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 generating events the public has asked for, tmg, agreed to two events a year two could be scheduled in advance the others would be 30 days of the planned event, when there is no other conflicting event planned for this space, it would be added with no cost to the fee so they would have to pay

for security, janitorial services etc. and the groups would have to get all the necessary permits but we're pleased that tmg has made this into a public space. we have been port staff and tmg, and premier structures their joint venture partner, have been communicating, with the commission today today, you are asked to make an on the burden act, the port has gone to the state commission and ask them to issue a letter, finding a project consistent with the public trust. exhibit d, to your staff report, includes, trust analysis in

consultantation with tmg, and land state commission and that further the purpose of the trust or land time use that will be available for water taxi public access on the north apron the spraunt use, and now the event use, the publicly oriented event use in parcel c. in closing, the port staff recommended rationale for lease approval includes the following the project meets, the rfp goals of bulkhead restoration rehabilitation use and services and ongoing port revenue today, we believe it balances, appropriately risk and award, this is an old facility there are conditions,

risks our partner is making a substantial investment we think there a good balance for both the port and tm g. through a long term lease like this we will reduce part harbor fund obligation with capital backlog, insurance claims, we believe we have come up with interesting, financial incentive structures, to promote improvements to the peer over time, future sea level rise risks, and the like with that we recommend approval of the lease, elane and i are available to answer any questions you may have >> thank you. any further presentation is that it is there a motion? >> so moved. >> second >> we have public comment. first speaker i don't have a

card -- katy little >> good afternoon commissioners, my name is katie lidel, i'm the south beach neighborhood association first of all, i have to say i'm excited, peer 38 is going to go back into use, it's a gem everybody in the neighborhood is looking forward to having it treasure again. tmg's plans for restaurants, and event space look terrific, after the april commission meeting, some of us were concerned after hearing about the 20 fairly high end events that were going to take place there, commissioner woo ho you are the one that asked about community events so thank you. we wanted to urge that the space, the event space be made available for a broader-based audience with maybe some

community type things nonprofits profits, whatever types of things. so i'm happy to say that alice rogers and i, also of the neighborhood association, met with tmg last week and talked about what brad just told you about and have come to an agreement i think we can all live with that is the 12 events the two we can serve six months ahead of time,ened and the other ten within a 30 day window, tmg said we're going to be a good neighbor we appreciate that. i think we're okay with this. i have a one last request, a small one, i think the restaurant is going to be one with white table cloths and crystal glasses i would like to request that that kiosk have a to go -- so those of us walking

by, to grab a bite, passer buys to make it more affordable otherwise we're happy, we thank tmg, and the port for working with us. >> thank you. next speaker al lass rogers. >> good afternoon commissioners, i'm alice, rogers, with the neighborhood association although the association wasn't party to our discussions this is a group of neighbors that addressed you with our concerns we're very pleased obviously the port staff and tmg staff were receptive to broadening the use of the project as katie said, we're glad to have it back in the community. while i understand the sponsor

can't negotiate the kinds of uses with neighbors i would like to encourage them as the project develops to look to pricing on the event space beyond the community use so that when it's not booked by the high end users it might be available to more loyal people for brder till m nights -- film nights or markets and son forth, this would be add on revenue for everyone concerned, it would broaden the inclusion of the project in the neighborhood again, we thank tmg for their reception of our proposal and we support the project. >> thank you. any other public speakers?

you don't have to submit a card, feel free to come on up. seeing none public comment is closed. before we start i just want to thank you our staff for the work on this project, it's been a long time in coming. and a tremendous amount of work has gone into it i want to thank in particular, brad benson jeff dower john doll, grace and byron i particularly want to thank elane who has gone above and beyond, from all angles coming in i want to thank you for working hard in an exciting jewel in our port crown thank you for elane, to pushing a boulder uphill there, thank you.

commissioner woo ho >> always point to me first >> when it comes to finances [laughter] >> i want to add my thanks to f staff it's clear our comments from the last commission were taken seriously both in terms of the community benefits as well as financial terms i think we're in a good place i don't have that many questions i think we addressed them. in fact you in some cases, took it farther than what we said, we're excited to see this project move forward as much as possible. we thought it would be up in running in a year, that was 2012, now we're in 2015, i think we're in the right time line, i think details have been worked out how the space can be used in terms of what can is going to

happen with the restaurant and others, i think is a much more defined purpose than what we started off way back when, it looks like it's going on the right track, i appreciate that elane and brad and everybody involved has really put this on a more even keel so it is a win-win proposition for the developer and well as the port. thank you. >> i totally agree with commissioner woo ho's comments i wanted to thank brad and elane for the presentation working on this it has been a long time coming i'm excited about peer 38 coming back online. i want to thank tmg, and everybody working so well with the community, with the commission with the staff, to bring this forward. also for creating the lbe utilization plan especially the porting and monitoring aspect of

it. thank you very much. >> commissioner adams? >> so just want to thank tmg, as well i think my colleagues have indicated i appreciate you working with the community, we have come up with something in addition to a lot of the other term, the arrangements that you need will benefit all of us in the long run we're excited to see the community participation and event space. and the comments taken if there is an opportunity to increase revenue, in this space, it would be great to have that considered as things move forward again, i appreciate everybody coming in and addressing a lot of concerns and questions that were raised last time i did have one very specific question i was curious why there is a dip in revenue in year 12.

