San Francisco Port Commission Meeting – May 26, 2020

The San Francisco Port Commission met by phone on May 26, 2020, to hear recovery updates after the Pier 45 fire, authorize an expanded Army Corps flood-resilience study, approve Mission Rock infrastructure agreements, receive an informational Pier 70 update, and extend COVID-19 rent deferrals. All votes taken were unanimous, and Commissioner Macris recused himself from the Seawall Lot 337 item.

Public Comments & Testimony

• Non-agenda public comment: Bartolome Pantoha, an affiliate of the Building Construction Trades, expressed support for the historic Mission Rock project and urged approval. Peter Osborne, owner/operator of Mission Rock Resort, thanked the Port for deferring rents but said a balloon payment would be a cyanide tablet for businesses; he asked for new lease terms and structured financial agreements and said a coalition of waterfront tenants had submitted a letter to Port staff.
• Item 8A public comment: Danny Campbell, representing Sheet Metal Workers Local 104 and a trustee of the San Francisco Building and Construction Trades Council, said the Council supported the Mission Rock project and urged approval.
• Item 8C public comment: Drew Harper, a 35-year Port tenant at South Beach Harbor with a sailing school and excursion company, said tenants cannot earn revenue during the shutdown and that deferral alone would force bankruptcies; he asked for rent relief and noted Pier 39 was not charging commercial marina tenants. John Valier, a 20-year non-alcoholic/beer distributor, said his business had lost more than 80% of its revenue and asked for rent forgiveness for the past two months.
• No public comment was offered on the Executive Director’s Report, Item 7A, or Item 8B.

Discussion Items

Executive Director’s Report

• Acting Executive Director Katie Patricione reported that a four-alarm fire broke out at Pier 45 Shed C at about 4:15 a.m. on May 23, 2020. Shed C was a total loss, 35 tenants were directly impacted, and the Port was offering relocation assistance and working with insurers. Shed A, B, and D were not directly burned, and the Jeremiah O’Brien was saved and was being moved temporarily to Pier 35.
• Patricione also announced that the Downtown Ferry Terminal project was nearing completion and would open fully within about two weeks, adding six ferry berths and a new public plaza.

Item 7A – Waterfront Flood Resiliency Study Amendment

• Waterfront Resilience Director Brad Benson requested approval to amend the Feasibility Cost Sharing Agreement (FCSA) with the U.S. Army Corps of Engineers. The study budget would first increase from $3 million to $6 million, and later to $20.1 million if approved by the Board of Supervisors and the Assistant Secretary of the Army, extending the schedule from three to five years and allowing the Port to advance cash as the non-federal sponsor.
• Benson noted the study covers the entire Port jurisdiction, uses a 50/50 federal/non-federal cost share, and would move to refined alternatives and environmental review before a possible 2023 recommendation to Congress.

Item 8A – Seawall Lot 337 Infrastructure Plan Amendment and MOU

• Rebecca Benassini, Waterfront Development Director, presented the Mission Rock infrastructure plan amendment and five-party memorandum of understanding (MOU) among the Port, Public Works, SFPUC, SFMTA, and Fire Department. Commissioner Macris recused himself because of a financial interest within 1,000 feet of the site.
• The amendment adds lightweight cellular concrete and stone columns as a more cost-effective ground-improvement method for sea-level-rise protection. DPW and SFPUC had already approved it.
• The MOU assigns responsibility for accepting and maintaining infrastructure; the Port will retain parks and unique features, with maintenance supported by CFD special taxes estimated at $2.8–$3 million per year at buildout.
• Project sponsor Jack Bear of the Giants spoke in support, saying the items were technical but important steps before final map approval and signing of parcel leases.

Item 8B – Pier 70 MOU Informational Presentation

• Benassini presented an informational MOU for the Pier 70 Mixed-Use District. The project envisions about 3,000 housing units, 1.75 million square feet of office, 500,000 square feet of retail/arts/light industrial space, and 9 acres of open space. Phase one includes about 600 residential units with 30% affordable housing.
• The MOU would define infrastructure acceptance among city agencies. A key issue is an overland stormwater release path required by subdivision code; the short-term solution is to avoid building on the flow path, and a long-term improvement would be designed with Brookfield and agencies. The item was informational only and will return for approval in June.

Item 8C – COVID-19 Rent Deferral Extension and Tenant Relief Discussion

• Port staff requested approval to extend the broad-based rent deferral through July 31, 2020. The policy waives late fees and default interest for rent due March 1 through July 31 if paid by July 31, and establishes forbearance from eviction for unpaid rent related to COVID-19.
• Staff reported that, as of May 18, 2020, only 298 of 594 invoices had been paid (50%), with May payments at 33% compared with April’s 54%. The Fisherman’s Wharf portfolio had the highest share uncollected at 97%, and the China Basin portfolio had the largest dollar amount uncollected at $1.4 million.
• Staff outlined future options: an opt-in extended deferral through December 31, 2020, possible repayment plans, mutual lease terminations using Resolution 0904, rent forgiveness, participation-rent restructuring, and lease extensions. Staff noted FY 2019-20 real estate revenue was originally expected to be $98 million but had been projected to fall to just over $75 million.
• Commissioners supported the extension but asked for more data on the Port’s cash position, sector-by-sector relief forecasts, and a policy for treating tenants equitably before individual negotiations.

Key Outcomes

• Approved the minutes of the May 12, 2020 meeting unanimously.
• Authorized the Item 7A amendment to the FCSA, expanding the Waterfront Flood Resiliency Study budget and schedule, in a unanimous roll-call vote.
• Approved the Seawall Lot 337 Infrastructure Plan Amendment and MOU (Item 8A) unanimously; Commissioner Macris was recused.
• Received the Pier 70 MOU as an informational item and directed staff to return with an update on the stormwater release-path solution and the formal MOU approval.
• Extended the COVID-19 broad-based rent deferral through July 31, 2020 by adopting Resolution 2027 unanimously.
• Directed staff to return on June 9, 2020 with the opt-in extended deferral program and continued discussion of rent relief, including sector-based relief and Port fiscal-impact projections.