SAN FRANCISCO AIRPORT COMMISSION MINUTES

Transcription

1 SAN FRANCISCO AIRPORT COMMISSION MINUTES March 20, :00 A.M. Room City Hall #1 Dr. Carlton B. Goodlett Place (400 Van Ness Avenue) City and County of San Francisco MARK FARRELL, MAYOR COMMISSIONERS LARRY MAZZOLA President LINDA S. CRAYTON Vice President ELEANOR JOHNS RICHARD J. GUGGENHIME PETER A. STERN IVAR C. SATERO Airport Director SAN FRANCISCO INTERNATIONAL AIRPORT SAN FRANCISCO, CALIFORNIA 94128

2 Minutes of the Airport Commission Meeting of March 20, 2018 CALENDAR AGENDA RESOLUTION SECTION ITEM TITLE NUMBER PAGE A. CALL TO ORDER: 4 B. ROLL CALL: 4 C. ADOPTION OF MINUTES: Regular meeting of March 6, D. ITEMS INITIATED BY COMMISSIONERS: 4 E. ITEMS RELATING TO ADMINISTRATION, OPERATIONS & MAINTENANCE: 1. Approve Phase C4 to Contract 8427C.66 - Design- Build Services for Mel Leong Treatment Plant, Industrial Wastewater and Recycled Water Upgrades Project - Walsh Construction Company II, LLC Bid Call - Contract Construction Services for the Police Training Support Facility Project Award of Four Terminal 2 Concession Leases 5-7 Specialty Retail Lease No. 1 - Electronics/Travel - Brookstone SFO T-2, LLC Specialty Retail Lease No. 2 - Local Gifts - Avila Retail & Development & Management, LLC Specialty Retail Lease No. 3 - Candy/Confections - Canonica New York, LLC Food & Beverage Lease No. 6 - Casual Dining - SSP America, Inc Award Terminal 3 Pop-Up Retail Concession Program Permits - San Franpsycho, Inc Commence RFB for On-Airport Rental Car Leases Accept Proposals for Terminal 1 Retail Concession Leases Accept Proposals for Terminal 1 Food & Beverage F. CONSENT CALENDAR OF ROUTINE ADMINISTRATIVE MATTERS: 8. Approve Phase C7 of Contract Design- Build Services for AirTrain Extension and Improvements Program - Skanska Constructors Modification No. 7 (Annual Renewal) to Professional Services Contract PMSS for Long Term Parking Garage No. 2 Project - The Allen Group, LLC

3 / Cooper Pugeda Management, Inc., A J.V Approve Phase C7 of Contract 9350A.66 - Design- Build Services for REACH - Customer Hospitality - Boarding Areas A & G Project - Webcor Construction LP dba Webcor Builders Award Security Checkpoint Mailing Service Lease to Airport Mailers, Inc Extend Ground Leases with 12 Trillium USA Company LLC and Clean Energy Accept Proposals for Airport Automated Retail Lease Approve 2011 Lease and Use Agreement with Thomas Cook Airlines Limited Approve Reimbursement to HFF-BRH-SFO,LLC for Costs Associated with Phasing Construction at Farmerbrown in Terminal 1 Boarding Area C G. NEW BUSINESS: 13 H. CORRESPONDENCE: 13 I. CLOSED SESSION: 13 J. ADJOURNMENT: 13

