >> all in favor? >> (multiple voices): aye. >> opposed? motion carriedscarries.

item six. pledge of allegiance america and to the republic for which it stands, one nation, under god, indivisible, with liberty and justice for all. >> please be advised the use of cell tones, pagers, and similar sound producing electronic devices, are probited at this meeting, the chair may remove for the use of a cell phone, pager or other sound producing electronic device, be advised a person has up to three minutes to make comment on an agenda item, unless they adopt shorter period on any other item item

eight or not listed on the agenda >> any public comment? seening none public comment is closed. next item. >> nine a, executive directors report >> good afternoon members of the port staff, thank you for joining us today, welcome those that are new to our meetings and those of you that come regularly thank you for come why, i have a couple of items today the first is to recognize the 50th anniversary of scoma's restaurant opened in 1965 when probrothers, al and joe scoma, heard about a coffee shop for sale, contained six stools, on peer 47, that served local fishermen breakfast and burgers alan scoma bought the restaurant and turned it into a

world renowned restaurant it is today. it's recognized as one of the top ten seafood restaurants by san francisco open diner choice award, which is an important award to receive, we're proud of them if being a great service, and great sea pooed here at the port, we wish them many happy returns, equally lengthy service red's java house, they were opened in 1955 as reds in the 1930s an establishment called franco's lunch open to sell food to the sailers at that time breakfast was a burger and a beer -- selling copies of the san francisco news to the longshoreman during the

great waterfront strike in 1934 he was hanging around when the restaurant came for sale in 1955. tom and his brother, mark migarvy, renamed it red's java house. then in 1994, the peers, 30/32, burned down, but reds remained due to the fire department now it's celebrating, it's 60th anniversary, thursday may 27th. they will be rolling back their prices to their 1955 prices you can get a hot dog as a bud for $0.65, you get a double dog for $0.45,ened and a double dog and a bug, you can't misthis a

cheese burger for $0.50 a double cheese burger for $0.75 and double cheese burger and bud for a buck see red's java house tomorrow if you work on the port do so on your own time after hours, [laughter] i can see all of you salivating, in the audience i wanted to meek sure i got that in, my other favor quip about red's, in 20001, they had their first addition, to the menu, with french fries, so join us in congratewe lacelating red's java house feeding the sailers and all of us that menader by. also for the nop for the environment impact report, for the mixed use, district project

became available -- wait hold he let me revise this -- the notice for the proposed peer 70 project is available there say public scoping meeting, for the eir on thursday, may 28th from 6-8 at peer one, that is this thursday may 28th, you can come to the public scoping meeting for eir, for peer 70,. next is the schedulely scheduled meeting for june the 9th. has been cancelled due to quorum issues and rescheduled for thursday june 23rd instead of tuesday june the 9th. then my last item commissioners is to ask david bubray to give you information on data for bids we received for the bayview

project, which are available for public comment in the next month or so. david? >> thank you, david with planning and development i wanted to announce the arts are commissioning an art piece, on third and cargo way, as part of the bayview gate way project, through a panel selection process, through the arts commission, and the three artists, submitted proposals available online at the port's website sf port.com/bayview gate way.com. and sf.org,/collection under proposals, they include sied alabi, with gate keeper a sculpture, along with plaque and quote, that is illustrated here. the flaming lotus, girls with the proposal for a spiral

sculpture and the history and community of the bayview and lastly cliff garden with his proposal of [inaudible] skullture, and seating of islas, creek. again the public is able to review these proposals, from the bayview public library, from now to june 14th and submit written comments on the website at sf port.com, or the bayview website, at sf commission.org public collection. thank you. >> commissioners, this concludes me report >> any public comment? seeing none public item is closed. next item. >> item nine b commissioner's

report >> commissioners? anybody have anything to report? >> nope >> seeing none this item is closed seeing none public comment is closed, next item. >> item ten a, request approval of amendment so the san francisco building code remove 8.12, which provides fences, exceeding fence height, for construction of all future fences of port property ten b advertise for competitive bids, for pier 32 building and repair project >> is there a motion >> so moved >> second >> all in favor -- oh, public comment? seeing none public comment is closed. all in favor of the two items on the consent calendar >> aye >> opposed?

