francisco -- intra-san francisco travel. >> what kind of fuel will they use? l.n.g. >> we're very excited about the electric vessel, and that's the work that we're doing, as well as implementation, it's really -- is the technology there for us today, and if it's not there today, it will be there very, very soon so we're excited about the possibility. >> it would be nice if they could go to the dock and plug in like they do to the cruise terminal. you can go and plug the ship in at pier 27 and it's just so less fuel efficient and just so much better for the environment. >> yeah. >> thank you. >> david and kevin, thank you so much for this presentation. i think it's great that you guys are actually studying this, and hopefully some type of implementation will happen soon. i think you said the earlier it could happen would be within five years maybe? >> it's all about whether we can find the money, but our idea that it would be a year's time before we could have the first vessels out there, and as long as we can identify some funding. >> and that's for the vessel, but as far as the new swipe, like hunters point. >> right. i think that's more of a five-year timetable just in terms of permitting, construction. i wish things occurred faster than five years. >> i know. because of all the development going on in the southeast portion of the city, i hope there's some type of ferry service sooner rather than later. i know that commissioner woo ho is very upset she missed this issue because she is passionate about this type of presentations. hopefully funding will be available because it's much needed with all of the transportation issues that we are having now in the city. so thank you so much for this presentation. >> thank you. >> okay. item 11-b, informational presentation on the city's cannabis policy and the opportunities for cannabis business at the port. >> good afternoon, president brandon, members of the commission. i'm diane oshima with the planning division. i am here to provide some introductory overview remarks about the city's cannabis policy and how they apply to the port and wanted to introduce to you nicolle -- i'm having a brain freeze, i'm sorry. >> elliott. >> to actually do the substantive work of explaining the full breadth of the cannabis policy in san francisco. i think the -- the need for us to understand what the policies apply in the city are important because most of the port's property is what they call the green zone, notwithstanding the zoning map that is in front of you today. we have broken it up and color coded it by the zoning districts themselves. as indicated in the report, there are eight different areas of cannabis related industries and businesses. and we have three stick zoning districts. m-1, light industrial. m-2, heavy industrial in the pink. and then c-2, in the green, commercial business that are basical basically receptor businesses. but for all of the manufacturing, agriculture distribution type facilities for producing cannabis products, they are allowed in the city in the m-1 and m-2 areas. that are carveouts for the schools and some spatial spacing for retail and medical cannabis businesses that are to be taken into account. and we wanted to share this information with you about those opportunities along with information that nicolle will be presenting. it is a legalized products in california. -- product in california. there are opportunities that san francisco is trying to promote. there are a number of areas that we would have to research further, but we thought that it was a good idea to start here, get your initial direction and feedback, and then with that knowledge take it out to the port advisory committees and start understanding what are some of the neighborhood and community concerns that we should be taking into account, and then bringing that back to you in -- as part of your next steps, to do that research, work with nicolle's staff and her team further, city attorney's office, and then, we can come back and try and answer the full scope of questions that people have to figure out what pathways forward there might be here at the waterfront. so with that, i would like to introduce nicolle and happy to answer questions afterwards. thank you. >> thank you. >> good afternoon, commissioners. nicolle elliott, director of the san francisco office of cannabis. a true pleasure to be before you three today in this capacity. i was asked to come and give you an overview of our regulatory framework and touch specifically on the equity program. so with that, i want to walk you through a little bit of background on the creation of the office to begin with, and then, i will go through the equity program, which is very complex. i will do so relatively quickly, and then, i'll open it up for any questions that you may have. so in looking at this slide before the first bullet point, back in, i believe, 2015, then supervisor now senator scott wiener compromised a network of stakeholders to prepare for the inevitable legalization of commercial cannabis activity. in obviously 2016, we saw prop 64 pass with a 75% approval from the voters of san francisco in november 2016. and then midyear 2017, the state put in place the medical and adult use regulation and safety act which combined medical and adult use cannabis controls for purposes of state implementation to guide local jurisdictions in how they could proceed in developing comprehensive regulatory schemes. because at the end of the day, the state contemplates a dual licensing system where the local jurisdiction but opt in to regulate -- must opt in to regulation and veldevelop a lo framework. so in light of that, in july 2017, late mayor lee and the board of supervisors passed an ordinance that established the office of cannabis. in august of 2017, i was appointed to direct that office and to develop the first set of regulatory frameworks for the city. in september of 