-1- A09132016

CITY & COUNTY OF SAN FRANCISCO PORT COMMISSION

MINUTES OF THE MEETING

TUESDAY, SEPTEMBER 27, 2016 1. CALL TO ORDER / ROLL CALL

Port Commission President Commissioner Adams called the meeting to order at 2:35 p.m. The following Commissioners were in attendance: Commissioner Adams, Commissioner Brandon, Commissioner Katz, Commissioner Kounalakis and Commissioner Woo Ho.

2. APPROVAL OF MINUTES – September 13, 2016

ACTION: Commissioner Brandon moved approval; Commissioner Katz seconded the motion. All of the Commissioners were in favor. The minutes of the September 13, 2016 were adopted.

3. PUBLIC COMMENT ON EXECUTIVE SESSION 4. EXECUTIVE SESSION A. Vote on whether to hold closed session.

ACTION: Commissioner Brandon moved approval; Commissioner Katz seconded the motion. All of the Commissioners were in favor. At 2:36 p.m., the Port Commission withdrew to closed session to discuss the following: (1) CONFERENCE WITH LEGAL COUNSEL AND REAL PROPERTY

NEGOTIATOR – This is specifically authorized under California Government Code Section 54956.8. *This session is closed to any non-City/Port representative: (Discussion Items) (a) Property: Seawall Lot 322-1, an approximately 37,810 square foot

rectangular land parcel bounded by Broadway, Front and Vallejo Streets; Assessor Block 0140, Lot 7, located at the corner of Front and Broadway Streets.

Person Negotiating: Port: Byron Rhett, Deputy Director, Planning and Development; Rebecca Benassini, Assistant Deputy Director, Planning and Development; and Ricky Tijani, Development Project Manager, Planning and Development.

-2- A09132016

*Negotiating Parties: Mayor’s Office of Housing and Community Development (‘MOHCD”): Teresa Yanga, Director of Housing Development; Faith Kirkpatrick, Project Manager.

5. RECONVENE IN OPEN SESSION

At 3:22 p.m. the Port Commission withdrew from closed session in reconvened in open session. ACTION: Commissioner Brandon moved approval to adjourn closed session and reconvene in open session. Commissioner Katz seconded the motion. All of the Commissioners were in favor. ACTION: Commissioner Brandon moved approval to not disclose any information discussed in closed session. Commissioner Katz seconded the motion. All of the Commissioners were in favor.

6. PLEDGE OF ALLEGIANCE 7. ANNOUNCEMENTS – The Port Commission Secretary announced the following:

A. Please be advised that the ringing of and use of cell phones, pagers and similar sound-producing electronic devices are prohibited at this meeting. Please be advised that the Chair may order the removal from the meeting room of any person(s) responsible for the ringing of or use of a cell phone, pager, or other similar sound-producing electronic device.

B. Please be advised that a member of the public has up to three minutes to make

pertinent public comments on each agenda item unless the Port Commission adopts a shorter period on any item.

8. PUBLIC COMMENT ON ITEMS NOT LISTED ON THE AGENDA

9. EXECUTIVE

A. Executive Director’s Report

San Francisco Voted Top-Rated U.S. & Canada Destinations by Cruise Critic

Elaine Forbes, Interim Port Director - Today in Item 11A, you will learn about the Maritime revenue and expenses and you will see that the cruise revenues are exceeding our expectations and that we are on track to break even on our $114 million of investment and go into positive revenue stream which is such an accomplishment because the cruise terminal delivers public trust and public benefits to use and to our community.

-3- A09132016

I'm also very excited to announce that we have earned Cruise Critic's Award for the Best Destination in the U.S. and in Canada. This is vote of cruisers sailing between August 1, 2015 and July 31, 2016. Cruise Critics is a leading cruise review and information site which hosts the largest cruise community in the world. More than 5 million people from first-time cruisers to avid cruise fans visit Cruise Critics each month to research and plan their cruises and to plan their trips. San Francisco receiving this award is very important for our cruise facilities. I want to congratulate Metro who operates the cruise ship at Pier 27 and 35, to the ILWU and to Peter Dailey and the Maritime Division.

Port of San Francisco awarded 2016 Healthy Mothers Workplace Silver Award Elaine Forbes - The next item is also celebratory. This involves the 2016 Healthy Mothers Workplace Silver Award. The San Francisco Board of Supervisors initiated the Healthy Mothers Workplace Award to recognize San Francisco employers with policies and practices that support the well-being of new parents and their children. This year's award ceremony was this morning. It featured advocates for health and equity government officials, including Supervisor Scott Wiener and Supervisor Katy Tang and employers and employees who have benefitted from and champion policies that help new parents and are baby friendly. The program recognizes excellence in health and gender equity in three areas, parental leave, lactation accommodation and work-family balance. Notably Supervisor Wiener has passed legislation that provides six weeks of paid parental leave to all employees, private employees in San Francisco. Supervisor Tang has passed City policies for lactation rooms. This morning the Port celebrated winning the Silver Award. The Port received this award because we placed two lactation rooms at the Port. One is located at Pier 1 and one is at Pier 50. The Port also developed a breast-feeding lactation policy and a childcare referral notice for employees. In our category was the Bi-Rite family of businesses, Nixon Peabody LLP, the Board of Supervisors, the Human Resources Department, the Department of Children Youth and Their Families, the Public Health Department, the University of California, and the Women's Foundation of California. The Port was in very good company winning this award. I would like to thank personally our Port Human Resources Director, Lavena Holmes, who spearheaded this policy and had the lactation rooms installed.

-4- A09132016

Thank you so much Lavena. We're very proud to be family-friendly, baby-friendly workplace.

Cancellation of October 25 and November 8, 2016 Port Commission Meeting

Elaine Forbes - This is to give notice that the October 25th and November 8th Port Commission meetings have been cancelled. A special Port meeting is scheduled on November 15th at Pier 1.

Video Presentation - Port of San Francisco Welcomes Pasha to Pier 80

Elaine Forbes - Finally, I would like to end with a video presentation of the Pasha event at Pier 80. President Adams, Vice President Brandon and Commissioner Katz reported on this civic event that was held on August 22, 2016 to welcome Pasha Automotive to Pier 80. I'd like to play this video to give members of the public who could not attend more insight into the promise of this 15-year Maritime Terminal Maritime Agreement offers. You will see in the video that many members of the community came down to Pier 80 to celebrate as well as City dignitaries who joined in the celebration. Thank you again to Renee Martin who just seamlessly planned the event.

B. Port Commissioners’ Report

Commissioner Adams - I want to thank Commissioner Katz. Several months ago, she hosted a forum with the Indian government officials at Pier 1 as she has done for the last couple years. I think they came from Berkeley, I wanted to commend Commissioner Katz for doing this. I thought it was a great turnout. It was great interchange. Commissioner Katz, thank you for your vision and your interaction for that and may we continue doing that. Before we have a moment of silent for the late and legendary Rose Pak, I will ask my fellow Commissioners for some comments. Commissioner Woo Ho - It is with a sad heart that I'm going to hear, talk about it and obviously you see that we are going to remember her In Memoriam. My husband James and I have known her for probably over 35 years. I did attend the funeral on Saturday. She was a one of a kind. She was a trailblazer. She was a community leader for the Chinese community and for all of San Francisco. I want to note on the community side the things that she did accomplished. She did preserve Chinatown so it's still an iconic destination, authentic for San Francisco and very important in terms of how we present ourselves as the Gateway to the Pacific. She did raise $30 million for Chinese Hospital, one of her labors of love and also a labor of love for my husband James too.

-5- A09132016

She raised the profile of Chinese Americans in politics as we know and you've read about it in "The Sphere of Influence." What she did was amazing. She made it possible for many Asian Americans, Chinese Americans including myself to get involved in the civic process here. As Mayor Brown noted too, not all were successful but many, many were. I know that you all know that in terms of the history of the Port. On the personal level, I knew Rose very well personally and my children would call her, as she was affectionately known by many people in the city as Auntie Rose because she always had time to talk to you. Not just about all the politics, which she spent most of her waking hours devoted to politics and what was happening. But she also was very genuinely concerned about people, the people that she met and the families. She'd always ask about our children. She'd talk to them and give them advice and, "Where you should to college," and "Do this, that and the other." She was human in that sense in that she really cared both on the community level and on the very personal level. Rose was also a very tough person to deal with as you know. She was controversial. There was tough love. Winning was everything to her, and she didn't like to lose. Sometimes when that happened, she could be merciless with you and very mean. But as we all know, she was very famous for what she would say in the parade and other things and in the newspaper. Her passing is a tremendous loss for all of us. She was bigger than life and she will be missed tremendously. I'm so proud that we are going to remember her today. For my family, we'll remember her. Auntie Rose, there's just so many stories we could tell you that are just very personal between the journeys that she's had with my daughter in France, with James in Las Vegas, lots of fun stories to remember her by. We'll never forget her for that. Commissioner Katz - I too have known Rose for many years. She's certainly known as a community activist, a leader on behalf of her community. She also trained a new generation of active, political and engaged young people. Simultaneously, she schooled and held the old generation accountable too. I know it was always with a little bit of trepidation if I knew she wasn't happy with something that was going on, or even if she was happy with something. I was like, "Okay, what else is she going to ask for?" But what always struck me about Rose was her unwavering commitment to community. She will be so sorely missed. There are so few people that have that single focus, where you know they're really looking out for the good of the people that they care about. I have a couple funny stories. Of course, I was one of the ones that got some of her comments as I went through the Chinese New Year parade. I can't

-6- A09132016

remember what she said. It wasn't too bad. But my favorite part at the end was after she made a crack, she said, "Okay, now come sit next to me." That was Rose. She could zing it, but she could also give you a big hug. When she met at the Port a few years ago. She was coming to a meeting with then Executive Director Moyer. I remember seeing her downstairs. I was going to be attending the meeting. Director Moyer and I knew that we'd found a solution for the problem that she was bringing to our attention but Rose didn't know that yet. I wanted to wait until we got to the meeting to tell it to her, but I saw her downstairs and we started chatting. Then we went up into the meeting and Rose launched into her fierce advocacy, and we kept trying to interrupt her. Then we told her that we'd reached a solution. She kept going, then after about 95 seconds, she suddenly stopped. She said, "Oh, wait a minute. Okay." But she had to get it out and that was Rose. She needed to make sure that her point was made. Rose has made so many points to San Francisco that she really will be remembered with some great fondness. I'm pleased that we're adjourning in her honor, in her memory. With a great debt of thanks from all of San Francisco to all that she's done to make our city a better place. Commissioner Kounalakis - I only met Rose Pak a few times, but it was enough. Between that and what I read in the newspapers about this incredible, larger than life character and personality and force of political nature in San Francisco. For me, I've always looked around at women leaders because they're not as common as you might think, even now. Although San Francisco's probably had more than its proportionate share if you look elsewhere in the country but it's always interesting to me to look and to see a woman who manages to really be able to be so central in the political life of the community. Because it's a competitive world, that world of influence and ideas. What's absolutely clear is that she had the community always at heart. It was always about making the community better. You can see it. You could see it then and you can see it now. Future generations will see it when they walk into the beautiful Chinatown Hospital, and when they walk around Chinatown and see so much that was preserved. Of course the legendary stories that I know will go on forever, her impact will be felt for generations to come. Commissioner Brandon - Rose Pak will definitely be missed and San Francisco will never be the same without her. May she rest in peace. Commissioner Adams - Rose Pak, power broker, icon, activist. One of the last of the giants, one of the forerunners. Sixty-eight to me is so young, but it's not how long you live, it's the mark that you leave and what you do with the time that you've got here. Clearly she paved the way. Clearly her story will go on for eternity. Rose Pak with the time that she had on this earth, clearly made a difference. At this time, may we have a moment of silence. God bless you Rose Pak. May you rest in peace.

