good afternoon. it is now 10:00 1:00 p.m. this is the regular meeting of the community investment and infrastructure for tuesday,

december 18, 2018. welcome, members of the public. please call the first item. >> the first order is item one, roll call. please respond when i call your name. (roll call). >> commissioner singh is absent. all others are present. item two announcements. the next regularly scheduled meeting will be held january 15, 2019 at 1:00 p at city hall room 416. announcement of prohibition of sound producing electronic devices. the use of cell phones and similar electronic devices are prohibited at this meeting. the chair may order removal from the meeting room of any person responsible four the ringing of or use of a cell phone, pager or

other similar device. a member of the public has three minutes to make public comments on each item unless a shorter period is adopted on any item. it is recommended members who wish to address the commission fill out a speaker card and submit the completed card to the secretary. next is item 3. report on actions taken at a previous closed session meeting, if any. there are no reportable issues. next is item 4. no matters of unfinished business. next is item 5. matters of new business consisting of consent and regular agenda. first 5a. approval of minutes from november 6, 2018. madam chair. >> madam secretary do you have any speaker cards for this item?

>> no speaker cards. >> since there is no request i will close public comment. now, i turn to my commission members for comments and questions. do i have a motion to apbrief the minutes? moved by commissioner bustos seconded by commissioner scott. roll call. >> please announce your vote. (roll call). >> it is four ayes and one absent. >> the item carries. >> next is item 5b election of chair and vice chair for discussion and action. >> fellow commissioners, we have before us election of chair and vice chair. first we will elect the chair.

do we have any nominations for chair? yes, commissioner bustos. >> i would like to nominate our current chair, commissioner mondejar. >> i would like to nominate our chair as well. >> i would like to nominate our chair as well. >> thank you. any other nominations for chair? nominations for the chair is closed. any members of the public who would like to comment on nominations for the chair. public comment is closed. any oppositions or abtentions? please call the roll call for chair. >> commission members please announce your vote for the chair

when i call your name. you commissioner scott, vice chair, madam chair. the vote is 4 an ayes and one absent. >> the elected chair of the commission is marily mondejar. >> thank you for your confidence in me. >> next the vice chair. any nominations for choice chair? >> i would like to nominate vice chair bustos for the vice chair position. >> i second that. >> i would like to nominate as well. >> i second that. >> any more nominees for vice chair? >> nominations for the office of vice chair is closed. any members of the public who

would like to comment on the nomination for vice chair? hearing none, public comment is closed. any oppositions or abtentions? hearing none, madam secretary, please call the roll for vice chair. (roll call). >> madam chair is 4ayes. >> the vice chair is bustos. congratulations. [applause.] >> with you like to say something, commissioner. >> no thank you. >> please call is the next item. >> next is 5c authorizing a personal services contract with

hollynns consulting inc. a california corporation for one year with an option for two additional one year extensions for an amount not to exceed $1,700,000 for phase one and phase two of the hunters point shipyard and redevelopment areas. 44-2018. madam director. >> this item before is ruiteam. it is to engage engineering firm to provide assistance in subdivision and technical engineering services for the shipyard. phillip will present this item. apologies for butchering your

last name. >> thank you. good afternoon. i am phil. i am a specialist. this item is a request for authorization to enter into a personal services contract for engineering support services withollins consulting inc. for e design of the infrastructure to support new development, primarily in the candlestick project area. some of these services they are offering are reviewing subdivision apps at the new lots for the new buildings, reviewing improvement plans to bring utilities to the new locks created with the maps, reviewing

form water designs in excess of water from storms and delivering it to the bay, coordinating various regulatory approvals without side agencies and other city departments. the project area is shipyard one and two and can dill stick point, but the primary focus will be candlestick point where they are preparing multiple phases of projects final maps. this will require extensive review of utility designs and public improvement plans. in terms of consultants for this

work since 2015, it is currently done by hawk engineers, the contract with hawks engineers expires at the end of this month. relative to this selection process, ocii followed the following steps. on august 8, 2018, ocii issued a request for proposals for engineering and technical services. on october 22, we held a pre-proposal meeting with five interested firms. we went through the r.f.p. criteria to discuss the issues and answerkies. on september 11, we responded to all written questions from the various interested parties, and on september 22, all r.f.p. responses were due.

