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SAN FRANCISCO AIRPORT COMMISSION

MINUTES Tuesday, September 10, 2019

9:00 A.M.

Room 400 - City Hall #1 Dr. Carlton B. Goodlett Place

(400 Van Ness Avenue) City and County of San Francisco

LONDON N. BREED, MAYOR

COMMISSIONERS LARRY MAZZOLA

President LINDA S. CRAYTON

Vice President ELEANOR JOHNS

RICHARD J. GUGGENHIME MALCOLM YEUNG

IVAR C. SATERO Airport Director

C. CORINA MONZÓNCommission Secretary

SAN FRANCISCO INTERNATIONAL AIRPORT SAN FRANCISCO, CALIFORNIA 94128

Minutes of the Airport Commission Meeting of Tuesday, September 10, 2019

CALENDAR SECTION

AGENDA ITEM

TITLE RESOLUTION NUMBER

PAGE

A. CALL TO ORDER:......................................................................................................................... 8

B. ROLL CALL: ................................................................................................................................... 8

C. ADOPTION OF MINUTES:......................................................................................................... 8

Special Meeting of August 27, 2019. ...................................... 8

D. DIRECTOR’S REPORT: ................................................................................................................ 8

1. Analysis of Airline Traffic for Fiscal Year 2018/2019:................................. 9

E. ITEMS INITIATED BY COMMISSIONERS: ............................................................................11

F. ACTION ITEMS RELATED TO ADMINISTRATION, OPERATIONS & MAINTENANCE11

2. Approval of 30 Lease Extensions for Concession Leases with Development Costs Exceeding Supportable Investment Amounts...............................11

Amendment No. 1 to the Lease 3 with Amy's Kitchen Restaurant Operating Company, LLC........................................................................................11

Amendment No. 1 to the Lease 4 with Paradies Lagardere @ SFO 2018 (F&B), LLC...........................................................................................................11

Amendment No. 1 to the Lease 1 with Bun Mee, LLC ......11

Amendment No. 1 to the Lease with Soaring Food Group, LLC ……………………………………………………………11

Amendment No. 1 to the Lease with InMotion Entertainment Group, LLC ……………………………………………………………11

Amendment No. 1 to the Lease with Paradies Lagardere @ SFO 2018, LLC ……………………………………………………………11

Amendment No. 1 to the Lease with Skyline Concessions, Inc. …………………………………………………………....11

Amendment No. 1 to the Lease with Tastes on the Fly San Francisco, LLC ……………………………………………………………11

Amendment No. 1 to the Lease with SSP America Inc.....11

Amendment No. 1 to the Lease with HFF-BRH-SFO, LLC 11

Amendment No. 1 to the Lease with SSP America, Inc....12

Minutes, September 10, 2019, Page 2

Amendment No. 1 to the Lease with Canonica New York, LLC ……………………………………………………………12

Amendment No. 1 to the Lease with Amoura International, Inc. ……………………………………………………………12

Amendment No. 1 to the Lease with San Francisco Soup Company ……………………………………………………………12

Amendment No. 1 to the Lease with Paradies Lagardere @ SFO, LLC ……………………………………………………………12

Amendment No. 1 to the Lease with Tastes on The Fly San Francisco, LLC ……………………………………………………………12

Amendment No. 1 to the Lease with Host International, Inc. ……………………………………………………………12

Amendment No. 1 to the Lease with Black Point Coffee SFO, LLC ……………………………………………………………12

Amendment No. 1 to the Lease with Andre-Boudin Bakeries, Inc. ……………………………………………………………12

Amendment No. 1 to the Lease with DFS Group, LP ........12


Amendment No. 1 to the Lease with Stellar Partners, Inc.12


Amendment No. 1 to the Lease with Joe & The Juice SFO LLC ……………………………………………………………12

Amendment No. 1 to the Lease with Canonica New York, LLC ……………………………………………………………12

Amendment No. 1 to the Lease with Stellar Partners, Inc.12

Amendment No. 1 to the Lease with Tastes on the Fly San Francisco, LLC …………………………………………………………….12

Amendment No. 1 to the Lease with Elevated Tastes SFO Inc. ……………………………………………………………12

Amendment No. 1 to the Lease with Bayport Concessions, LLC ……………………………………………………………12

