[ gavel ] can i call us to order. Good, call this meeting of the Transbay Joint Powers Authority to order for thursday, december 10th, would you call the roll, please, medal secretary. And ill go ahead and note director sartipi has a conference and welcome director gee. Present. Director kim. Here. Kim present. Reiskin. Present. Mohammed nuru. President harper present as well and mr. President you have a quorum and per the concurrence of the board well call the closed session, followed by the regular calendar and return back to items 37. Excellent. So at this time you are scheduled to go into closed session pursuant to Government Code Section 54956. 8. Well go ahead and clear the room. The tjpa board of directors meeting of december 10th, 2015 is now back in open session and Council Counsel will report on closed session. Item 16 conference with Real Property negotiators related to assessors parcel number Listing Properties all known as parcel f, the tjpa will be executing terminating the execution of the purchase and Sale Agreement with crescent height and related agreements. Are you ready to move into your regular calendar. We are. Regular calendar item 8 is presentation of the master lessee request for proposal. Directors this next item is going to be presented by our Consultant Team hr advisors. While you are familiar with pelly clark pelly, i wanted to introduce the additional firms that that we have engaged to assist us with the master lessee, because this is the first you will hear from them. So we retained hr advisors talking to the Port Authority of new yorks real estate director. There was a recommendation from them and after our vetting with we agreed to retain them to lead the master lessee process. They are going to be supporting us in evaluating the responses. They are a real estate and Economic DevelopmentAdvisory Firm with over 30 years of experience supporting public and private clients with complex Publicprivate Partnership projects across the entire u. S. Recently, they advised the mta in new york city on the facilitation for the newly built Fulton Center in lower mt. Rainier and assisted them with the Lease Agreement with major retail develop westfield who is now operating the Center Including retail and public spaces. You will also going to hear from sensory interactive and they bring expertise in creating technologydriven experiences that generate revenue and correct brands with customers and professional platforms and Digital Media projects in times square and manhattan, washington, d. C. And other parts of the country. They are supporting evaluation of our current promotional elements including advertising, sponsorship, namingright opportunitis and youller from the director of sensory interactive. I did want to let the board know over the last almost six months now we have been working with this team of consultants to identify the appropriate structure for a Publicprivate Partnership. Market the opportunity to potential partners and draft a compelling rfp document. Today they are going to present on the recommended partnership structure, and rfp for the boards comments. The presentation is also going to include a brief overview of the commercial spaces included the Transit Center for the benefit of director yee, who is joining us new today and the discussion at master lessee scope. Its complete and has nine sections and 13 appendices and its intended to provide potential respondents with four key elements one a compelling overview of the opportunity to take part in the growth of trance bay district through management of the Transit Center. 2 a description of facility itself and the responsibilities associated with the master lessee and the key deal terms we seek. 3, adequate information to understand how the deal may be economically attractive to respondent firms . And 4, Key Information to guide the formation of multidisciplinary teams who can fill the roles of the master lessee. I do want to also mention that we presented this to our cac last night. We have scheduled meetings on january 11th to present this to the greater rincon hill benefit district board, south beach rincon Neighborhood Association on january 11th. January 12th well be presenting to the San Francisco chamber of commerce. January 13th, to San Francisco beautiful, and the millennium hoa and to the Citizens Advisory Committee oci. We heard loud and clear when we presented before on this, the importance of presenting to all of the community on this item. So id like to ask hr and a team to please come up and please begin the presentation. Could i ask one context question . In terms of the overall operation of the entire facility. Are there other procurements that are envisioned that would handle operations and maintenance or security . Is the intent to do a single one and its all bundled in this . The intent is to do a single one on the operations and maintenance, the promotional platform. Digital signage, advertising reality leasouts and this rfp and youll hear in a moment that the recommendation is to put out the security rfp in early 2017 because were not going to be able to hold those prices from now until when the station opens. We need to get the security onboard a little closer to the opening ever of the stations. This one for every that i just mentioned and the recommendation to have a security rfp early 2017 to give time to bring onboard a chief security officer. And this would include the o m for the entire building . Yes, and you will hear about that from a moment from the team. Where is the sponsorship . That will be part of this as well. Part of this . Yes. Okay. So its really the entire operations of the facility will be in those two procurements . Yes. The proposal . Yes. Thank you. I hope we