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new transaction would bring market rents and be in keeping with port retail leasing policy, which allows for extended terms if a tenant is making a significant investment in the property. at that time, you will have the option of approval. the transaction will also require board of supervisors approval. thank you for your consideration and i am available for questions. mr. osborn regrets that he cannot be here today, but he has invited other representatives to speak for him. >> so moved. >> second. >> public comment. we have john, then topher. >> good evening, members of the commission. i am john. i have been fortunate to have had a relationship with peter osborn since the development of momo's restaurant. we have begun the conceptual design work for mission rock. we are at a point now where we have taken that conceptual design and distributed it to those who are distributing it to the subcontractors. we are compiling the estimate that susan has referred to. what i can say is that peter has been a tremendous asset to king street. he has a passion for san francisco. he is a tremendous restaurateur. he has conveyed to all of us his commitment to san francisco into this particular area, despite the notice today that sales forces have outgrown their campus before they have broken ground. that has not deterred his spirit to participate in developing mission bay to a greater extent. i am here for any questions you might have or technical issues you are curious about. i will turn it over to topher, a member of the community and someone we will be working with as we develop our "vista park -- aqua vista park. >> wait for her to call you, please. >> topher delaney. >> this one is yes, yes, yes. we have been terrorized by this kelly mission rock for the last nine years and i am so thrilled to have this guy here. i just ms. -- met him. he is a responsible restaurant eur. he is going to help us out. he has a wonderful restaurant that is run like a grown-up. that is really fabulous. we are thrilled to have him. i hope you will give him whatever this guy needs to come in. he is going to run a good ship and it will be a good reflection on the port. it is going to be fabulous for the community. that is it. three cheers for the sky. >> thank you. -- for this guy. >> thank you. >> good evening, commissioners. i am the managing partner at water bar. just down the street. i am the newly elected president of the golden gate restaurant association board of directors and i am late for dinner service right now. i have known pete osborn for little over 10 years. he is a wonderful human being. you are not going to find a more dedicated and passionate restaurateur. a super-smart businessman and someone who is committed to san francisco. i will recommend that you approve this measure as a fellow waterfront restauranteur. we are all there scratching, fighting every day to fill our seats. even with pete as a new waterfront restaurateur, i welcome the new addition to the area. thank you. >> public comment? questions? >> i just want to add, i have known mr. osborn personally through being a soccer mom and dad together a few years ago. i want to reiterate what everybody said. we are fortunate that somebody of that caliber are rows -- arose to take a look at this. i think it would be a wonderful addition and solves problems that residents have been complaining about for a long time. >> i think mr. osborn is a great restaurateur. still, i guess my concern with this one is that we welcome him to the neighborhood, we welcome him to take over kellies mission rock -- kelly's mission rock, it has been a problem since mr. kelly passed, and there are 11 years left on the lease. i want to understand what his vision was when he purchased the lease out of bankruptcy for that 11 years verses what he needs -- what, 20 years on the lease? we have teatro, investing $4 million and wanting a 10-year option. this has 10 years and did -- and is investing $1 million. he says better is not sufficient time to advertise. what does support staff think? have we done market research on the area and what that property will bear? and there are developments. it is a prime piece of property. >> it will be part of our negotiation and research. i have reached out to the association. we are going to use some of our economic development analysis consultants based on what he is going to invest and to get investors, they are going to want to know that there is some term to their investment. it is the end of 11 years. 11 years is chewed up. if you were to invest in business, you would want to know that they would be there beyond 11 years. the difference i see in this and teatro is that this is a restaurant. it is going to be a restaurant. we have to make sure that what is paid by whatever operator is in there is the best that thet port can get in today's market. >> i agree. >> that will be part of our negotiation. what i am asking you today is to be able to negotiate with that tenant that is already occupying the space. that he will want to invest his money and other investor money. that the return will be as good to them as it is to the port and that is what the goal is of war will bring that back. there has been a request of terms, and it is the base rate of the current rate on annual adjustment. i guess when you say you can look at it in terms of market rent and other things, and this is a new lease, not just taking over the existing lease end extending it, i think it is afford to understand between the old and new. and given there will be an investment in higher value in terms of