2017, we introduced those -- that regulatory framework. it included a new article for the police code, which is the administration framework, and it also revised the planning code to develop clear zoning categories for cannabis related activities, for everything from seed to sale. in creating the office, the mission is to implement cannabis related policies that ensure a fair structure for all cannabis activity. overall, the office of cannabis seeks to foster entrepreneurial and opportunities for communities disproportionately harmed by proceed hibitihibiti. our core functions with permitting, rulemaking, enforcement, coordination, with our partner agencies, of which there are at least ten, and the implementation of the cannabis equity program. this gives you a sense of where we are today. this is a little bit of outdated information but still really relevant. you can see we have quite a few existing retailers, and many of those are our legacy storefront retailers that are medical cannabis retailers prior to prop 64. the supply chain represents over 151 activities that were previously unregulated or quasi unregulated and that came into compliance or are in the process of coming into compliance through our amnesty program that our office ran in 2017. the applicants, you can see we have quite a number of permits being sought for our four-person office. equity, you can see we have sought a large number of individuals who have sought to be equity individuals for purposes of participating in our equity program. now i want to point out that the way that the city developed the regulatory framework, in its most simple form, what the city sought to do was to lock in our existing industry and ensure that any growth of our industry beyond our existing industry be done through this equity program, so any expansion of business and any existing business is done through this equity program. so san francisco has defined our equity program as a program meant to reduce bare years in the legal entry of cannabis businesses by people in the community that have been disen franchised by i think we can all agree in what have been misplaced drug policies and the unnecessary policing of our communities. there was a mandate that the office delivered to the mayor and the board of supervisors on november 1, 2017, an equity report. and in that report one of the sections covers barriers to entry. and in that section specifically related to financial barriers, it states all new businesses face requisites capital to enter into market. it's necessary to purchase the equipment and labor to get any business up and running. for individuals disproportionately targeted for drugg drug enforcement, these financial barriers can be particularly difficult to overcome and without the initial resources to launch a business venture or to sustain operating costs until profits are realized, these individuals are rendered unable to unable to enter the adult use cannabis market. so in developing this business, we as the city are looking to pull from the private or public sector, these include reduced application and permit fees, priority processing, small business support services via technical assistance of all varieties of access in securing real estate -- just want to pause there and repeat that. access in securing real estate, and direct access to capital, which to date, the city has not yet provided. the way the program is structured is either through an individual accessing ownership opportunities and permits or incubators, providing support for individuals to access those ownership opportunities. i'll spend very brief time on this, but this shows you the process by which an individual becomes verified as an equity applicant. on the left side, you can see a row -- this is every type of qualified applicant, so you can see at the top, equity am pl t applicants and equity incubbators, and then, you see at the top, m.c.d.s, those entities signed agreements to cease their activity, and those operations that experienced federal enforcement in the past and have been given access to permits. going back up to the top, as an individual, you are verified by one, being a natural person. two, passing an assess test. and then, on the bottom of that second row, meeting three of six criteria. and then last but not least, the column on the right shows you the percentage of ownership that that individual must maintain in a permit in order to deem that permit valid as a verified equity applicant permit. and that includes options like 40% and c.e.o., 51%, sole proprietor, so on and so forth. so we provide access to the application after that second column has been verified and then verify the ownership once we have the application in the queue. this gives you a sense of the number of permit applications we have pending before us -- i'm sorry, the number of equity applicants that have been verified and the types of qualifications that have helped them be verified, broken-down by type. and then the second half of our program is the incubator program. this is where the applicant does not have a verified equity program for its ownership structure and commits to no less than four year support the entry of an equity applicant into the market or the financial equivalent in technical assistance. that's it. it's a lot, i know, so i'm happy to answer any questions that you may have. >> thank you. is there any public comment on this item? no public comment? commissioners? >> thanks for the presentation, nicolle. do you believe that the port can do whatever they want, either looser or more restrictive than the city policy on our property? >> that's a loaded question. i think as a property owner, the property owner is capable of being more restrictive when it comes to what can be done on their property. every applicant is required to provide proof to occupy, meaning consent from the landlord that allows for the specific activity for