can extend this afterward because i want to know why it is that the master leaseholder wouldnt want to have a whole lot of influence over the security . And that just doesnt make sense to me from the getgo here. So lets work on that one. Yes. They will be responding to that, too, director. Thank you, maria. Good morning board members. Thank you for this opportunity to present the overview of the master lessee procurement process for the Transbay Center. As maria said, im a partner at hr advisors and hr a is an Economic Development and Real Estate Consulting firm. We work in the intersection of public and private spheres both for public clients, as well as private clients. We have been in business for more than 35 years. Im based from the new York City Office and im here with a couple of people from my office, who have been working on the project the last six months, a principal in our office and olivia is a director in our office. Wanted to briefly talk about a couple of relevant projects for the Transbay Center. Maria fencinged the Fulton Center a projects 1. 4 billion new subway station built in Lower Manhattan brings together 11 subway lines with the connection to new jersey. Here we assisted the mta, the new york city mta essentially privatized the entire facility apart from the tracks and the platform. And bring in westfield to run the entire facility awesome take care of that entire facility on behalf of the mta. We have had a number of sort of station planning and station redevelopment projects including Union Station in washington, d. C. , is a current project and our clients its a client group. Union depot is a project we did a couple of years back. A procurement process where we helped both the retail privatized the retail, as well as o m of this facility in st. Paul, minnesota and closer to the bay area we have been advicing the Concord Local Reuse Authority on the redevelopment of the naval base. As you may know its right now in hiatus, two finalists and they are going through the process. The agenda for this morning is an overview of the master lease process. Which will include a discussion about the operation the goals and deal structure and scope that the master lessee would have to do and then well talk get into and talk deeper about key rfp content. We see the opportunity as the Transbay Center for the sector as three guiding fundamental principles here. First, the private sector over here will have the opportunity to create a thriving sort of opportunity to create and manage a thriving sort of Retail Center in the midst of a mixeduse, vibrant new district that is coming up. No. 2, operations of the center, operations and maintenance of the center could be a significant Revenue Source for the private sector master lessee and a third point that a private sector would be interested in this is the fact that they could control and they could sort of Program Major open spaces and public spaces in the facility, including the 5. 4acre rooftop park, and the urban public spaces in the fulfillment itself such as at grand hall and other pedestrian cutthroughs. We see the Transbay Center and the master lessee essentially serving four different customer segments. As you well know, this is right now very vibrant office district. There is about 18 million square feet, 18,000 workers are currently there. Most of them at least half of them are in professional services, it or financial services. Significantly high sort of wages and salaries. This is only going to grow. The next five or six years, the projections are for another 7 million square feet of class a space including 1. 4 million force. 37,000 commuters would use this facility on a week day basic, a significant major would be ac transit travelers. They, too, have very, very high sort of demographics. Household income in excess of 80,000, which makes them very attractive for a master lessee to canter some of their disposal income. 10,000 residents now and expected to grow by 7,000 inment the next few years and that is say market that the master lessee could leverage and finally visitors. With the Moscone Center that drives about a million visitors, the renovation of the sfmoma that you have up on the screen and a number of institutional locations and we feel visitors are a very important segment that the master lessee could leverage at the Transit Center. Questions . What does the board think . On the market, i guess two questions. With regard to commuters, the volume of commuter traffic will significantly change once phase 2 is done and you have caltrain and highspeed rail having huge flows of people running through the facility that wont be there in the first phase of the facilitys operation. First question is how do you accommodate for that pretty dramatic change in the way that the facility is going to operate in terms of people walking through it . How do you plan for that . I think that is a significant new operation for the master lessee. We think its only going to add to the vitality and the kind of sort of tenants that master lessee would plan in the first phase. As you are aware in the second phase, there is an opportunity to do another 60,000 square feet of retail in the train concourses. And as part of this master lessee ceo procurement, well give the selected master lessee the first right to negotiate for that phase 2 retail space as well. So 100,000 new sort of potentially 60,000 new additional sort of commuters that would come from the trains we think would be a tremendous sort of improvement and a tremendous new demographic for the master lessee retail and promotional opportunities. We also think they would have high disposable income. That quantum idea of stepup in terms of traffic is accommodated by opening up the train