details narrative base stories to map and 3 d where you've got an extrusion of say at its peak world war ii era. number five, theyldou have text panels inscribed, a number of techniques that could just add to the richness. not only do you get here and have the great presence of historic buildings now reimagined with new uses, the parks and open spaces, but it's the kind of detail that will warrant more visits. each time you come back you will see and discover something new. we're excited by the close out date. we're working very hard to get it right and make sure that we make this waterfront something that is special for the future but that it evokes its unique past, so thank you very much.

>> thank you. >> thank you, richard. as previously mentioned, the port's executive director established a design advisory committee to review the park's design for both the commission rock and pier 70 projects for consistency with their design controls. so in this case, for consistency with the design for development, d for d. the d.a.c. met twice, once in february , once in may, one of which included a meeting with the bay conservation's design and review board. each wz -- was publicly noticed. the d.a.c. approved the preliminary schematic designs of all of the parks within the suda area, and 9 bbucdrb approved the shoreline parks within their jurisdiction as well the d.a.c. approved the

schematic designs for phase one. the d.d.a. also required that forest city conduct community outreach, in addition to the design review meetings, the port hosted a c-w.a.g. meeting where the early plans were proposed in early april. they held a separate mee in the dogpatch neighborhood which was attended by over 100 people. they met the requirements of the d.d.a., and overall, the design advisory committee and the public seemed to be very happy and excited about the project and want to see it move forward quickly. next steps, should you approve phase one, would be to come back to the commission in the near future to get approval of the preliminary schematic design of the entire 28-acre site and then subsequently as they move forward with phases two and three, they'd come back to the commission for approval. with that, we're available for any questions. thank you. >> thank you. can i have a motion? >> so moved.

>> i'll second. >> is there any public comment on this item? >> my name is penny wells, and i'm a sea kayaker. i believe to the bay area sea kayakers, which is a local kayaking club with about 600 members. i also am on the advisory committee for the san francisco bay water trail. the prospect of having a beach with a boat house, a place where nonmotorized boats can launch and land has us pretty excited. when this project is completed,

it'll probably be one of the premier sites on the san francisco bay water trail, and what i can tell you is that from -- you probably already know this. when you see san francisco from the water, it's a completely different perspective. it's a perspective that is quite wonderful, and when this site is finished, and people are able to get out on the water in kayaks and standup paddle boards and whatever they've invented to get around in by that time, it's going to be quite magnificent, and it's something that san francisco resident and visitors will be able to experience to get the perspective. [please stand by for captioner switch]

... didn't want to see any greenery on the walls of the building, so it looked stark to me. all that corrugated iron. i just wondered, how are you going to coordinate so the flow between the two projects looks like integrated. we understand the two different sponsors, developers here, but from the public point of view,

they sort of flow into each other. to make sure there is a sense of design that works together. >> amount of new greening we can put on the site because of the designation, one of the character defining features was that the district lacked greenery because of its industrial nature. so we worked closely with the city on the balancing of how much greening is appropriate. at some point in time, we thought it may have been tipping the scale, but i think we're at a point that meets the needs of the district, but also provides comfort to the visitors. >> i love the greenery, i was just surprised, they were saying they couldn't do much. i hope you press on that. because it makes it more

inviting, i guess very sort of rigid and cold, i guess is the feeling i felt. co as it relates to the ectivity, one of the design themes that field operations and forest city developed from the early on set was to have a place of continuing the theme of these small corridors that connect to various spaces they have. if you look at how the pier 74 plan connects, there still is a connection from the machine shop courtyard, or the piazza, to the market square, to the passage between building 2 and building 12. from the atrium of 113. into the courtyard off of 20th street. through building 12. or even walking down louisiana street and connecting 21st street. so i don't know if, richard, if you want to add onto that?