abtensions? the item carries next item. >> [reading] california corporation, for -- two lease number 15892, between the port of san francisco and tmg partners or it's affiliate for the term of 25 years, this action constitutes the approval of action for the project for the purposes of ceqa, pursuant to the section 31.04 h of the san francisco administrative code. >> good afternoon commissioners elena ford port staff and joined by rent. director of development, and brad ben son, of port staff,

jeff bower, and brett stall -- and the attorney helping us with our team. today we have representatives, cathy green wald a vice chair and charles gibson who is a partner. today, i will go over the project time line and give a brief overview i know you heard about this project back in april 28th i will keep it quick, but enough for the public tuning in today, i will go over the changes to the deal terms, since the last presentation, and respond to the questions that came up that day, and provide a rationale for the finding, we're asking you to make of trust consistency, and the lease approval. brad benson will be helping with the presentation. we're very pleased to be before you today to recommend this lease, it restores the bulkhead

of peer 38, it makes important public access improvements, this is 100 year old building, it's been closed since 2012, because of code violations we're glad to get it back into use for the beach community and the public trust -- while they're considered the capital investment in july, today marks the conclusion of the process of the selection of tmg as the most qualified response back in 2013, that is with deal term presentation with november 2014, cadix, seqa determination on the thirty-first -- we're here before you today. may 26th, then we will be bringing the lease for the board

of supervisors in july. the lease does include the investment option we have been discussing it's something we asked from tmg, it's not something they have asked of us. they continue to work through this option with us and to structure it, and provide for auditing provisions it's a creative option, that the port commission to choose to exercise or not exercise, in july it will be coming to you so you can look at opportunity costs, relative to this investment should you choose to exercise the investment option, we will bring it in august and the board of supervisors in september when they return tr the board recess as the lease is structures to the option we have to provide cash, october 30th, 2013 or after

lease commencement this schedule will allow you to exercise your options, should you choose to do sto and the other bodies concur. the proposed uses are consistent with the rfp, issued, with bulkhead restoration for ongoing port revenue office serving commercial and maritime uses and historic rehabilitation. you will see the green is the first floor the blue is office, the pink is special event space, and the taupe yellow, is the north access area north apron, and birth. the restaurant is going to activate a portion of the peer eight apron, and provides an important amenity for this project. the project includes approximately 29,000 square feet

of office space, it will be to creative and technology uses and the open floor plan will provide, unique space, will you see from the revenues sidethe tenants generates revenue and allows for some of the other improvements in the project. you will notice when you came here on the 28th. the office parcel c, was larger it was 45, now it's 3880 the reduction is with the fire marshal exiting this is for special events, likely to include corporate events and it will accommodate 20 parking spaces solely for the tenants and working with the commission

last time it is proposing public community use of this space, event 135es, will you be hearing more detail about that shortly. the project includes quite a bit of public access improvements needed, including 4,300 on embarcadero, in north apron, repairs to the gate way and floating dock -- and short term guests [inaudible]. represents 6,000 square feet of public access. now to changes in term. since your last review. the majority of the lease terms are the same, so we will cover everything that has changed that is significant, first, a tmg partners requested three months additional due diligence

period to assess environmental riskses of the project, commencement we're 40th quarter of this year, to second quarter of next fiscal year the earliest is september of lease commencement, it could go out as long as second quarter, 2016, the tenant will provide a completion guarantee, for capital work, in lieu of a performance bond. four parcel c, the special events area. if for three years there are no special events, the port will have a right to propose a subtenant, and participate in revenues from parcel c. regarding sea level rise, when we were here last time we would discuss sea level rise and how to deal with it in the lease, this is proposed in the lease

framework, how to pay for flood mitigation requirements, so temporary improvements, sandbagging, that kind of thing, for needs of temporary improvements for permanent, they will meet for nine months of improvement, if the work is required to prevent threats to public safety the lease will terminate. if the tenant makes the improvements they will be eligible for 25% of base credit, year 21-25, we will charge back the cost of the improvement based on the em mer tiezation of the asset, but no one in the rent exceed 25% of the base rent. we have changed the rent credit

in years 21-25, the port commission will recall the rent credit is initially structured from year 1-25, when we look to change the deal term determines for important rent one commission that tgm, made, is have a market reset in year 21. we have been discussing important improvements that are required substructure the prior deal, included substructure up to half of it's base rent for substructure improvements, we removed that to provide for rent. we have looked to resolve and incensivize sizement improvements, the bulkhead and flood mitigation, we're offering rent credit up to half years

