San Francisco Port Commission Regular Meeting - July 12, 2022
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San Francisco Port Commission Regular Meeting - July 12, 2022
The San Francisco Port Commission met on Tuesday, July 12, 2022, at 10:00 AM. The meeting included approval of minutes and consent items, several major real estate and development discussions, a maritime portfolio update, and a vote to adjust the executive director's salary. Key actions included endorsing a term sheet for the Piers 38 & 40 project, adopting a new broker policy for two properties, and setting the executive director's salary with a catch-up increase.
Consent Calendar
- Minutes: The commission unanimously approved the minutes from the June 14, 2022 meeting.
- Resolution 22‑34: Approved a settlement agreement with Acclama Inc. for past due rent exceeding $1.8 million, including a 14‑month payment plan and a 20% reduction of past due base rent if completed.
- Resolution 22‑35: Approved a final settlement agreement to resolve disputed title claims on former Custer Avenue with the Coal Trust, including a purchase and sale agreement, public trust easement, and authority to seek state legislation.
- The consent calendar was adopted unanimously.
Public Comments & Testimony
- Executive Director's Report: Kathy Q, Commodore of the Bay Area Association of Disabled Sailors (BADS), expressed concern about the Piers 38 & 40 term sheet, noting that BADS currently pays no rent and that the term sheet only promises to honor existing leases "to the extent feasible" without a dedicated space for their workshop or storage. She asked for protection for BADS.
- Item 11A (Piers 38 & 40 Term Sheet): Norman Pierce, a 45‑year resident and member of South Beach Yacht Club, spoke in full support of the project, emphasizing the need for visitor docking and the economic benefits of boaters. Drew Harper of Spinnaker Sailing praised the developer's inclusion of maritime tenants and noted that other Bay Area projects are excluding small maritime businesses. Another caller from BADS highlighted the organization's free sailing programs for underserved communities.
- No public comments were made on other items.
Discussion Items
Item 11A – Endorsement of Term Sheet with Pacific Waterfront Partners III, LLC for Piers 38 & 40
- Presentation: David Beaupre (Deputy Director, Planning & Environment) and Josh Keene (Waterfront Development Director) presented the proposed term sheet for the $528 million project. The project includes 215,000 sq ft of office, 21,000 sq ft of market‑rate restaurants, 10,000–20,000 sq ft of affordable restaurant space, and expanded maritime berthing. A key component is resilience improvements (seismic upgrades, sea‑level rise protection) that also benefit the South Beach neighborhood. The capital stack includes $420 million in private equity/developer funds, $65 million in historic tax credits, $19 million in IFD, and a $58 million gap to be secured through grants with port support (no obligation to use port capital). The developer, Simon Snellgrove of Pacific Waterfront Partners, committed to a DEI plan including workforce development (via Cornerstone), affordable rents, and construction assistance for tenants.
- Commission Discussion: Commissioner Gilman asked about the extension/termination mechanisms, which will be formalized in the Development and Disposition Agreement (DDA). She also noted the high level of public financing (25–30%) and praised the DEI program, stating it sets a new floor for future deals. Vice President Brandon asked about community feedback (reported as generally positive, with ongoing outreach to BADS) and the change in financial terms from the original RFP. Staff explained that the original higher rent with rent credits was replaced by a simpler base rent ($120,000/year escalating 15% every 5 years over 66 years) plus participation rent (0.5–4% on a tiered basis). President Adams expressed support but noted a desire for more public testimony from regular community activists.
- Outcome: Resolution 2236 endorsing the term sheet was adopted unanimously.
Item 11B – Broker Policy & Multi‑Site Offering (Ferry Plaza East & Pier 33½)
- Presentation: Ricky Tijani (Development Project Manager) requested approval to rescind the prohibition on paying broker commissions (Resolution 0729) and adopt a new interim broker policy allowing commissions (4–7% of base rent, paid from rent over time). The policy requires broker registration, port discretion, and that payments come from rent unless an exception is granted. Staff also requested authorization to use a broker‑assisted competitive solicitation for two properties: the Ferry Plaza East building (≈18,000 sq ft, needing reconfiguration) and the Pier 33½ restaurant space (≈4,600 sq ft, more turnkey). The pilot program aims to fill vacancies more efficiently.
- Commission Discussion: Commissioner Gilman clarified that the detailed selection process in the staff report is a contingency if the broker fails, and she expressed hope that the port will move quickly for ideal applicants. Vice President Brandon asked about how broker fees are negotiated; staff explained that brokers submit fee proposals with their qualifications, and the fee is set before contracting through the Department of Real Estate. The commission confirmed there is no hard cap but an expectation of 4–7%, and that fee details will be brought back when lease terms are presented.
- Outcome: Resolutions 2237 (rescinding old prohibition and adopting new broker policy) and 2238 (authorizing the multi‑site offering) were adopted unanimously.