4 AIRPORT COMMISSION MEETING MINUTES March 20, 2018 A. CALL TO ORDER: The regular meeting of the Airport Commission was called to order at 9:00 AM in Room 400, City Hall, San Francisco, CA. B. ROLL CALL: Present: Absent: Hon. Eleanor Johns Hon. Richard J. Guggenhime Hon. Peter A. Stern Hon. Larry Mazzola, President Hon. Linda S. Crayton, Vice President C. ADOPTION OF MINUTES: The minutes of the regular meeting of March 6, 2018 were adopted unanimously. No D. ITEMS INITIATED BY COMMISSIONERS: There were no items initiated by Commissioners. D. ACTION ITEMS RELATING TO ADMINISTRATION, OPERATIONS & MAINTENANCE: Item No. 1 was approved unanimously upon a motion by Commissioner Guggenhime and a second by Commissioner Stern. 1. Approval of Phase C4 to Contract No. 8427C.66 - Design-Build Services for the Mel Leong Treatment Plant, Industrial Wastewater and Recycled Water Upgrades Project - Walsh Construction Company II, LLC - $30,593,412 No Resolution approving Phase C4 to Contract No. 8427C.66, Design-Build Services for the Mel Leong Treatment Plant, Industrial Wastewater and Recycled Water Upgrades Project, with Walsh Construction Company II, LLC, to increase the Contract capacity by $30,593,412 for a new total Contract capacity amount of $46,260,288 with no change to Contract duration. Ms. Judi Mosqueda, Planning, Design and Construction... this requests your approval of Phase C4 to the design build contract with Walsh Construction Company. The project replaces the industrial waste treatment process in order to ensure that no partially treated or untreated industrial waste flows into San Francisco Bay. This project also upgrades the existing recycled water treatment system to a more efficient system. This Phase C4 approval will provide for Trade

5 Package Set (TPS) No. 3 to be added to the contract. The TPS includes industrial waste plant concrete, electrical re-bar instructional steel, and process piping and equipment. Phase C4 will increase the contract amount by $30.6 million, for a total contract amount of $46.2 million. The contract forecast amount is $59.5 million which is within the contract budget of $61.9 million with appropriate levels of contingency. The project remains on schedule to be substantially complete in September CMD has approved a 20% goal for both design and construction services and Walsh Construction is committed to meeting these requirements. Item No. 2 was approved unanimously upon a motion by Commissioner Stern and a second by Commissioner Guggenhime. 2. Authorization to Call for Bids for Contract No Construction Services for the Police Training Support Facility Project No Resolution approving the scope, budget, and schedule for Contract No , Construction Services for the Police Training Support Facility Project, and authorizing the Director to call for bids. Mr. Geoff Neumayr, Chief Development Officer... this requests your approval for scope, budget, and schedule, and authorization to call for bids for construction services for the new Police Training Facility project. This project will replace the current facilities used for the police training range. The existing facility consists of portable trailers that are no longer usable. The new facility will be a permanent 7,150 sq. ft. single story building with spaces for offices, classrooms and training rooms. The Engineer s estimate for this work $6.9 million and the contract duration is 428 consecutive days. The Commission has previously approved the use of Asset Forfeiture Funds for this project. Since the project will involve Federal assistance through the use of these Asset Forfeiture Funds, the LBE requirements are preempted. The Airport has establish a small business enterprise goal of 25% for this contract. Item No. 3 was approved unanimously upon a motion by Commissioner Guggenhime and a second by Commissioner Stern. 3. Award of Four Terminal 2 Concession Leases Specialty Retail Lease No. 1 - Electronics/Travel - Brookstone SFO T-2, LLC Specialty Retail Lease No. 2 - Local Gifts - Avila Retail Development & Management, LLC Specialty Retail Lease No. 3 - Candy/Confections - Canonica New York, LLC Food & Beverage Lease No. 6 - Casual Dining - SSP America, Inc. Resolutions (1) Approving the recommended operators and awarding four Terminal 2 Concession Leases, comprising three specialty retail concession leases and one casual dining food & beverage concession lease: Minutes, March 20, 2018, Page 5