our outreach efforts inintoeded 90 e-mail solutiontationses to the city for engineers. we contacted the african-american chamber of commerce who disseminated the r.f.p. to its members. we coordinated the shipyard assistance center, both disseminated the information to clients or members. finally, we posted the r.f.p. to both the city contract and administration web page and oci web page.

we eventually received one r.f.p. from holland consulting inc. it included sub consultants hawk engineering who is the older for the contract and sustainable wattster shed design and sustainable watershed designs are certified lpes. after we received the response, we conteened a review panel for all subject matter experts. we had a member from ocii, public works and two developers.

it was selected because they met all of the r.f.p. criteria. the panel received positive reports of previous working relationships. fees were determined to be fair and reasonable. the panel found they were qualified to perform the required services. they have extensive experience with large infrastructure projects including transit center, central subway, extension and other projects. it is a one-year agreement with options for two additional one year expenses with a contracted of $1.7 million.

before i conclude or my voice concludes, i would like to introduce members of the holland team present today. first we have the principal in charge of holland consulting, second we have mr. derrick cooper, the lead project engineer and project manager. that concludes my remarks. i will be happy to answer your questions. >> before we ask any questions, madam secretary, do you have any speaker cards for this item? >> yes, madam chair. washington. ace washington. >> okay. please have a seat there.

i don't speak on nothing i have too much knowledge about, but i am speaking about here because i have an opportunity to speak. i have to speak on the item. let me just go over this quickly here. okay. i wouldn't make difference in i had whistles or a donkey, you wouldn't do what i want you to do. i support you. what else can i pay at this point. you are prepared. i can't speak on the item. this is what i come up here to speak upon. i get three minutes instead of two minutes. wonderful. that is special because i got up here. you all must be in a good mood today. i took my high blood pressure medicine.

don't go by my appearance. i am not here to impress. i am here to make statement on record. have it your way. i support the project. you will hear me speaking on other items. i am ace, and as always i am on the case. >> no more speaker cards, madam chair. >> no further request on this item, i will close public comment. any questions on this item? >> commissioner bustos. >> a comment. this is a contract that is about three years, right, we are looking at, if needed, right? the contract we would be approves is one year plus two years of one year extensions so basically three years. >> the contract you would be

approves is one year. with option of the executive director kor. >> correct. >> i know our contractors are well aware we are dealing with the peoples' money. when we approve contracts it comes back later for amendments so i just want to put on record i would not support an amendment. i think they are qualified to do the work, we are dealing with a lot of money. i am good supporting this, but behind full and careful about how we are spending the people's money. i think it is important for us to be reminded of that once in a while. i want to make that comment. >> thank you, commissioner

bustos. >> yes, i have a process question on slide 5. it is mentioned that five firms were invested, that attended the proposal. >> that's correct. >> were those all potentially prime consultants? >> yes, they were. >> do we have any understanding why we drew just one proposal? >> my understanding is that it is a busy time. there is a development boom and most people are really busy. >> that is what a lot of the professionals say. i do not the incumbent consultant hawk is on this as well. >> there is continuity in the work that is being performed?

>> that's right. >> any comment or questions? >> no comment. >> we retained hollis consulting before? this is not the first time? >> yes. >> yes, this is the first time? >> yes, this is the first time. >> thank you. hearing no further questions do i have a motion? >> i make a motion. >> motion to approve this contract. >> second motion from commissioner rosalis, seconded by commissioner scott. >> please call the roll. (roll call). >> madam chair, the vote is four ayes, one absent. >> thank you. motion carries. thank you for the presentation. please call the next item.