Amendment No. 1 to the Lease with Midfield Concession Enterprises, Inc. ..........................................................................................................12

3. Commencement of the Request for Proposals Process for the Harvey Milk Terminal 1 Airport Lounge Lease .....................................................................14

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request


for Proposals and conduct an informational conference for the Harvey Milk Terminal 1 Airport Lounge lease. .........................................................................14

4. Commencement of the Request for Proposals Process for Five Harvey Milk Terminal 1 Food and Beverage Concession leases in Phases 3 and 4...15

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for five Harvey Milk Terminal 1 Food and Beverage Concession leases in Phases 3 and 4. ....15

5. Commencement of the Request for Proposals Process for Three Harvey Milk Terminal 1 Retail Concession Leases in Phases 3 and 4 ..............16

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for three Harvey Milk Terminal 1 Retail Concession leases in Phases 3 and 4.................................16

6. Commencement of the Request for Proposals Process for the Terminal 2 Retail Market and Harvey Milk Terminal 1 Specialty Retail Stores Concession Lease ...................................................................................................16

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 2 Retail Market and Harvey Milk Terminal 1 Specialty Retail Stores Concession lease…………………..............................................................................................16

7. Commencement of the Request for Proposals Process for the Terminal 2 Bookstore Lease ......................................................................................................16

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 2 Bookstore lease. .........................................................................................................16

8. Commencement of the Request for Proposals Process for the Terminal 3 Boarding Area E Pop-Up Retail Concession Leases ................................16

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 3 Boarding Area E Pop-Up Retail Concession leases.........................................16

9. Award of the Terminal 2 Employee Café Lease to Sky Terrace, LLC 17

Resolution awarding the Terminal 2 Employee Café Lease to Sky Terrace, LLC. ……………………………………………………………17

10. Approval of Phase C4 to Contract No. 11002.66, Design-Build Services for the International Terminal Checked Baggage Inspection System Modernization Program and Baggage Handling System Improvements


Project, Skanska USA Building Inc. $11,247,541 ......................................18

Resolution approving Phase C4 to Contract No. 11002.66, Design-Build Services for the International Terminal Checked Baggage Inspection System Modernization Program and Baggage Handling System Improvements Project, with Skanska USA Building Inc., to increase the contract amount by $11,247,541 for a new contract amount of $81,300,305 and to authorize a corresponding contingency amount, with no change to the total contract duration.......................................................................................................18

11. Award of Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project Schembri Construction Company, Inc. $7,950,303 ......................................................19

Resolution awarding Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project, to Schembri Construction Company, Inc. in the amount of $7,950,303 with a contract duration of 365 days, and with a corresponding amount in contingency authorization.....................................................................................19

12. Determination to Proceed with Energy Management Control System Project and Approval of Phase C2 to Contract No. 11068.66, Design-Build Services for the Energy Management Control System Project Suffolk Construction Company, Inc. $3,403,280 ......................................................20

Resolution determining to proceed with the Energy Management Control System Project and approving Phase C2 to Contract No. 11068.66, Design-Build Services for the Energy Management Control System Project, with Suffolk Construction Company, Inc., to increase the contract capacity by $3,403,280 for a new contract capacity amount of $17,942,367, and $255,246 in corresponding contingency amounts........................................20

This proposed action is the approval action for purposes of California Environmental Quality Act, as defined by Section 31.04(h) of the San Francisco Administrative Code.................................................................................................20

13. Approval of Modification No. 4 (Annual Renewal) to Professional Services Contract No. 11068.41, Project Management Support Services for the Energy Management Control System Project Faith Group, LLC $2,699,625 .........................................................................................................................................21

Resolution awarding Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project, to Schembri Construction Company, Inc. in the amount of $7,950,303 with a contract duration of 365 days, and with a corresponding amount in contingency authorization.....................................................................................21

14. Authorization to Issue a Request for Qualifications/Request for Proposals for Contract No. 11422.66, Design-Build Services for the Building 710 Modernization Project .........................................................................................22


Resolution authorizing the Director to issue a Request for Qualifications/ Request for Proposals for Contract No. 11422.66, Design-Build Services for the Building 710 Modernization Project. ...................................22