6 No Specialty Retail Lease No. 1 - Electronics/Travel - Brookstone SFO T-2, LLC No Specialty Retail Lease No. 2 - Local Gifts - Avila Retail Development & Management, LLC No Specialty Retail Lease No. 3 - Candy/Confections - Canonica New York, LLC No Food & Beverage Lease No. 6 - Casual Dining - SSP America, Inc. and, (2) Directing the Commission Secretary to request approval of the leases from the Board of Supervisors. Ms. Cheryl Nashir, Director, Revenue Development and Management... I m here to seek award of three retail leases and one restaurant lease in Terminal 2. All floor spaces are presently retail locations. You may recall that we repurposed one location from retail to food and beverage due to the fact that Terminal 2 is experiencing 15% more passengers than when it opened it in While we don t have excess retail space, it s much worse to be short on food and beverage space. The Terminal 2 RFP offers six leases but award is sought today on only four. The due date was delayed for one of the leases when we changed the use from retail to wellness. We wanted to give the industry more time to respond to this significant change in use. I plan to be back in May to seek award of that lease. We did not receive any proposals for the Museum Store lease. Originally, we had said that this needed to be a non-profit museum and we had been in contact with a few local proposers. As soon as this process ends we will reach out and try to learn exactly why we didn t receive proposals. I will return, probably in April, to seek authorization to recommence that RFP process. For the Electronics and Travel Store Lease, we re seeking award to Brookstone SFO T-2, LLC. This will be Brookstone s second store at the Airport. For the regional gift store we re seeking award to Avila Retail Development & Management, the incumbent. They re an excellent operator who s product is entirely locally sourced. For the candy store, award is sought to Canonica New York, LLC for the chocolate market. This store will feature a selection of brands including their own Canonica, See s and local brands, Ghirardelli, Phillip Marks, XOX Truffles which is one of our former pop-up operators. And for the restaurant lease, award is sought to SSP America. Their concept is Sweet Maple. They ve licensed Sweet Maple which is a lower Pacific Heights favorite and a multiple award winner which features American style food with a really well done breakfast which is important to us in this Terminal. The terms for the retail leases is seven years, the restaurant lease term is ten years. Everyone will pay the greater of percentage rent or minimum annual guarantees. We expect percentage rent during the first year of these leases to equal $1.5 million. Last fiscal year these four locations earned us $776,000. So we have a net gain of $724,000 we believe in these new concepts. As far as local ownership, we are moving from 1 of 4 locations having a local owner to none of the locations being fully locally owned. Sweet Maple however has a 15% local joint venture partner. In terms of sales earned by local owners, today it s about Minutes, March 20, 2018, Page 6

7 $800,000 and with these new leases, it will be about $810,000 at least the first year. All five of these leases are subject to Board of Supervisors approval. Commissioner Stern... what type of concept are you considering to replace the Museum store lease? Ms. Nashir... the new concept might be a bath & body & cosmetics or a sunglasses concept. Both are very strong concepts. We absolutely could get good proposals for this space. We just really liked that use and I don t think we re ready to give up on it yet. We want to work a little harder at it. Commissioner Johns... when you say none are fully locally owned are you saying that they are license agreements? Ms. Nashir... just the restaurant locations. The three retail stores all have out of town owners. Commissioner Johns... which ones? Ms. Nashir... Greetings from SF. We have, actually two of them today. Commissioner Johns... what does that name mean? Ms. Nashir... I guess it s their attempt or interpretation of letting everyone know it s a gift or a souvenir type store. Greetings, you re in San Francisco. They do a really good job of having faires where they invite local artisans in and they wholesale from local artisans merchandise that s produced here. The resolution awarding a Pop-Up Lease to Away was removed from the calendar without discussion. Item No. 4 was approved unanimously upon a motion by Commissioner Guggenhime and a second by Commissioner Stern. 4. Award of the Terminal 3 Pop-Up Retail Concession Program Permits San Franpsycho, Inc. and Away No Two Resolutions awarding the Terminal 3 Pop-Up Retail Concession Program Permits to San Franpsycho, Inc. for Space 1 and Away for Space 2. Ms. Nashir... I m here to seek award of one pop-up retail store lease, although the Commission memorandum speaks of two. We only want to award one this morning and that s to San Franpsycho. Pop up store leases are for one year and they pay the greater of a minimum guarantee or a percentage rent. As well, they pay a tenant reimbursement fee which reflects the fact that we built these stores. We even had fixtures for them which is unusual so we ve made a capital investment in the space and the tenants reimburse us for that on a per sq. ft. basis. San Franpsycho is a San Francisco-based company that sells lifestyle apparel and accessories... t-shirts, hats, jackets, blankets, children s clothes, mugs, and so on featuring graphics of San Francisco icons like the Golden Gate Bridge and Sutro Tower, and they have a really fun and interesting story. They Minutes, March 20, 2018, Page 7

