Take them past. Its not currently at sea level. So, i think it wouldve gotten more than three feet if that makes sense. I think that is something that any design, for any project that is going out for the length of time that this one would have to do pits outback. I think its going to have to go handinhand with the flood study on the seawall, because obviously there has to be a protective line, over time, as the sea levels rise. The only thing, i think i would like to see some direction. I like the idea of an open map so i can do what i want. If they take down the pier, and they are going to rebuild it and they can rebuild it at a different shape do we want to ship to be able to come up to it . I think we need to make that policy decision and not leave it up to the private sector to tell us that youre just not going to have it in our proposal. Id like to carve that in and i think that should be a policy decision. I think we need to bring that back from our selection criteria. We will definitely come back without recommendation. In the pig your you have the maritime birth at the end of the pier. If you have a set of horizontal vertical is the water deep enough or is not a whole another set of issues . As you come towards the shore on the way the pier is now it gets progressively shower. Shallower. Im just saying if you were to try to, if you want to change the shape. If we were open to that it might be that you would be able to do it horizontally. I dont know. There would be grudging cost. I did want to point out there will be permitting challenges to demolishing and rebuilding the facility. One is the army corps of engineers and their standard is that if youre building new, overwater, need to be for an essential maritime facility. We would need to work through with the potential issue. The other would be, dc dc, they would require removal for any new construction. Those are two challenging issues. This is a very complex issue. Its long overdue, and i want to thank commission woo ho. Shes like a pitbull. She doesnt let go of this great im glad she keeps bringing it to the forefront we have to discuss this. When i moved here 16 years ago, i was on a cruise ship committee, they would be talking about using that to build a cruise ship down there at peer 30, 32. One part, i thought the museum i go there. I think its going to take a visionary. This is like a bold tooth project grade i dont know how we get it all together, but this is so complex because the warriors were going to put 100,000,000 dollars into it. We need somebody with some deep pocket that is willing to take this issue on. Im glad alice got up and talked about, you know, getting feedback from the community. If the Community Comes out against, i learned that in San Francisco, you need the Community Behind it. If the Community Goes against you you may have a hard time moving forward. They kinda went out there after the warriors a little bit. Mike, in saying that, what do you think it would take . Definitely some private partnerships, right . What else do you think it would take in the political wheel to get it done, especially here in San Francisco . How do we get through all of these agent these . Agencies . Lets use the giants, they were the one that showed this community how to reach out to the community and get all the partners together, the politicians together. Im just throwing that out there. That is just what it looks like to me. I agree. It is definitely a years process my no doubt. What i would say is, the last two effort were solesource deals where they were brought to the location foz on the community and said we are doing this and then we had to convene with the folks that were here. Whats the path . Here, i think, i really like that we are getting, you know, the horse ahead of the car. Going out to the community and saying what are we asking for . We have a really good dialogue with bcdc and state land, its only going to get more intertwined as we work with our regulators area we are working directly with the army corps on the flood that he. We have the relationships, and i think if we come into those relationships in the right way i would be optimistic we would do better foz on the past but its going to take time. Its a very challenging thing that everyone has to think through and understand really well. Wears mayor breed on this issue, definitely we have to have the support of city hall and our supervisors to get anything done in the city. Besides public, we have to have that will to get this done. The mayor is very supportive of us putting out this development opportunity. She wants to see something done on these facilities if all possible. I think commissioner woo ho when you mentioned the developer making the site smaller, if you think every square foot of the 13 acres is negative land value, the smaller against the march start to pencil. That is a great recommendation to see if there is a taller footprint that will work for this outofthebox idea to develop the pier area the mayor is supportive of what were doing here. Thank you. Thank you, mike, for this report. Can we demolish part of the pier . [laughter] [inaudible] that is a great option, maybe. I agree with my fellow commissioners, they asked great questions, and this is a great conversation. I think we all want to see something down there. Its been way too long. I remember when we tried to put the cruise terminal there. I remember all of this. Yes, its been way too long, we would really like to see something happen out there. Looking forward to the community feedback. Regarding the interim leasing. When you come back at the end of the year, theyre going to come back with recommendations for both, possibly doing an rfp for interim leasing. How does the pop up interim leasing fit into all of this . I dont want to get these things completed. I guess i would like to do the Community Outreach at least. We do the development, so that is something you have been looking for for a long time. We would go out and talk about the material for what interim leasing would look like you that we will come back to you and seek