21-25, 25% can be used for investment needs, throughout the term of the lease, substructure or upgrades, in the bulkhead building, if the tenant made substructure improvement in year 18, we look at the cost of the improvement see it as an eligible substructure improvement, and prime plus two, and reduce rent commence rate with that improvement, for a voluntary, seismic upgrade in the bulkhead and a 25% credit for end of term improvements flood mitigations more measures, we discussed, and these improvements tenant would propose in the last five years and port could approve in it's sole discretion.

this chart will be familiar with you from last time it differences i'm now showing that end year 21-25 rent credit. so the basic tenant is the same, port's rent has improved noticeably from november 14th because of the tmg's willingness to restructure our rent also, we added investment option for the sole discretion the green is the base rent worth 6.12 million over the year term. 3-and-a-half million is in the first year, and 3.5 million in the last year. the rent credit is worth up to 1.3 million the value of the rent credit will depend on the market rate readjustment, we don't know the timing of what economic cycle we're in when

that market rate reset is made, it could be more, it could be less. the yellow here is the special events this is what we're calling the low scenario based on five eventses, that is 1.5 million over term what we're calling capital investment is repayment of port capital with a rate of return, by year seven in the light blue. the dark blue, is net cash flow distributed to the port totalling 2 million, in the base case the total rate of return is about 9.7%, it's about $34 million, of net revenue so port staff believe this is a fair and reasonable internal rate of return for a project with this risk portfolio. the high scenario is almost

exactly the same except it goes from 5-20 in the special events, what you see happens is the base rent stays exactly the same but the special events revenue goes to 6.3 million which then flows through and increases the payment to the port from that initial investment. port would earn back return on capital in year eight the dark flew represents, additional value to the port of 1.4 million here the internal rate of the return case, would be about 16%. this is a graphic showing exactly what i showed on the bar chart just in a pie, to show you where the share of revenue is coming from in the low and high case and we only changed one factor that was the number of special events.

when we were here last commissioner woo ho asked about where the revenue is coming from in the project i think you were right commissioner woo ho we were over stating the importance of special events in the economic of the project, when it's really the office revenue is the economic driver in the project, it's just that special events flows to net cash flow that's why it's the difference between the base and high case you will see in the low case five events a year 46% of the revenue is generated from the office use 20% from the restaurant and 13% from special events. in the high case 20 events per year special events grows to 38%, office, 48, and restaurant

at 14%. tmg in response to your we commissioner brandon related to the lbe utzation program tmg, has produced a utilization program. it's attached to the report, we have looked at it. it includes good faith outreach and a project specific website, it has clear and objective website, for lg -- contracts awards to lbe's i would note that the new legislation that the board of supervisors passed would not require this lease to produce this lbe utilization plan because they're not entering into an agreement plan with the city, but tmg produced

a plan regardless of the requirement similar to peer 27. with that i'm going to turn it over to brad benson to talk about the rest of the items. >> thank you elai ne. good afternoon commissioners, brad benson -- they're not being set up or taken down, so there is going to be some constrained access to the that space, we have been consulting, quite a bit, with the fire marshal about the use of this space in order to lease it for a

warehouse dead storage kind of use, there would need to be exiting, up to the jog of the peer it's hard to see on this slide, it's approximately where the one is by rebuilding, the apron but building a small ten foot wide concrete existing a pron we can provide that access. so the lease provides that the port will be able to lease out that space to a third party. and we think there is, based on important rents, there is a good portion to be made there we will need to continue consultants, with the fire marshal and will likely come back to the port commission, with a plan of improvement with the rate of return, based on respective leasing in that

space we talked about occupancy in the peer i will say this plan includes more office and restaurant type use, than we have historically had in the bulkhead building, for a while made us worry with the use of the rear end of the shed we talked about that. with the fire marshal, and the chief harbor engineer, and we think there is use for dead storage use in the back of the shed. elanie mentioned, there has been negotiation with members of the south beach some of who are here today and tmg, of the types of events going on in parcel c, those would be corporate events limited public access high revenue g