San Francisco Port Commission Meeting - April 27, 2021

The San Francisco Port Commission met virtually on Tuesday, April 27, 2021, at 3:15 p.m. due to the COVID-19 health emergency. The meeting was called to order by President Kimberly Brandon and included roll call, approval of minutes, a pledge of allegiance, and announcements. The commission addressed a consent calendar, finance and administration items, a planning item, maritime items, and received informational presentations. No public comments were made on any agenda item. The meeting adjourned at 5:25 p.m.

Executive Director's Report

• Executive Director Elaine Forbes opened with remarks on the Derek Chauvin verdict, stating it provided "a powerful message to us all that working together, we can make change despite the toughest odds." She noted the port is striving to become an anti-racist organization.
• COVID-19 update: 67% of San Franciscans have received their first vaccine dose, and over 85% of residents over 65. All port staff have access to the vaccine. The pandemic is not over; continued vigilance is urged.
• Economic recovery: Port revenues have fallen by nearly 50% this year, with economic forecasts estimating a total loss of $100 million over the next five years. The port is pursuing a $20 million interfund loan from the city (likely from the San Francisco Airport or the city's general fund) to fill the revenue shortfall and avoid layoffs in FY2021-22. The loan would be repaid in full over time.
• The Civic Impact Rent Forgiveness Program: Initially authorized for up to $200,000 total, the port received 14 eligible applications totaling $95,000. Staff allowed a 15th applicant (Young Community Builders, which exceeded the $3 million revenue threshold) to enter the program, bringing total forgiveness to approximately $111,000.
• Equity: The port is making progress on its racial equity action plan, including identifying a racial equity change team and finalizing a diversity calendar to celebrate AAPI Heritage Month in May.
• Crane Cove Park received a merit award from the American Society of Landscape Architects, Northern California chapter.
• The Energy Observer, a French vessel running on renewable energy (hydrogen from seawater), is scheduled to berth at Pier 9 from May 2-8, 2021.

Consent Calendar

• Item 7A: Amendment to MOU with Department of Public Health for COVID-19 testing site at Piers 30-32 (Resolution 21-19) – Approved unanimously. The amendment clarifies rent is due from April 6, 2020; reduces the premises to approximately 172,400 sq. ft. effective April 1, 2021; and extends the term through no later than June 30, 2022, on a month-to-month basis.

Discussion Items

• Item 8A: FY2021-22 Operating and Capital Budget Supplemental Appropriation (Resolutions 21-20, 21-21) – Nate Cruz presented the supplemental budget. Key components: $2 million in salary savings by moving port labor to capital projects; $3 million increase for rent negotiations with Prologis at Pier 1; capital de-appropriation of $17.7 million from deferred projects and $9 million in technical adjustments; replenishment of fund balance by $38.3 million, including an $11.5 million repayment from the Resilience Program. The presentation included a forecast showing fund balance dropping to $20 million by end of FY2020-21 and recovering to above $30 million in FY2021-22 with the interfund loan. The loan of up to $20 million (interest-only for first 5 years, repaid within 20 years at ~2% interest) would avoid any layoffs in FY2021-22 and reduce needed future ERI savings from $8 million to $5 million. Commissioner Woo Ho suggested considering a drawdown structure for the loan to avoid paying interest on unused funds, which staff noted was under discussion. The resolution passed unanimously.
• Item 8B: Informational Presentation on LBE Contracting Activity (July 1 – December 31, 2020) – Stephanie Tang and Tiffany Tatum reported that the port awarded 5 contracts totaling $3.2 million; 55% of contract dollars went to LBEs (100% when excluding a federal contract with no LBE preference). Total contract payments to LBEs were $3.0 million (14% of total payments). Over time, the port outperformed similar city departments (SFO, PUC, Rec & Park, Public Works): 62% of contract awards vs. 38% for other departments, and 39% of dollars vs. 32%. The port launched an LBE Emergency Relief Program (17 loans approved, ~$700,000). Future efforts include developing an LBE toolkit, a conceptual framework for an LBE loan program, and continuing stakeholder engagement. Commissioner Woo Ho suggested exploring requiring developers to set aside funds for technical training to help LBEs gain qualifications. President Brandon noted quarterly meetings with development partners to increase LBE opportunities.
• Item 9A: Amendment to Transit Shelter Advertising Agreement with SFMTA and Clear Channel (Resolution 21-22) – Dan Hodap presented. Due to COVID-19, transit ridership is down 60-70% and ad revenues down 60-88%. The amendment reduces minimum annual guarantee payments from May 1, 2020 to June 30, 2022. The port expected $1.34 million over that period; under the amendment, it will receive $702,000 (a decrease of $638,000). Payments are guaranteed regardless of advertising revenue. There is a revenue sharing clause (50% share) if Clear Channel earns more than $11.8 million annually, which has never been triggered. Commissioner Gilman supported the item. The resolution passed unanimously.
• Item 10A: Extension of Terminal Management Agreement with Pacific Cruise Ship Terminal (Metro) (Resolution 21-23) – Andre Coleman presented. The pandemic caused 198 canceled cruise calls through 2021 to date, with $15 million in lost passenger tariff revenue. Metro has continued to maintain the terminal at a cost of ~$90,000/month and paid the monthly management fee (~$18,000) throughout the pause. The proposed amendment extends the initial 10-year term by one month for each month of no cruise activity (maximum 24 months). The first cruise call will lock in the new expiration date. The port benefits by preserving Metro's operations and ensuring stability for cruise resumption. Vice President Adams expressed concern that labor (ILWU) was not included in the discussion but supported the item. Resolution passed unanimously.
• Item 10B: Informational Presentation on Pier 45 Shed C Post-Fire Improvements and Long-Term Replacement Strategy – Mike Martin, Dominic Moreno, and Dan Hodap presented. The fire occurred on May 23, 2020. Cleanup and demolition were completed in November 2020. The port relocated displaced tenants (fishing industry, Red and White Fleet, SS Jeremiah O'Brien) and implemented a three-phase interim improvement plan: Phase 1 (completed April 2021) created 8,700 sq. ft. of maritime storage and 32 parking spaces; Phase 2 (by June 30, 2021) includes lighting, fencing, and electrical for the Jeremiah O'Brien; Phase 3 (by July 31, 2021) will prepare 40,000 sq. ft. for general storage. The port received a $25 million advance from insurance for site stabilization. A basis of design for rebuilding is expected by summer 2021. A resilience charrette is planned for May 2021 to address sea level rise and earthquake vulnerability. A survey of the fishing industry found desire for continued operations at Pier 45 with improved storage, cold storage, ice, bait, office space, vehicle access, and parking.

Key Outcomes

• Votes:
  • Resolution 21-19 (Consent): Approved unanimously.
  • Resolutions 21-20 and 21-21 (Budget Supplemental): Approved unanimously.
  • Resolution 21-22 (Transit Shelter Advertising): Approved unanimously.
  • Resolution 21-23 (Cruise Terminal Management Extension): Approved unanimously.
• Directives: Staff will continue to work on securing the $20 million interfund loan, refine the LBE program, and proceed with Pier 45 interim improvements and long-term planning. No new business was introduced. The meeting adjourned at 5:25 p.m.