which they're seeking permits, and of course any conditions that would come with those activities. >> so if the city policy basically doesn't want two of them within 600 feet of them, correct? >> the city land use policy prefers to not have two storefront retailers within 600 feet of each other, and there are controls in place to prevent that moving forward. >> so if the port decided on our property we wouldn't mind that, we'd actually like them together, do you believe that would be okay? or do we have no say in it? >> well, anything can be changed any given tuesday via legislation, but there is a provision in the planning code that allows for storefront retailers less than 300 square feet to be colocated in the same area, not restricted by the 600 feet area. >> and i guess this is more for our director. are you trying to get a temperature on how we feel about cannabis on our property? >> yes. i wanted nicolle to come and talk about the city's policy and then come and get a temperature from the commission and then work with the city policies to get a tempture, as well. if we'd like to embrace the city policy, and part of this is i thought it was important to have a policy discussion absent actual request. we do have cannabis distributors and retailers that have been eyeing port property, so this is timely. >> i'll limit it to those couple of questions, and then i'm happy after my colleagues have their questions to share my views on the use of the property. >> you can share it. >> no, victor, go ahead. >> why don't you go ahead now, victor. why don't you commit yourself. >> i have no problem with it. the voters spoke. i actually think that we may be able to have the busiest cannabis shops in the city because they would want the locals and the visitors using it, so i think it would be a very high-grossing business, and i think we should look at it very carefully. and i think within our current policy, we should be open-minded to looking at applications as they come. i would caution us from studying it to death and then having the free marketplace every where else in the city take all the business and then we will be a day late and a dollar short. the front page of the chronicle had a sale that took place recently with the canadian stock exchange and sort of valued what the three stores in san francisco are. the three stores were valued in the range of 40 million for three retail operations. so i would just ask the director, how many businesses do we have that gross that type of money that would be worth that type of value to us in sharing their percentage rent with us that we think that would to have that chl -- that would top that. but i think we have to look at that, and we owe it to ourselves to look at that. i would reserve the right to vote no against it, but i truly believe that we should be an open door policy, and we should look at it, and we should be proactive in responding to those who have an interest in it. >> done? >> yeah. >> vice president adams. >> i'm going to tell you where i'm at on it. first of all, nicky, i want to congratulation you for the late mayor lee's appointment of you to that position. u.s. senator ron white of oregon is about ready to use some legislation in the u.s. senate making cannabis legalized across america. i remember a lot of states, starting off with colorado and washington state and oregon, with respect to colorado, the governor, he followed it. he realized there was an extra 60 or $80 million for roads and schools. i like it, and i know a lot of unions are getting in there and they're organized and things like that. i'm out of washington state. and with the puyallup indian tribe. most of the city of tacoma is on puyallup land. it's going to happen, and then, when jeff sessions was the attorney general, a lot of people were afraid to move forward. i think it's inevitable. i think we ought to move forward. it's like technology. you've got to embrace it. we've got to move forward and people say, you were trailblazers instead of fighting it. i think this is something to look at, and even the cannabis stock, i've been studying the stock market. john baoehner has been investing. when he was the speaker that kept trying to push it through the house, and he was against it. now, he's a leading advocate as he's working, and the stocks for this cannabis, medicine, it's a lot of things. people just think it's marijuana, and you've got to look at the big picture. now, he's for it. he says he's had conversations with the president, and he said i'm for it. i'm for this cannabis, it moving forward. i think if there's some benefits for it. i think we ought to have an open mind about it, but i think there's a lot of benefits to the community, and we're always talking about the disen franchised. if we can do some things to help our community, we should be willing to think outside the box and be willing to get on the train now. don't wait three weeks to get on the train. i like this. i'm open-minded to it, and i've done a lot of studying on this cannabis. i think it's something that's going to happen in california, and i think it's a moneymaker. we've got to look at any kind of funding that we can get and embrace it. thank you. >> thank you. diane and nicky, thank you so much for this presentation. i agree with my fellow commissioners that this is the way of the future. it is something that we definitely need to study, and i think it's something we need to embrace. i just want to caution us in that although it is legalized, we have the juul issue, and so hopefully, we can come up with a policy or policies that everyone can get behind, because i'm not quite sure what the difference is between this and that. as long as we come up with a citywide issue that works with the port, i would be very supportive. but i don't want us to have our own policy. but thank you so much for this presentation. >> nicolle, thank you for joining us on your