>> agenda item 5d. finding pursuant to section 9.07 of the disposition of urban housing llc the developer has made good faith efforts unsuccessful in leasing approximately 12,400 square foot gross rear store at transbay block b and north block of folsom street. 45-2018. madam director. >> thank you, madam secretary. this item is before you since the purchase of the land in 2015. the developer has used good faith efforts to obtain a

grocery tenant provided ocii with updates. they have been unable to lease the space and in february 2018, they provided in writing a request to seek approval to release them of this obligation. we understand there is concerns and the need in the community to have a grocery on that site, but today's staff is recommending we relieve them are the obligation understanding the sensitivity of the matter. i will turn it over to shane heart to present on the matter. we have an extensive team to support him as well. thank you. >> good afternoon, madam chair, commissioners, i am shane heart the project manager for transbay. we are here to discuss transbay block 8. the agenda i will give a

presentation, then the developer of blockade related california and jonathan, the project manager will give a presentation, then we have sarah graham who is with strategic economicises a consultant we hired will give a presentation. >> the commission actions today are to find the developer made good faith efforts to lease the grocery space and to approve termination of the developer's obligation to provide a grocery store in transbay block 8. before we start, i want to step back a little bit. i want everyone to know that block 8 is one you have the cal tran's parcels that was a former embarcadero freeway parcel. the proceeds from the sale of that piece of land went to the

funding of the transit center, and, you know, the goal of all negotiations and sales is to maximize the land price and get as much affordable housing as possible. for this project land price we were able to negotiate with $71 million and 70% of affordable housing. summary of the key findings. the developer and broker reached out to numerous grocers, too much grocery competition. ocii hired a consultant to review the grocery market. the developer met the dda conditions.

block 8 is follow some street between -- folsom street between fremont and first street. it consists of 548 residential units. 50/50 affordable 17,000 square feet every tail. the grocery portion is totally of 13,010 square feet, 2700 square feet is to the ground floor. 10,400 square feet is located in the basement. the dda was approved in 2015 and dda requires developer make good

faith efforts and hire a listing broker to market the space, provide proper staffing and provide quarterly progress updates to ocii includes market surveys, outreach efforts and obstacles to leasing the space. the dda reading the developer is unable to lease within a year of opening the developer may request commission approval to terminate the obligation. that shall not be unreasonably withheld, conditioned or dela delayed. regarding the developer's efforts, they hired collier as the listing rocker and contacted 13 grocers. the majority were local. all of the grocers declined due to competition from woodlands market. they opened in 2017 located

three blocks away. there was too little space that was not contiguous or they were not interested in the area. this is a list of the grocers contacted by the developer and broker. the developer provided staffing and quarterly progress updates to ocii. also provided three updates to the commission. this slide is a timeline of the developer efforts and the key events affecting the grocery marketing campaign. i am not going to get to the detail. the developer will speak about their past actions. ocii hired strategic economics topiary view the grocer objections to the space.

they agreed with woodlands that opening that market it could not support a second grocer within block 8. they state further grocery key mapped is uncertain due to increasing delivery options. they agree the space size is anism pediment. they did not agree that traffic and lack of parking are an issue due to transit option in the area. this is a map of the grocery store in the area. you can see the location of woodlands and proximity of the larger grocers. a key provision is 9.07. if the developer is unable to enter into a lease with an

acceptable grocery tenant on commercially reasonable terms acceptable to the developer the developer make seek approval to terminate and it shall not be unreasonably withheld, conditioned or delayed. this was brought to the transbase cac last thursday. they voted against recommending the commission terminate the grocery obligation. that was a 5-3 vote. there are cac members here to speak during the public comment period. although staff understanding the cac's concerns, staff finds developer complied with the terms. made good faith efforts, the o ocii hired retail consultant

agrees local demand cannot support two grocers. space constraints are challenges. in our opinion the dda language is very clear the approval shall not be withheld. therefore staff finds the developer has fully comply with the terms and recommends the commission approve termination of the grocery obligation. i will ask jonathan shum from related to speak. >> good afternoon, madam chair, commissioners. i wanted to give a brief overview what i will present on today. first, i will provide an introduction of the project team. we will have an overview of the

retail market outlook as well as trends. i will go over the design of the grocery space to inform every one of the efforts made. we will transition to outreach efforts conducted, then afterwards we can conduct q&a. here today is myself, jonathan shum, vice president, there is senior vice president who is going to give an overview of the retail market as well as trends that they are seeing out there. most of you are familiar with related california. one of the latest supportable housing developments in california. 14,000 units over the last 30 years. we have 1500 affordable housing