-7- A09132016

10. PLANNING & DEVELOPMENT

A. Informational presentation on the Water Emergency Transit Authority’s (WETA) Strategic Plan. David Beaupre, Planning and Development - I'm here to introduce Kevin Connolly from the Water Emergency Transit Authority who's going to present on their draft Strategic Plan. He's also joined by Director Rannells and Mike Gougherty. After Kevin presents an overview of their Strategic Plan, I'll come back and give a quick update on some of the things we have going on with the water taxi. Kevin Connolly - I'll just build a little bit on the themes that we heard in the introduction of the meeting which was about collaboration and partnership and mention that we're also a partner with you. It's been a very fruitful partnership. We're the fastest growing transit agency in the Bay Area right now. We grew our ridership 72% over the last three years, and it was 33% last year. That is not possible without a close working relationship that we've had with your staff here, right outside our door here and at the Ferry Building as well as Pier 41 and their facilities there, as well as all the planning and development that we're doing with your staff, in particular, Dave and his staff. We really appreciate that and you've been really a part of that success. Part of that success is from our standpoint, it's a little double-edge sword. We are experiencing the growing pains of having that much ridership in such a short time. We're leaving people behind. We're having very full boats. We're having trouble beating that demand. That's one reason why it's really critical for us to introduce this Strategic Plan at this time which is the vision for where we want to be 20 years from now. It's represented by the graphic that you see in front of you which is where we are today and where we're going which is essentially kind of quintupling what we do. We've been spending the last year plus with our board, as well as the public, with stakeholders like you and the staff in terms of creating this vision which we expect our board to adopt on October 6, 2016. Our mission statement, which was created as a part of this process. We are a regional agency. We see ourselves as providing a service for the entire Bay Area and that it be comprehensive in that way. Our vision builds on that. We want to build a reliable, a state of the art and attractive -- if you look at all our surveys for our riders as well as our one-time riders for recreation -- the attractiveness of the service, the experience is really what sets us apart from other modes of travel, from other transit. Plus we have a second part of our mission which is to provide emergency response capability as

-8- A09132016

being one of the first transit agencies that will be up and running after any natural event. Our Strategic Plan, we have seven focus areas ranging from Expanded Service, Funding, Quality of our Service down to our Organizational Structure and our Leadership. I'm going to spend my time here talking about our Expansion program which has been an interest of yours. We have today four services that are operating in Vallejo, Alameda, Oakland, Harbor Bay and South San Francisco. We anticipate Richmond opening in 2018, Treasure Island in 2022 and those are the certain ones. We have others that are partially funded in Seaplane Lagoon, Berkeley, Redwood City, Hercules and Mission Bay which I know you're very interested in. Off on the horizon are some projects that we consider to be emerging areas, and that's in the South Bay as well as the Carquinez Straight. No defined projects as of today but work is going on with them. Altogether, our capital need is little under $900 million. We have an Annual Operating Budget today of $33 million. We think we need to have another $49 million in order to operate this extensive of a ferry system where we start to see people choosing the ferry as their first choice of a transit option. Our Project Delivery. Today we have eight projects that are in some form of delivery, all the way from construction -- we have three projects that are in construction right now -- to design, and in the planning stages such as Mission Bay. You'll hear a lot about the Downtown Ferry Terminal, but I want to say that none of this is possible without the Ferry Terminal's expansion. This is the cornerstone of our future expansion of our system, together with our two maintenance facilities that are under construction today. Without this expansion, nothing else would be possible in terms of growing our service. That's why it's such an important project for us not just for us but of the entire region as well. With regards to Mission Bay, we'll be having detailed discussions in the future. It's off to a great start in terms of selecting a design consultant. You are the lead, we are your partner. We will work together towards implementation of this very important project that's serving the underserved part of San Francisco. Up on the top of the line are our expansions, projects and our anticipated opening date. On the bottom are notable events. Today we carry over 2 million people a year. We expect that to grow to six within the next five years and up to 12 by 2026. So within 10 years, we expect to roughly quintuple our ridership. In terms of our expansion, we are on a pace to open a new terminal almost every other year for the next 20 years. That's about as fast as you could possibly go given this environment that we have in terms of regulation and permitting

-9- A09132016

requirements which are strict in the Bay and they should be. But this work has been going on for a while and we're set up to deliver this expansion program. David Beaupre - Last thing we wanted to touch on because we have not been to the Commission for a while was an update on the Port's water taxi service. While not directly related, we thought it was worthwhile to provide a little bit of an update. What you see up here is a map that will be installed on future signage that we're doing to help improve the identity and understanding of the water taxi system that's happening within San Francisco. We have the Pier 15 facility that's open and operating and being utilized by our water taxi providers. I mentioned the new signage. By the end of the year, we'll continue to look at studying the Mission Bay area for a new water taxi landing and whether that's feasible or not. One idea might be that we use the Pier 52 boat launch which is directly close by and that we're continuing to coordinate with our water taxi providers. Yesterday we met with Tideline to get a better understanding of what their strategies are and what improvements and new services they're looking to offer. Commissioner Kounalakis - This is great to see because I've seen the signs down there and looked around to see how exactly you go about getting a water taxi. My only question on this signage is on the last page of the presentation, is this what it's going to look like? David Beaupre - That's the map that will go on the signage. The actual signage will be a little bit different. Right now we have the banners. We're installing new signposts that'll carry this information on where the water taxis will go. There's a little place on there for the Hop-On Hop-Off service that they can put the next time of when that will be coming. The other one talks about how to contact Tideline which is more of the on-call type of service. Commissioner Kounalakis - Let's say you're down at Fisherman's Wharf and you decide you want to take a water taxi over to go on a hike on Angel Island. And you see one of these signs, you make the on-demand call. How long will it take for a taxi to arrive to take you? And when you want to get back, would people feel comfortable that there would be a water taxi available to bring them back a few hours later? David Beaupre - Peter Dailey might be able to help me better answer that question. Commissioner Kounalakis - I'm trying to get a sense of how available it's going to be that's why I gave the example. I got the Hop-Off Hop-On, but I'm curious looking at all these dots in and around the area at Berkeley, and Emeryville and San Rafael. I'm curious about how it works.

-10- A09132016

Peter Dailey - The Hop-On Hop-Off service, we see the little yellow taxis bob up and down the waterfront. They look like a taxi cab and they have their fenders hanging over the side. Those are pretty easy to spot. The on-call service is an innovative new mode of transportation. Nathan the President of Tideline is here. David, Byron and I had discussions with Nathan yesterday about their. They have a very interactive Web site that you can look online or on your portable device as to where the next boat actually is. They have different sizes of boats. They have two 40 passenger boats and two smaller 22 passenger boats. As they have more boats available on the water, it will become more of a guaranteed service. Right now it's pretty much like Uber to a certain extent. If you want to get them, you can get your app on your phone, you can punch it and they'll let you know how long it's going to take you to get picked up. Did I capture it right Nathan? If you don't mind, he's the President of the company. He'd be a perfect guy to ask. Elaine Forbes - This particular conversation is not on the agenda. Commissioner Kounalakis - It's on the map. I think it's just very exciting. Commissioner Katz - Perhaps we could reopen public comment and perhaps there might somebody from Tideline -- Commissioner Kounalakis - It’s all right. I might've jumped the gun a little bit. I can see it's developing. Probably the answer is, "It's going to take some time before we see water taxis buzzing all over the Bay for the first part of the service." But I think it's really great. I spend a lot of time in Greece. My family is from there, and people get around like this. Not with their own boats but with water taxis. It's such an incredible opportunity to liven up the Bay. Commissioner Adams - Why don't we next month have David Beaupre get some information and report back on it next month. Commissioner Kounalakis - Sure. Commissioner Woo Ho - We've talked a lot about water taxis so I'm going to go back and talk a little bit about WETA. When you say your total capital need is $844 million, does that cover what you'd call now your funded and your partially funded and unfunded? What does that cover? Kevin Connolly - That's the unfunded portion. Commissioner Woo Ho - That's the unfunded portion. Can you explain a little bit more about your sources of funding? If we look at your timeline and it's a great timeline, what are the sources of your funding? What concerns do you have that you will not get the funding in place to do this?

-11- A09132016

Kevin Connolly - In terms of our Capital Funding, our funding comes from a variety of grant sources, regional, state and federal. Our operating funding comes from two sources. Fares, and we have a very high fare box recovery, as well as bridge toll revenues through Regional Measure 2 which was passed in 2004. In terms of where we're going in the future and what we see as our optimistic place to finding future funding is if there is a new Bridge Toll Measure which is being talked about in the region today, a Regional Measure 3. It's a natural nexus to use bridge toll revenues to fund a transit service that specializes in crossing the Bay. However, we will pursue any and all sources of funding. There are not a lot of ferry discretionary funding, that are dedicated just to ferries. The available money is relatively small and it would never be able to fund this level of expansion. Commissioner Woo Ho - On an operating level, do your fare revenue cover your operating costs or is there also a deficit there? Kevin Connolly - There is a deficit. Our fare revenue covers roughly 50-60% of our operating cost on an annual basis. We cover the rest through toll revenues that subsidize the ferry. Commissioner Woo Ho - From the bridge toll revenue. Kevin Connolly - Yes. Commissioner Woo Ho - So that helps you both with operating as well as with capital costs. Kevin Connolly - With a little bit of our capital, yes. We have bought vessel purchases here and there. Commissioner Woo Ho - This is great to sort of alleviate a lot of the congestion that we see particularly going to the South Bay. You're very focused on the East Bay which is great. But do you see in this plan as you're going about your Strategic Plan of thinking further, what happens in the South Bay? I know you don't know where the capital's going to come from but we know there's a lot of congestion right now in that area. Kevin Connolly - Absolutely. We have a project that's in development in Redwood City and that's the low hanging fruit of the South Bay in the sense of there's a deep water port there as you know. It's an ideal location to develop a Ferry Terminal. South of Redwood City, there's a lot of unknowns and there are certainly significant environmental hurdles. We may have to address those in

-12- A09132016

terms of technology and other things. That's a little bit far reaching in terms of time table. Commissioner Woo Ho - I'm fully aware that obviously Marin is under a different service. I'm not exactly sure the entire structure for the Golden Gate Ferry. What are the opportunities to collaborate and work together so that we can see this whole planning process be very comprehensive for the entire Bay Area since you do call yourselves a regional agency? Do you have conversations with them in terms of how to approach this with the total region, even though you're two separate agencies? What are the points of collaboration going forward? Kevin Connolly - That's a great question. We do have a regular dialog with them and in terms of Emergency Response Planning as an example. We have arrangements with them in terms of how we operate. Their vessels are compatible with our facilities. Ours are compatible with theirs. For example during the BART strike, they loaned a vessel to us that we used because we were seeing such high demand, we used some of their vessels. There's a great deal of interest on the part of the public, and there's some interest on the part of our two agencies about seeing service that's not just directly to San Francisco but potentially goes places like Larkspur to Oakland, etc. Frankly, we're both in the same position where our demand is so heavy and we throw every asset we can going to San Francisco. But a future threshold is, "How does the whole system work in a comprehensive way, and not just through San Francisco?" Those are things that we have on the horizon. Commissioner Katz - I'm very excited. As always, the devil's in the funding as we find. But like Commissioner Kounalakis, having travelled to areas where ferry service is used more widely as we've seen with taxis on land, the more you have, the more people will be able to use them and rely on them. I look forward to seeing our expanded ferry and taxi services on the water. Commissioner Brandon - I do agree. This will be exciting for both, the water taxi and what WETA's doing. Most of my questions were answered when Commissioner Woo Ho asked her questions. Commissioner Adams - This is very well thought out. I do agree, how do we pay for it? But at least we're getting out front on it and I like that. It's good that we're going to be dealing with ferries and water taxis and my fellow Commissioners are asking very good questions. When you said, "the bridge toll," is that going to be one of the highest forms of revenue for us? Is that going to be more than the money that we get, say from Leader Pelosi, from federal funding, or from the state or something like that? Are we going to get more from bridge tolls?

