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desiring a modification of their obligation so far as to allow them, the lessees, to build a dock of a capacity less than stipulated in said lease, and for the following reasons :

That since the assumption by the lessees of the obligations pamed in the lease, other and responsible parties, with ample capital, have commenced the construction of a dock at Hunter's Point, which, when completed, will be of a size sufficient to accommodate vessels of the largest class, and which, from the plan of its construction, being a permanent and substantial structure, excavated into the fixed stone of the Point, affording equal accommodations and greater safety to vessels when docked, and for these latter reasons would divert such a proportion of the docking of large vessels as to reduce the business of the dock required to be built by the lessees so as to result to their loss, while from baving to operate a large dock for vessels of a smaller class would require either exorbitant charges or else pove unremunerative; and the communication of the said lessees having been accompanied and sustained by communications to the same effect from several of the more prominent merchants and ship-owners, requesting said modification, the Commissioners, after consultation with their counsel, and upon due consideration of the matter, did, by resolution, consent to a modification of the said dry dock lease, so as to allow the said lessees to build a dock of the length of two hundred feet, and of a capacity sufficient for docking vessels of fifteen hundred tons burden, custom house measurement. In making this modification, the Commissioners required the sureties to the bond in connection with said lease to agree, by an obligation properly executed, that said modification should in no manner impair their liability upon the bonds; and the obligation of the lessees to build a dock of the size originally specified in the lease is in no way invalidated or varied on the part of the Board, except in the event of the completion of the Hunter's Point dock.

Upon the termination of said lease the lessees are to surrender the premises leased, with the outer half of the streets of a width of seventyfive feet by the entire length of the frontage granted, substantially built, and in good condition.

On the eleventh day of January, eighteen bundred and sixty-six, the Board contracted with Mr. T. R. Brooks, Civil Engineer, to make further soundings upon a line parallel to, and fifty to sixty feet outside the water front line eighteen hundred and sixty-four, to ascertain more fully the character of the bottom, its slopes and general surface, the depth of water and mud, and to furnish profiles, etc., for the assistance and convenience of Engineers in making plans and estimates for the contemplated sea wall. This contract was completed together and at the same time with the contract of October, eighteen hundred and sixty-five, (see last report,) on the ninth of March, eighteen hundred and sixty-six, and the report of the said Engineer was printed for the use of parties intending to compete for the premium for the best plan for a sea wall, which premium (one thousand dollars) was offered by this Commission through advertisements published in several of the daily newspapers, in the month of April, eighteen hundred and sixty-six.

Parties submitting plans were requested in said advertisements to affix some mark or cypher in lieu of their names. On the fifth of July following, the time named in the advertisements during wbich plans would be received having expired, the Commissioners found upon examination that no less than thirty plans had been submitted by various parties for structures differing widely in general design, material, method of con

struction, and cost. Many of these plans were at once rejected, being so incomplete both in drawing and specifications, as well as palpably erroneous in estimates, as to be unworthy of careful consideration. Others were elaborately designed, with estimates and method of construction detailed fully and with great care. A work so inportant as the contemplated structure, involving under the most favorable circumstances a large expenditure of money, and intended as a permanent and effectual barrier to the encroachments of the sea upon one side, and as a defense against a vast quantity of mud upon the other, required the exercise of the greatest caution. In the adoption of a plan the Board were also to be governed by the most comprehensive economy, properly considering not alone the actual cost of the work, but also the ability of any plan to meet the conditions to which it would be subjected during the process of and after its construction, and the amount of revenue wbich would be required and could be devoted to meet the cost.

After the most thorough and systematic examination and re-examination, the plan marked “Y.y” was accepted, on the twentieth of September, eighteen hundred and sixty-six; this plan proved subsequently to have been that of Messrs. W. J. Lewis and G. F. Allardt, Civil Engi. neers, to whom the premium was awarded and paid. (For a description of the plan adopted, reference is respectfully made to the specifications of the Engineer, hereunto annexed.)

By authority of an act of the Legislature, approved April second, eighteen hundred and sixty-six, (Statutes of 1865–6, pp. 853, 854,) the Commissioners were empowered to lease that portion of the water front upon the south bay, being the frontage of blocks seven and eight, for a term of fifteen years; tbis also included the privilege, as mentioned in the said Act, of erecting a wharf at the foot of Townsend street; upon the following eighteenth of April, the Board advertised for proposals for leasing the same; upon the thirtieth day of May, as advertised, the Board opened the bid, one only being received, that of the Pacific Mail Steamship Company, and on the sixth of June the bid of said Company was accepted and a lease executed; by the terms of the lease, said Com. pany pay a rental of one thousand two hundred and fifty dollars for each and every month during the period above named, and upon the termination of the lease the improvements, which are to be maintained and surrendered in good order, will revert to the State; as a guaranty for the faithful performance of the obligations of the lessees under said lease, the Cominissioners required a satisfactory bond, in the sum of one hundred thousand dollars, (liquidated damages,) which bond was duly executed by said company, and is on file in this office.