>> the reason for the dip in revenue is releasing so the tenant is anticipating a ten year term with the restaurant with the office tenants, and assumes, i think it's a nine month releasing time, will you see a dip in books in year 11 and 21 to look at risk of market rate risk for releasing >> thank you. i want to thank everyone involved in this and again, thank our staff, for their hard work, poving this ford forward, and community representatives, making this project better and look forward to seeing this open up. i had a motion to second all in

favor of resolution of 15-19. signify by saying aye >> (multiple voices): aye. >> the motion carries, next item? >> [reading] selection process for proposed em bar indication site for ferry service between the north san francisco waterfront and alcatraz barkation site for ferry service between the north san francisco waterfront and alcatraz island. >> i'm john doll from the real estate division i also want to acknowledge, that ann ultimaten is here from the park service as well as brian aveloz as well as other national park staff. libby siful may or may not be here, she has a conflict at the time, she's with siful consultanting, and looking at

the market comp ps for this project she may be available to answer specific questions regarding that. any way, this presentation wz requested by commissioner woo ho to provide the commission and report with an update on the port's efforts, to retain mps embarkation sites, to alcatraz within the port's jurisdiction. the staff report, overall articulates, an overall response to this request, we standby the written report. let me reiterate a few points with regards to background, what mps is doing and wants, what the port's due diligence has been three the status, and

negotiations negotiations, and four, what the steps will be -- within the port's jurisdiction it has been at peer 41 since 1972, then 30 years ago, it moved to peer 31-and-a-half. alcatraz attracts, a million visitors each year, it could be higher to the island, but limited to a first class operation or first class visitor experience on the island mps, has plans to expand future operations beyond alcatraz to fort baker and other federal attractions within the bay. this operation generates approximate fatally 53 mill dollars, a year in revenue that revenue in time will increase as noted in the staff report in

2008. the park service indicated to the port they wanted an long-term imbar indication site, this will be contrast to a mandated approach to acquiring selected ferry operator to secure an embarkation site every ten years ago. nine years ago, they selected horn blower, as the operator secured a site at peer 31-and-a-half now, they want to secure a permanent or long term site, but they require ten year or concession contracts with the ferry operators what they have done is to embark on a site selection process. by using environmental impact study. hang on for a second. can i move back here? okay. as a way to evaluate

sites of the northern waterfront the idea is through the process the national park service would identify a preferred site based on the preferred site they will initiate a process to identify and select a ferry operator this can only be done if there is a selected site. national park service wanted to complete the final eis or environmental impact statement. late 2015 or early 2016, with a recard decision to occur some time in 2016. this slide is difficult to read but the draft ies eval watt weighted a number of sites, there is the nonaction alternative which is the current site of peer 31-and-a-half, and three

alternatives, and enhanced peer 41 and fort mason the draft does not identify a preferred site but it did designate peer 31-and-a-half as the preferred site, they choose not to prefer an identified peer idea as a port prerequisite, the current status or the current site of peer 31-and-a-half consists of using approximately half of the marginal war f, which is used for visitor circulation and the other for -- peer 31 shed is used for temporary restrooms, and back of half. the peer 31-and-a-half alternative this is the one that would be envisioned alternative shows the entire

wharf back, and parking to peer 31 as well as developing new modern restrooms, plus new program uses, excuse me -- in the bulkhead buildings and possibly a third birth in the future. this was the site plan we have been working with the port to develop this and again it's difficult to read, but these outline some of the site uses that would be part of the overall enhanced or peer 31-and-a-half alternative, and it also again, shifts some of the uses from peer 33 to peer 31, part of the consent item on

your agenda today had to do with a peer 31 project. this would dove tail with that project, it would make peer 31, a trust consistent anchor for peer 31. the next part is where are we with regarts to negotiations? we have met continuously with mps staff, we had regular meetings, we know why they want a long term embarkation site this has left the port in a difficult position, as i noted, they chose to identify a preferred site, after an agreement on business terms with the port, mps, insists they want a long term deal national park service needs to maintains the contract every ten years, mps,

says they cannot directly invest into nonfederal prolt property -- this say potentially expensive proposition for the port whose costs are unknown, and funding sources not known over a 50 year period, nonetheless the port has been committed to working on an arrangement to retain peer 31-and-a-half, as the long term reembarkation site. over the past year national service and the port has met continuously in exchange business term proposals, as of today, we have not reached a business terms agreement to major issues remain unresolved, one, the amount of required capital investment required by the port and how they will be

funded and two a rent structure, indicating a fair percentage of gross reseats the port would earn as compensation for the use of facilities and it's capital obligations, with regardses to the capital investment even with the uncertain status with peer 31-and-a-half as a preferred site, the port has done it's due diligence invested $10,060,000, looking at the structural integrity, at 31-and-a-half, which is the key for embarkation. recently consultant has involved a preliminary cost estimate of $7.7 million, that requires scrutiny, in terms of the need of load capacity and when repairs need to be made on a long-term basis. there are also costs associated with the peer 31 bulkhead,

primarily, a new public restroom facility upwards towards a million dollars, this is additional cost to the peer 31 project. so we are in general agreement, or close to a general agreement on the site plan, we are in the process of developing cost estimates. we -- need to develop when these improvements need to be made over a 50 year term and who pays, and identifying each party's responsibilities and ultimately a rent structure that compensates the port for it capital obligations. with regard to the rent

structure, this slide shows the gross revenue in 2014 of nier teen $54 million the port currently received 3% of the total gross and we're about $1.5 million, mps, has offered -- excuse me -- that the rent say virtually the same. and is not akresed the long term capital responsibilities and the including the expansion of square footage in the peer 31-and-a-half alternative -- we included a sheet to mps, included rent structure and higher percentage of gross revenue, to compensate the pord for it's capital obligations the nekdz steps how do we resolve