>> particularly, one of the forest city buildings i guess is building a is going to look into the piazza, is that correct? building 2. if people look down, you want it to be inviting. >> just to build on what david was describing, one of the great charms of this pier 70 site will be all the different ways to walk through and find your way from the district out to the waterfront. because of the historic buildings, you can't just apply a straight forward grid. so there is this built-in variation, labyrinth quality. being able to walk through the site, the atrium, and the passage and a shortcut through the project will be one of the special moments. there is a small space between building 2 and 12, a small

passage. right at the cent. another passage. so that network and being able to meander through and not just main streets is going to be special part of the project. at the same time, the streets are also the familiar way of navigating. the team is developing all of the streets. so 21st street will be built as part of the project and making sure it's all connected. and thirdly, david used the word, mosaic. all the court yards, park spaces. one of the ideas, we have developed furnishing and attractions within the park, we're trying to create multiple stages for activity. and the market space, the square is activity space for the

building 12 program to extend out, as well as community events. it's about half the size of the piazza. the piazza is more wide and open, but it has different function. the program using those buildings are going to be occupying that space. you have big open spaces, you have trees that make intimacy. we have furnishing that brings people together. so i think the collective works, works together, especially given the ways that you navigate and connect with the site. this whole notion of meander, the streets being the main way to connect. so it feels like one place. then building on the richness that each place you find can offer something a little different. different scales, different opportunities for experience. >> commissioner makras: i want

to echo commissioner gilman's comments. i'm just delighted that we're going with this phase that gives the public the maximum up front. the developer should be commended for that. it's usually the opposite. they want to do something that brings in a lot of money fast to help makehe project work. they're giving the community everything up front and that's o sewonder. congratulations. >> president brandon: commissioner adams. >> commissioner adams: very thoughtful, very meticulous work, great presentation and i'm in support. thank you. >> president brandon: david and richard, thank you so much for a great presentation. i want to echo my fellow commissioners and commend the team for putting so much thought into the open space piece of this project and doing it in the beginning, in the first place.

which is absolutely wonderful. so we really look forward to you coming back with phase 2 and phase 3. and this is great. you guys, you've put a lot of thought into this and i like the design. so thank you. any other questions? all in favor? any opposed? resolution. 18-32 has passed. >> item 11 a, request authorization to execute a modification to construction contract number 2740, crane cove park surcharge and site preparation project to increase the contract scope and amount by the sum of $272,277 and to extend the substantial completion date. >> good afternoon, president

brandon, commissioners, port members staff of the public, commissioner gilman and commissioner makras. i'm a project manager in the engineering division, this is to request authorization for a final contract order to construction number 2740, crane cove park surcharge and site preparation. with me today, mr. trace porter, the executive sponsor and mr. jad hamel who are available for questions if needed. crane cove park will be a major new open space in the union iron works national historic district at pier 70. it includes a 7-acre park, new 19th street and georgia roadways, renovation of building 49 and 19th street parking lot. planning work started in 2010. design work in 2011. and construction in november of 2016.

opening is anticipated for december of 2019. the overall budget is $36.7 million, $25.9 million is from the 2008 and to 12 clean and safe park bond. i will provide a status update on the overall project at the end of my statement. contract 2740, is the first of five construction contracts that will deliver the overall project. a budget of $5.66 million was established for the contract. all funded from the 2008 parks general obligation bond. and the purpose is to prepare the site of the former shipyard for the park. contract scope includes building demolition, site cleanup and demolition of miscellaneous structures, infill and embankment for the future 19th street, surcharge portions of the site to strengthen the

underlying mud and weak soil. dismantling and restoring the historic cranes and anchoring the towers. bids for the contract were open an august 31, 2016. and construction was the low bidder, $4,110,000, 1,550 million dollars below the lowest bidder estimate. notice to proceed was issued on november 16, 2016. this photo is from the site kickoff meeting, a monumental day for the project. the port hired the san francisco public works to provide construction management and site inspection services. the designer provided design support services and port engineering and planning

division provided oversight and project management. change orders are part of every construction project. during construction staff issued three change orders for additional work totalling $407,516. in addition, staff has negotiated a proposed fourth and final change order for additional work in the amount of $272,276.74 bringing the proposed final contract total to 4,789,793.43 and extending the duration from 181 days to 350 days. 350 days. each of the change orders contains multiple proposed items that were identified as additional and necessary work. the scope and estimated amount of each proposed change order

was agreed upon. the work completedly the contractor and monitored by the inspectioners and the final amounts verified by the construction team and port staff. the reasons for change orders include unforeseen conditions at 9.73%. design errors and omissions at 3.9%. port requests for additional work at nearly 4%. and quantity adjustments as -1%. the site was a former shipyard and existing records were sparse. unforeseen conditions were not unexpected, but it was surprising h much was different when we started scraping the surface. the discovery of rail, asphalt and concrete slabs covered by soil and gravel, requiring drain