G. CONSENT CALENDAR OF ROUTINE ADMINISTATIVE MATTERS ...............................23

15. Approval of SFO Museum’s Revised Code of Ethics and Collection Management Policy ..............................................................................................23

Approval of SFO Museum’s revised Code of Ethics and Collection Management policy..................................................................................................23

16. Approval of Modification No. 6 to Professional Services Contract No. 9034.41, Project Management Support Services for the Demolition of Terminal 2 Air Traffic Control Tower and Terminal 2 Office Tower Modifications Project The Allen Group, LLC $600,000 ..........................23

Resolution approving Modification No. 6 to Professional Services Contract No. 9034.41, Project Management Support Services for the Demolition of Terminal 2 Air Traffic Control Tower and Terminal 2 Office Tower Modifications Project, with The Allen Group, LLC, in an amount of $600,000 for a new contract amount not to exceed $6,970,000 with no change to the contract duration.......................................................................................................23

17. Approval of Modification No. 1 to Contract No. 4105.76, Terminal Upper Level Viaduct Improvements Phase 1 Project Pilot Construction Management, Inc. ..................................................................................................23

Resolution approving Modification No. 1 to Contract No. 4105.76, Terminal Upper Level Viaduct Improvements, Phase 1 Project, with Pilot Construction Management, Inc., to extend the contract duration by 256 consecutive calendar days for a new contract duration of 741 consecutive calendar days with no increase to the contract amount. ............................23

18. Approval of Modification No. 1 to Contract No. 50014, PFM Asset Management LLC to Increase the Contract Amount by $550,000 from $1,800,000 to a New Total Not-to-Exceed Contract Amount of $2,350,000 to Provide Investment Advisory Services ....................................................23

Resolution approving Modification No. 1 to Contract No. 50014, with PFM Asset Management LLC to increase the contract amount by $550,000 from $1,800,000 to a new total not-to-exceed amount of $2,350,000 to provide investment advisory services, with no change in the contract’s original five-year term or scope of work..............................................................................................23

19. Approval of Modification No. 2 to Contract No. 50078, Monitor Dynamics, Inc. Access Control System Maintenance and Support Services with G4S Secure Integration, LLC .......................................................................................24

Resolution approving Modification No. 2 to Professional Services Contract No. 50078, Monitor Dynamics, Inc. Access Control System


Maintenance and Support Services with G4S Secure Integration, LLC, to exercise the second of two 1-year options to extend the contract through October 31, 2020, with no increase to the contract amount......................24

H. NEW BUSINESS:.........................................................................................................................24

I. CORRESPONDANCE: ...............................................................................................................24

J. CLOSED SESSION: ....................................................................................................................24

K. ADJOURNMENT:.......................................................................................................................24


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Minutes of the Airport Commission Meeting of Tuesday, September 10, 2019

CALL TO ORDER: The special meeting of the Airport Commission was called to order at 9:00 A.M. in Room 400, City Hall, San Francisco, CA.

ROLL CALL: Present: Hon. Larry Mazzola, President

Hon. Linda S. Crayton, Vice President Hon. Eleanor Johns Hon. Richard J. Guggenhime Hon. Malcolm Yeung

ADOPTION OF MINUTES: The minutes of the special meeting of August 27, 2019 were adopted unanimously upon a motion by Commissioner Crayton and a second by Commissioner Johns.

Special Meeting of August 27, 2019.

* * *

DIRECTOR’S REPORT:

Director Ivar Satero provided an update about the 28 Left Reconstruction Project. The Airport has been preparing for reconstruction for nine months and recognizes how impactful construction will be. However, the Airport was experiencing unforeseen failures that were causing emergency shutdowns of the runways that impacted operations. The construction’s timeframe targeted when loads drop off after August and before the rains arrive. Because of extensive preparation and strong partnerships, the Airport has been able to achieve schedule reductions of 13% by the airlines. The last project the Airport did that had this kind of impact, the Overlay Project, there was a 6-7% reduction in schedules so the airlines have really stepped up for this project. With the FAA’s leadership and everyone’s support we were able to achieve the 13% reduction. Staff had modeled this construction on an expected arrival rate of 30-32 arrivals per hour; when the weather is clear we bring in 60. We developed the projection of average delays in the half hour to 45 minutes up to an hour based on the 30-32 arrivals. Because of weather issues, the arrival rate, which is established by the FAA, has been as low as 25. On average, Staff is seeing an hour to two-hour delays, but there have been outliers of five-hour delays; this is impactful to our passengers. Construction is proceeding well. Staff have seen favorable subsurface conditions and are hoping for 14-15 days total of construction instead of 20, depending on subsurface conditions during Phase II. We had planned for 20 because we were concerned about the subsurface conditions but we are seeing favorable conditions in Phase 1. We measure our schedule by the hour. It’s an around the clock effort.