-13- A09132016

Kevin Connolly - The nature is that it will fund a lot of our operations. Then the challenge for any transit agency is, "How do you fund your day-to-day operations?" In terms of capital, it's going to be a mix. There will be hopefully bridge toll revenue that's dedicated to vessels, for example but there's a whole range of other forms of funding. I neglected to mention before, private funding. Private partners we're seeing, certainly in Treasure Island which is paying for an entire terminal as well as a vessel. In Alameda, they have a development and they committed $10 million. We're seeing more of that as well as a funding source, particularly for capital. Commissioner Adams - Thank you. You've gotten a lot of stakeholders involved. That's good. Commissioner Woo Ho - This is one of the areas that I think most of us are very passionate about so we're really happy to see that this is getting more and more traction. Kevin Connolly - I would like to say thank you for your continued support and the partnership that we have with your staff. It's been very fruitful and I expect that we will produce this plan with their help. Commissioner Adams - Thank you Kevin and David.

B. Informational Update on the Expansion of the Downtown Ferry Terminal. Dan Hodapp. Port's Planning and Development Division - Along with James Hurley, we are going to walk you through the Downtown Ferry Terminal Expansion Project. I'm going to describe a little bit of what the Downtown Ferry Terminal is now. Then show you a little bit about what the Expansion Project entails. Then Mr. Hurley is going to talk about responsibilities and schedule regarding that project of what's going on. Phase One of the Downtown Ferry Terminal was completed about 2002. As you heard about the level of activity in the Bay, the Downtown Ferry Terminal is where most all boats come to. It is the primary destination. There are 130 boats a day carrying 10,000 passengers. You heard the numbers of what the expected expansion of that activity is going to be. Gates B and E were added in about 2002 and opened up. Those are managed by the Port, responsible for maintenance and capital repairs. This image shows a Master Plan that the Port and WETA assembled several years ago. It shows Gates A, B, C and D it would be Golden Gate, and E, F and G. B and E are the two that exist today. The project that we're talking about today is E, F and G. Gate A is something that could be added some time in the future. This shows a full build out except it does not show how Golden Gate's facility may be

-14- A09132016

reconfigured to be part of this which is something we do expect to see happening. The project area is south of the Ferry Pier. You can see it dances around the Agriculture Building and it goes out to Pier 14. This is a plan that's been going on for about eight years to do all of the entitlements and the regulatory and the permitting process and the design and the community input that's been involved. Gate E exists now. It would be shifted about 30 feet further into the water. There would be new gates and new berths F and G to handle four more boats. There would be a promenade constructed that extends the promenade along the east side of the Ferry Building and also a new plaza filling in the lagoon area between the Ferry Building and the Ag Building. The Port in 2015 entered into a Memorandum of Understanding with WETA about how this would operate, where the WTA would be responsible for ownership, operation and maintenance of the waterside. The Port would take on the landside. Mr. Hurley's going to go into a little more detail on that. When you look at the existing facilities where Sinbad's recently was and right adjacent to the Agricultural Building, that would be removed. The Agriculture Building would stay. The deck area that currently services Gate E would also remain although reconfigured. There's dredging associated with the project to accommodate the new Gates F and G, about 20,000 cubic yards between E and Pier 14. It's a very multi-faceted piece of work. If you have your office on the third floor of the Ferry Building, this is the view you're going to get of the new gates. The project would be constructed in phases to allow continuation of the Oakland/Alameda service. The details of the phasing is very complicated but it's going to work. The staff at WETA has been so good at resolving this issue and has convinced us all of such, and I think they're right. If you are at the ground level at about that same location, this is the view down that promenade. It shows Gate E. If you notice, the walkway slopes up here. It rises up about 38 inches to accommodate Sea Level Rise throughout the life of the project, taking it out to about 2070 and then it also includes provision for it to extend out to about 2100 with minor adjustments to it. The boarding levels are going to be 38 inches above the conditions that are out there now. The plaza next to the Embarcadero is also going to be at this raised level. We're conforming with all the agencies and the Port's goals of making sure we're building to that anticipated condition. You can almost see a little planter in the right hand side of this image. That's where a stormwater retention area meeting the stormwater design standards.

-15- A09132016

From the Embarcadero Promenade, you can see the new raised plaza. This would be used for queuing for the ferry passengers. It would also be an emergency gathering because that is part of the role of this facility. On a daily basis, it's going to be a prime spot to look out on the Farmers' Market or the Embarcadero Promenade. The finishes are consistent with what we would expect in the Ferry Building area and the civic importance of this area. Granite clad on the steps and on the plaza up top and proposed quality construction throughout. There is also a high level of passenger amenity. This is a shade structure with photovoltaic panels on top of it that help power some of the equipment on the ferries. There will be benches, signage, providing information about the ferry service and lighting and other such amenities associated with it. The project is designed to dance around the Agriculture Building and give the Port the ability to renovate this structure in the future. It stays about 15 feet away and leaves that portion of the deck intact and constructs a fence there and also has the ability to cordon it off. If the Port chooses to come back in the future and renovate that structure, it'll have room to work and also it anticipates the elevation that that building would likely be raised up to meet the plaza on the north side of it. You see somewhat similar condition on the other side of the Agricultural Building and there would also be another ramp provided directly to Gate G and the promenade in back. This ramp could be lifted out of place and allow a barge to come in and work on the Agriculture Building. It's very much done in consideration of how the Agriculture Building could be renovated in the future given the Port's option there. Jamie Hurley, Port Planning and Development - This project is entirely funded by the project sponsor WETA. The total project cost is around $65 million and that's through a combination of sources. There is a piece of the project that I wanted to highlight that involves a Port contribution and that relates to Gate E. Gate E as Dan mentioned is the existing gate in the south basin. It is a Port-owned facility and the Port currently has maintenance responsibility, including capital repair responsibility for that facility. The total cost is a necessary rehabilitation of that facility is estimated at $1.5 million. The transaction documents that we would be bringing to you next month contemplate and recommend a Port contribution of 20% towards the rehabilitation of Gate E. WETA has the ability to obtain grant funding, federal grant money to cover 80% of that cost and they're quite confident in that source. Pending their ability to deliver on that source and pending the approval of both the WETA Board and the Port Commission of the transaction documents, that is how we will move forward with Gate E. We would then transfer ownership to

-16- A09132016

WETA of Gate E. From that point forward, they will have maintenance responsibilities including deferred maintenance. In terms of ownership and maintenance , they're split generally between what we're calling waterside and landside. The landside is pile supported deck as this project is entirely east of the Seawall. The waterside facilities include the floats, the gangways, the canopies that cover the gangways, the portals, the entry portals to the terminal, the shade structure that Dan mentioned and showed which is actually on the landside but it's considered a very specific improvement. It provides shade and weather protection for the ferry passengers and then utilities. The Port would be responsible for the new plaza, the walkways around the substructure. There is a bio retentive planter that is part of the Stormwater Management Plan and some furnishing like the benches that Dan showed. As it'll probably be a question, what are the costs associated with taking care of these new improvements. Pretty minimal. We believe and we've been working with Tom Carter and his staff on understanding what those costs are. We think it's about half Full Time Employee or about 20 hours a week of labor to do some power washing, to water the planter, to collect the garbage, etc. As Dan mentioned, we've been at this project for a number of years and what's exciting now is we're getting to the implementation phase. It began back in 2010. We spent a couple years scoping the project, hiring the design team, hiring the environmental review consultants, getting public input and developing concept designs. This project had a full EIR/EIS because it had to satisfy both the California Environmental Quality Act and the National Environmental Policy Act because it has federal funds in it. That was about a two year process to get a certified EIR/EIS. In the last couple of years, we've been focusing on the design development, getting more public input, working with BCDC, their design review panel, our Port design review panel and the a lot of engineering and engineering review as well through both BCDC's Board and Port staff. We're approaching 2017 which is when we expect to actually get in the ground on this project and start construction. And because of the work windows, and because of the in-water work being from July through November, we think it will take three years to finish off, or two and half years once we start construction. So by the end of 2020. This last slide gives a closer look at what's going to be happening in the next nine months before we get under construction and have a groundbreaking in June 2017. As you can see, there will be a lot of activity with this project. As I mentioned, we will be bringing the transaction documents, the Lease Development and Disposition Agreement and a construction lease, to the

-17- A09132016

Commission. Those will have to go to the WETA Board as well as the Port Commission next month. Following that, in early 2017 if not the very end of this year, we'll be bringing a long-term lease that will govern after construction the WETA's operation of the facility. In the spring, final design and permitting and groundbreaking in June. I do want to acknowledge the WETA staff - Executive Director Nina Rannells, Planning Director Kevin Connolly and Senior Project Manager Mike Gougherty. As Kevin mentioned, it's been a tremendous partnership that we've developed and we've grown with each other and gotten to know each other as agencies over the last few years. Obviously that partnership is going to continue well into the future. Commissioner Brandon - Thank you for this wonderful report. This too is very exciting. As far as the funding and the Port piece, we're only responsible for maintenance after everything is built, right? Jamie Hurley - Correct. We have responsibility today for Gate E in its entirety as well as Gate B in the North Basin. We will be transferring that responsibility, our current obligations to Gate E to WETA pending your approval and the WETA Board approval. With our contribution of 20% of the cost, that is an existing cost today and an existing Port obligation. Commissioner Brandon - As far as Sea Level Rise, and I know you mentioned building 38 inches above. Is that along the total plaza, or just that section? Dan Hodapp - Building to Sea Level Rise, this would be for the new improvements, but we'd also include some thinking about how the plaza in back could be accommodated for that. We hope to bring a plan forward to look at improvements to the Ferry Plaza in the future. It's unlikely we're going to raise the Ferry Building 38 inches. Working with our engineers, working with the whole team on the Seawall, to look at options for how the Ferry Building can continue into the future probably without its 3,000 piles. But the new facilities will be built to that and they are also built to be able to rise up another foot beyond that so we can take the project to 2100 if that's the conditions that continue to evolve. Commissioner Katz - Thank you very much for a great presentation. For Gate E, you said it's going to extend out a little bit further. Will we have to do any additional dredging? Dan Hodapp - Gate E does not involve more dredging. We put up a dredge map as part of this and that dredging really occurs where F and G are located. The estimate is just a little over 20,000 yards between the current E berthing area and Pier 14. It's to accommodate the new F and G, where the shallow water currently exists.

-18- A09132016

Commissioner Katz - In essence, the new dredging would then be that 20,000 figure you just stated in addition to whatever we'd been doing previously? Dan Hodapp - Correct. Commissioner Katz - And that's a cost that we bear? Dan Hodapp - No, that is part of the $65 million project cost that our project sponsors will bear. I haven’t given them enough credit for the fundraising they've done, leading the design and environmental effort that's occurred and that's included within that. Our costs are limited to the 20% participation and the remodel or renovation of the Gate E float. Commissioner Katz - Landside. Dan Hodapp - And then the future maintenance of the landside. Commissioner Katz - Do we have any numbers about the projected increase in ridership after all is said and done? Dan Hodapp -,The projections you heard Kevin state a little earlier, as much as quintupling the ferry activity in the Bay. I don't know if all that reflects use at the Downtown Ferry Terminal, but very substantial increases. Between Gate F and G, substantially expands the available service by having obviously four more boats able to come in and offering flexibility as to where different things can move around to. Commissioner Katz - Following up on Commissioner Brandon's question about addressing Sea Level Rise. You touched on it a little bit, protecting the Ferry Building, is there anything that we might want to look at even extending from A to E that might be additive to the process, separate from this but something we could do while it's ongoing that might protect the Ferry Building? Dan Hodapp - This project has a pretty defined footprint that starts at the edge of the ferry pier and the seawall and moves out from those two. Because it's an emergency facility, it's built to Essential Structure Standards. Which means if there's a major earthquake, it's going to be what remains standing in the area. The Embarcadero Promenade may shift a little bit. This project is designed to accommodate the movement of the landside facilities and still be serviceable the day after an earthquake. It anticipates a major natural event. It also makes room to the extent that we find possible the renovation of the seawall and some of the options that the teams are looking at to build up the seawall, provide that larger level of protection. Commissioner Katz - Perhaps we could consider, and I know it's not part of this project. But it seems, while we're doing it, to be thinking ahead, if there's

-19- A09132016

something we can plan for that would address some of the potential problems we might incur in front of the Ferry Building. In that between space between A to E, something that might fit in that would be in keeping with the improvements that we're making to the plaza and other things that might help us protect against Sea Level Rise. That’s what I'm getting at, to think forward about what else we might want to do. Maybe that's a topic we could bring back under another item since we're undergoing this effort. Let's think about ways that we might capitalize on all the materials and equipment and everything else being there. Elaine Forbes - Absolutely. As a reminder, we're bringing the Seawall conversation back to the Commission more than just twice a year, so we'll include this conversation in that agendized item. Commissioner Woo Ho - I think it's great to have this presentation to follow the Strategic Plan so we can see step by step how everything is fitting into this big puzzle that we want to solve for transportation in the region. Perhaps the numbers are not available today, but would be good to see as each phase of this, and we're talking about primarily Gate E today in addition to the other gates, but if we could understand how the traffic or the passenger volume will be impacted as we go along with each one of these phased developments, because they do take time. If you could work with WETA to come back and give us a sense so that we know how this is changing in terms of what the capacity is as we go through each phase of this project. Because the timeline is phased out. Where are we right now with Pier 2? Dan Hodapp – There are a couple of things going on. One we have a BCDC requirement to provide public access on the site of the former Sinbad's restaurant and that involves some minor surface improvements, benches, railings and some fencing to keep people off of the sections of the pier that are considered unsafe. The exact schedule for those improvements is within the next 30 days. Commissioner Woo Ho - We're removing the pier? I didn't see that in the timeline that you mentioned. Dan Hodapp - That's correct, we will be removing that. The first phase is the demolition. Commissioner Woo Ho - I did not see exactly where Pier 2 was, what timeline we were in when that's going to get demolished. Dan Hodapp - Michael Gougherty from WETA will tell you.