The Commissioners, upon the twelfth day of February, eighteen hundred and sixty-six, executed a lease to the Alameda Ferry Company of a portion of the water front on Davis street, between Broadway and Pacific streets, said company having applied to this Board for a landing place, under a clause of section four of an Act of the Legislature, approved March fifth, eighteen hundred and sixty-four, (Statates 1863-4, p. 140 ;) this lease is for three years, free of rent, (as specified in the Act referred to,) the ferry company constructing and maintaining all necessary works required for its use; subsequently, the said company having to a very considerable extent transported merchandise and landed the same upon the water front, the Commissioners caused an action to be brought by their attorney against the company, the Board maintaining that ferry companies bave no right, under the section of the Act referred to, to land merchandise free of wharfage. For further information as to the

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condition of this suit, and the points at issue, we respectfully refer to the report of Mr. Tompkins, special counsel to the Board, which is hereunto annexed.

Upon the nineteenth of November, eighteen hundred and sixty-six, the Commissioners received a communication from the Secretary of the Pacific Rolling Mill Company requesting the appraisement of certain submerged and tide lands for said company, in pursuance of an Act of the Legislature approved April second, eighteen hundred and sixty-six. (Stat. 1865-6, p. 841.) After an examination of the premises, and due consideration, the Board upon the fourth of the following January determined the valuation of the land at three bundred dollars per acre, and communicated their decision to said company.

The Commissioners deeming it for the interests of the State to possess that portion of the water front granted to the Oakland and San Antonio Steam Navigation Company by Act of the Legislature approved April twenty-seventh, eighteen hundred and sixty-three, (Stat. 1863, p. 95,) in the month of December, eighteen hundred and sixty-six, notified said company in the manner directed in section six of said Act, and subsequently appointed Mr. J. Galloway as Commissioner in behalf of the State to appraise the premises. • The company on its part selected as Commissioner Mr. E. W. Burr, and the third Commissioner, Mr. James Dows, was selected by the said Galloway and Burr. On the fourth of June said Commissioners submitted their decision, and appraised the premises referred to at thirtyone thousand dollars, awarding said sum to the company. This amount the Board considered excessive, and declined to pay unless compelled by due procoss of law. The Commissioners were, however, anxious in behalf of the State to obtain possession of the premises, and finally, as an ultimatum, expressed a willingness to pay the sum of twenty-seven thousand five hundred dollars, which was accepted, and a conveyance of the premises, with all the rights and title of said company therein, submitted to and accepted by this Board, and the amount paid in the manner prescribed by law, on the nineteenth of the same month. Since the above has become the property of the State the net revenue from the same has averaged

The decisions of the Supreme Court in the cases of the People v. tho Broadway, Pacific Street, Market Street, and Central Wharf Companies, having been favorable the State, on the thirteenth of last February the Commissioners entered into the possession of said wbarves and commenced the collection of the revenues thereof.

In the settlement of these suits the State received the sum of fifty thousand dollars, (currency,) which was remitted to the State Treasurer and placed to the credit of the Harbor Protection Fund.

On the day following the surrender of said wharves, the Board advertised the same for lease for a term of three years, according to the requirements of the law, and also advertised for proposals for building the outer half of East street, from the northerly line of Market Street Wharf to the southerly line of Clay Street Wharf, seventy-five feet in width. This important improvement was contracted for on the fourth of March and completed in the middle of April, at a cost of thirteen thousand six hundred and twenty-two dollars and eighty-three cents, establishing a safe and convenient landing place and thoroughfare from wharf to wharf upon a portion of the water front where a large amount of business is transacted.

Of the proposals received for the leasing of the wharves, advertised

per month.

as above, the only bid accepted was that of the California Steam Navigation Company for Broadway Wharf, at a monthly rental of two thousand dollars per month, the company making all repairs, and upon the expiration of the lease surrendering the structure in good condition; the said lease also provided that said company shall, at their own cost, perform all dredging that may be required in the slips upon each side of the wharf. The obligations of the lessees to the State are secured by a bond in the sum of twenty thousand dollars, signed by responsible sureties.

The amount of money accumulated in the Harbor Protection Fund baving reached a sum that would justify the Commissioners in commencing the construction of the sea wall—the prominent idea of the law under which this Commission was established--the Board, as a preparatory step, appointed Mr. W. J. Lewis as Engineer.

Mr. Lewis was one of the designers of the plan adopted by the Board, and from his great experience in the construction of extensive works requiring a high order of engineering talent, was deemed by the Commissioners as particularly qualified for the position.