units under development. that is 588 in mission bay. west side court and the fillmore, the sunny dale public housing and goodwill site working for office space for the city of san francisco on the corner of mission and vanness. the neighborhood development is the nonprofit partner as well. don is out of the city today. he wasn't able to attend. affordable housing is important. we formed this partnership. in addition to being a nonprofit developer they are providing social services for the 150

families occupying the transbay blockade. as shane mentioned the project consists of 548 residents, 150 are affordable housing. right now we are scheduled to complete construction ahead of our dda schedule to provide much needed housing to the city of san francisco, tax revenue and sales tax revenue to finance the debt obligations of the transit center. we expect residents to move in early spring of 2019. in addition we provide a community benefit which is an important part of our design for the overall project. this is something we volunteered. it is open space that will be open to everyone inspired by local favorites. in addition, the project as well as the related team has been

very active and engaged supporter of the east neighborhood. showing some renderings and construction progress for the project to give you a sense where we are. this is a rendering of the project. you can see the neighborhoods serving retail. the following slide was an image taken last week where we are in the construction process. as you can see we are pretty far along, and we expect to meet our completion date and residents move in early next year. to emphasize, the destination we are trying to create here with v remembereaverylane.

an overview of retail is laura, who is right behind me. >> good afternoon. just touching base across the trends here domestically in the u.s. we will start with openings for 2018. there is a lot of press right now about retail struggling. there is disruption in the market. not all negative. some of the highlights are the openings across the board. we have seen 75% that are discount retailers and restaurants such as t.j. maxx, home goods, ross, dollar general, across the board and restaurants based on the experience in retail in general. quick serve small format restaurants we ar we seeing.

to closures if we take out toys and department stores. the toys at the top of the list are toys-r-us and the bankruptcy last year as well as department stores are due to sears. if we take out those the 700 closings, 50% is grocers. the trend is that they are closing or consolidating. some of the closures or groceries we have seen pullout of the market in the bay area is new seasons who pulled out in 2016. cal foods that closed in san francisco and bell and ralphs. some consolidations we have seen from save more acquiring 140 albertsons eight years ago to the rest of the safe way here in

california as well as probably the one to make the news recently is amazon acquiring whole toeds. in whole foods' struggle am magone bought that not as an investment. going to the next slide which is the consumer demand and the trend across the board what we are seeing a movement where we see a lot of consumers wanting more of an experienced based retail. we are getting away from what we are familiar with. we are shopping more from the couch. we can get the goods to the door front. what is drawing us out you have the house? food and beverages, entertainment, personal care and medical and fitness.

those categories specifically food and benches and entertainment is very active. as we moved to home goods and delivery service, there is definitely a friend includes the groceries to get the goods to the front door. one of -- i think one you have the ones to highlight as far as the quick to fix retailers locally, albert'ss started here in bay area and is moving to brick and mortar stars. there are others that come to mind. most of them are in appairrel. amazon is the one exception. clicks to bricks including amazon go is in san francisco in seven locations throughout the

bay. now on 300 california. 2800 to 3,000 square feet. then most of the pop ups which is a trend for the clicks to bricks operators are in new york, la and san francisco. that is a way to text the market before they get to physical brick and mortar stores. there is grocery demand with the introduction ofence take cart and others that it is a one hour delivery service to your door. less frequent visits to the grocer in general. i think the take away is there is a consolidation to best-in-class and experience. grocers are impacted by the changes across the retail category.