transfer that. We would issue an invitation, im not sure there is competing, not sure how it will work. That is something we would like to think through and with the feedback of the Community Figure out what is the right way to target that. I dont think i would like to do it together, just because am just trying to find out what the timeline is for the interim leasing . I know there is interest and people are ready to go out there tomorrow. Im trying to figure out what the timeline is for the interim leasing. I think the timeline is we will go to the same Advisory Group and come back to you with criteria. Not of the same time, different times . Different time. We have two meeting i think in september, and october. My hope would be in quick succession i want to make sure we have two conversations. Thank you. I had a question about our process. Ive seen us do rfps have we ever done where we could get a nullified offender list for the pop up so maybe for a couple of weeks we can work off the vendor list and have all of the proposals at once. Im wondering if youve ever use that for interim leasing or popups. It might be a way to get a group of providers, over a year we can map out the interim leasing so we can bring in that revenue to be more successful instead of having to do with negotiating the best use. I think we can do it that way. We have not done a popup request for anything youd this is leasing new trails for us. We can certainly think about, i think your point is a good one. One of the limitations at the site is, you cannot do a special event for more than six months. What we are imagining is, there is some chain of users think you would hope to find a way to select among them. You might wind up in an rfq. We will think about that, try to come back with a better recommendation. I definitely hear what youre saying, we better be working with people and keeping the lights on overtime. Thank you. [reading items] [laughter] i missed the last meeting so i wanted to make sure i had a lot of fun this time. Thank you for bearing with me. Mike martin, real estate development. Here before you to talk about the proposed ownership restructuring lease extension into frankies java house. This was an item we brought you on february 12. I will go into more detail how this is an interesting policy question for us on our recommendation to you is predicated on thinking hard about something that isnt easily put into a policy bucket of how we would do things. At that time, the commission directed us to go negotiate a lease. We have done that with the proposed new tenant entity, they have completed their ceqa so now we are prepared to come back to you to continue with backgrounds, java house is a restaurant located at peer 40 and a half. As south beach harbor. The current lease runs through 2023, it calls for a bunch of Infrastructure Improvements to utilities and other things totaling three in a 46,000 dollars that has not been completed. They are delinquent in that obligation. The tenant, or actually the purchaser came to us with a proposal that was effectively purchasing the tenant, and then bringing in that new capital to work out these defaults, and then to improve the operation by developing outdoor seating that would improve the Revenue Generation and also changing the format of the restaurant to more focused on dinner and also bar sales. In february we had those representatives to talk about their business plan. In the time since then we have done a Third Party Analysis of the business terms. Maybe for more background to start out, right now, java house, as you can see here is only paying their minimum base rent. Their performance has not been good. We very much want to improve that. The restructuring proposal is shown here on this slide. His partner is also operating a winery up in sonoma. The lease would be amended to provide a 10 year extension that was conditioned that would be condition, and not available until they completed the Capital Improvements that are both required under the current lease about also improving the outdoor seating. We are back up to where we should have been already and also improving the alteration. In that location, with patrons and others would be valuable. The new financial terms, immediately upon executing this amendment. The base rent would increase to 4000 dollars a month. Including this sale. As i mentioned, since february 12, which stated value validated and saw the upside. To determine how it fares to fair market terms. Weve negotiated a 50,000 dollar payment to the port. There is a monthly penalty for not completing the Capital Improvements. Basically this 51,000 represents a portion of the time that the maritime improvements were completed. This would come off the top of the sales proceeds. Thats in addition to the cell preservation. Base rent will be adjusted to adjust actual rent paid, if they earn the extension. Also our consultants validated, even though as i mentioned earlier, the cost of these improvements have gone up to 737,000 dollars from what was previously estimated in the 500,000 dollar range. 10 years was still the appropriate time. We have not increased the extension term even though that information has changed. Here is what we project as though rent revenues with the help of our thirdparty consultant. As you can see, compared to terminating the lease and putting out a new operation, the present value improved by 45 percent based on our proposed transaction and similar timeframe. We see a lot of financial benefit. This graph shows graphically what we are talking about. The light blue and blue lines are percentage rent and base rent respectively for the lease amendment that we are proposing. As you can see, performance goes up from here. That is compared to the pink and red lines. That would show a dive and minimum rent and percentage rent as we terminate the lease and i wind up in a growth of goodwill for new operation. Eventually the new operation does sort of replicate what were doing here but with several years in between that shows where the port gets its benefit. We saw arguments setting