-20- A09132016

Michael Gougherty - This is all coming into view as we're planning the project, but the demolition of Pier 2, as well as the dredging and a substantial part of the initial pile driving would be part of the initial construction phase. That work would be completed between June 1, 2017 and November 30, 2017. Commissioner Woo Ho - The demolition cost, Director Forbes, are we absorbing that at the Port or is that part of the project too? Dan Hodapp - Demolition cost is part of the project. The demolition, dredging, all construction that we're showing today are all part of the project cost which WETA has organized through state and federal funding. The Port has no responsibility for those, other than the 20% contribution we are anticipating or proposing for the renovation of Gate E. Commissioner Woo Ho - The $1.5 million that you reference in the slide, is that the total cost or is that the 20%? Dan Hodapp - That's the total cost. Commissioner Woo Ho - So ours is just 20% of the $1.5 million estimate? Dan Hodapp - Correct. Commissioner Kounalakis - Thank you for the presentation. I'm curious a little bit about the environmental review process. I see you've broken it up into pieces here, suggesting that the CEQA and NEPA process go before the design is actually complete. I'm wondering, which parts of the process are you already engaged in? What comes after the design is complete? What elements are you most concerned about, either in terms of how long the permitting process could take or some of the mitigation measures that may be imposed? Dan Hodapp - Thank you for that question. I'm happy to report that the project is well along with all the processes you just described. The environmental review which is both the state (CEQA), and federal (NEPA), which to do an EIS are both complete. There was a concept developed in about 2011. That concept design which showed where the gates would be, where the plaza would be, how many boats, transportation and the circulation functions then went through architectural review with the Port's Waterfront Design Advisory Committee and BCDC's Design Review Board and public review with community stakeholders and other opportunities within that. That is complete. The environmental documents were certified. The project is now obtaining its various regulatory permits and its ticking those off at a rather ambitious pace led by Michael Gougherty. The Regional Water Quality Control Board's recently done. The BCDC permit stands out there as a

-21- A09132016

major one that's done. We expect to be able to go to the Commission, possibly as early as October or sometime this fall. The design is solid. The construction drawings are substantially along. I believe they're past 60%. They are issuing an RFP for a Construction Manager At-Risk. The design decisions on the project have been made. It's been presented to the Commission in the past. Environmental documents are complete. Some of the regulatory approvals and entitlements which is a long list are complete, but there's a few more to go such as those permits. Commissioner Adams - Thank you guys. Good presentation. I think my fellow Commissioners hit it. It seems like the environmental review takes time. Because I'm looking at this thing starting in 2010 and looking at it finishing in 2019, so we're looking at about nine years. Thank you very much and look forward to you guys getting back to us in the next couple months as we navigate through the process and thanks for the hard work.

C. Informational presentation on the Port’s legislation program.

Daley Dunham, the Port's Special Projects Manager - I'm here this afternoon to present to you the Port's legislative program. As an overview, we work primarily along with the Mayor's Office of Government and Legislative Affairs. As an agency of the City all of our proposed state and federal legislation goes through the City's Committee on State and Federal Legislation. Once we receive approval there, we can move forward with whatever initiatives we're working with. We also participate in the Mayor's contracted lobbyist for state and federal advocacy. In addition, industry organizations centered around the Port and waterfront communities, we are able to advocate through them. Occasionally, Port staff gets to advocate themselves directly in Washington, D.C. This is the dredge footprint for the Central Basin, one of our ongoing projects with the Army Corps of Engineers. The City has had Holland and Knight as its advocate for decades. In Sacramento it's Shaw, Yoder, Antwih, relatively new but they've been very helpful in one of our more recent efforts. The Port industry groups that we work with are primarily CAPA, AAPA and CMAN. CAPA being the California Association of Port Authorities. Director Moyer had last served as President of that organization before she departed. We have in past years made the advocacy trip to Washington D.C. with the San Francisco Chamber of Commerce. They are a great advocate of ours. We participate with them here and there. The Bay Area Coalition and Bay Planning Coalition, sporadic but engagement from time to time. The background slide here is the IFD project area for the Orton Development, Area G-1. The legislative program supports the Port's general work program. It comes in three groups. There's the administrative part. The mechanics, help

-22- A09132016

Port staff get the package to the Clerk of the Board and get meetings scheduled or get committee hearings scheduled. Those include leases, term sheets, grant A & Es. Then we get to more project specific advocacy or legislation. Sometimes this comes in the forms of a member of the board implementing an ordinance or other policy that's going to affect multiple City agencies. We need to weigh in and often seek amendments to that legislation to make sure the Port's interests are maintained. At the more strategic level, broader initiatives that impact a number of projects that are ongoing now or those that may come in the future including financing tools like Infrastructure Finance District authority from the state as well as changes to trust law for interim leasing. Then there's the occasional direct appropriation, bringing resources to the table through legislation. This is the removal of Dry Dock #1 which would not have happened but for a direct $3 million appropriation to the Department of Defense. A few of the bigger things that the legislative program have pulled off are the 2008 and 2012 GO bonds. First time that the Port had participated in General Obligation bonds as an enterprise agency. Infrastructure Finance Districts. That's an effort at both the state and local level. We needed additional authority from the state but also the formation of the IFD and accompanying IFPs. changes around Trust Law, engagement with the State Lands Commission which enabled us to do different kinds of interim leasing. The America's Cup Act of 2011 was the Port's only standalone federal legislation that we're aware of. Passed during the least productive session of Congress in the history of the Republic. The Water Resource Development Act of 2007 is a little bit dated now. It's 2007. But it really is a unique asset that we have in the whole country. Nobody else has authorities like this TO allow them to go directly to construction without an intervening study authority and appropriation. This gives us the ability to seek funding for a number of specific projects and we're still doing that. We have one in the hopper now, in fact. Those direct appropriations for Brannan Street Wharf and Dry Dock #1. This is the Mission Rock Development which is happening due to some very important state legislation which I have good news on. AB2797 was approved by the Governor on Friday. Very long effort. Brad did most of the heavy lifting here together with our partners at the Giants. Months and months of discussion with the State Lands Commission to make this happen. The Central Basin is ongoing. Hopefully it is brought to resolution at the end of the year. That Water Resource Development Act Authority that I mentioned, this

-23- A09132016

Pier 70 project, Wharves 6, 7 and 8 their removal, we're only able to do this because of this prior authority that we got, Water 2007. That is also in process now with the Army Corps of Engineers and we'll provide some important fill removal credits that we have other application for. National Flood Insurance Plan and then the last one I mentioned there. Here is a rendering of what's going to happen at Seawall Lot 352, the asphalt plant. That lease is going to need to go to the board. We'll be moving on an ordinance to grant some stormwater authorities and anticipate a number of leases and other approval documents. Alcatraz is on the way. The asphalt plant, Pier 38, affordable housing and then the larger agreement with the Central Basin will also need to go to the Board of Supervisors. The Seawall's going to be a big part of our program going forward. This is going to require a big effort at the local, state and federal level. We are looking at GO bond funding at the local level. Increment tax capture through Sacramento and then a new Water Authority and actually there are a couple of efforts going on at the federal level now for the Seawall. The Special Projects team which is Brad and myself are very happy to engage with Commissioners on the big ideas about what we want to pursue on the legislative side of things going forward. In part, just selfishly to take advantage of the skill set that's up at that dais. We look forward to your engagement. Veronica Sanchez, Masters , Mates & Pilots - I am very appreciative on behalf of our members of the support that the Commission provided to the WETA staff here. As you can see they've been doing a wonderful job and the funding for these projects was put in place, about 10 years ago. The $20 million of money going to the Downtown Ferry Terminal is coming from Regional Measure 2 money and that was put in state legislation way back in 2004. What I wanted to do is just as an addendum to the legislative program here is to encourage the Commission and the staff to consider including in your initiatives advocacy for funding for ferry initiatives. Funding at the regional level for the reauthorization for Regional Measure 3 and state legislation is being drafted right now so you could have the funding in place, at least meet part of the $482 million capital hole that WETA has. Of which I think $42 million of it alone is for the Mission Bay Ferry Terminal which of course is of high interest to the Port of San Francisco. You're investing $3.5 million of Port money into it. So that's one to track. Also on the federal level, the reauthorization of the next transportation bill and making FTA money available. There's always a need to expand that program. During my tenure we did expand it from $30 million to $60 million. That was an initiative that I led. I know that WETA's federal lobbyists certainly are pushing to increase it.

-24- A09132016

Then they have other needs at the regional level. Needing support from MTC because what WETA didn't tell you is that if they don't lose all their operating funds, they lose it. This year alone, for example, they didn't use $5 million of operating funds because they didn't have the capacity of the boats to use them. So these are advocacy points. There have been times at the City level where ferry projects have taken a backseat to Muni projects. This has been historical from way back to when I was here as a Legislative Affairs Director. To have the support of the Commission on this at the local level when we need the sign off at the City level to apply for grants or to get a letter from Leader Pelosi about what are the City's priorities. It's really important for the agency to have the Commission's support. I would encourage you to consider including ferry terminal funding advocacy in your legislative initiative. It is top priority for our union. Commissioner Kounalakis - Thank you very much for the very informative presentation. This may have arisen because we found out sort of after the fact about a piece of legislation that was going to affect the Port significantly as was moving forward without our knowledge. I think it's super helpful not to just have an update, but also to have a reminder that we don't need to have a whole dedicated item to hear if any of these lobbyists are moving forward either at the direction of one of our partners or the direction of the city on an issue that affects us. That a light should go off that if there is a significant piece of legislation concerning the Port that we should get a brief update as you go along. So that's the only comment I would have. Commissioner Brandon - Thank you very much for this report. Do we have any lobbyists of our own? Daley Dunham - Thanks Commissioner Brandon. We do not. Currently we are the only enterprise agency in the City that does not retain their own lobbyist. Commissioner Brandon - So how do we fit into the prioritization of other city, state federal efforts if we don't have our own voice? Daley Dunham - Traditionally we have not, ourselves, sought transportation funding because we go through City Hall. Because there are transportation agencies that are given that priority. We do generally have the Army Corps of Engineers all to ourselves because we sit in their jurisdiction. But apart from that, these are discussions that take place at City Hall. Commissioner Brandon - How do we as the Port of San Francisco decide what legislation we're going after? Brad Benson, Director of Special Projects - We have historically come to the Port Commission on big legislative initiatives. We can produce for you a list of the staff reports that we've made to the Commission in the past on big legislative