>> i wanted to talk a little bit about the design of the grocery space. when we first proposed on the project? early 2014, we had envisioned 25,000 square feet at transbay blockade. if you recall the original proposal included letter of intent from whole foods about amazon. based on feedback when we presented during the afp, feedback from the community recommended we contact the local grocers. their footprint was 5,000 to 20,000 square feet. notable names included buy right, gus and molly's among other also. based on that feedback we realized the size of footprint fell within the range accessible

to grocers at the time in 2014. the project when we were designing it included accommodation for customer elevator do adjust the two level format. loading sign for a 40 to 50-foot long truck. loading zone when we worked with development team and other government agencies to accommodate. a loading dock, service elevator and back up house. here are diagrams to illustrate that. you can see the loading zone on first street for the longer loading truck. we have the service elevator to the right of that. as you move to the center you have the ground floor space 2700 square feet. we included customer elevator and staircase. we cannot have the loading area

on freemont street due to the off-ramp. we cannot put the loading zone on fulsome street we are trying to enhance the pedestrian environment from a planning perspective. second floor from the left you can see the service elevator to the second floor. we designed a path to allow the grocer operator to stock their store. in the middle of the dye gravel we show the connection for the elevator and the staircase. similar to what you can see at trader joe's on fourth and market if any of you have been there before. next diagram is one we prepared in 2014-2015 before the outreach

to grocers. it shows from adry dimensional perspective what that would look like to get the grocers comfortable with the space. the transition to the outreach efforts. we'll didn't market the space until 2017, we started conversations with multiple grocers from 2014 when we were awarded the project. we reached out to over 20 grocery prospects local as well as national operators. it is important to know because we were very goody sign and construction team made of local and regional consultants and contractors and subcontractors, they have done a fantastic job to meet and exceed the schedule. we were able to give hard had

tours of the physical space four the grocers. a lot of times it is hard to them them with the space. it helped the decision-makers make a informed decision. in addition to that, the terms we offered were well with in and at times below market rate rents for commercial real estate. the rest we were offering was $55 per foot annually. that is significantly less than leases first signed at the kansas center and block 64. to reiterate the points laura just made, i think while we had a positive response initially,

as the market became more volatile some concerns expressed were the transbay neighborhood is developing and we can see the density created and vibrant neighborhood it is going to become. a lot of operators are unsure of the neighborhood. it is largely to the general public unestablished. when it opened after our design of the project and after we were awarded the project, that was a big concern expressed by potential prospects. despite our efforts to make accommodations, i want to reemphasize as we heard from the last item. the shortage of labor on the construction side as well as operations has increased costs

to operate all businesses here throughout the city. the grocer business model is a very low margin business that made it more consult with these variables in place. next slide is diagram of the timeline that shane presented in his presentation. really what we saw happen in 2017 was announcement of trader joe's fourth and market, acquisition of whole foods by amazon and woodlands opening. in addition to that the real foods closed the business which is the supermarket, new seasons also went out of business and local market in the mission went out of business, showing the consolidation of the industry.

all of our design concept took place before 2017. while we were certainly excited about having a grocer at the space or project. the series of events in 2017 hindered our abilities to move forward on that effort. here is the expanded list of the grocers that we contacted, conducted hard had tours with and had personal discussions about the space. feel free to ask questions about this list. meanwhile as an active member of the east neighborhood, i have done extensive research and my team has done surveying of the existing retail in the neighborhood. if you are just walking around

tans bay you see retail and restaurants catering to to employees working in the neighborhood. not many food and restaurant options in the growing neighborhood in transbay district. what the survey illustrates. it is difficult to read. what it indicates. there is a lack of food and bench options serving the evenings and weekend. something they need and have been asking for in addition to a super market or grocer. start of that we have our efforts focusing on this market k.it is to create a neighborhood for the transbay district. >> in conclusion. we respectfully request our

release of our obligation. we feel it is an outreach process as well as offerin offer prospects reasonable terms. it ensures adequate time to identify the retail sennants and mitigate having a vacant ground floor retail space in the neighborhood. i request take any questions. >> before we take questions, i think shane has to come back. >> good afternoon, commissioners, i am sarah graham. i am getting my slides up here.

