San Francisco Port Commission Meeting - March 10, 2020

The San Francisco Port Commission met at 10:00 a.m. on March 10, 2020. The meeting included approval of prior minutes, a closed executive session, an executive director's report focused on COVID-19 and the Grand Princess response, an ethics-law briefing, and three land/engineering actions: authorization to advertise the Mission Bay Ferry Landing dredging and site-preparation contract, a settlement/new lease with the Pilara Family Foundation for Pier 24 Annex, and a settlement/new lease with the Dolphin Swimming and Boating Club. All votes were taken by voice vote with no audible opposition.

Consent Calendar

• Approved the February 25, 2020 meeting minutes.
• Voted to hold a closed session under attorney-client privilege and later voted not to disclose the executive session discussions.

Public Comments & Testimony

• Non-agenda public comment: A speaker from an LBE-certified company said Grant Construction initially described a Mission Rock material-export job of roughly 50,000 to 80,000 tons but later reduced it to about 1,000 tons. The speaker said he was told his firm would be used for LBE credit while Grant's South Bay team performed the work, and he asked the Port to address large companies using LBE-certified firms to obtain credit while funneling work elsewhere.
• Executive Director's report: Vice President Adams publicly thanked Port maritime staff, relayed a call from Governor Newsom about the Grand Princess, reported that about 900 passengers had been disembarked with hopes for 1,000 more, and described the operation as a humanitarian effort.
• Pier 24 item: Simon Snellgrove of Pacific Waterfront Partners called Pier 24 a world-famous cultural facility and supported the settlement; Mary Murphy, counsel to the Pilara Family Foundation, requested approval and thanked staff; artist Erica Dieman described the foundation's impact on her career; instructor Bijan Yashar read a letter from CCA professor Chris Johnson supporting the museum; and Keith Silva praised its educational value. All spoke in favor.
• No public comment was offered on the executive session, the Ethics Commission presentation, or the Dolphin Club item.

Executive Director's Report and COVID-19 Response

• Executive Director Elaine Forbes reported that the planned Port Contract Open House and Downtown San Francisco Ferry Terminal ribbon cutting were canceled due to COVID-19.
• She detailed Port involvement in the Grand Princess response: Mayor Breed had declared a local health emergency on February 25; on March 3 the Port became aware of the potential issue; by March 4 a unified command was assembled with HHS, CDC, FEMA, the Coast Guard, Cal OES, the California Department of Public Health, and Port staff. She praised the maritime team, including Andre Coleman, Joe Riley, Dominic Moreno, and Mike Nurney, and thanked the City of Oakland and labor partners.
• She outlined COVID-19 precautions: telecommuting, canceling discretionary events, social distancing, staying home when sick, hand-washing, and avoiding handshakes.
• Vice President Adams added operational details from Governor Newsom, noted about 900 passengers had been taken off the ship, and called the effort a humanitarian effort. Commissioners Gillman and Macris also thanked staff and emphasized vigilance.

Ethics Commission Presentation

• The Ethics Commission's executive director presented updates on city ethics laws and resources. Key points included: Form 700 statements of economic interest are due by April 1; annual AB 1234 ethics training is synced with the filing; a no-file, no-vote rule disqualifies non-filers from acting on matters; new behested payment reporting applies to city officers; recusal disclosure forms are public; gift limits are $500 from a single source under state law, $25 per source per year for city lobbying contacts, and $50 as a disclosure threshold; and city officers appointed by the mayor are prohibited from fundraising for the mayor or mayoral candidates.
• She also described department statements of incompatible activities, reminded officials to ask for advice before acting, and noted the Ethics Commission can levy fines up to $5,000 per violation or three times unreported/unlawful amounts and refer matters to the district attorney and city attorney.
• Commissioners thanked her, and Vice President Adams suggested annual or semi-annual refreshers.

Mission Bay Ferry Landing Dredging and Site Preparation (Item 10A)