equipment and import of additional soil to backfill the area. slabs up to six feet thick. requiring extra demolition and placement of soil to fill the areas. existing pile supported crane runway structures that did not match the record drawings and necessitated redesign of t crane foundations, including reinforcing and concrete. in this case, expensive drilling equipment was on the way to the site and the team completed additional demo and redesign work to avoid costly standby time. and to allow the drill pier installation to proceed without additional costs. all contracts have sell amounts of design errors and omissions. costs are celled when the team -- controlled when the team

comes together to find solutions and allow work to move ahead. 3.9% is higher end of the industry standards. they did step up and resolve issues quickly and effectively. port staff requested additional work totalling 4%, including importing and placing additional fill on the grounded berm for shoreline protection. and improving the site and improved site protection and stabilization measures that became necessary to the unsuccessful, due to the unsuccessful bid of contract 2 in late august of 2017. to summarize, the approved and proposed change order amounts are for work that staff deemed was necessary and additional to the contract. work has been completed and time and materials have been verified by public works construction management staff and documented to the satisfaction of port staff. and the overall proposed contract amount is within the

established budget at $870,260 below the engineer estimate and $237,000 below the second lowest bidder, representing good value and outcome for the contract. in addition, staff is requesting an additional 169 days in contract duration for the extra work. the extra work was necessary and effectively managed to minimize time impacts, therefore liquidated damages are not warranted. the additional time is not impacting part delivery. the proposed final contract local business enterprise participation with this change order will be 30.05%, versus the contract monitoring division goal of 34%. and the original contract participation of 24.47%. this is a good outcome and

supports our livability, strategic goal of supporting the funds spent with the firms. also of note,buness owned enterprises account for the bulk of the contractor work. in conclusion, port staff request authorization to execute a final change order and modification to contract number 2740. increase the contract scope, and amount by the sum of $272,277. to extend the substantial completion date from 181 calendar days to 350 calendar days and to increase the contract time limit for final completion of the contract to a maximum of 60 days after adoption of the proposed resolution, should you adopt it. and now i'll give a brief overall status update on the crane cove park project.

the commission expressed interest in a comparison of crane cove park cost versus other parks. this shows the overall budget for crane cove park is $4.3 million per acre. compared to a low of $1.5 million and high of $20.2 million per acre for other port and city parks. and the total soft costs are estimated at 19%. which is on the low end of the 15-31% range for other parks. the response to the failed bid of contract two last august, we have moved forward by simplifying the contract. by separating out building 49 into its own contract. eliminating bid alternates for restoration of the cranes, utility racks and design of the

entry plaza, 19th street gardens and landscaping. in addition, we've embarked on a campaign, calling and e-mailing prospective bidders, both prime and subcontract. the revised contract two is now advertised. it was advertised on may 15. the engineer's estimate is 17,543,000. the pre-bid meeting is may 24, at the san francisco public utility commission contract center in hunters point. bids are due in early june and we're expecting award of the commission in july. contract 3, building 49 and crane tower has met abatement, will be advertised next month. contract 4, building 49 improvements, we are finalizing the design with bidding anticipated in july of 2018. and contract 5, 19th street and

georgia street, we're finalizing design with bidding anticipated this winter. and finally, we've hired a new project manager, erica peterson, i don't think she's here. who will take over as project manager for crane cove and give the project the time it needs as i transition on to the seawall program full-time. and this concludes my presentation. i'm available for questions. david is the co-project manager is available for questions and mr. porter and mr. hummel from the construction. thank you. >> president brandon: can i have a motion? >> so moved. >> second. >> president brandon: there is public comment on the item.

>> good afternoon, commissioners, my name is corrine woods. i've been involved in the pier 70 project for a long time. and dating back to 2006, i've been working with david on implementing mayor newsom's vision. and the crane cove park is a really important piece of the blue greenway. it not only gives us pedestrian and bicycle connection along the water front from mission bay park to the main park in peer pier 70 on down to the power plant site, but it also gives us one of very few water access points for human-powered boats. most of the waterfront down there is too rough, or too

turbulent to really encourage human-powered boating. we have mission creek, we have it at pier 52, but this is a really wonderful protected area. and the fact that we're doing so much to encourage water access, maybe why it's a little more expensive? the dirt under the water is probably not terribly clean. like it is everywhere else. but whatever -- and i think the staff has done a tremendous job in controlling costs and getting this project done. and i really encourage you to support it all the way because really, it is a critical piece of pier 70 and it's a critical

piece of the blue greenway. >> president brandon: thank you. >> hello, commissioners. my name is bill barnes, i'm president of kayaks unlimited, the steward for the creek park location on the san francisco bay water trail. and until this park is built, we're the gem of the water trail in the san francisco area. just as the ggra took upon themselves to make a world class area at chrissy field, which i'm a waterman and also a wind surfer, but mainly a kayaker now, knows about ggnra. with the addition of this park that i worked -- i've been going to meetings since 2006.