Commissioner Guggenhime asked if work is being done 24 hours a day, who is overseeing the work, and if the Airport has all the equipment and personnel necessary. Director Satero confirmed that work is being done 24 hours a day with the best equipment and personnel under the oversight of the Airport’s Design and Construction team, Geoff Neumayr, Judi Mosqueda, Daniel Lee, and Joe Birrer, and the best contractor that has worked with us before.

Commissioner Guggenhime added that there needs to be more facts and clarification given to the media, which could possibly include a press conference.

Vice President Crayton asked for an outline of outreach efforts and if all appropriate stakeholders have been briefed. Director Satero confirmed all appropriate stakeholders were briefed. Staff has done more outreach and received more cooperation than on any other significant project. United is also offering relief to customers that want to change their flights within certain time frames. The preparation has been extensive but we didn’t expect the 5-hour delays and that is an incredibly difficult circumstance for those travelers.

Commissioner Johns noted she observed the frustration of people who weren’t aware of the closure and added that Delta is now offering the ability to change flights at no extra charge. She would like the airlines to do more to communicate with passengers in advance, and she hopes that the Airport is prepared to help in every way we can in the terminals – from restaurants to restrooms to good-will ambassadors.

Vice President Crayton commented that Delta warned passengers of delays.

Director Satero introduced Mike Nakornkhet to present on Item #1 Analysis of Airline Traffic.

1. Analysis of Airline Traffic for Fiscal Year 2018/2019:

Mike Nakornkhet, Acting Director of Finance presented on the analysis of airline traffic for Fiscal Year 2018/19. Fiscal Year 2019 concluded with 57.6M total passengers, which represents the second highest year on record at SFO. This is only slightly behind the highest year on record, which was Fiscal Year 2018 with 57.8M total passengers. Even though the total number of passengers was approximately the same, the make-up of passengers, domestically versus internationally, was different. In 2018, 76% of passengers were domestic while 24%, or 13.8 million, were international. In 2019, international share increased to 26%, or 14.8M, which represents a record for international passengers at SFO. The reason for such strong international growth was the new and increased services, such as 12 new routes added by seven carriers, two of which switched service from Oakland. International routes perform well at SFO because of the year-round strong demand that the Airport attracts. The domestic sector did experience some tapering, primarily due to Alaska Airlines and Southwest. Alaska went through a process called route rationalization, where they cut back on some non-profitable routes after their merger with Virgin America. This is only temporary as they are adding back services this fiscal year. Southwest


declined because they are focusing most of their Bay Area growth at San Jose. Regarding the Airport’s monthly performance during the year, international traffic mostly offset domestic decline with the result of a slight overall decline of only 0.7% for the entire fiscal year. At other Bay Area airports, Oakland increased by 1.9%, while San Jose increased by 10.7%, primarily from domestic traffic increases. The outlook into early 2020 exhibits the same trend, where the main story at SFO is international growth and the main story at San Jose is domestic growth. This results in a shift in the market share of international passengers towards SFO. Two years ago, the market share of Bay Area international passengers was 88% at SFO, last year it was 89%, and this year it is likely going to be 90%. SFO’s flat traffic this past fiscal year does not compare favorably to other international gateways. However, because the Airport has grown so rapidly during the prior four years, its five-year average is still in the top half of large international gateways in the U.S. The one-year reprieve has been healthy for the Airport because it allowed for the shift in traffic mix towards international, and it’s giving Staff time to add more gates to accommodate future growth as part of the Ascent program. Over the past five years, the average aircraft size has gotten larger from 142 seats to 159 seats. Staff would like to see this number continue to increase to 175 because it will help the Airport reach its target of 71M annual passengers in about a decade. In addition, the domestic number of times airlines use each gate in a day (or the number of turns per gate) has increased from 6.9 to about 7.5 over the past 5 years. This is almost the full capacity that a gate can handle, which explains the need to build more gates. The international average has also increased from about three to four, which is relatively high for international operations because it takes more time to load and unload international aircraft. As for preliminary year-end financial results for Fiscal Year 2019, the total operating cost was approximately $1.09B dollars, which was offset with non-airline revenues ($580M from concessions, parking, and passenger facilitation charges). The remainder is covered by airline landing fees and terminal rentals. The cost-per-enplanement (CPE - unit cost airline pays to fly one passenger out) is $17.93. SFO’s CPE number compares favorably to other international gateways, and it is in a competitive position to continue to attract new and increased airline service going forward.