8 were inspired by a surf film that some of their founders put together many years ago about the ocean beach surf culture. That film attracted so much attention and I guess they thought people were really interested in the lifestyle here. This was a new program for us that we started when Boarding Area E reopened and we had authorization from you to do a five year program for the pop-up retail leases. This will be the fifth year and we ll be back later this year to make recommendations on the future of the program. I suspect that we ll share with you that we re very proud of the program. It s received a lot of acclaim and it has brought some really interesting and fun merchandise to the Airport. Commissioner Johns... in your background information, did you say a program has evolved to include the requirement that the proposer cannot be a past or current tenant at the Airport? I just want to clarify because at some point it did seem in 2016 Emporio Rulli and the Exploratorium did have leases. I take it that the requirement changed after that? Ms. Nashir... correct. Emporio Rulli was a tenant of ours; the Exploratorium hadn t been, but that s why we changed it. They cannot have a current or prior lease with us. Commissioner Johns... I think that s a great idea. Item No. 5 was approved unanimously upon a motion by Commissioner Stern and a second by Commissioner Guggenhime. 5. Commencement of the Request for Bids for the On-Airport Rental Car Leases No Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing staff to issue a Request for Bids and conduct an informational conference for the On- Airport Rental Car Leases. Ms. Nashir... we currently have five on-airport rental car leases that will expire on December 31, 2018 so I m here today to seek approval to commence a request for bids process for on-airport rental car leases. A request for bids rather than proposals is the standard way in which this sort of business is sought at airports. We set minimum qualifications, we let the industry know what the methodology is for their minimum acceptable financial offer. We also let the industry know that much of the space in the rental car facility and quick turn around area will be grandfathered, meaning if an incumbent is successful in securing a lease again they will utilize their existing ticket counter location, office, fueling, and wash stations. This is customary in this business at airports that have made a lot of investment in these facilities. What the bids determine, which is of critical importance to the industry, is how many parking spaces they get within our rental car garage and at the fueling, wash and maintenance area. We ve determined that the number of individual brands that fit within our building is nine and we will accept bids to fill up to nine brands in that building. The business terms will mimic what they are today and that includes a concession fee which is 10% of gross revenues or minimum annual guarantee, and space rent. The space rental Minutes, March 20, 2018, Page 8

9 rate has been updated for these new leases and it reflects the current value of the land the facilities sit on and the operations and maintenance cost for us to maintain parts of those facilities, and debt service. We are proposing a five year term with two one-year options. This will give us the flexibility we need in case we decide to construct a new facility or renovate the existing facility. On behalf of the Airport, the rental car operators also collect an AirTrain fee. For context, last year the on-airport rental car operators realized sales of $479.9 million and paid SFO $68 million in concession fees and space rent, and they collected $32.7 million in AirTrain fees. The rental car business at SFO has experienced declines over the last two years. Contracts have fallen off 5.6% and concession fees or gross sales has fallen 4.3%. So, they re doing a good job managing price. They have fewer contracts but sales aren t declining at the same pace. Another reason to keep this term at five years with two one-year options is we continue to watch the industry evolve in terms of changing behavior around transportation. With your approval, we d like to publish this RFB and schedule an informational conference to hear from the industry about our business deal. Commissioner Johns... I was recently in San Diego and experienced a very, very efficient rental car operation and I d love to have someone from the Airport experience that or review it. Perhaps in your negotiations we can have some kind of discussion about how the operation is run so that people don t have to wait in line. I seriously was able to get there and get the car in less than 10 minutes. It was amazing. And the same for the return. I do think they have a new facility? Ms. Nashir... they do. Item No. 6 was approved unanimously upon a motion by Commissioner Stern and a second by Commissioner Guggenhime. 6. Authorization to Accept Proposals for the Terminal 1 Retail Concession Leases No Resolution approving the revised lease specifications and proposal requirements, and authorizing staff to accept proposals for the Terminal 1 Retail Concession Leases. Ms. Nashir... I m seeking your approval to change a few business terms and accept proposals for the Terminal 1 Retail Concession Leases. In December we issued an RFP for retail stores that would open in the first two phases of Terminal 1. Terminal 1 is opening in four phases. July 2019, February 2020, May 2021, and November 2022 I believe are the dates at this point. The RFP includes seven leases comprising eight locations, with one lease having two locations. Five of the seven leases have seven year terms with two one-year options. Two of the leases have a 10-year term. The minimum annual guarantees for these leases range from $124,000 to $480,000. When all gates are open in the Terminal, we expect sales from these locations to be $18.2 million and rent is estimated at $2.6 million. We held an informational conference and accepted questions as well throughout our comment period on the RFP. There are three changes we re recommending be made to our originally published business terms. The first is to Minutes, March 20, 2018, Page 9