birthday. >> oh, happy birthday. >> clerk: item 12-a, request approval of memorandum of understanding with the san francisco recreation and park department for use of port property consisting of a portion of the hyde street pier and a portion of the launching dock at 500 jefferson street. resolution number 19-06. >> good afternoon, commissioners. i'm pinch hitting for jay edwards, our senior property manager for the northern waterfront. he had a medical emergency. joining me today from port staff, vickie lee, also property manager for the northern waterfront. we also have miriam hizer of the north end rowing club to answer any questions. this is a memorandum of understanding with the recreation and park commission regarding the south end rowing premises. this is the second step of a reset process in resetting the relationship with the landlord of the south end rowing club. st step one was the supplement of the original port south end rowing club lease that you approved at your january 8 meeting. step two would release the small amount of property owned by the south end rowing club to the rec and park to a new lease, and i'll describe the templs of that shortly. and then step three, after this m.o.u. is in place, the board of supervisors would then hear the overall lease combining the port and jurisdiction property into one lease with the south end rowing club. i'll start with who the south end rowing club is. they're operated on a nonprofit basis, a nonprofit organization that provides facilities for rowing. in addition to monthly memberships for its members, the south end rowing club is open to the club three days a week for a day use fee, and so a lot of people have app opportuniapp -- an opportunity to access the bay. in 2016, it completed an extensive renovation to its if a ilt i a -- facility. here's a photo of the south end rowing club facing towards jefferson street, and here's another photo of the rear of the premises that relates to the port's jurisdiction at issue. this is taken from the hyde street pier, looking back towards the clubhouse. so to the left is the beach area, part of which is in port jurisdiction. to the right, the docks -- the launching dock, a port of that is in port's jurisdiction, as well as the water area under the dock, and i'll have a clearer diagram in a moment. so the jurisdictional issue is what ghives rise to our kpalg today that we're -- challenge today that we're trying to address. in 1990, it was zofred that the pothe -- discovered that the port held jurisdiction to the property. the port's jurisdiction is the dotted line that sort of cuts through the middle there. below that dotted line, the gray shaded area is the beach area, the crosshatched area is the dock that's on the port jurisdiction, and the water area underneath that, the polka dots is the water area in question. the port, when this was originally discovered entered a lease with the south end rowing club to be sort of a colandlord. that was a complicated relationship that really didn't work out financially. as part of the settlement agreement, you approved, we wanted to move forward to a relationship that sort of standardized the city landlord position, and this m.o.u. is intended to do that. so the terms were approved in september 2018. and the terms as they were negotiated were included in the negotiations for the underlying lease as a subsequent matter in step three would proceed to the board of supervisors. so the terms of the m.o.u. are fairly straightforward. the premises that i just showed you on the diagram would be leased to recreation -- the recreation and park department under this m.o.u. the m.o.u. would allow the recreation and park department to sublease those areas in question to the department of the south end rowing club. in lieu of paying a use fee, recreation and park department would ensure that the south end rowing club continues to be available for public use and recreational use on a day use basis. the recreation and park department would be responsible for the security, main nance, and repair of the premises, and the recreation and park -- [inaudible] >> -- for use of the port premises. so by and large, the sort of structure of this deal is intended to acknowledge that the areas under port jurisdiction are not revenue-generating pieces of property, however from securing us from operation and maintenance liability as well as users of that priority, it provides continued use and enjoyment of the bay. one other item that the m.o.u. addresses is secondary access. right now, it borders on the hyde street pier. they need a secondary access route besides the front door. this sort of codefies that and it provides the access needed for all parties in a way that allows them to conduct their operations. so in summary, the staff believes that the m.o.u. terms will get approval to the -- give approval to the supplement agreement that you approved. we feel that the overall relationship is a more cohesive approach and allows for the continued use of this facility for the staff and public, and we recommend approval of the m.o.u. so with that, i'm here, as well as colleagues, to answer any questions. >> thank you. can i have a motion? >> so moved. >> i second. >> we have public comment. mirrian hizer. >> good afternoon, commissioners and staff. thank you for providing us the opportunity to be here this afternoon. with me here this afternoon are bill wygant. bill is sixth -- i believe he was president of the south end rowing club for six years, one of our longest term president. i've also got fran hegler, who is our current vice president. the reason we're here this afternoon is we want to say thank you. the memorandum of understanding just presented to you is the result of a lot of work. it's a lot of time, energy, and effort that has gone into solving a problem of various overlapping jurisdictions, and i think it does so is ysuccinc and prewevery