so it's been a long time. and this time, it's so close, i'm just excited. and the location as corrine said is the key. ggnra realized that chrissy field was a world class wind area, this is just the opposite. this is a world class protected, safe area for new boaters, instruction for boaters, whether they're dragon boaters, kayakers, outriggers, this is the place. this will be the gem of northern california. just as mission bay in san diego is the gem for down south. so this is an exciting, exciting thing. and i would hope that david and company has a good thing going and they'll keep the cost within your realm.

>> president brandon: thank you very much. penny wells? ok. may? >> hi, good afternoon, my name is maya. i serve as the southeast manager for the san francisco parks alliance. i'm speaking in support of crane cove park because besides bringing much needed open space for the dog patch neighborhood and the future pier 70 neighborhood, the park will replace fenced off area with direct connection to the public with the waterfront. our organization shares concerns with the costs and the desire to see the important project finalized, we also recognize that construction costs have escalated dramatically over the past few years. this has been seen all over the

city agencies and recreation and parks report that bids exceed estimates by 20-40%. and the construction cost doubled in price since 2011. for too long, this has been disconnected from the public with a lack of pedestrian access and trail connectivity. crane cove park will bring us closer to the realization of the san francisco blue greenway. i know this has been a long process, but we should keep in mind we're just a year away from completion and it's fundamental that the elements envisioned by the dog patch community are fully incorporated to the project. thank you. >> president brandon: thank you. any other public comment? seeing none, public comment is closed. commissioner woo ho?

>> commissioner woo ho: thank you, i think we've all been in favor of crane cove park. it is a unique location and we understand its value and importance, not only to the existing neighborhood, but obviously what is going to change and happen at pier 70 and with the development. i think the questions have been raised, not just with this change order, but i guess we're seeing that there will be at least another four contracts being awarded to complete the park. and so i think that we, as commissioners, have some sense of responsibility to make sure that the balance of what we get in terms of the cost versus the benefit, and we do understand the benefit and we are totally in support of it and we have to be very careful because there is no, as you know, this is an open space, there is no revenue to be generated, so there is no payback for us, so we have to be

careful of the investment. we have to be sure what we provide in terms of the uniqueness of this park in providing water recreation, but i would ask the staff to look very carefully -- not just at the contract we're looking at today -- but all the other contracts, are we asking for perfection in the park? or can we find a good balance that helps us to maintain our fiscal responsibility to keep expenses under control. it's not a question of what has happened with construction costs in the city. i think it is probably related to the design of what we want in the park. and i think we have to figure out a good balance. so i guess i wouldn't want to give up and say, let's just accept that costs have gone up and that's what it's going to cost us. because $36 million as we saw is the highest amount we're spending on any single park in the port system. and this is not the end. and i just one question, david,

do you have any idea or even what the other contractor, anywhere, what the total cost of this is going to be? do we have any idea of the total? >> well, we're managing right to the budget. >> commissioner woo ho: so far, but you have no contracts? >> the total budget of $36.7 million. and so the amount we had set aside for this contract, we're going to come in under, so we'll have a little extra. contract 2, our bids came in much higher. that was a failed -- >> commissioner woo ho: i recall. >> the proof going forward is going to be what happens with the rebid of contract 2 that is on the street right now. and you know, we took two measures we think are important. one, we think there was savings

in the designs, we did value engineering of the park, particularly around the plaza. and two, we did not get enough bidders. we did not get competition on the first bid. there were no serious bidders and we need serious bidders to come in close to the estimate. so we're hoping that we attract three, four, five would be excellent, bidders that are going after this thing. so we simplified it in hopes of getting that. in terms of what will we spend when we're done? i expect we'll spend the full allotment for the project. >> commissioner woo ho: i guess what i'm saying, if we have looked at the value of the design, while we're hoping to meet all of our objectives in terms of open space and providing recreation access to water, et cetera, we all are in support of that, but it's a question of how we do it. and we have lots of excellent input from the community and our own team to ensure we're doing