Item 11C – Informational Presentation on FY 2022‑23 Parameter Rates
- Presentation: Rebecca Benissini (Deputy Director, Real Estate & Development) presented the proposed rate schedule. Of 115 rental rates, roughly half will increase slightly, 40% stay the same, and 10% decrease, reflecting market conditions (high office vacancy, stable industrial demand). New rates were proposed for sidewalk use by port tenants, water‑recreation/maritime uses at Pier 40, airspace rights, and outdoor classes. Leasing tactics include termination rights for 3–4 year leases (with a fee) and sublease profit‑sharing. Special event fees were adjusted with more size categories and discounts for nonprofit and DEI events (up to $7,000 waiver, capped at $60,000/year). No action was taken; staff will return in August for approval.
Item 12A – Informational Update on Maritime Portfolio
- Presentation: Andre Coleman (Deputy Director, Maritime) reported on cargo, cruise, shipyard, Hyde Street Harbor, and excursion/ferry operations. Cargo at Pier 80 saw a 40% decline due to supply chain issues but is expected to rebound. Cruise is experiencing a record year with 115 vessel calls expected (highest ever). The shipyard is being activated with interim leases and a hydrogen ferry berth. Hyde Street Harbor continues to support 160+ fishing vessels, and the retail fish sales pilot program will return for permanent expansion. Also noted: the French Navy vessel visit, Fleet Week planning, and offshore wind exploration. Commissioners praised the team and the strong recovery.
Item 13A – Executive Director Salary Adjustment
- Presentation: Katie Petruccioni (Deputy Director, Finance & Administration) presented two options: Option A applied the new MEA MOU increases (5.25% in FY22‑23, 2.5% in FY23‑24, 2.25% on Jan 1, 2024) to the current salary of $318,942. Option B included an additional 7% catch‑up increase (which other MEA employees received but the director did not) followed by the same MEA increases, bringing the salary to approximately $352,000 by Jan 2024. The resolution was left blank for the commission to decide.
- Commission Discussion: Commissioner Gilman and Vice President Brandon strongly praised Director Elaine Forbes for her leadership through the pandemic, equity work, and team building. President Adams noted her selflessness. Vice President Brandon moved to adopt Option B, seconded by Commissioner Gilman.
- Outcome: Resolution 2239 adopting Option B (7% catch‑up plus MEA increases) was passed unanimously.
Key Outcomes
- Resolution 2236: Unanimously endorsed the term sheet with Pacific Waterfront Partners III, LLC for the Piers 38 & 40 project, allowing staff to proceed with environmental review and Board of Supervisors approval.
- Resolutions 2237 & 2238: Unanimously approved the new interim broker policy and authorized a broker‑assisted solicitation for the Ferry Plaza East building and Pier 33½ restaurant space.
- Resolution 2239: Unanimously set the executive director's salary with a 7% catch‑up increase plus the MEA negotiated cost‑of‑living adjustments over the next two fiscal years.
New Business
- Commissioner Gilman requested updates on wayfinding/signage and the Teatro Zenzani site at a future meeting.
Meeting Transcript
Twenty two. Item number one is roll call. President Willie Adams. Yes. Vice President Kimberly Brandon. Here. Commissioner John Burton will be absent. Commissioner Gail Gilman. Present. The San Francisco Port Commission acknowledges that we are in the unceded ancestral homeland of the Ramatushalone, who are the original inhabitants of the San Francisco Peninsula as the indigenous stewards of this land and in accordance with their traditions. As guests, we recognize that we benefit from living and working on their traditional homeland. We wish to pay our respects by acknowledging the ancestors, elders, and relatives of the Ramatishalone community, and by affirming their sovereign rights as first peoples. Item number two is approval of minutes for the June fourteenth, twenty twenty two port commission meeting. So moved. Second. Commissioner, there is a motion to approve the menace and a second. We have a motion and second. All in favor say aye. Aye. Opposed. Motion passes unanimously the menace of the June fourteenth, twenty twenty-two meeting or adopted. Next item, Carl. Item number three is public comment on executive session. We will take public comment on executive session. Is there any public comment in the room? Seeing none. Others will wait on mute until their line is open. Comments will be limited to three minutes per person. The queue is now open. Please dial star three if you wish to make public comment. So moved. Second. Commissioners, I've had a motion and a second to go in close session and invoke attorney client privilege for conference with legal counsel. All in favor say aye. Aye. Opposed. It passes unanimously. We are now in closed session. San Francisco government television. Reconvene an open session. Commissioners, can I have a motion not to discuss any of our closed session discussions? So move. Second. We have a motion and second. All in favor say aye. Aye. Aye. Opposed. We are now in open session. Item number six is the Pledge of Allegiance.
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