well, wit. with that, i would recommend that you approve the m.o.u. it continues the 150-year history of providing swimming, biking and running for the public and help us continue to be a vibrant member of the san francisco and we are just grateful for the opportunity to be here this afternoon. >> thank you. is there any other public comment? seeing none, public comment is closed. commissioner makras? >> i support the item? >> i'm in support. >> great. i think this is long overdue, and i'm so happy that we can get this m.o.u. with rec and park and move forward on this. so thank you. all in favor? item number 19-06 has been approved. >> clerk: item 12-b, informational presentation regarding the lease extension with java house located at pier 40 1/2. >> good afternoon, commissioners. mike martin, real estate and development again. i get to run it back. [inaudible] >> i'll hand this over to paul after going through some additional thoughts on the proposal that's in front of you. i do want to highlight for people watching and listening, this java house is not red java house, it's the building down by south beach harbor, so i don't want any confusion with that. i think the first couple slides give the basic context setting setting the stage for what we're discussing today. unlike a lot of information items where we're setting a path to an action item, i think this is a first principled discussion on whether we want to proceed. so the basic situation is the current java house is a restaurant located at pier 40 is/2. this lease calls for $346,140 in capital improvements that have not been completelied as per the lease. the tenant is seeking an approval for an ownership restructuring and a lease extension and also in addition to completing outdoor seating and public access improvements that would improve the operation. i think another important fact to note as shown in the staff report is that the sales and rent performance of the current operation has been -- it's one of our lower tiered performance in the restaurant sector. the gross sales, while increasing last year, still didn't provide enough percentage rent to break past base rent, so we've only been receiving base rent over the past five years i think for the entire life of the lease. so all of these are sort of painting a picture of a challenge site. so to take a step back, i think, there's kind of two ways to look at this proposal. one is to look at at the proposal through our existing loo lease extension policy. i think this proposal does not satisfy either of the criteria. the reason we thought this this far is we think many of our defaults that put people out of good standing is a failure to pay rent. in this case, there's a very specific thing that can be addressed with money, rather than an ongoing payment of back rent going forward. if there was enough money in the contractor tomorrow, they could fix these defaults. in these instances, there may be situations where it's beneficial for the port, for the tenant to bring in new capital in terms of financial capital to actually satisfy the performance default, even if that means sort of watering down their own ownership and their own benefits from the site. so i think it's that lens that we think there may be a potential benefit that the port would want to pursue in this context. so to move from there to the proposal that has been proposed, the -- the -- it's based around a restructuring of the ownership of the entity with the current owner retaining 15% while michael heffernan purchasing 85% of the business, and as i said earlier, there'll be more description of the ownership proposal in a moment. the lease will be amended to provide an approximately 11-year extension and more about that extension in a moment, as well. upon completion of a new capital investment of not less than $450,000 that includes those existing capital improvements, but also what i menti mentioned earlier, the skraegs creation of a 450 -- the creation of a 450,000 square feet outdoor seating capacity. so the sale of the company in this instance would bring revenues to the port on its own. so breaking down the staff's analysis of the proposal -- and there's a lot more detail in the staff report, but i think the underlying question of whether to proceed sort of relies more on just the overall out look on the commission. staff believes that the potential benefits outlined in the staff report are pretty reasonable. we think that an expanded sort of use of the dinner hour and bevera beverage sales at a great location on the waterfront can bring in customers at the local park, we think that's a model that's worked in other places and could work here. there's a lot -- we think there's a lot of information that could be taken from the slide you saw earlier could be realized if this transaction were to move forward. we have a third party consultant that could provide a proposal. i think we'd also want that consultant to look at the term of the extension that i mentioned earlier. i think the real goal here, if we're looking at this as a work out is to look at the benefits of the new brochlt improvements, nbrochlt -- new improvements. i think if we do move forward with that, i think those consultant analysis would help us move forward these terms and bring it back to you in a package that benefits the port. like i said earlier, we note the tension of trying to find a way out of this current situation and the existing terms of the leasing policies and the way the port focuses on competitive bidding, etc. the challenge with this lease is that it's in place until 2023. the challenge of enforcing the port's rights, the potential time a facility would are dark before we -- would be dark before we would solicit a new entity to come in, i think that's what we're weighing and we're hoping to get the commission's decision on -- direction on, excuse me. so -- and i probably should have broken this slide