• Shannon Cairns, manager of the Engineering Division's project management office, requested authorization to advertise Construction Contract No. 2830 for competitive low-bid dredging and site preparation.
• The project is a new ferry landing across from Chase Center, with two berths accessed from a single float with a pier and gangway, plus construction of Agua Vista Park. It sits within a half mile of about 11,000 new housing units, 7 million square feet of office and commercial space, over 1 million square feet of retail space, and 70 acres of open space, and is within one block of the Muni T-Third line and near UCSF Mission Bay.
• The advertisement is time-sensitive because $8.4 million in OCI funding must be used in calendar year 2020 and the in-water work window is June through November 2020.
• A prior July 2019 CMGC solicitation received three bids that were significantly over Port estimates; the Port rejected them. Staff learned that bundling dredging and ferry landing construction did not yield expected efficiencies, the dredging and debris removal were more specialized than expected, and value engineering ideas were not practical. The new strategy separates dredging/site preparation from a future best-value contract for marine mattress, ferry landing construction, and landside improvements.
• The estimated project budget increased from $47.1 million in July 2019 to $58.4 million currently. Increases are in construction management, inspection, monitoring, mitigation, dredging, debris removal, and cap. Funding identified includes $8.4 million OCI, $1.2 million in prior-year general fund allocation, and $3.4 million in currently appropriated Port capital, which staff hope will be reimbursed from Pier 64 cost sharing. Staff are also pursuing a $5 million general fund request and grant opportunities.
• The contract value is $11.8 million, with an LBE subcontracting requirement of 11% ($1.298 million), below the 20% city standard because 82% of the contract is marine specialty work, mobilization, and allowances. LBE work includes engineering requiring an A-license and trucking.
• Construction is scheduled to start June 2020 and be complete in spring 2022. Next steps include authorization for construction management services at the next meeting, an April 2020 award for this contract, a May 2020 award for construction management, and fall 2020 authorization to advertise the best-value ferry landing construction contract.
• Commissioner Macris questioned the earlier bid gap, noting the lowest early-construction bid was $17.6 million against a Port estimate of $10.8 million; staff explained the gap came from specialized dredging and debris-removal costs. Vice President Adams asked about over-budget funding; staff confirmed current funds include Port capital that would need future reimbursement to complete the project.
• The commission approved the authorization to advertise.

Pier 24 Annex Settlement and Lease (Item 11A)

• Mike Martin of Real Estate and Development presented the settlement agreement and Lease L-16653 with the Pilara Family Foundation.
• Background: Pier 24 Annex was originally slated for demolition in 2007. The foundation leased the property and made improvements originally under $3 million that ultimately totaled about $14 million; Port staff verified $8.5 million in substructure, core, and shell costs. The prior lease expired in November 2017, along with $3 million in rent credits. After failed negotiations and a December 2019 30-day termination notice, the parties reached a settlement.
• The settlement recognizes $5.5 million in remaining unamortized verified costs as rent credits to address rent delinquency from November 2017 to the present. The foundation will pay Port attorney's fees, and the settlement is conditioned on the new lease.
• The new lease sets rent at the Port's current rate of $3.40 per square foot per month. The tenant may apply $3.21 per square foot in rent credits, leaving a monthly payment of about $5,735. The term runs until rent credits are exhausted, with an example of about four years and four months if the lease starts May 1. The tenant may propose an extension within a year by providing facility-condition information and a feasibility study on lifting the occupancy limit. The lease includes no Port termination rate, two tenant termination rights, no increase to the security deposit, Port sole discretion over transfers, increased public-access reporting, and is subject to Board of Supervisors approval.
• Public speakers and the foundation's counsel supported the settlement. Commissioner Macris strongly supported it as a good deal; Commissioner Gilman supported it but urged broader day-of or walk-in access; Vice President Adams supported it but noted the history was contentious and urged a better relationship; President Brandon supported it while agreeing more public access and income are needed.
• The commission approved the settlement and lease.

Dolphin Swimming and Boating Club Settlement and Lease (Item 11B)

• Property manager Dimitri Amaro presented the settlement agreement and Lease L-16661 with the Dolphin Swimming and Boating Club.
• The Dolphin Club was founded in 1877 and has been at 520 Jefferson Street since 1927. Its lease with the Department of Recreation and Parks expires June 30, 2028. In 1993, the Port and Rec & Park determined that a 678-square-foot portion of the club's dock is on Port submerged lands, but no Port lease was ever executed. In late 2019, the Department of Building Inspection directed the club to the Port for permitting of dock repairs.
• The settlement includes payment of $5,913 in back rent for the prior four years at the submerged-land perimeter rate of 19 cents per square foot, escalating 3% annually; a new market-rate submerged-land lease co-terminus with the Rec & Park lease; rent credits of up to $30,000 for dock improvements, likely leaving no rent due; waiver of the security deposit; club responsibility for pier maintenance and operation; indemnification of the Port; and an augmented building permit. The club must continue to provide and promote aquatic activities.
• Port staff plan to work with Rec & Park to assign Port landlord responsibilities to Rec & Park, similar to the South End Rowing Club settlement, so the club can have a single landlord and eventually a consolidated lease.
• No public comment was offered. Commissioner Gilman supported the item and noted it took 27 years to address jurisdiction; Commissioner Macris and Vice President Adams also supported it.
• The commission approved the settlement and lease.

Key Outcomes

• Approved the February 25, 2020 meeting minutes.
• Voted to hold a closed session and later voted not to disclose the discussions.
• Approved authorization to advertise Construction Contract No. 2830 for Mission Bay Ferry Landing dredging and site preparation.
• Approved the settlement agreement and Lease L-16653 with the Pilara Family Foundation for Pier 24 Annex.
• Approved the settlement agreement and Lease L-16661 with the Dolphin Swimming and Boating Club.
• No new business was introduced, and the meeting was adjourned.
• All votes were voice votes with no audible opposition; no roll-call tally was recorded.