The law makes no provision for the permanent employment of an Engineer, or the payment of a salary for such service; hence the understanding with Mr. Lewis was this, viz: that the Board appointed him subject to future legislation, which the Commissioners would endeavor to obtain.

The necessity for the employment of an Engineer whose business it shall be to properly specify and direct the work, and to generally superintend the construction of an improvement so important as the proposed sea wall, the Board deem it hardly necessary to discuss. The arrangement with Mr. Lewis was entered into by the Board on the third of May, eighteen hundred and sixty-seven, at a salary of four thousand dollars per annum. The Commissioners respectfully request such legislation as may be necessary to give validity to the arrangement to enable them to pay Mr. Lewis for services rendered, and for authority to permanently employ and pay an Engineer.

In the latter part of June, descriptive plans and specifications baving been prepared by the Engineer, the Commissioners advertised for proposals for building three sections of the sea wall; the portions of the water front selected were as follows: First-Front street, from the portherly line of Vallejo street to the northerly line of Union street; second-East street, from the southerly line of Pacific street to the southerly line of Washington street; third-East street, from the sontherly line of Market street to the southerly line of Mission street. These sections were advertised with especial reference to the peculiari. ties of each of the localities above pamed, and for the purpose of testing, through such bids as might be received, the estimates made by the Engineers in connection with the plan adopted—the Commissioners reserving the right to accept bids for either of the above sections.

On the fifteenth of July, the day specified in the advertisements, the bids received were opened in the presence of the bidders, and on the eighteenth the proposal of Mr. A. H. Houston for building the second section, as above described, was accepted, and the contract executed on the twenty-third of the same month; the price for the section complete is two hundred and six thousand five hundred and fifty-four dollars, or two hundred and seventy-eight dollars per lineal or front foot, being sixty-six dollars and ninety cents per lineal foot less than the estimate of the Engineer, or nearly fifty thousand dollars less than the estimated cost of the entire section.

The bid of the said Houston for the building of section first from Vallejo to Union street, was accepted, and a contract executed on the twenty-third of July, as above, for the construction of the embankment of said section at the price of one hundred and twelve dollars per lineal or front foot. The Board reserved the right to contract (when the amount in the Harbor Protection Fund will admit) with the same party for building the superstructure at the price of one hundred and five dollars per foot, which would make the cost of said section two bundred and seventeen dollars per front foot, complete, or one hundred and fortyone thousand and fifty dollars for the entire section, being eleven dollars and thirty-one cents per foot in excess of the Engineer's estimate.

Responsible bonds were executed, and were given by the contractor in the sum of one hundred and five thousand dollars, for the fulfilment of the first contract, and seventy-five thousand dollars for the second. Work was commenced early in September, and is being vigorously prosecuted.

The accumulation of mud in the slips alongside of many of the wharves has required, as was mentioned in the last annual report, a considerable expenditure for dredging. During the period embraced herein, the Commissioners have expended the sum of fifty-four thousand four hundred and six dollars and fifty cents. This outlay was necessary in order to furnish dockage accommodations for the larger class of vessels at Vallejo, Mission, and Jackson Street Wharves.

Further dredging is required, and the Board have contracted for the deepening of the slips at Vallejo, Pacific, and Market Street Wharves.

By the Act of eighteen hundred and sixty-three the Commissioners are allowed only fifty dollars per month for office rent, which, as the business of the Commission increased, was found entirely inadequate for the procurement of the accommodations required. Accordingly, about the close of the year eighteen hundred and sixty-six, arrangements were made with Mr. Edmund Scott, agent for A. B. McCreary, to furnish an additional room adjoining the office of the Commissioners, for the sum of twenty-five dollars per month, thereby increasing the cost of office rent that amount beyond the allowance provided by law. By the arrangement above noted, Mr. Scott agreed to postpone the presentation of his demand for the additional rent until the Legislature should by necessary enactment authorize its payment, the Commissioners having agreed on their part to request such legislation. We would therefore recommend the passage of an Act authorizing the payment of twenty-five dollars per month from the third day of January, eighteen hundred and sixtyseven, for office room, in addition to the amount now allowed by law.

The increase in the business of the Commission renders it absolutely necessary that additional clerical force should be allowed; at present, in case of the sickness of the Secretary, serious derangement of the business of the office would ensue, causing delay, if not loss, and creating confusion in the accounts.

The leases for various portions of the water front having expired during the months of September and October, the Commissioners, as required by law, advertised the same for lease as provided by the Act, for terms not exceeding three years. The wharves held by the Commission have also been advertised.

The premises known as Folsom Street Wharf, together with a portion of Steuart street, have been leased to the California, Mexico, and Oregon Steamship Company for the sum of one thousand seven hundred and fifty dollars per month, the lessees to make their own repairs, dredge, if

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