i am with strategic economics we were to provide the peer review that a grocery store is not feasible at the location. today i will provide an overview of our review, our peer review and dig deeper to the demographics and other conditions in the area that in the transbay area that relate to this. the developer sited three main issues that discouraged grocer operations from locating afternoon that is parking, site layout and the neighborhood or location. for parking, the developer claims most operators would require more than 10 on site parking spaces. we disagree this is a major

impediment to locating a grocery store in the location. most patrons are not car dependent when grocery shopping. they offer valet parking at thelumina. very few patrons request the stickers for valet parking. it is not a big issue. of the our nearby grocery stores, two offer no parking at all. i will give you more information about that. we do agree with the claim that the layout of the space is an impediment to grocery. it is an awkward split of square footage between first floor and underground floor is not well suited to grocery. third reason sited by the developer is the neighborhood in proximity to woodlands were im

peddiments. we agree with this claim. this is an unproven retail market, and the woodlands market is just two blocks away. i am digging in deep pirto this particular claim in the next several slides. we recently completed a study of the state every tail in san francisco as a whole for lewd. the report was released earlier this year. i will rely on information from that study and other work we have done in the transbay area. i am going to give a really quick review of national trends in retail, reiterating a lot of what you just heard, but i will go over it quickly. nationally, retail ask

undergoing a major restructuring. you may have seen the headlines. we just heard about store closures. it appears the trend has slowed in 2018, but it has continued this year. a major trend that continues is that online sales are driving growth in retail. in 2017, which is the most recent year that i have data, half of all growth in retail happened online. online sales account to half of the growth in all retail. along with that trend and there is discussion about this in the previous presentation, grocery as a retail category is changing rapidly right now. grocery stores are

experimenting. here in san francisco grocery stores are experimenting with online sales strategies, with delivery and click and collect. nationally amazon's purchase of whole foods suggests there is value in brick and mortar. they are an asset for sales. the whole foods 430 existing locations which are by large located in affluent urban areass are expecting them as hubs. while preferring to go in person. the other major trend is that increasingly americans are spending their money on experiences rather than buying

things. by experiences i mean dining out and travel are the experiences that are seeing an increase in sales. as part of the city wide study, we looked at how the financial trends are playing out here in san francisco. we looked at sales tax revenue city wide, and the thing that really jumps out is that since 2015, sales tax revenues for general consumer goods has been declining. for the last three years those sales have been declining. sales in restaurants continue to increase, but sales of stuff are down. i looked at the data for the most recent portion of 2018, an

and that trend continues to this year. we also looked city wide at vacancies and specifically in the transbay area. in the transbay area earlier this year the vacancy rate was 16%. 16% every tail locations are vacant with vacancies concentrated in the eastern parts along fulsome street. this prevalence is something that retailers notice when they look at a location. it doesn't provide the welcoming attractive location that they desire. as part of our work for ocii we looked at the competitor grocery stores and the map that you see

here shows half-mile radius from the block 8 location, and the five grocers. there are five globe you ares located near this site. woodlands is two blocks. it is within that half-mile, then four more right on the pere outside. trader joe's on fourth, whole foods on fourth. safe way on kings street and safe way on jackson street. two of those stores offer no on site parking. trader joe's and jackson street safe way. given the san francisco population and density and income. we found this half-mile radius or a 10 minute walk appear to capture most of the trade area

for neighborhood or convenience retail like grocery. in a more suburban location there is an old rule of thumb a grocery store requires a population of 10,000 to 30,000 people within a one to three mile area to support the grocery. that is a different scale. we found that in san francisco in our denser neighborhoods about a half-mile usually covers it. that is why we have the circle at a half mile. there are a few more factors of why we consider this a challenging retail location then i will go more to the demographics. this is a largely unproven retail location. we talked to brokers earlier this year for a different progress.

they reported the lack of foot traffic, lack of location with a critical malice every tail, unwelcoming pedestrian environment, congestion, construction, ongoing construction all relate to this being a challenging location. in addition. the rents in the area are relatively high compared to other places in the city. all of that together makes it challenging for any type every tail. with that i will go to the demographic to illustrate why we did agree that the current and projected population does not support an additional grocery store at this location. what you see on this slide is the current and projected population and job in the transbay area.

the most significant source of demand in this area is office-based employment. for a couple different jobs we talked to retailers and brokers. this is an office-based employment neighborhood. that drives the retail that is currently available which is largely convenient space with serving those employment uses. the area i is -- dominated by te workers. they might pick up food to take home. they are unlikely to do major shop and get on bart or transbay bus to go home. [please stand by] squires as you.

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