what their restaurant will be, and we also understand the economics of mr. osborn's projections. if you're going to pay the existing rent of two percent, that does not sound like a good deal for us. i understand he is investing. we want to picture we understand the economics of the deal, and he is asking for further extension over time, so police is very valuable. -- so the lease is very valuable. we want to make sure we understand the return on the investment and what the poor is. i am not clear yet on what the balance is. >> we will bring that back to you. if that enat the end we had to t out, we would lose close to a billion dollars in revenue because we would have to go through the new process of bidding a new owner. since he is already there, there is of value to have a tenant on site paying rent. >> you lose a million dollars though. i would disagree with that. >> if he vacated the property and we have to go through the process we are going through now without somebody in the building, then we would lose that. >> we have to remember 10 years from now what the neighborhood will look like. we understand that. we're projecting there are lots of activities. it's great to have that investment. it will be more valuable 10 years from now than it is today. >> i would offer what we're asking for today is the ability to negotiate. you can see notes, and you will be stuck with the least you have. >> i do not think we are saying do not enter into negotiations, we just want to make sure we're giving direction on making sure the least comes back with what we think are beneficial to the port. that is what i am saying. >> that is our intention, to make sure through market analysis that what he is requesting an not -- is not necessarily what will be the final lease that we present to you. we're just committing to use that through an using educated information in the marketplace, looking at the future value of the lease, looking at the current value of the lease and property, we are going to take that into consideration as we design the deal we would bring back to you for approval. >> hopefully we would see the performance of how he expects for restaurant will do. >> i actually have that with me today. and until we start negotiating with him, i did not know how much information i could share. in we would want to see it n we negotiate a lease terms. take a that was part of our due diligence that we see his pro forma. we have a lot of that information that helped us make our decision to come and ask you to go forward. >> he could have been bought out and told 202until 2023? we get not only the base rent but a percentage -- >> it is based rand vs percentage. -- base rent vs percentage. we could consider that. >> i thought it looked pretty good. [laughter] >> it is currently 11 years. he is asking for an extra 10 years? >> correct. >> if he would assume the current lease as is, that is what he is requesting, an extension of the lease? >> correct. usually in the other percentage of rent transactions it is based grant verses percentage. its 7% of the gross revenue is 50,000 a month, then that would exceed the base rent of 20,000 that would be set at the beginning of the lease. >> take the terms that are proposed as both. >> these are all proposals. >> what i am getting at is this is a unique situation where that if the properties improved over the initial 10 years we would see increase revenue potentially as a result or not? >> no, because we would be stuck with the current term that does not have the up side of the percentage. >> obviously this place has about you in terms of the 375 paid out of bankruptcy, because i do not think there is much improvement in the building that was worth very much? >> not really. actually the bankruptcy judge, which is very unusual, went down and visited the location so that the trustee had gone back to borrow more money, it was just making a bigger and bigger hole, so this did it did the port a huge favor, up -- so this bid did the port a huge favor because we would of been stuck with an underperforming tenant before and would not have gotten the benefit of the improvements that he is offering. >> how much was originally invested in this please? -- in this lease? >> i do not know appear yw. >>those original improvements he just -- talk about depreciating. they are probably more than appreciated. unfortunately the last tenant did not keep up the restaurant. >> if i did drive up by it today just to take a look. is the concept to use the shell of a building and redo everything inside or really a tear-down kind of situation? i do not think for a million dollars to tear down? >> the proposed investment is an excess of $2 million. and it is between two and $2.5 million. the 1 million was in reference to the hard construction cost. all of the furniture and equipment that go on top of that. one of the things we have been working with david and the staff has been to make the building a little more transparent, so there is a little more interaction that pedestrians and people in the area have with the shoreline. we are using as much of the existing building as we can, literally getting guttin it. >'s a shell. >> it's a shell. >> any more discussion? the motion is on the table. all in favor? aye. >> thank you. >> item 13, new business. >> any public comment on new business? hearing none, i move to adjourn. >> thank you. >> public comment? >> anybody? >> nobody? >> we will adjourn in african nation -- recognition of robert ryan today. >> item 1, a hearing to consider the type 48 on sale general public sales liquor license from 1525 mission street to 1525 mission