it in the most economical way. >> if i could add to what steve said. we did value engineering to the design of the plaza, which hopefully will bring the cost down. and recognizing that we aren't able to get everything else we wanted, we've eliminated certain items from the design and bid package as well. we're cutting back where we can. i want to reinforce that the $36 million is a large budget, a large investment in the park. but we're delivering more than just a park. we're delivering two new roadways, 19 and georgia street that provide access to the shipyard operations, better connectivity to forest city and orton. so there are two new roadways and we're building a new parking lot to support the needs of pier 70 and the parking area. while we call it a park, it's important to recognize that there is a roadway, there is a

parking lot, we're also doing remedial work in the shoreline, sediment cap. just wanted to point that out, ank yo >> president brandon: commissioner makras. >> commissioner makras: i'm supportive of it. i'll leave it a at that. >> commissioner gilman: i just have one quick question as a new commissioner. i think it would be for steve or david. is there a risk because you're re-putting out bid two? as someone in residential construction, we're having a hard time getting a bid. is there a risk that it could stall moving forward? >> there is certainly a risk. it's a tough bidding climate. there are certain trades that are really difficult. and those are centred around the building industry for the most part. i think we have a better shot at kind of heavy civil and park

construction, than building construction right now. when we put -- i mentioned earlier when we put the contract 2 out the first time, we did not get competitive bidding. i think it was not perhaps the right mix of work. there is a lot of risk. contractors looked at the contract and said this is messy. a lot of different subs. there is a lot of risk there. i don't need to do this, i have plenty of other work. and so we think that by simplifying that package, we got rid of the alternates, we know we can't afford to do the cranes right now. that's the unique sub. we took building 49 out and that will be its own package, hopefully building contractor will bid on that, not heavy civil. and we think that mix gives us the right opportunity, the best opportunity we can to get

competitive bidding and to be able to award this contract. but there is certainly a risk. it's a tough climate. >> commissioner gilman: thank you, i want to make sure we stay within budget, but we also live up to the commitment we made to the community to see this come to fruition and be a waterway access, so thank you for your comments. >> commissioner adams: i like this presentation. i really appreciate the questions of my fellow commissioners. i'm in support of it. the main thing for me, this is going to provide a better quality of life for the citizens of san francisco. and they're the ones that are the shareholder of this port. i'm in support of that. i know budget sometimes, things go a little bit, but i'm looking forward to the final product. think i as a city and citizen of san francisco, we'll all gain. i want to thank the public, corrine and others coming out and speaking on the issue.

i like it when you engage the community, take the time from your busy schedule to come out and talk to us and tell us what you're thinking. i know, corrine, it doesn't matter for something you support, if it's something that is good for the city, you come out and support it, we love you and you continue to be the conscience of this commission. thank you. >> president brandon: david and steven, thank you so much for the presentation. this is a large project. i am in full support of this park being built. i'm not quite sure i'm totally committed to how we're building it and the cost it's taking to build and that the price keeps going up. and it does keep going up. i know you say we have a $36.7 million budget, but we don't have $36.7 million in funding.

so we don't necessarily have to spend that amount. if we don't have to. and i think this might be a perfect time with two new commissioners to get an update on the project to see what it is we're spending $36.7 million on. to see the total scope of work. and i just -- i have a couple of issues. one is that we're on our fourth amendment. and it's just now coming to the commission. so i think in the future, if we get to the second amendment, maybe -- most likely before the third, i think there needs to be some kind of update to the commission that there is some significant change in a contract, i think you need to bring it to the commission's attention. instead of just keep spending and then bring it to us.

luckily, this is a small amount, but this is a huge project. and this is, you know, a quarter of the cost. the other issue i have, this is yet another multimillion dollar project on the southern waterfront with less than 2% going to nbe. and with these proposed amendments, it goes down to less than 1%. now there may not be anything we can do about that legally, but every time i see it, i'm going to bring it to everyone's attention. that once again, we're at less than 1% contracting with nbes. so for that, i cannot support this. commissioners, ready to vote?