up to two slides, probably -- on the second bullet, if there is some direction to look at the transaction benefits to see if they outweigh the policy erin concerns, we pursue validation, pursue policy concerns to talk about what could work. but first, i'm going to step away from the microphone and invite representatives of the frankie's java house to talk about their proposal team, their management team and the proposal that underlines this business strategy. so with that, i'll help it off. >> president brandon, vice president adams, commissioner makras, thank you. i'm the consultant to the new open group for java house. the current owner tenant has been in place since the 1980's. i think that's in the staff report. there's been some personal changes in the family that owns the family. the patriarch passed way a few -- away a few years ago. mike heffernan, as the staff report indicated, is the lead investor. he is a long time member of the business community in san francisco, heffernan insurance. it's a respected basis brokerage. he's admired in the business community as a leader, most admired c.e.o. for his small businesses. he's a founding member of a nonprofit that works in san francisco in the western addition, in the fillmore, and he owns a restaurant in san raphael, in addition to his insurance practice. kel ae is the new manager, so she is -- kelley is the new manager, so she would be taking over the day-to-day operations. david donati would help with wine, and i'll be running the construction management and ensuring all the improvements are done. mike's experience with restaurant operations is primarily in the restaurant in san raphael where he purchased it and turned it around, brought kelley in to rebrand and refocus the operation, and it's been very successful since he took it over and then she said it down and make it even more successful. so similar to the approach we're going to -- would recommend at the java house if we're fortunate enough to have this approved. dave was focused in the wine industry. he's a member of the team and also focused on turning around food and beverage operations. the four things that we think are going to help the operations at java house are to add an outdoor patio because right now, the seating capacity's extremely limited. it's just indoor, and for giants games, some -- most of your other tenants that have done really well have outdoor patios. in addition to a full bar, they only serve beer and wine, so liquor sales will help improve the top line and the bottom line. following the renovation, probably add dinner service. right now, it's just breakfast and lunch by tend -- which tends to limit the revenue. and raise prices. not much. right now, we looked at reds, pier 23. right now, the pricing is at the very lowest end of what it probably could be. so the final thing that i looked at was how are we going to position that within your portfolio of casual approachable successful waterfront restaurants. so really, pier 23, high dive, and red's are what we're going to model our business plan after. right now, it's really underperforming, and we think that we can, after the renovation, adding a bar and an outdoor patio, we can form it into a better business operation and be an assess to the waterfront. that's the conclusion of my presentation. thanks. >> thank you, paul. >> that's the conclusion of the entire presentation, so we welcome your questions and any comments. >> thank you. is there any public comment on this item? seeing none, public comment is closed. commissioner makras? >> first, good afternoon. i guess i will start off -- i want to focus in on the tenant in good standing policy. obviously, the tenant improvements promised by this operator are 11 years past due or some large amount of time. walk me through what we have done as the landlord to have them fulfill their promise under the lease. >> i think most of the work that i'm aware of have been focused on the leadership group. for example, one of the pieces of the capital work was to improve their sewer line, so we had work going under the walkway in the area. we hoped that they would try to join our project so that they could save on costs, and that did not succeed in drawing them forward to do that. so mostly, it's been i would say the carrot of trying to get this done rather than the stick of performing contractual remedies. >> so we've given them no notice to perform. >> we're given them letters seeking performance but not a formal notice of default. >> i guess this is an indication of my colleagues where i stand. i support the expansion of the hours, i support the expansion of the seats, i support the outdoor seating, i support selling alcohol outside, i support the new operator, i support it all. with a lease assignment, no extra time, and they fulfill their t.i.s that they promised us. in all fairness, they are not a tenant in good standing, and i don't think we should have any extension of a lease when the tenants don't fulfill their basic obligations to us. they have an asset. they can sell that asset. they have a partner that they want to take, and we will encourage them and facilitate anything they want, but we will not reward them with the extension of a lease. that's how i would approach it. and if not, then our signal to every tenant in the entire port is you don't have to be a tenant in good standing to negotiate, and i will, on every term, ask each tenant if they are, and we -- this is a public meeting. everyone should know, there should be one basic way of honoring our leases, and we should honor them all fairly and equally among us. and the policy is clear. tenant in good standing, on page 3 -- let me see. the entire document is four pages long, and the only thing in bold print is tenant in good standing. it's almost what we're talking about here. so if a person wants exceptions, exceptions looks like favoritism. exceptions look like