street for expansion of public occupancy into adjacent portion of the building. doing business as sloane square, willful -- will serve the public convenience or necessity of the people of the city and county of san francisco. >> do you have a report for us? >> the applicant is seeking a promised expansion, type 48 for public promise license, located between 11th street. hours of operation are daily 5:00 p.m. until 2:00 a.m. and this was a licensed as a type 48. the owner has expanded his business to the rear. the purpose of the hearing is to determine if the expanded portion of the premise will be licensed as part of the type 48. letters of protest for, letters of support, no record. please call for service, 19. police reports during that same time, 6. there is no opposition from the southern station. premises is located in a high crime area. premise is located in high concentration and we recommend approval with conditions. the current conditions shall remain and be transferred to the new license with additional conditions as follows. between the hours of 10:00 p.m. and until one half-hour past closing, the license shall provide security personnel. the number of security personnel shall be sufficient to maintain order therein and maintain activity which would interfere with the quiet enjoyment of the property of nearby residents. said personnel should be identifiable as security personnel. security personnel shall make frequent visits to areas including parking lots to ensure patients from the premises do not disturb the peace and quiet and comfort of persons in the neighborhood. the petitioners call utilize electronic surveillance and recording equipment able to view all exit and entrance point of the exterior of the premises. the electronic surveillance recording shall be operational at all times in the premises. electronic recordings shall be maintained for no less than 72 hours and shelley made to the police department on demand. 3, and the doors or windows that open to the street shall be kept close and not be used as an entrance or exit for patrons. it will be used for emergencies or permit deliveries only. the doors are not to consist only of a screen or ventilated security door. thank you. supervisor elsbernd: members of the public here to speak, we will give everyone two minutes to speak. >> i'm here today with the managing member of zfc concepts. we have had an extension -- extensive conversations and there have been no less than 10 neighborhood meetings, mostly with the neighborhood association. that is primarily behind these premises which go from mission pack 2 minute street. this location is directly across from goodwill industries which starts on the corner of mission and runs back to 11th. it used to be a great little bar. they have been unsuccessful and are expanding from 2,000 feet to 5,000 feet. this will create 15 new jobs. they have been operating for sometimes on a series of temporary licenses and there have been no problems with the neighborhood. they have brought in a sound attenuation expert who has button up the sound and i think the makers are happy. i'm not sure if we have anyone here today from the neighborhood -- the neighbors are happy. the conditions enumerated are fine with us and we're here to answer any questions you might have. supervisor elsbernd: seeing no questions, are there any members of the public who wish to comment on this item? see in thenone, public comment is closed. >> with regards to the calls for services, there were 19 carl's and the span of the year. do you believe -- 19 calls in the span of the year. do you believe this addresses the conditions? >> we do feel the conditions are sufficient. >> there is a typo which i would correct. it says between the house -- it should be between the hours. if we make that adjustment, i will move the item. supervisor elsbernd: can you please read item number 2? >> hearing to consider the issuance of the lobby bar located at 835 hyde street. it will serve the convenience and necessity of the people of the city and county of san francisco. >> this is a license for 835 high street located between bush and setter. hours of operation are 4:00 p.m. until 2:00 a.m. 835 high street is the nob hill hotel. this would be for beer and wine inside the lobby hotel. the bar can only be accessed through the hotel lobby and would not have street access. letters of support, no record. letters of protest, no record. police calls for service from october 2010 to october 2011, the team. police reports during that same time, three. there is no opposition from central station. the premises is in a high crime area and the premises is located in undue concentration. approvals are recommended with conditions as follows -- sales and consumption of alcoholic beverages should only be allowed between 4:00 and 2:00 daily. no noise shelby audible are on the area of control as defined in 257. interior lighting shall be sufficient to make easily discernible the appearance and conduct of persons and asians -- persons and patrons wear all call is served, delivered, and consumed. the petitioners shall not make any structural changes without prior written approval from the department. 5, the sale of all college beverages for of sale is strictly prohibited. sixth, there shall be no exterior advertising are signs of any kind or type including advertising directed to the interior from within and promoting more indicating the availability of a hot beverages. the interior displays about collet beverages which are visible shall constitute a violation of this condition. >>

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