all in favor? any opposed. ok, thank you. three for, two against. >> 12 a, request approval of first amendment to lease l-13550 with budajen properties located at 160 jefferson street, to provide for two extension options of ten years each. mike martin, i'm going to give a brief introduction. you've been on a long road with us, this interesting proposal and proposition in terms of dealing with one of our highest performing tenants and higher

performing fishermen wharf tenant who came to us seeking extension before the expiration date of their current lease term. that was intended for them to continue to manage their project related debt in a way going forward that would hopefully continue to allow them to operate and perform as well as they have up to date. and i think this work with you over the several months we've worked with you, really allowed us to sharpen our thinking about what it is that the port needs to get out of these relationships and how do we share in the conferring this extension. i wanted to thank our consultants who helped us really drill down on what the possibilities were to grow the capital investment in this facility, sort of in addition to the state of good repair that is already required under the lease. i also want to thank the tenant, boudin properties. for really rolling up their

sleeves and trying to think hard about what their business plans were and what they can expect to out of the extension. it's a win-win for both sides and we're going to run through thath you again today, to see the approval. i want to send it over to jay. >> good afternoon, commissioners. jay edwards, senior property manager. i want to congratulate the commissioners for the reappointment, commissioner adams and commissioner woo ho and welcome commissioner gilman, looking forward to working with you closely. so, we're going to -- what i thought we'd do is give you the background. talk briefly about a retail

leasing policy going to the proposed business terms. talk about our financial analysis. and then give you our hopefully, our recommendations to proceed with the first amendment to the boudin properties leased for extension of two ten-year optionxten the lease based on their investment into all facilities. so, by way of background, first of all, we like to congratulate boudin for being the oldest continuing operating business in san francisco. that's quite a legacy and we're very proud to have them as one of our marquis tenants in the fishermen wharf. locals that come to participate in their facility that was constructed in 2005. and just a brief refresher, it's a two-story new building that houses a ground floor cafe, a

retail center. there is a demonstration bakery, a bakery that produces wholesale goods for the entire san francisco. there is, as you get upstairs there is the boudin bistro, a full service restaurant with a banquet area and there is also a historical museum. so it's quite a lively facility. it's multipurpose. and it's really been a big draw for san francisco's visitors. so we have back in 2005, they invested about $30 million so this was not an inexpensive venture and it showcased their talents there at a multiuse facility. they made quite an investment into this property and they continued to make additional investments as time progressed. when they started in 2005, there

were roughly at $13 million and within a little over ten years, they've doubled their sales to almost $27 million. by all accounts, they're extremely successful with what they've done. and it's really - they have a really good pulse for what happens in the wharf and i think it's the type of experience that people do enjoy when they come to the wharf. as you can see, the port earns $1.6 million, which is the percentage of rent. they pay us $500,000 base rent and another million dollars in percentage rent. so their success has meant increased revenue for the port and we'd like to continue to see that happen. the way the lease was set up prior, 40-year lease, but there was no options to extend. it was a firm term and then just expire. so through a lot of discussions with boudin and their management

and ownership, they've really been anxious to continue to reinvest into the property and that's why we're here today. so as you can see, they are our top performer in the fishermen's wharf and probably one of the top performers in the city in terms of revenue at $27 million. it's very impressive. we have a fine roster of other tenants. nothing against our other partners, but they're clearly performing at absolutely magnificent pace. so as premises for bringing this item here to the commission, we did want to just rebehind commissioners -- remind commissioners of the retail leasing policy that was implemented in 2011 and that gave us and our partners really the foundation, if you will, for being able to go ahead and try to either reinvest in the

property with either an extension of for renewal and that's existing -- for an existing tenant without having to go through a bid process. so we covered that here in the staff report. we have some points here up on the slide. but i think it's all well within the retail leasing policy. and in terms of other policy considerations, we've really been looking at how do we incentivize our valued tenants to keep reinvesting in their businesses and how do we do that? and how do we make sure those are investments that are going to be revenue-producing or extend the useful life of the asset? so it's really been a good exercise for us and our partners to evaluate these type of opportunities. and so we've done that here. and we think we have a package that is front of you that does both incentivize our operator,

provide specific benefits to the port and allows us to move ahead on potentially extension options. so here's the proposed business terms. i'm laughing because we skipped through this before, but now we're going to talk about this. this is the heart of what we have in front of you. and that is to extend for two options of ten years each, starting in 2045 to 2055 and a second option contingent on the first being exercised from 55-65. what that would allow us to do is base rent, it's a good formula. the base rent ratchets up to 70% of the sales, the preceding three year sales. we're about to implement a new based on the success, their base rent is going to be increasing and going to be doubling. so right away, a very good

