San Francisco Port Commission Meeting - April 13, 2021

The San Francisco Port Commission met on April 13, 2021, at 2:00 PM for a closed session and reconvened in open session at 3:15 PM via teleconference due to the COVID-19 pandemic. President Kimberly Brandon presided. Key topics included economic recovery, tenant relief, the state of the cruise industry, a shoreline resilience grant, and a transit shelter advertising amendment. Commissioner John Burton was absent.

Consent Calendar

• Approval of Minutes (March 23, 2021): Approved unanimously.
• Item 10A: Mutual Termination Agreement for Lease L-8627 with Ferry Plaza Limited Partnership (Resolution 21-14): Approved unanimously.

Public Comments & Testimony

• Item 8 (Non-Agenda Items): Alison Madden, an attorney, requested the Port Commission be aware of a recent unpublished court decision interpreting Public Resources Code Section 6009.1(c)(13) that she believes incorrectly preempts local charters from creating independent ports. She asked the Port to consider supporting a legislative clarification. Port staff agreed to follow up.
• Item 9A (Executive Director’s Report): Pete Sitnik, managing partner at Water Bar and Epic Steak, expressed gratitude for Port support but noted restaurant businesses are still operating at approximately 50% of pre-pandemic revenue. He advocated for continued small business relief, especially for Fisherman’s Wharf restaurants.
• Item 13B (Transit Shelter Advertising Amendment): Three callers supported the amendment: Victor Hill (Clear Channel Outdoor operations) highlighted that Clear Channel kept all 853 Teamster employees working throughout the pandemic, providing essential cleaning and maintenance services. Romero Gonzalez (Teamster Local 853) described continued work under difficult conditions (homelessness, vandalism). Emily Abraham (San Francisco Chamber of Commerce) offered support, noting Clear Channel is a reliable community partner and that preserving the agreement is vital for transit recovery.

Discussion Items

• Item 9A: Executive Director’s Report – Elaine Forbes reported on: (1) Economic recovery – Mayor Breed announced return of indoor live events; over 50% of San Franciscans received first vaccine dose; Port seeking federal funding via the American Rescue Plan Act ($350 billion for state/local, with language allowing seaport sub-allocation) and the American Jobs Plan ($17 billion for ports and waterways). (2) Equity – Port completed a Racial Equity Action Plan Tracker and will participate in the Human Rights Commission’s Campaign for Solidarity. (3) RFP for Building 49 and Nice Building at Crane Cove Park to be issued April 14, due June 9. Commissioners praised the report, emphasizing the need to secure federal stimulus and infrastructure funds.
• Item 11A: Portfolio Management Strategies (Resolutions 21-15 and 21-16) – Deputy Director Rebecca Benassini and Jay Edwards presented: (a) Revised Mutual Termination Policy – raising delegated authority for lease terminations from $10,000/month to $20,000/month for leases with less than 5 years remaining, with additional documentation requirements. (b) Interim Leasing Tactics – for new leases and renewals of existing tenants with leases expiring within one year (approximately 40 tenants). Options include tiered rent discounts (70%, 80%, 100% of minimum parameter rent for 3-year terms) and rent abatement (up to 5 months for 3-year leases, up to 7 months for 5-year leases) for tenants making capital improvements. Maritime leases have similar but lower abatement. (c) Delegation to share sublease revenues (currently 100% to Port) at no less than 50% on a pilot basis. Commissioners discussed the basis for the tiered discounts (based on market data from consultants Maven Properties and Kaiser Marston) and requested future reports include tenant typology. The resolutions were adopted after reading corrections to increase the monthly limit to $20,000.
• Item 12A: State of the U.S. Cruise Industry – Andre Coleman, Deputy Director of Maritime, presented: Cruise operations paused since March 2020 due to CDC orders; Canada extended cruise prohibition to February 28, 2022, impacting Alaska sailings. In 2020, only 12 of 117 scheduled calls occurred, causing $15 million in lost passenger tariff revenue and an estimated $500,000 per call in local economic activity. The terminal operator (Metro Cruise and Events) has sustained $90,000/month in maintenance costs and requested relief via TMA extension (to be presented April 27). The Port is seeking $60 million in state stimulus (sub-allocation from American Rescue Plan). 27 calls remain on 2021 calendar (earliest July); 2022 forecast shows 118 calls and 295,000 passengers, including 22 calls from Carnival Miracle homeporting. Commissioners noted the industry is in a holding pattern with CDC; Port is coordinating with Metro and local health authorities for safe resumption. Commissioner Gilman suggested using the terminal plaza for public recreation while idle.
• Item 13A: Heron’s Head Park Shoreline Resilience Project (Resolutions 21-17 and 21-18) – Carol Bach presented: The project addresses 50 feet of shoreline retreat since 1999 using a living shoreline (gravel beach, groins, cobble sills, oyster reef balls). Phase 1 (native plant propagation/restoration) is funded by a prior grant and underway. Phase 2 (shoreline stabilization) requires $1.667 million from the California Ocean Protection Council (Prop 68) and an application for $1.517 million from the Wildlife Conservation Board. The Port will seek Board of Supervisors approval. Commissioners commended the project and noted its community benefit. Approved unanimously.
• Item 13B: Transit Shelter Advertising Agreement Amendment (Informational) – Dan Hodapp presented: The three-party agreement (Port, SFMTA, Clear Channel) provides maintenance and cleaning of transit shelters in exchange for advertising revenue. Due to pandemic ridership decline (60-70%), Clear Channel requested reduced payments from May 2020 to June 2022. Port anticipated $1.32 million over the period but would receive a guaranteed $702,000 (a reduction of $618,000). SFMTA Board approved March 2. Clear Channel kept all employees working and provided essential services. Commissioners expressed general support but asked for clearer date/revenue breakdown for the action item on April 27. No vote taken (informational).

Key Outcomes

• Resolutions 21-14 through 21-18 adopted unanimously (consent calendar, mutual termination policy, leasing tactics, Heron’s Head grants).
• Mutual Termination Policy (Resolution 21-15): Delegated authority to Executive Director to terminate leases with monthly rent up to $20,000 (previously $10,000) and less than 5 years remaining, subject to economic benefit analysis.
• Interim Leasing Tactics (Resolution 21-16): Authorized for one year: tiered rent discounts (70-100% of parameter rent) and rent abatement (up to 5-7 months) for new leases and renewals of expiring leases (3-5 year terms). Also authorized sharing of sublease revenues (Port to receive no less than 50%).
• Heron’s Head Park: Accepted $1,667,000 OPC grant; authorized application for $1,517,000 WCB grant.
• Cruise Update: Staff to return April 27 with Metro Cruise relief proposal; Port continues federal/state advocacy for $60 million relief.
• Transit Shelter Amendment: Informational only; formal action scheduled for April 27.
• Closed Session: No reportable action.