-25- A09132016

efforts. Commissioner Kounalakis, your comment about AB2797, we hear it and we will be before you before we're launching any big legislative initiative like that. So our apologies for that misstep. Commissioner Brandon, I wanted to address your point about having a separate lobbyist for the Port. It's certainly a policy conversation that we can engage with the Commission. As Daley was mentioning, there is a city, state and federal legislative committee. The Mayor is setting policy direction for the city through this committee. There are some board representatives. The Board President has a representative on this committee. Typically, departments are not allowed to pursue state and federal initiatives without the blessing of that committee. In many ways the Mayor owns the City's legislative program and it's his to pursue in Sacramento and Washington D.C. So we're trying to play on the City's team and it's worked well for us. We've gotten into some controversies at the state level, even with AB2797, we needed the help of the Mayor's Office to rescue the bill when it was caught on a Senate suspense file at the end of this session. The Mayor's Office and the Mayor itself came to our rescue in terms of speaking to the Senate Pro Tem to get the bill off of suspense and out of the Senate. So just a few thoughts to add. Commissioner Brandon - How does the Port of San Francisco decide what legislation to pursue? Brad Benson - Again, we've brought major initiatives to the Port Commission for you to review. Commissioner Brandon - So do legislation initiatives have to be approved by the Commission or not? Brad Benson - We've come to you on an informational basis to seek your nod that we should move forward on things like the IFD or the Seawall Lot legislation, the big moves that we've made in Sacramento. We want to hear how you want to manage this conversation with the Mayor's Office normally. Commissioner Brandon - I'm trying to figure out how it gets to the Mayor's Office or how it gets to the committee or who decides what legislation we're going to pursue. Elaine Forbes - I think that it's a variety of partners. As Brad was saying, we do need to come to the Commission to seek policy guidance before we move any big legislative initiatives. Sometimes it's a partner like the Giants with this last legislation will realize there's something in state law that will prevent the project from working or as we conceived of the project at the time of the bill's passing, the facts have changed and we need more flexibility.

-26- A09132016

The Port Commission does not have a formal approval responsibility. It is the legislative body that needs to make the law change that needs to approve or deny. But we certainly need to solicit policy direction before making those big moves. Commissioner Brandon - I thought this was a great presentation and it's the first time I've ever seen it, so I'm really happy to see it. I really like the fact that we are so engaged and we have so many things going on. It’s just that I’m wondering how the Commission can stay knowledgeable about what's out there because we can also be an ambassador or help with whatever efforts we have going. But if we don't know, we can't help. Brad Benson - To that point. in some prior cases like the General Obligation bonds, the Commission was very active in helping us get those through the process and to the voters. I think we are hearing that the best way forward, usually the City's state legislative committee meets and hears proposals from all City departments in December. What we would like to do just going forward is bring to the Commission on an informational basis all of the items that we'd be bringing to that committee so that we're doing an informational presentation about those issues before we're seeking committee approval. As Daley was saying, we know that many of you travel to Washington, D.C. You know legislators at both the state and federal level. Certainly with the Seawall project, we're going to be embarking on an legislative effort that is much bigger than we've been doing in the past, and we're going to need all the force of the Commission along with staff to get those ideas through that are going to finance a project as big as the Seawall. Commissioner Brandon - Thank you. Commissioner Katz - You took the words out of my mouth when you went to Seawall. That's the note I had here. Piggybacking off of that, it would be helpful to work with you in the formation of potentially some of the questions and the issues that we want to raise and start thinking about what we'll need to be doing with respect to Sea Level Rise and the Seawall. I was going to ask you in addition to that we've got the initiatives for 2016 and 2017 but do you have a sense of what else? You did allude to the Seawall. Is there anything else coming up in the next few years that we should start thinking about and the corollary to that is taking Daley up on his offer, what can we do to help? How can we start weighing in to help shape any thinking on future efforts and projects? Brad Benson - The Seawall team has been meeting as Steven wrapped up Phase One, to begin thinking about the legislative program that we're going to need to launch to support the project. We have a Mayor Senior Fellow coming on board, Kevin Brough. A very exciting new hire for the Port. We're thinking of

-27- A09132016

slotting that person in primarily to support the Seawall legislative program. We've brainstormed a little bit as staff. We're going to engage with the Mayor's staff this week as we come up with our additional laundry list, that's going to fold into a program that was launched with the Mayor's Office. The Living Cities Cohort is putting together a complete plan for how we can finance the Seawall. We're imagining that over the next two to three years, we'll be developing the complete legislative program to address the Seawall and Sea Level Rise. Elaine Forbes - There's two major categories in the legislative program for the Seawall. One is around financing and paying for the project and finding sources of funds because there are not a lot of existing programs for Sea Level Rise and resiliency. The other one is around permitting and how we will get the project permitted. I see the Seawall project on the legislative program for the next decade in terms of initiatives and efforts. We already know that we will be pursuing statewide IFD for the Seawall project. That is one we definitely want to pursue and we're looking to find federal and state and private sources of funds for the project in addition to local sources. Brad Benson - To the second part of your question, these are going to be big asks that we'll be making for the Seawall at the state and the federal level. We're going to be needing to engage a lobbying effort unlike we've had to do in the past. A lot of our bills have been local district bills just affecting the City and County of San Francisco. As we're tackling the Seawall and Sea Level Rise, we're starting to talk about issues that are of statewide and federal importance. We're going to be needing to speak to legislative leadership and that's where the Commission comes in to help us. Commissioner Katz - Thank you both so much. The presentation was really informative and interesting. Commissioner Woo Ho - Thank you for your presentation. I want to say that the fact that your backdrops are quite clever and cool so in terms of how you've presented that. I wanted to give you a little credit. A lot has been discussed already. To address the issue, I think the Executive Director's Report can give us updates as things happen on a periodic basis and maybe such a report that you gave today to give us a bigger picture of what you're trying to address on the legislative agenda. As mentioned by my peers here, some things are very strategic. That's where I think we weigh in from a policy level. Others are transactional meaning you have to get something done for a particular project and we may or may not weigh in

-28- A09132016

as much, but I think it's good. We need to separate out the strategic ones which I think we have a role to play in so that you give us something in advance so that we can give you input. Then the others, you let us know which ones are sort of transactional, they're in the way of getting something done that needs to be addressed because of Trust issues or State Lands or whatever it is. The third piece is what we need to know on a periodic basis and the direction that you're going. I see you listed a number of the forward 2016-17 initiatives. Some of them I can relate to and understand, NPS and Alcatraz. On Pier 38, I'm not exactly sure what the legislative issue is that we need to clear up on Pier 38. It's good to see this because once in a while it does prompt us to say, "We're not quite sure what you're talking about here." Some of the ones we can relate to that we understand is part of the normal staff reports. I don't think we need to have a staff report every single time you have some legislative action. I think that could be handled through the Executive Director's update. But more strategic issues, we should have a better dialog. Brad Benson - Pier 38 falls into the transactional bucket. There's probably a Term Sheet Endorsement that might go to the Board of Supervisors along with Fiscal Feasibility in the next year on Pier 38. That would be the legislation. Commissioner Woo Ho - You have to put it on because it's going to the Board of Supervisors, I understand that but I didn't know there was some legislation that needed to pass to get whatever we need on Pier 38. Then that's a different matter. Brad Benson - Just a Resolution. Commissioner Adams - I think this is a good discussion. I like having a legislative report every three or four months because lobbying is very important. We need to know what's going on in Washington D.C., Sacramento. For so long the Port has been the stepchild from the City as far as getting funding. It's all the other transportation issues. When Commissioner Brandon asked the question, "Who is the lobbyist?" They couldn't answer the question because we don't really have a lobbyist. There is a pecking order in the City. The Port is at the bottom. That's just how it is. We need money whether it's for infrastructure, we've got over a billion dollars’ worth of piers, for ferries. I was with the Secretary of Transportation, Secretary Fox. They've got billions of dollars that he was trying to give away, right? Tiger Grants? The City wouldn't allow the Port to apply for these grants. Why aren't we going after this? We need this. One thing I can say about Mayor Lee, he has shown that he's acceptable to the Port, he believes in the Port. But we've got to stand up and say, "Hey, we

-29- A09132016

need some kind of funding." We have to go out, and I think we've got to lay our case out. Even Leader Pelosi and others have got to say how viable the Port is. We've got to say, "We understand about the trains and everything else in the city but the Ports are valuable too. How about all this human cargo that we have on ferries and water taxis and stuff like that?" And dealing with the transportation. We've got to put our flag in the ground and go, "Hey, we're important!" We've been the stepchild. Nobody wants to say it. I'll say it. We have been the stepchild. One thing for the Commissioners, this is really a good policy issue for us to sit down with the Mayor and other people and say, "Hey, we don't want to be the stepchild anymore. We've got issues that are important for our Port. This is a valuable thing here." We need to put this front and center. I pretty much said what my other fellow Commissioners, I'm probably more blunt about it. But this is some of the things that happened. That's just like this year when Brad and Byron went to Washington D.C. They went with the Chamber of Commerce, Commissioner Brandon. That was really great. When they go into Leader Pelosi's office she goes, "How's Alcatraz going?" But I want them to sit in front of these lawmakers and tell them what's going on. We've got to be valuable. We're hidden down here at the Port. We've got to be out front and center and saying, "Hey, share it with us a little bit." I've said what I've had to say and I make no apologies about it. The Port is just as valuable as the other parts of transportation in this city, especially when we're talking about human cargo and transportation and parking and stuff like that. We're part of the City family too. Please, count us in. Commissioner Woo Ho - You're right. We should get our hands on it.

11. MARITIME

A. Informational presentation of Port of San Francisco Maritime Revenue and Expenses, Fiscal Year 2015/2016.

Marilyn Yeh, Maritime Division - Joining me here is Peter Dailey and also Mike Nerney. I'm here to talk about the Maritime portfolio, operating revenues and also expenses. Port Maritime has a very diverse portfolio. We have cruise calls, Special Events, ship repair, cargo, ferries, water taxis, commercial and sport fishing, marinas, foreign trade zone, excursion and harbor services. The two biggest revenue generators within the Maritime Division is cruise and cargo. Last year cruise generated about $7.7 million or 36%. Cargo generated about $5.4 million or 26% of the overall 2015-16 operating revenue.

-30- A09132016

Fiscal Year 2015-16 operating surplus was $2.7 million which consist of $1.6 million in operating expenditure saving and also $1.1 million surplus in operating revenues compared to budget. On the operating revenue side, 1015-16 came in about $1.1 million or 5% more than budget. The primary factors for the favorable variances are $900,000 in ship repair. This is due to the delay in the impact of the new competition from Vigor Marine in Oregon. Ship repair projects in 2015-16 were booked before the new dry dock went into operations in September, 2015. Cruise revenues were up about $400 more than budget. This is because we have more than anticipated passenger volume. Cargo revenue were up about $200 higher than budget. This is due to San Francisco Bay Railroad cargo activity came in more than anticipated. The positive variances in revenue were offset by a $300,000 shortfall in Harbor Services. This is due to a rent adjustment for a tenant at Pier 9. When comparing year over year of rating revenue, the division posted an increase of $2.9 million. The main factors are cruise, $2.7 million. This is due to the new passenger fee which was increased from $12 per passenger to $18 per passenger. As well as more cruise passengers came through the Port in year 2015-16 compared to 2014-15. Also the terminal hosted 21 more events in Fiscal Year 2015-16 compared to 2014-15 for 48 versus 27. Ship repair. We have a positive of $562,000. This is because of the full year impact of the monthly rent adjustment from $87,000 to $100,000 and plus more ship repair activity in 2015-16. Cargo. We had $480,000 plus. This is mainly due to the strong volume from San Francisco Bay Railroad. The positive variance was offset by a $630,000 in the other Marine line because of Oracle Racing Pier 80 Shed A. They were in 2014-15 but their agreement was terminated in May of 2015. On the operating expenses side, Fiscal Year 2015-16, the operating expenses was about $3.3 million or $1.6 less than budget. The main factors for the favorable variances are in the professional services line. There is $140,000 savings. This is really due to the actual payment to Metro Stevedore Company, the previous cargo terminal operator. Their activity came in significantly lower at Pier 80 in 2015-16. Also in salary and fringe, there's a $300,000 savings. This is due to the timing of replacing vacant positions. In the PUC line, there's a $300,000 savings is due to the overestimate of cruise ship shoreside power usage. When comparing 2015-16 actual to actual in 2014-15, its $400,000 lower. The main factors are salary and fringe. The $300,000 is due to the timing of replacing vacant positions in the division. Then we did a couple of studies in 2014-15 that we didn't have in Fiscal Year 2015-16.