10 lower the minimum annual guarantee by 50% until the third phase of Terminal 1 opens. We computed the minimum annual guarantees based on the ultimate operation of Terminal 1 however, pending the full MAG for the first two phases when we only have 18 gates of the 24 open would result on naturally high rent as it compares to sales. Second, we d like to lower the minimum qualification requirements for two leases. They are the sunglass lease and the beauty and bath lease. Currently we ve said operators have to be doing $750,000 per qualifying year. We would like to lower that to $450,000 per qualifying year. We heard from the industry that this would allow more proposers to participate in our process, and we think $450,000 still makes us comfortable that someone doing that could perform in our Airport. The third change we d like to make is to lower the minimum acceptable financial offer for Lease No. 7 from $230,000 to $200,000. This is a newsstand lease that s been identified as a small business set aside. Again, this may increase competition for the lease. With your approval we d like to make these three changes and publish a document which allows us to accept proposals. Our current schedule has us coming back to you in July to seek award. Item No. 7 was approved unanimously upon a motion by Commissioner Stern and a second by Commissioner Guggenhime. 7. Authorization to Accept Proposals for the Terminal 1 Food and Beverage No Resolution approving the revised lease specifications and authorizing staff to accept proposals for the nine Terminal 1 Food and Beverage Concession Leases. Ms. Nashir... this item is similar to the last one. In December we issued an RFP for food and beverage locations that would open in the first two phases of Terminal 1. I m here this morning to seek your approval to change two business terms and accept proposals. The RFP included nine leases for nine locations, so there in no bundling in this RFP. All the terms are at 10 years. The minimum annual guarantees range from $240,000 to $620,000 per location. Sales during the first year that all gates are open and these restaurants are operating, is estimated at $38 million with rent around $4.1 million. We held an informational conference and heard from the industry about our RFP. Like the retail leases, we recommend lowering the minimum annual guarantees by 50% during phases 1 and 2 of Terminal 1. The second change we d like to make is that we would recommend increasing the term from 10 years to 10 years with one two-year option. This option, as always, would be exercisable at the sole discretion of the Commission. This would give the industry a little more comfort as they put their P and L s together and consider the amortization for their capital investment. It also gives us flexibility when these leases expire to phase construction a little more easily if we were to exercise the option for some but not all. It just staggers the releasing effort. With your approval we d like to make these changes and accept proposals, and it s our plan to return in July for award of these leases. Minutes, March 20, 2018, Page 10

11 E. CONSENT CALENDAR OF ROUTINE ADMINISTRATIVE MATTERS: The Consent Calendar, Item Nos. 8 through 15, was approved unanimously upon a motion by Commissioner Guggenhime and Commissioner Stern. 8. Approval of Phase C7 of Contract No Design-Build Services for the AirTrain Extension and Improvements Program - Skanska Constructors - $3,441,001 No Resolution approving Phase C7 of Contract No , Design-Build Services for the AirTrain Extension and Improvements Program with Skanska Constructors, to increase the Contract capacity by $3,441,001 for a new Contract capacity amount of $101,979, Modification No. 7 (Annual Renewal) to Professional Services Contract Project Management Support Services for the Long Term Parking Garage No. 2 Project - The Allen Group, LLC / Cooper Pugeda Management, Inc., A Joint Venture - $1,390,000 No Resolution approving Modification No. 7 (Annual Renewal) to Professional Services Contract No , Project Management Support Services for the Long Term Parking Garage No. 2 Project, with The Allen Group, LLC/Cooper Pugeda Management, Inc., A Joint Venture., in an amount of $1,390,000 for a new contract amount not to exceed $7,485,000 for services through April 29, Approval of Phase C7 of Contract No. 9350A.66 - Design-Build Services for the REACH - Customer Hospitality - Boarding Areas A & G Project - Webcor Construction LP dba Webcor Builders No Resolution approving Phase C7 of Contract No. 9350A.66, Design-Build Services for the REACH - Customer Hospitality, Boarding Areas A & G Project, with Webcor Construction LP dba Webcor Builders to extend the Contract duration by 292 consecutive calendar days for a contract total of 1,060 consecutive calendar days, and no change to the contract amount. 11. Award of the Security Checkpoint Mailing Service Lease to Airport Mailers, Inc. No Resolution awarding the Security Checkpoint Mailing Service Lease to Airport Mailers, Inc. Commissioner Johns... I assume it s not much of a money maker. Minutes, March 20, 2018, Page 11