a bad precedent by moving ahead with a tenant who is in default on a capital obligation. We heard the commission note that it would allow market to compete for the opportunity although we also reported on the challenges which did not wind up with the proposals. The argument for approving it, the improved Business Model i think benefits the ports bottom line. I think we are protected because both the previously required improvements on the new ones must be in place before the new term is triggered. The money that is paid out with terms of participation, as well as the rent metrics increase right away. We avoid the downtime and start of time as an operations get started. Therefore, we recommend approving this transaction realizing their arguments against. We feel like on the balance, the benefits of the part on the structure of the work out and the thinking behind this effort makes a lot of sense to us refreshing this location, especially as we are looking in the neighborhood to do other things on pier 38 and 40. We think this would be a good operation to add to that mix. With that i am concluding my presentation and will answer any questions. Thank you. So moved. Any Public Comment on this item . Public comment is closed it commissioner gilman . For the presentation i like the provision that the extension is not triggered until all of the Capital Improvements are done. I think that is a good tool for us to use other negotiations with other folks dealing with and i like the penalty. I am generally supportive of moving the item forward her to have no other questions. Commissioner woo ho . I have no questions. I am supportive. I am also. Thank you, mike. All lives matter one favor. Resolution 1926 has been approved. [reading items] hello commissioner brandon, commissioners, Joel Williamson senior project management with the ports real estate department. Glad to be before you this afternoon with an update on the mission rock project. If youll indulge me i want to go through history before we get to the meat of the presentation. First of all, i would like to share a timeline of how the project has evolved. Going back 11 years to 2008. We started before then with outreach, this is when the project started taking shape back in 2008, if you can believe it . A lot of activities since then with state legislation, ballot measures, every session of some note. Anyway to get us to today. We are glad to be here today with an update on the project. Some project highlights to refresh your memory, you will see project size at full buildout of approximately two point eight gross square feet. With the breakdown of residential, over 1,000,000 square feet with those units being affordable. Approximately 1,000,000 square feet of office space as well. Groundfloor retail on some upper level retail as well. Pier 48, subject to a separate lease, currently being used for parking and special events, eventually to be used for more industrial purposes. Overall, a project that we cannot wait to get started on with 28 acres, 11 buildings at the end of the day, three parks and pier 48 to be rehabilitated. For some context, today the parking lot, as it exists with the narrowband, fronting on china base. A foldable full buildout, over four phases, you will see the project, new neighborhood at the waterfront, very exciting place. To refresh your recollection of the funding structure for the project, this chart starts at the bottom of the page and Shows Developers import equity combined with important land value. In the opportunity to invest ift funds into the project to fund the predevelopment costs, which have stopped or nearly stop because we are now in the Development Part of the project, and on the phase cost as well. Any port return, part capital returned at 10 percent, the developer returns 218 percent. Above that we have excess land that we get to share. We are very interested in sharing those revenues and we have builtin some strategies to mac maximize the revenue sharing potential for the project. Doing our best to limit developer capital with public financing. Efficient use of tax exempt that an important capital. We were before you last year, and he had a very busy day last january of 2018 approving projects on transaction documents. Obviously the lease, the master lease, and on the next page you also recommended we take the ift over to the board, and approve a 10 year lease for pier 48. We appreciate all of those actions you have taken to get us to this point. Since that time we have been busy securing other approvals for the project to get a fully entitled. We went to the commission i received their approval, state Land Commission as well. And in the fall of 2018 the mayor signed the transaction document subsequent to board approval. Other big developments since approvals. The giants, as you here shortly have added a Development Partner. The major submittals to the Public Works Department in San Francisco including a tentative map application. Several contracting milestones have been achieved including hiring a general contractor. Hiring architects for the first four buildings in phase 1. Hiring a Landscape Architect and doing all of this, and exceeding a Workforce Development plan of 10 percent for preconstruction contract expenditures. Of significance, and the reason we are here today is to share with you phase 1. We have received a giant phase 1 submittal. Staff has reviewed that and found it to be complete. We will continue to review for compliance with all of the terms of the dda report back to you in a few month with an update on that, including your chance to review and approve hopefully the phase budget. Phase 1 submittal in a nutshell, you can see some of the accomplishments on the items we hope to achieve in phase 1 including the rental residential unit. A good chunk of those are affordable, 202 of the Office Square footage and retail square footage, the workforce plan goals that are listed here. Of course, the construction of an expanded market over five acres area there have been a few changes since phase 1, since the project was approved yet just to hig