-31- A09132016

The next slide shows our Maritime top tenants for the Fiscal Year 2015 and 2016. As you can see total revenue between these top 10 tenants generated was $14.8 million or 70% of the overall total Maritime operating revenues in 2015-16. Princess Cruises ranked number one and they generated about $4 million in revenue, 20% represented of the total Maritime operating revenue. Of the 80 calls that came into the Port last year, 51 were from Princess. On this slide, it shows the trend, the cruise trend and also the projection. As we can see the trend has been on upward position. We have been projecting for Fiscal Year 2016-17. We're going to be at the similar level as 2015-16 as far as number of calls, however we are projecting a slight increase in the number of passengers to 300,000. Special Events. For 2015-16 we hosted about 48 events compared to 27 in 2014-15. Generated $1.2 million in revenue, as opposed to $609,000 in 2014-15. This is the slide to show the dry bulk and liquid bulk historical trend in projection. For next year, 2016-17 which is current year, we're projecting it will be a 3% increase from last year 2015-16. Looking ahead, we expect it's going to see a decrease in ship repair revenue. This is due to the competition from Oregon as well as Vallejo. We are anticipating a significant increase in cargo revenue at Pier 80 due to the new Pasha deal, partly offset by the operating payment to Pasha. We have very strong cruise booking into 2018 and also Special Events is very strong as well. We are seeing continued growth in bulk. This is mainly due to big construction projects in the City. For example Transbay Terminal, the Warrior Arena as well as the other San Francisco high rise construction. We also expect San Francisco Bay Railroad volume is going to remain strong. This concludes my presentation. Ellen Johnck, Co-Chair of the Maritime Commerce Advisory Committee - I couldn't resist the opportunity to make a couple comments based on the very nice report. I'm very happy to see some very positive financial report here. I did want to just let you know that the Maritime Commerce Committee continues to meet six times a year. Most of the major tenants are represented and attend the meetings. We have very vigorous discussions. I wanted to let you know as well that we are planting our flag, thank you President Adams for mentioning that idea, as a continuing theme for what we need to do here to support the Port. But the Maritime Commerce Group representing all the tenants of the Port. Of course, we welcome a lot of public folks, outside of the Port, to come too. We have that and we have City departments make presentations. If there are some things that we need to be doing. We did do a sail in to the Board of

-32- A09132016

Supervisors a couple years ago. If we need to do something like that again, we could do that. That could be another task we take on particularly as we get into more discussions. We're also very active and well represented on the Waterfront Land Use Planning Group and have a strong presence there. I just wanted to let you know that. Thank you for your interest and support of the Maritime Commerce for the Port. Commissioner Woo Ho - Thank you for giving us this report. It's great to see that we are making progress and that we see the increases in both the revenue line in the various categories as well, I guess we've been very judicial in our expenses this past year. Some of it may be good, some of it may be in terms of vacancies if we really needed those positions to create more revenue for us. My questions relate to number one in looking forward and it's great that we have Princess Lines. How many more cruise lines can we attract to come to San Francisco? The second question is, obviously you're forecasting increased passengers, is that a result of not necessarily counting more cruise calls from the existing clients but also bigger ships? I assume that's why we get more passengers. The last piece is that I would like to know as a combination of how many idle days we actually have at Pier 27 so that we know between the Special Events and the cruise which I understand sometimes takes two or three days depending on how they manage that, so we know what more capacity there is for revenue generation at the Cruise Ship Terminal. Whether it's more cruises, more events, and what days of the week are idle. It's great to see 48 events but it seems like potentially, that could still go up. It's a question of understanding the idle day capacity, the days of the week, when they are, etc. To see what can be marketed. I think there may be some opportunity there, it'd be great if whoever is managing the Special Events with Metro, if they could explain what they're doing to market the Cruise Ship Terminal. Because I'm not sure everybody in the city still knows that it's available for rental. I think there's still an opportunity there. Mike Nerney from the Maritime Division at the Port - In terms of the cruise lines that we are visiting, Princess Cruise is our main client. Out of 80 calls, about 50 are Princess. The other lines that we're targeting are Norwegian Cruise Lines, Royal Caribbean and Celebrity. Those lines have large fleets and we are meeting with them to try to increase their business. Also Holland America which is part of the Carnival Corporation. Elaine Forbes - The days the cruise terminal is idle, do we know how many days of the year?

-33- A09132016

Mike Nerney - This year we have 70 calls at Pier 70. About a dozen calls at Pier 35. That's on days when we have more than one ship in Port. For example, this week on Thursday we have one ship at Pier 35 and one ship at Pier 27. Commissioner Woo Ho - My sense is that you're not going to know all the numbers that I'm asking for. Because it's not just having the numbers. It's analyzing them and telling us where the opportunity is and directing us in the direction of where we could be doing more activity rather than for you to tell me exactly. But it's more futuristic. Mike Nerney - Strategic. Commissioner Woo Ho - Because it’s strategic in where we can go. Because obviously we're making some great progress and it's great to see, but I'm looking at the opportunities to keep growing the business. Only if we understand where our opportunities are in terms of the capacity and the usage of the terminal which will then direct us where to go in terms of marketing. Whether it's cruise lines, the Special Events, whatever. Elaine Forbes - We will get back to you on that. I will say that we've looked at this utilization rate from the beginning when we had the challenge to have the Cruise Ship Terminal break even. We really know that cruise generated more money for the Port but that utilizing the facility as many days as possible for events is the way to move to an "in the green" position. The utilization rate for the Cruise Ship Terminal has gotten better and better over time. We will look at the numbers and analyze them. But Special Events has been going up and up as the word gets out and as the marketing program from Metro and Hartmann Studios begins to take hold. But we will look again at the utilization. We're also having two events in the facility, so we'll look at how intense the use is. We'll continue to work with Hartmann to see where our potential is. But I will say we've been on an upward trajectory, both on cruise and on Special Events. The one area where we're still struggling is parking. We've not met our projections in that regard. But why don't we have a look and do some more analysis and we can get back to the Commission with more detail. Commissioner Woo Ho – You're saying that we can't charge enough, there's not enough utilization of parking for us to get revenue out of the parking lot at the Cruise Ship Terminal? Elaine Forbes - Right, we thought there would be many more parkers at the Cruise Ship Terminal than there have been. We haven't seen the use that we anticipated when we did our initial projections.

-34- A09132016

Commissioner Woo Ho - Obviously we're very excited about what Pasha's doing at Pier 80. What are the other things that could be coming down the line in Maritime that could help in that regard? I don't want to just focus on the cruise by itself, but what are the other Maritime activities that we see possibilities that could be developed? Peter Dailey - Obviously, there's some good news. I'm going to answer your question inversely too. I think there's concern quite frankly, Marilyn touched upon it in the ship repair segment. BAE Systems, San Francisco Shipyard who operates the yard for us had a record year last year. They knew, they entered into a new 20-year agreement with the Port a couple years ago. We have raised their rent. They knew that there was going to be new competition. There's a new dry dock up in Portland, Oregon, Vigor Marine runs it. Apparently the pricing between the two yards has been very aggressive and BAE is looking at a significant decrease in the next Fiscal Year in terms of their revenues at the yard so that's an area of concern. Marilyn touched on the increase in our more gritty industrial uses. The bulk cargo is going to continue to be a high. The Warrior's Arena which I think construction is due to begin in 2017, will provide significant new income for our rail operation as they take contaminated soils out of the area to Utah. We'll also increase our aggregate volume needs at Pier 94 to fill the concrete going forward. The Pier 80 operation obviously is the one that has the home run potential. I would say the grand slam potential. It's going to take some time, but there are some irons in the fire that Pasha has right now that could be significant economic revenue booms for the Port. We will continue to brief the Commission on that opportunity as it comes forward. We're very excited about their plans. I think that's probably the most significant opportunity for us. One thing about cruise also is that we have been meeting with the cruise lines to try and get more of a commitment from the cruise lines to have them guarantee a certain amount of calls to the Port every year in order to get preferential berthing assignments. There are some ways we can try to pump up the revenues, the business from our current customer base that we're exploring as well. Water taxis are good or transportation. They're not big moneymakers for us but we look forward to try to grow those business. What's not in this report today were South Beach Harbor. That's going to be a separate report to the Commission later on this year or early next year which has been a very positive revenue position right now. The way the Port does our accounting, the excursion business, Alcatraz, Hornblower, Red and White, Blue & Gold is not in this report. The Real Estate group does a good job in managing those and there's some opportunities there

-35- A09132016

for their revenue to increase going forward. Hopefully that answers your question. Commissioner Katz - Thank you very much for the presentation. It's exciting to see all the good news. Unfortunately all of us up here sit and figure out, "how can we make it even better?" But a couple questions. One is, we've seen a projected decrease in ship repair both for smaller ships and larger ships. Are we doing anything in the way of added marketing to try and diminish that drop? Peter Dailey - Excellent question. We have in recent months met with BAE's Senior Management Team to discuss strategies to achieve more competitive nature of the yard. The cruise segment for ship repair is a real opportunity area for BAE. They have seen the yard up in Portland be aggressive with the cruise lines and essentially buy that business at a loss. So BAE in 2017 has no cruise calls scheduled for the shipyard. Commissioner Katz - Aren't there some laws against that? Peter Dailey - Yes, there are. But the plan of attack with BAE, Mike, most recently went to Florida and met with all the Senior Technical Executives from all the cruise lines to help market the Port, help market the ship line to the cruise line decision makers. We have a trip planned in November to Holland America Princess Group who is our biggest customer who is up in Seattle, a joint sales calls with BAE executives to those lines as well. There might be some financial incentive we can give to cruise lines to call. If they use the dry dock we can do some reduction of certain costs to them to try to make it an incentive for them to come to San Francisco. W we're trying to be collaborative with BAE, particularly on the cruise segment. Commissioner Katz - Perhaps there's some opportunities to have them do embarkation and disembarkation points for different cruises in San Francisco so they can just then do the repair there. Peter Dailey - Exactly. Commissioner Katz - Have we thought about exploring adding a berth to our new terminal and can we look into that exploration? Elaine Forbes - I have thought about that and Maritime has certainly thought about that. We will be analyzing the cost of adding a second berth to Pier 27. It will be part of our Capital Planning process so you'll learn more about that when the new Capital Plan comes up. Now it's a year and a half down the road, but we can certainly come before that and describe what we've learned.

-36- A09132016

Commissioner Katz - It seems to us that the cost of funds is probably still at one of its lowest points. It might be a good time to explore that now if we're going to embark on something big like that. Commissioner Brandon - Thank you for this report. It's absolutely wonderful that cruise and cargo revenues are going up so much and will continue to increase so congratulations and thank you very much for that. I was looking at the expenses and it just jumped out at me that we have budgeted $1.2 million for professional contracts but we only spent $360,000. I'm just wondering what we thought we were going to do that we didn't do. Marilyn Yeh - This is related to the revenue share payment to the old cargo terminal operators when we did the budget. We thought the cargo activity would increase two years ago when we did the budget, but the cargo activity at Pier 80 has been really low. So the revenue share payment to Metro was reflected here about $300,000. Commissioner Brandon - We also had a decrease in revenue, or we just had no payments to them? Marilyn Yeh – It was decrease in payments. Commissioner Brandon - I also noticed that the entertainment and promotion budget was 50% over. Marilyn Yeh - Yes, that was because we bought some new Fleet Week banners as well as we spent more money to promote our cargo and cruise business in 2015-16. Commissioner Brandon - CEMEX, Darling Delaware and Central Concrete, are they Maritime tenants? Marilyn Yeh – Yes, they are Maritime tenants. Commissioner Brandon - Do they ship, I mean, how are they Maritime tenants? Peter Dailey - CEMEX brings in material by barge that they get from a Canadian shipping line at Anchorage for their batching operation. When you drive in it says "Port of San Francisco Marine Terminal." Darling has not recently but will export animal oils to Asia on a somewhat regular basis. They have a ship berth across at Pier 90 that they plug into when they have to do that. Central buys aggregate from Hanson and from Bode Gravel that is sourced by water and they have a cargo component in their lease that they have to buy a certain amount of cargo that comes across the docks at the Port of San Francisco.