concourselevel and does it mean that area is shuttered until the trains come . And secondly, does that also suggest there are no impacts to the balance of the Transit Center once all of that train traffic is there . I think im probably more sort of qualified to answer the first question. For the master lessee opportunity right now, essentially envisions that the phase 2 is going to be sort of in a there is a lot of Building Systems on the train box in phase 2 right now, which the master lessee will have control over and operate. But there will not be any sort of revenueproducing opportunitis from the train box, the phase 2 train box right now as part of this rfp. At least the train concourse, above the box at least whatever there is a floor above the box that is not going to be developed at all maybe. And one of the questions that i have is that this stage, before we go out or even during working with the architects and saying if that concourse is going to be vacant for say, ten years, then is it possible to do anything with it other than storage during that ten years that can make some money . And that is kind i dont know that is maybe can be dismissed with quickly, but i would kind of like somebody to look at the question and come back definitively and say okay ten years empty floor, that is all you can do. Architect says nothing else, and buildout time is too mall for the tenants, Something Like that. I just want it addressed at some point. I believe the answer that right now you cannot achieve any revenues from that, but i will let randy answer that question. Good morning, directors, we have looked at that director harper, that train box. Train box is actually two levels. Train platform is down on the bottom, 50 down, 25 down nominally is the lower concourse. To be able to occupy it, we have were we would have to introduce all of the lifesafety egress access, ventilation things that we deferred to phase 2 at this point for costsavings reasons. Its not that it couldnt be done, but there would be a cost to do it that we havent currently in the budget. If we actually penciled out and said here are what the costs should be . No, we i think what would be the right thing to do, we would need to know what we would want to use it for . And we havent even if its a storage, that is kind of one thing. If it becomes an active space where people are down there and there are restaurants and grocery stores, anything, that would be a different kind of an equation. And depending on the usage, it would then determine and drive what wed have to do for the egress and access and lifesafety components that wed need to provide. At what point do you think that thinking will start happening . Im sorry . The usage of that level, when would you think that type of thinking should start happening . It could happen now, or the intent obviously the longterm goal, that is the trainlevel ticketing passenger waiting retail at that level. People would come down and have their tickets, and much like an airport, waiting areas. As the trains come in, they would go down and get on the train and again, there would be retail, 60,000 square feet we see and there would be toilet facilities, amenities as people are waiting. Its always been conceived of and planned for as part of phase 2. It sounds like its worth the exercise now to determine what the costs of putting the lifesafety systems in to make the space usable and then what type of uses scenarios of types of uses, some of which might generate net positive return you that could support the operations. It seems like an exercise were doing. I agree and say we have done this calculation for you as a ballpark notion and that may be something that you want to look at, or Something Like that . Because we dont know how long its going to be the case, but it could be a while. It could be a while. A floor, we hope not, but it could be a good while. Yes. It would be a study, i think, that would take some time to do, you know . Its not something that question turn around in a couple of weeks i believe, but we can certainly look at it. I think mark wanted to add to the discussion. We did do a brief study in 2010 and the cost for making that space dwarfed for that amount of Square Footage was not worth the effort. And the costs would be higher now . Against a potential return. Okay. Against some sort of potential return that you had to imagine. Correct, correct. Okay. I think it might be worth looking at. So my other question related to the market. Just on the first, it sounds like even without the train traffic, you believe that the other potential elements of the market are enough to support the level of retail above the train box that is contemplated . Yes. We have done a maria mentioned in her opening remarks as part of this sort of writing this procurement rfp, we have had significant outreach and talked to potential entities who might be interested in this opportunity and what we have heard back is very, very positive. So the commuters as things stand now for phase 1 along with the employees and the residents and visitors and not just right now, but looking by the time the next 35 years is a very is something which i think a lot of people feel very bullish about. Okay. That was my first question. My second question, when you were speaking of employees and commuters and perhaps visitors and talking about kind of like relatively highincome people, the district which this sits in if not the immediate neighborhood has lowincome people that the redevelopment calls for 35 affordable housing. So i guess i would hope that were not contemplating only retail that is catering to higherincome people because that would not be reflectivityneighborhood. Right, when we go through the presentation, you will se