benefit, a good clause that is already in the lease. so what has been proposed here to a lot of discussion with the consultants with the partner boudin, is to have a fair market periods and those would be on collared if you will, between 6-7%. their existing percentage rate is 6.5% on their food and beverage. so the other terms would remain the same. and in the lease, and that lease has served us well here for the last 13 years. it's well put together lease. we've had really a good operating history with boudin. so get the extensions in order to earn the extensions they have to make the investment. it's significant investment of $2 million before 2025. that's $2 million into improvement that will either improve the financial

performance, or extend the asset value of the facility. and so we have had -- so that's for the first option. the second option is the same and there will be million dollars of corresponding investment during the extension terms. that's $2 million up front to get the option and additional $1 million while the option term is in effect. so that's $3 million for each option. $6 million for these two options. and as it shows here, verifiable capital improvements to improve the financial performance and extend the asset useful life. and we have robust amendment here we put together in the last 30 days since we saw each other last. we have the amendment that outlines that and really gives us very good protection before and after. and so also return, boudin has agreed to increase their

participation from the 10 to 12%, and that's above the adjusted basis. we feel we have a really strong business proposal here. and now we'll move into the analysis portion. which so we asked our consultants to really look at the opportunities here in conjunction with boudin to be able to, how do we put the output and the input of the facility? their success is now limited future growth. they've really in some ways, utilized the facility to its maximum and now they need to make improvements to improve the delivery and several different item areas we can talk about a little bit. but really, it's going to help us, we believe, and we've done analysis here that will show you, that will generate additional income.

so as an example. these are potential projects that have been discussed. these are not necessarily the final projects. these are the projects that we have jointly come up with that could improve not only their ability to serve more diners, but also enhance the existing experience for many of their current diners. so there is four projects listed up here. they were analyzed, so it's very robustly and they've come back with the potential projects that would generate the capital invested and generate projected sales based on the investment. and for ceqa purposes we did not get into exact -- this project or that project -- because that would require another layer of regulatory approvals and this is things we want to keep flexible,

because this is a dynamic market and we want our partners to be able to change as we progress here in the next couple of years. we did look at three financial scenarios on what happens if we don't proceed with this. one would be existing lease would run through its course and then we would just basically have the tenant in place on an interim basis. and it would be no capital investment and really probably no corresponding increase in the sales and even a decrease. so that was scenario one. 1 a, that would be the tenant would vacate and we would be trying to find another boudin, which is not easy to do. there would be down time, capital expense, expenses incurred by the port and we've analyzed that and we an lazied

the -- analyzed the proposal we have in front of you. those are shown in the graphs. scenario 2 is much more financially beneficial here, because it allows boudin to keep the revenue curve going upward. and you see the ratcheting of the percentage rent compared to the base rent. so as the sales grow, the rent grows. the downside is protected and we benefit the upside. scenario one is flat line of revenue. and the percentage rate stays even to that as well. under this next graph, we show the scenario 1-a, where we lose boudin as tenant and we've estimated some actual loss of revenue, because that happens quite often in that replacement period. and also the ramp-up time a new tenant would need and that would be if they get to the existing

sales numbers. we felt under those three scenarios, we like scenario two for port and future in the long run. we did additional value analysis if you will, a nominal and net present value analysis. you can see it's pretty robust returns for us as an organization under the scenario that we analyzed here. so, that brings us to our final recommendations. and as you can see, we've projected here, 30-35% net present value of the proposed lease extension. at say a very good return for money we're not investing, that our partner boudin is investing, but allows us to continue on in the partnership and allows them to make investments in the property and serve san

francisco's locals and visitors for many years. and we also are going to share in the future proceeds. we've increased that amount. and then we've negotiated amendment that we spent a lot of time. i'd like to thank the city attorney, she started this out of scratch. it's not easy to do these agreements in 30 days. and she did a wonderful job. i think we had very good input from boudin's attorney, they're well known in the real estate industry and we crafted a fair amendment that allows us to both win and have our tenant continue on for many years. that concludes our presentation. and we're available for questions. >> president brandon: thank you. can i have a motion? >> so moved. >> i'll second. >> president brandon: any public comment on the item? seeing no public comment, commissioner gilman? >> commissioner gilman: i just wa