-37- A09132016

Commissioner Brandon - I met the President of Holland a couple weeks ago which I told him I would follow up with him. I also know the President of Carnival so if I can help in any way, please let me know. Peter Dailey - Excellent. That would be very helpful, thank you. Commissioner Adams - Going back on this overage for entertainment and promotion, is that for food and alcohol and other things like when you're out promoting? Marilyn Yeh - That is for hosting a reception at the Breakbulk Conference. Commissioner Adams - It's not for entertaining clients and providing for food, alcohol and stuff like that? Peter Dailey - Commissioner that is a part of it. The biggest component of that is promotion. With the new cruise terminal, we developed new ads to promote in-trade periodicals and placed those ads both online and in magazines. There is a component for prudent entertainment of tenants or prospective tenants. For example, as Marilyn just said, we have our new Marketing Representative and one of our Operations guys in Houston as we speak at the Breakbulk Conference. They have a display at the conference so they're manning a booth. Those costs are all incorporated into that. Commissioner Adams - Peter, while you're up. You're $31,000 over on the Other Current Expenses. There's no explanation on that. I do financial reports. I'm the Secretary Treasurer of my union, if I said, "Miscellaneous." What does that mean, "Other Current Expenses," that we were over $31,000? Please itemize it. Peter Dailey - I will turn that over to Marilyn. Marilyn Yeh - The reason for the $31,000 overage was because we spent money on installation of the Fleet Week banners and also we bought some new emergency supplies for the ferry operations as well as we made a new sign for Pasha at Pier 80. Commissioner Adams - Thank you guys, good job.

12. FINANCE & ADMINISTRATION A. Informational presentation on the Port’s Contracting Activity for Fiscal Year

2015-16 (July 1, 2015 through June 30, 2016).

Boris Delepine, Port's Contract Administrator - The item before you is an informational item to review the Port's Contract Activity in Fiscal Year 2015-16. That's the period from July 1, 2015 to June 30, 2016. There are a number of

-38- A09132016

ordinances that govern contracting in the City and County of San Francisco. Throughout this presentation I will discuss two. The first is the Chapter 14B of the Administrative Code, the Local Business Enterprise Ordinance. We'll also discuss the City's Local Hire Ordinance. I'll begin by reviewing some of the numbers of LBE Certified firms, then discuss new contracts awarded and payments made on all our open and active contracts, review Local Hire Ordinance requirements and discuss upcoming opportunities in the coming Fiscal Year. The Local Business Enterprise Ordinance, or LBE program is designed to level the playing field for small local businesses bidding on City contracts. Certified LBEs gain competitive advantages such as bid discounts and LBE subcontracting goals when bidding on City contracts against non-local firms. The Contract Monitoring Division certifies firms as small local business and classifies them as either Minority Business Enterprises (MBEs), Women Business Enterprises ( WBEs) or Other Business Enterprise (OBEs). There are currently 1,166 certified firms, a 133 firm decrease from the last report last Fiscal Year. Minority-owned firms are further classified by ethnicity. The representation of minority firms remains the same as our last report in March with 44% Asian American firms, 24% African American firms, 25% Latino American owned business, Arab American, Iranian American and Native American owned firms make up the balance of the MBE business program. This ordinance is the successor to the City's Minority Women Owned Business program or MBE/WBE program. That program was enacted by the Board of Supervisors in 1984 to combat discrimination against Minority and Women-owned Businesses. In 2004 the San Francisco Superior Court ruled that Proposition 209 prohibited the City from addressing discrimination in public contracting through ethnicity and gender based bid preferences. It's important to note that the LBE program is race and gender neutral. No bid discounts or scoring preferences are given based on race or gender. Nevertheless, the court did allow the City to continue to identify businesses based on ethnicity and gender for the purpose of tracking how and to whom contracts are awarded. During the Fiscal Year we awarded 21 new contracts valued at $44 million. In the first half of 2015-16, we awarded approximately half a million dollars in contracts. The second half of the year was extremely busy. By comparison, from January to June, we awarded $43 million in contracts. One contract in particular influenced our overall LBE performance. That is our five-year maintenance dredging contract which is valued at over $28 million and does not have any LBE subcontracting work associated with it.

-39- A09132016

As you can see from the first table in the slide, when we include the maintenance dredging contract on our overall LBE performance, our overall LBE performance is 23%. However, when we exclude it, our LBE performance climbs to 65%. Twelve of the newly awarded contracts went to LBE prime contractors, that's 57% of new contracts. We also successfully awarded four contracts as micro set asides. Those are small informal contracts set aside for competition only amongst the smallest LBE firms. This is another look at our awarded contracts here. They're broken out by LBE type. This pie chart shows our LBE performance with the maintenance dredging contract. Again, 21 contracts awarded valued at $44 million, with 23% going to LBEs when we include the dredging contract. This is another look at our awarded contracts without that $28 million dredging contract. As you can see from the pie chart on the left, our LBE performance climbs to 65% with 41% going to OBE firms, 9% to Women-owned firms and 15% awarded to Minority Business Enterprises. Per the Commission's request, I've broken out the MBE awards by ethnicity. A few things to keep in mind when reviewing this slide. One, there may be some local firms that are represented as non-LBE because they are not certified with the Contract Monitoring Division. Though they are currently in the process of obtaining their LBE certification, Mariposa Leadership for example, is a local women owned business that actually appears in our non-LBE slice because they're not currently registered with the Contract Monitoring Division though they're in the process of that and should be shortly. Another thing to keep in mind is when becoming a certified LBE firm, the firm must self-select between either Women-owned or Minority-owned certification status. Darolyn Davis and Associates were awarded a subcontract during this reporting period. They are represented in this chart as a Minority-owned firm, not a Women-owned firm. The opposite may also occur. Non-profit firms are represented by a board and therefore are classified as OBEs. Hunters Point Family, one of our contractors on the youth employment program contract is a non-profit and their dollars are also reported in the OBE total. Finally, the pie chart on the left shows the breakdown between Minority Business Enterprises by ethnicity. Half the overall awards to MBE firms, or $1.2 million of that total $2.4 million went to three Asian American prime contracting engineering firms. The remaining $1.2 million was split among African American, Latino American and Iranian American subcontractors. Given all that, I think the take away from this slide is that while we're doing well when it comes to awarding contracts to LBEs, 65% of contract awards is a strong number, is a good number for LBE awards. We also need to come up with creative ways to outreach and diversify those LBE awards. That can be done through a number of ways.

-40- A09132016

(1) Greater outreach. We recently hired a firm to help us outreach and engage construction firms in the City's Southeast sector. That's the Theyer Group and they're beginning their contract now. (2) We need to award more micro set aside contracts. These are small contracts set aside for the smallest LBE firms. For example, last Fiscal Year we had a two-person shop win one of our real estate economic consulting contracts that was awarded as a micro-LBE. This year, they came back. They bid on our as-needed real estate economic contract pool and won a half a million dollar contract. Micro set asides are a great way to build capacity in the smaller firms and it's something that we need to do more of. We also need to encourage more firms to become certified. The number of certified firms is decreasing and that's something that we need to be aware of and continue to promote. Finally, we need to be creative with our existing opportunities. This past year's parking lot RFP where we had a large international firm partner with a small local MBE firm was a great success and that opportunity is not reflected in this slide because it's a lease and not a contract, but those are the type of creative things that we need to do to be able to diversify our LBE awards. This slide is the same as the previous slide however we're looking at the number of actual awards instead of the dollars. So there's greater parity between the certified firms and the awards -- 27% went to MBE firms, 17 to women owned firms and 14% to OBE firms. This slide reviews our payments during the contracting period. Fifty-two percent of contract awards went to LBEs. We had $7 million in payments again. During the reporting period, construction and as-needed contracts exceeded the average LBE subcontracting goals. Professional service contracts fell 1% below the mark, but we anticipated that'll increase in the next period. Overall our average subcontracting goal on our contracts at the Port is 19% and we are subcontracting 25% of our dollars to local firms. It's important to note that each of the contract categories identified in the table are made up of many individual contracts with their own individual subcontracting goals. There are a few exceptions i.e. our previous dredging maintenance contract. We have a financial advisory contract that are below our goals, however most of our contracts are exceeding their Contract Monitoring Division set goals. Details on each of these individual contracts are located in attachments 2, 3 and 4 of your report. This slide compares awards and payments made this Fiscal Year against the previous two Fiscal Years. Even when we exclude the maintenance dredging contract, we awarded more dollars this year than the previous two years combined while maintaining a high LBE performance number above 60%. By

-41- A09132016

comparison, contract payments have been fewer than previous years but our percentage of LBEs has also increased. Construction projects over a million dollars are subject to the City's Local Hire requirements. Since the inception of the Local Hire Ordinance in 2011, 15 Port projects have been subject to it. All 15 have met the City's Local Hire mandates. The Ordinance is managed and implemented by the Mayor's Office of Economic and Workforce Development. There are currently four open projects subject to the ordinance at the Port. Two of those projects are complete. One is the Bayview Gateway and Pier 49 sewer repair. Both of those exceeded their goal. Two new contracts that have come online are roof repairs at Pier 31 and 35 and we anticipate that they will be able to meet their Local Hire requirement. As I mentioned before, there were a lot of contracts in the second half of the Fiscal Year and we have many more coming online in the next six months. On the construction side of the house, we have a $2.8 million roof repair contract coming in November that has a 20% LBE goal. On the professional services side, we have the Mission Bay Ferry Landing that will be coming before you at your next Commission meeting for a recommendation of award. That has a goal in excess of 20%. We have our as-needed environmental series that will be coming out to bid in January and finally the Seawall Resilience program will be keeping us all busy. The first contract associated with the Seawall program will be available in early 2017. It's anticipated to be in the neighborhood of $20 million. In conclusion, we had a busy contracting year with above average contract awards. Twenty-three percent of dollars went to LBEs if we include the dredging contract. If we remove that from the mix, we're at 65% LBE performance. Fifty-two percent of our payments went to local businesses. Our construction contracts are meeting the Local Hire Ordinance requirements. The next six months are going to be very busy in terms of our contracting portfolio. As I mentioned earlier, our aim going forward is not only to continue to award a majority of our contracts to local firms but also to diversify those contract awards as much as possible, to come up with creative opportunities to engage the city's most disenfranchised and underserved neighborhoods and businesses. Commissioner Brandon - Boris, thank you very much. This is a very detailed report and I really appreciate you putting all the numbers together and tracking everything. Thank you so much. I think that we should be congratulated for all that we have done with our outreach to LBEs and the success that we have had with that program. But I really can't figure out the emotion that I'm feeling right