something out of the box. tenant explain to me why we should go out of the box, out of our way, when at the end of the day they're still our tenant, and they still have four years left on the lease. >> done? vice president adams? >> well, mike, you heard commissioner ma'am rass commissioner makras. what have you got to say? >> i definitely understand where the commissioner's coming from, and in looking at that, i did see the bolded type, as well. i understand where the commissioner is coming from about tenant in good standing. i would -- i would like to suggest -- and by no means am i disputing the notion that he's describing about tending a message to tenants about agreements that we enter -- contracts that we enter into agreement with them. the tenants in good standing, as a follow-on to securing compliance, if we could get a condition where there's no extension until all the improvements are performed, and we have the outdoor seating and we have the improved financial terms, i would say the message has been sent that you're not going to profit by what you're not doing. the only way you get an extension is by the outdoor seating. that's a term i think would address some of those concerns, but i understand where commissioner makras is coming from and the document he's reading from is very unequivocal is. >> you know what bank of america or wells fargo would do if they were a party to this? they would say you owe us $368,000 for this, and you send us a cashier's check for this, and then, we can talk. these t.i.s just aren't for the benefit of the port, they are for the benefit of the public. this is the image of how we project the waterfront. so those tenants have deprived the waterfront of benefits for a decade. >> i'll say where i'm at. and i appreciate you, victor. you brought up some strong points. this is a legacy business, but i also see someone coming in, try to transform this business and make it profitable. and how do we do that? because this person's willing to come in, put their money in, and they have a vision. and i really think when i looked at the other restaurants there, i think this is a business that can thrive. it just needs an investment, it feels like it needs proper management, better oversight, and it seems like this person has the experience. i think, you know, commissioner makras has a point. but how do we get there that it works out that we create a new business here, and we keep it thriving and we keep this legacy business going, and how does it work? because they're going to put some money into it, and with the new manager coming in, owner, they're going to sell alcohol, they're going to have a full bar, and people love to drink. i think most restaurants, people make the money off the alcohol. even when we had a recession, people were out drinking every night, and even victor likes to have one. me, too. but i understand commissioner makras. mike, i think you and your team can make it a win-win situation and make it where commissioner makras can buy into it. i think we can make it work. i think i appreciate the guy being willing to invest, but they've been delinquent. why it went on for so long and nobody did anything about it, shame on the port. but moving forward, what do we do? i think this is a good opportunity from here -- that was shame on us for letting that happen. that's all i've got to say. thanks. >> mike, thank you. paul, thank you, also for your presentation. this is a hard one. i think our tenant in good standing policy is there for a reason, and i think think that as best that we can, we should abide by it. i think this is a unique circumstance in that although the tenant has not done the improvements that they agreed to do, and as commissioner adams said, shame on us. i think the reason we're look the at this is because we do have someone that's ready to step up, do the investment, continue the operation and pay us more in percentage rent and rent overall plus do the improvements. and if we were not in that situation, i think we would say -- and if we had not hired a difficultant to say -- consultant to say these are market rate terms that we're getting for this property, i would say maybe we need to put this out to property. but because we have an established community member that gives very nicely to various community organizations, is ready to invest in this, i think i would support it. i don't think it's breaking our tenant in good standing, but i think we have to take it case by case. but as you know, first and foremost, i am always the one to say put it out to bid. but because we have gone through so many studies and analysis of this particular deal, i would support this. only with the caveat that this investment is done within the first year of the lease. if it's not, we take our security and we do it ourselves and we put it out to bid. but the improvements have to be done. so that's my two cents. >> thank you. appreciate it. >> thank you. >> clerk: okay. item 13-a, update on the san francisco seawall earthquake disaster program, the seawall program. >> good afternoon, commission president brandon, commission vice president adams, commissioner makras, director forbes, and members of the public. steven weil. this is an informational update on the sea bawall program. i'll provide a brief update since our previous presentation in july, and then bring up mark to provide an update on the general investigation to date. so what have we been up to? in the spring of 2017, you know this, but i have to say it again. only 9% of san franciscans were familiar with the embarcadero seawall, and just over one year later, 83% voted yes in favor of the $425 million seawall bond. san francisco loves its waterfront. it recognizes the incredible value and identity is brings to the city every day, and the important role it must play when an earthquake strikes. they've overwhe

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