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 highlight those for you. Phase 1, show on the right here, as proposed today includes parcels a, b, g, and f. No longer includes parcel k. We believe it is a benefit to the project by swapping out parcel f. Which will allow the construction of additional residential units. It is significantly larger and a cohesive neighborhood at the intersection of a share public way and exposition streets. The other significant change since approvals is a ground improvement approach. Not to bore you with those engineering details but we are now pursuing a ground improvement approach using lightweight cellular concrete. You may recall, at project approvals we were proposing tile supported streets which proved to be inefficient for this site and overly expensive. We believe there is a better approach. With that i would like to have the microphone over on the podium over to jack wherefrom the giant walk you through other elements of phase 1. Think you phil, thank you commissioners. Im really excited to be here on the verge of breaking ground on this project are good its been a 12 year odyssey as a commissioner brenda knows. She shared at the Port Commission back in 2007 to look at this development opportunity, much like youre starting to look at pier 30 and 32. Its been a long odyssey. We had a recession, we had an election, we had legislation we have project approval and entitlement last year. And now we are in the implementation stage. Im really excited to be here looking at the groundbreaking before the end of this year. I would like to think and all of the members of the staff that have been working hard with us over the last many years to get to this point. We have worked really hard with all of these different city agencies on different technical aspects of this project they are challenging given where it is, along the water with sealevel rise and connections of utilities in mission bay and so forth. We have made great progress together, as a team. The project is indicated as a four phase project. First up is phase 1. In phase 1 we had several goals we want to deliver a substantial amount of market rate and Affordable Housing we want to establish a place that holds together in the phase itself. Compelling to the residents and visitors, and workers that will be on site. We want to create a worldclass Waterfront Park that will be talked about throughout not only the city but the country. We want to deliver a project that is financially successful for both of us on the port. The project components as it still indicated our building sites, two of which are residential which contain both market rate and affordable units, commercial office in blocks b and g. Chinabased park and then a whole long list of Infrastructure Improvement establishing streets and utilities stabilizing the shoreline and District Energy and Sustainability Systems on site. Residential units are in the two buildings, both of jonah 40 feet tall. We have swapped parcel k for parcel f to maximize the housing in the first phase. It contains approximately five and 50 residential units and 202 affordable units. The commercial offices are in two buildings and actually building parcel b is actually eight stories, and parcel b is 13 stories tall. This shows the views and the site that are spectacular. Which will expand over five acres. But also the ends of the streets that are pedestrian only and shoreline improvement in creating an environment not only with office and housing but parks for people. Restaurant and retail environments that will benefit the community, mission bay and also complement the ballpark itself. Site improvements as i indicated with streets and utilities. This site is also well served by public transit. It will have sufficient parking as we build down phases of the project and we will manage Transportation Demand in coordinated and systematic way. I wanted to introduce to you carl shannon. He is the principal with the west coast, and we brought dish inspire and with our partner to help them amend the project and fulfill a vision that we have created over the last 12 years. It is a great pleasure to be here, you know, this team has been working together for more than a decade, just thrilled to be now able to work with support, the giants and really appreciate the vote of confidence from the giants to be here. Our job is to try to make this actually come to reality. It is fortunate that there was a lot of vision here on this project and conceiving of a mixeduse project that would include both office and residential. I think a lot of you know that Construction Costs have been escalating rapidly in San Francisco. We have seen Construction Costs and inflating more than one percent a month, more than 12 percent a year. The ability to have a commercial project and a residential project here means that we are able to bring the entire project forward and see, you know, up to 1200 units of housing, 40 percent of which will be affordable come out of this mix used project in a way that would not be viable if this warehousing only project. So, thrilled to see that happen. The need for collaboration in the Public Private partnership remains as strong as ever here. Look forward to working with staff and you in the weeks and months ahead. We hope to be back here in august with a formal submission on the phase 1 budget, as they indicated the appraisals should come in next week. This is looking at the schedule from a high level standpoint, we submitted to phase 1 budget back in march and april. The appraisals had been working on the fair market evaluation process that should be complete next week. We would hope to be back here in august allowing for an execution in september, which is soon as the baseball season is over we would really like to be under construction beginning the Horizontal Development on site and be in a position to begin vertical construction early in the new year. With that, i will turn it back to phil. Thank you. Commissioners, the next steps are outlined on this slide. As mentioned earlier we are continuing our review to ensure compliance and we hope to complete that process in the next few weeks. We are also reaching out to our consultants and reviewing the phase budget, we will plan to bring that back to you, i should say in august for your consideration. We will also be outreaching to the community to make sure they are abreast of the project development schedule. In the fall, we hope to have a part design to bring to you with informational presentation so you can see how the part design is coming along. That completes our presentation. We are available if you have any questions. Thank you. Is there any Public Comments on this item . Seeing none. Public comment is closed. Commissioner woo ho . Thank you. I think at this point i would have to say, its great to see the progress because i think commissioner brandon i, when i first came on this, i think