-42- A09132016

now. I'm extremely disappointed that if this program came out of the City's, it's a successor program to the MBEWBE program, we are seriously failing. I'm reading this correctly, out of $44 million, $131,000 has gone to African Americans, and $181,000 has gone to Latinos. Am I reading this correctly? I may be misreading. Boris Delepine - There are a lot of asterisks, yes those are firms that are certified as MBEs. Commissioner Brandon - I get that. It's still a basis point of the overall contracts that we have put out over the last year. I personally feel like I've failed because obviously I'm not doing something right. I'm not sure how we went to quarterly to semi-annual reporting, but we need to go back to quarterly so we can track this. Not only do we need to come up with creative ways, we need to come out with a direct focused outreach program to bring minorities into the Port of San Francisco. I really appreciate the effort that we have all focused on LBEs because we have done a tremendous job but our outreach needs to be much wider and much further. Commissioner Kounalakis - I'm not sure how to follow that but that was very well said, the concerns. I also support tracking it quarterly if that will help us stay focused on this issue because it's significant. My other question is on the mechanics. When the law prohibited awarding contracts on this basis, it didn't prohibit tracking. Is that right? Boris Delepine - That's correct. Commissioner Kounalakis - If we're not allowed to award on this basis, then what can we do within the law. I've heard outreach, but how do we go about trying to see the kind of diversity that we're after in our contractors in a way that doesn't run afoul of the law? Boris Delepine - I think those ways are to build the capacities, to go out, outreach, engage those contractors and build their capacity slowly from small contracts on up so that they learn the process of bidding on City contracts. They get involved and join teams that are successful bidders and winners and get out there. We can't give a bid preference, but we can do outreach. We can encourage, we can issue small contracts and continue to put the word out. I think people that bid on City contracts at the Port know that we take the Local Business Enterprise Ordinance seriously. Even we have opportunities like Pier 29 where it's not part of the actual project in submittal, we have firms like Jamestown that come forward with an LBE Utilization Plan. They know that to do business here, they have to have a local business component. Now that we've

-43- A09132016

attained that level, we need to go further and dig deeper and reach out to small local firms, Minority firms, Women-owned firms and increase those numbers and that can only be done through outreach. Commissioner Woo Ho - Thank you for this report. It's very illuminating. I guess some of the results as Commissioner Brandon said was surprising. We really appreciate that you've really drilled down on this. In a sense, I'm always looking at the bigger picture. Is there any way for us to know whether other City agencies are also having this problem? And if they are doing better than us, what are they doing that we could learn? Or is it the nature of the kind of work that we have that we don't have more firms like this that can qualify or are interested in doing the work? We've done the outreach. I'm wondering is this pervasive in the City or what can we learn from other departments or agencies that can be shared so that we're not struggling to scratch our heads all the time? When you said there two Asian American engineering firms, that's one plus one equals exactly two because Asians do engineering firms. That's the nature of what a lot of them are. I hate to stereotype but there is a little bit of that that goes on. I mean, that's what they do. The problem is deeper than we can solve here and gets into a lot of other issues in terms of social issues and other issues. On the other hand, we should know and learn a little bit. We’ve been a model, a paragon of trying to do the right thing and trying to reach out. Commissioner Brandon has been terrific in terms of her advocacy for this and I'm sure no other agency reports on this in the detail and etc. We're pushing this, but we're not seeing the results. We need to figure out what's going on. I understand outreach is a tactic, but it isn't going to solve the problem unless we understand it more. I think that's one thing. The second piece of this is we do award a lot of contracts. This is just one of your reports. I know that you report on another report. What I wanted to know and certainly Elaine knows this, in terms of what has actually been concluded, not necessarily awarded, but in terms of contracts that have been concluded, the other area that I look at financially speaking is did the contractor complete the project on budget and on time? There's another lens that we would like to see because there's always a 10% contingency and periodically you come and as the Port Commission when somebody needs more money. We generally always have a little bit of a concern that a contractor comes in and bids low and then does change orders and then finds a way to move the dollars up. We want to have a check on that to say, "Well, did they really come in on time, on budget?" If we could see who or where most of these contracts are going, the top 10 firms. I understand the dredging is probably the biggest

-44- A09132016

contract we have and it seems like it's difficult to get more competitive bidding on that one because of the specialty nature. As I read this report, there's just a lot of things that we need to reflect on and talk about it some more and figure out whether there are other ways. Keep working on it and doing the same thing and you may not get a different result. We really have to think about this. Elaine Forbes - It's not often that I talk about staff constraints, but we do have just one Contract Administrator, one in our entire department. That's why the report went from quarterly to twice a year. Also no other City department that we know of reports on the data in this manner. I do want to say that I was also very disappointed in the numbers but Boris presented the numbers as they appear. We didn't recast Hunters Point Family, we didn't add the leases that we did for the parking operator. We just reported the data as it appears so that's important to note. I do think that there are underlying issues that are difficult for us to solve relative to who is in the pool. I want us to set realistic goals for ourselves and to achieve those. I think that these numbers are disappointing but they also reflect a lot of different outreach and a lot of different efforts that have gone into dividing these contracts differently. We don't have the lease portfolio. We can think of strategies. We want to talk to other enterprise departments and see what else we might be able to do to accomplish more diversity but I do think there is limitations to what the Port staff can provide as we're currently staffed. I just wanted to add that note. We can go back to quarterly reporting but that has a direct conflict with moving contracts through for projects but we have to balance it all out. Commissioner Brandon - That's fine. Maybe we want to look at another position in the next budget cycle because this is a serious issue. Elaine Forbes - I agree with that. I think that's clear. Boris Delepine - If I could add one point to the coordinating with other City agencies. I serve on the LBE Advisory Committee. We meet once a month. It's not only City agencies but it's also a representative from each of the Chambers of Commerce and representative from different trades. We go over upcoming opportunities. We discuss ways that we can enhance and increase LBE participation. There is coordination happening monthly with other City agencies. We have a representative from the Contract Monitoring Division that serves at the Port and helps advocate for LBEs. I think that this report is a snapshot. The bulk of the awards here are related to the as-needed engineering contracts that went up. That's $6 million of that $15 million pool. It's a combination of all those things. The types of contracts that are going out. Next year there'll be another series of

-45- A09132016

contracts and we will continue to do outreach and hope to see those numbers increase. Commissioner Katz - Thank you Boris. I know how much work has gone into actually getting these numbers up from where they have been. As I've said before, we certainly need to do better in this and that's what we're all up here looking to do to see how we can. We talked about outreach being a way to make improvements. At the very beginning you noted, one of our big successes recently was the parking contract and we did think a little bit more creatively there. Are there other ways that we can "get around the restrictions" we have on parameters, or figure out ways we can be creative in looking at partnerships and mentoring? Is there a way we can bring up and train the next generation of contractors that we might be able to apply some of that in our RFPs. Boris Delepine - There are some resources that are available. The PUC has a center where they hold classes and the Contract Mentor Division's Mentor/Protégée program which took off last year. It has 10 large international firms that are partnering with small local firms and they have to meet certain milestones to win bid preferences on contracts in the future. There are those types of programs and plugging firms into those programs and then getting them in to bid on our contracts is the goal. Commissioner Katz - That might be where the added person could come in and help on accelerating that. We need to take a look at how we do something a little bit differently and it sounds like that might be the way and looking at our success with the parking lot contract. Commissioner Adams - Thanks for the report Boris. I have to say that this is a very painful conversation. In some areas we're really failed and we've got to do better. I'm hoping that you can come back to this Commission and look at the disparity. It's just really unacceptable. It's bad. There's got to be a way to find more of an equal playing field. I can't speak for Commissioner Brandon, but I agree with her. Commissioner Kounalakis, we're not getting there. I know we've got a lot of brain power at this Port. We've got to find some way to make it an equal playing field. When you look at the disparity of the numbers and stuff like that, you would almost think that if you're African American or Hispanic, you're being left out. You would think that. I'd just ask that we work diligently to find a way to make this thing work. I know we can make it work. Painstakingly, I know Commissioner Brandon would help out. But what's in front of us right now, it's just not acceptable. I would ask that you guys come back in the next month or two with a plan. Clearly with Commissioner Brandon's input on this, we can make this thing work. I'm not

-46- A09132016

blaming you but the only thing I can say is if someone was to look at this you would think that systematically African Americans and Hispanics were being left out. This is an honest conversation. We need to have this conversation. I'm fine with having that conversation. I believe that's not what the Port stands for. Let's try to find a way to fix it. Commissioner Woo Ho - Can we also do something? There's the beginning of the funnel when people actually submit bids. Is there any way for us to know from those that have submitted, is the pool out there greater than what we actually end up with? That would be helpful to know what the beginning of the funnel is and that's another data point for us to understand. Boris Delepine - I can do that. I do an analysis on the firms that are registered for the work that we are seeking. Commissioner Katz - Something that we alluded to in the past that I think is a problem, but when we're looking at just percentages and we have percentage goals that we're looking at for LBEs, that really doesn't drill down to actually who's participating in that LBE pool. I think perhaps we can have some of the larger contractors look at a more diverse pool of LBEs. There seem to be some of the same entities that are chosen and selected over and over again. Maybe that's a way we can look at it as we're looking for LBE participation in these contracts, that it be amongst LBEs that are new to the process. That maybe we can think of a way of adding extra points if they choose new LBEs instead of the same ones that keep getting all the contracts. As a former woman-owned business owner, I didn't sign up for the WBE program, and frankly because I felt like that's not what the program was for, it was to help me. I can't tell you how many people approached me to meet their quota and I guess that's what I'm concerned about. Put it out publically that we need to look at not just finding the traditional or the same old companies that are brought in to meet the requirements for the larger contractors, but see if there's a way that we can encourage the bigger contractors when they're reaching out for their LBE partners that they be more creative and do a little bit more than just the standard approach that’s done. Boris Delepine - I hear what you're saying. Commissioner Woo Ho - Can we take a look and have conversations with the Department of Public Works and other departments to see what their results are, what they know of and what they found something that works and results? Boris Delepine - Yes.

-47- A09132016

Commissioner Katz - As I recall, some of them unfortunately have been looking to us for creative approaches too. Traditionally we've actually been a bit ahead, but that doesn't mean that everyone shouldn't be doing better. Commissioner Adams - Director Forbes, do you have anything to say? You've heard from all five of the Commissioners. This is clearly a policy issue and that's what we do as Commissioners. Elaine Forbes - I appreciate very much the policy conversation and I do absolutely understand where the Commission is coming from. I struggle with the constraints that we have with our rules and regulations and we only have so much flexibility. But that doesn't mean we can't be more creative and we've been creative in the past with the parking operator. With Hunters Point Family, with many different contracts that I can think of. We've deployed a lot of creative strategies. Commissioner Woo Ho - The lease, which building was it? Elaine Forbes - Yes, Queens in the Northern Waterfront. That's a lease and that's not in this report. We can solve this problem together. We should keep talking about it and I think the reporting is really important to solve the problem. I do struggle with the constraints, the limitation in staffing and I know the workload. But we'll figure out how to make that happen internally. We just have to see the results and we have to talk about it more. We certainly talk to our partners. The PUC has been incredibly creative and forward thinking in this area so that's probably our first stop. Thank you for asking for my feedback. Commissioner Brandon - Boris, thank you so much.

13. NEW BUSINESS

Elaine Forbes - We will be tracking the contracting report quarterly and going forward we will do so. We will report on the forward calendar about a second berth at Pier 27. The Executive Director Report will include legislative updates going forward as needed but we will also have a December presentation on the legislative program. We will calendar a discussion on water taxi services and the business plan. When we update on the Seawall, we will look at other improvements that might be needed in the Ferry Building area that supports the WETA Project. Commissioner Woo Ho - I would like to amend on the contracting report. I don't necessarily think it has to be quarterly, but within one of those reports, I would like to know the contracts are on budget, on time so that we do know as we award our contracts that our contractors are actually performing as a group. I think that’s important for us to know.

-48- A09132016

The second piece, and it's not under any urgencies, but I would love to hear more about how we can work on what I said about the Cruise Ship Terminal where we can aim for more cruise line activity as well as Special Events. Please spend the time to think about it. I know it sounds like we're going to have some people talking to some of the players in this. Spend the time to come back and tell us something that would be helpful to us to know whether the trend line is going to be moving up more to offset as we heard that the shipyard repair is going to be going down. Elaine Forbes – Absolutely.

14. ADJOURNMENT

ACTON: Commissioner Brandon moved approval to adjourn the meeting in memory of Civic Leader Rose Pak. Commissioner Katz seconded the motion. Port Commission President Commissioner Adams adjourned the meeting at 6:09 p.m.