12 Ms. Nashir... it s not. This is the security checkpoint mail back service lease. It s annual sales are about $60,000. It s basically little mailboxes, not U.S. Post Office mailboxes, but boxes at the checkpoints. So, if you get to the checkpoint and discover you have an antique pocket knife or something that would be confiscated, you can mail it home rather than lose it at the checkpoint. They provide the packaging for a fee and they will mail it home to you. Commissioner Johns... do they let folks know at the checkpoints that this service is available? Ms. Nashir... we positioned these boxes, which have graphics on them, as best as we can so that everyone walks by one when they re getting in a checkpoint line. About 17 items are collected a day. Commissioner Johns... they re the only one, or maybe one other, that does this throughout the United States? Ms. Nashir... I think they re the only ones at this point. 12. Extend Ground Leases with Trillium USA Company, LLC and Clean Energy No Resolution approving extension of Ground Leases No L with Trillium USA Company, LLC and L with Clean Energy, exercising the first of two (2) two-year options to extend, commencing April 1, 2018 through March 31, 2020 and increasing the minimum ground rent to fair market value of $41,728 for each Lease. 13. Authorization to Accept Proposals for the Airport Automated Retail Lease No Resolution approving the revised lease specifications and proposal requirements, and authorizing staff to accept proposals for the Airport Automated Retail Lease. 14. Approval of a 2011 Lease and Use Agreement with Thomas Cook Airlines Limited No Resolution approving a 2011 Lease and Use Agreement with Thomas Cook Airlines Limited at San Francisco International Airport, and directing the Commission Secretary to forward the lease to the Board of Supervisors for approval. 15. Approval of the Reimbursement to HFF-BRH-SFO,LLC for Costs Associated with Phasing Construction at Farmerbrown in Terminal 1 Boarding Area C - $46,000 Minutes, March 20, 2018, Page 12

13 No Resolution approving a one-time rental credit to HFF- BRH SFO, LLC in an amount not to exceed $46,000 for the reimbursement of costs associated with phasing construction of Farmerbrown in Terminal 1 Boarding Area C to accommodate temporary food and beverage operations. F. NEW BUSINESS: Discussion only. This is the Public Comment section of the calendar. Individuals may address the Commission on any topic within the jurisdiction of the Airport Commission for a period of up to two (2) minutes. Please fill out a Request to Speak form located on the table next to the speaker s microphone and submit it to the Commission Secretary. There were no requests to speak. G. CORRESPONDENCE: There was no discussion by the Commission. H. CLOSED SESSION: There are no planned agenda items for a Closed Session for the current meeting. In the event of any urgent matter requiring immediate action which has come to the attention of the Airport Commission after the agenda was issued and which is an item appropriately addressed in Closed Session, the Airport Commission may discuss and vote whether to conduct a Closed Session under Brown Act (California Government Code Sections (b)(2) and ) and Sunshine Ordinance (San Francisco Administrative Code Section 67.11). If the Airport Commission enters Closed Session under such circumstances, the Airport Commission will discuss and vote whether to disclose action taken or discussions held in Closed Session under the Brown Act (California Government Code Section ) and Sunshine Ordinance (San Francisco Administrative Code Section 67.12). J. ADJOURNMENT: There being no further calendared business before the Commission the meeting adjourned at 9:27 AM. (Original signed by: Jean Caramatti) Jean Caramatti Commission Secretary Minutes, March 20, 2018, Page 13