Commissioner Yeung asked about the benefits of shifting to more international traffic.

Mr. Nakornkhet responded that international planes are larger which is more favorable operationally. International passenger spending is also higher on average in the Airport and the City than domestic.

Commissioner Yeung asked if the shutdown of the A380 is going to impact business.

Mr. Nakornkhet responded that the Airport has been seeing retirements and shutdowns. However, they are being replaced with larger medium-gauge international aircrafts with around 300 seats which is about the right size to get to 71M passengers in our projections.

Vice President Crayton asked how the Airport is supporting international passengers.


Director Satero mentioned the Airport’s concierge program and investment in lounges have served passengers well. Another opportunity is a premium experience at the fixed based operation with Signature flight support. The investment in lounges by the internationals is very important. The C3C Project will turn offices on the 5th floor of the International Terminal into airline lounges.

Commissioner Johns said the presentation is timely given the Airport’s limitations on space. Since the Airport can’t expand runways due to our geography, larger planes mean lesser planes come in. Other airports are going to have to take over the short hauls. Fewer but larger planes is how we are going to be able to handle the traffic within the confined space that we have and weather. Director Satero added that the Airport can only operate one runway for arrivals and departures during bad weather conditions.

Vice President Crayton inquired about the hotel opening. Director Satero answered that there will be a ribbon cutting on September 30th at 11:30 am. The first room nights are October 1st. The hotel is on its way to completion and looks fantastic. The AirTrain station opening is the real push, and Staff are working aggressively to make it happen. It is estimated that 80% of passengers will be arriving to the hotel by AirTrain.

There were no further questions from the Commissioners.

E. ITEMS INITIATED BY COMMISSIONERS: There were no items initiated by Commissioners.

F. ACTION ITEMS RELATED TO ADMINISTRATION, OPERATIONS & MAINTENANCE Item No. 2 was approved unanimously by a motion by Commissioner Crayton and a second by Commissioner Johns.

2. Approval of 30 Lease Extensions for Concession Leases with Development Costs Exceeding Supportable Investment Amounts

Amendment No. 1 to the Lease 3 with Amy's Kitchen Restaurant Operating Company, LLC Amendment No. 1 to the Lease 4 with Paradies Lagardere @ SFO 2018 (F&B), LLC Amendment No. 1 to the Lease 1 with Bun Mee, LLC Amendment No. 1 to the Lease with Soaring Food Group, LLC Amendment No. 1 to the Lease with InMotion Entertainment Group, LLC Amendment No. 1 to the Lease with Paradies Lagardere @ SFO 2018, LLC Amendment No. 1 to the Lease with Skyline Concessions, Inc. Amendment No. 1 to the Lease with Tastes on the Fly San Francisco, LLC Amendment No. 1 to the Lease with SSP America Inc. Amendment No. 1 to the Lease with HFF-BRH-SFO, LLC


Amendment No. 1 to the Lease with SSP America, Inc. Amendment No. 1 to the Lease with Canonica New York, LLC Amendment No. 1 to the Lease with Amoura International, Inc. Amendment No. 1 to the Lease with San Francisco Soup Company Amendment No. 1 to the Lease with Paradies Lagardere @ SFO, LLC Amendment No. 1 to the Lease with Tastes on The Fly San Francisco, LLC Amendment No. 1 to the Lease with Host International, Inc. Amendment No. 1 to the Lease with Black Point Coffee SFO, LLC Amendment No. 1 to the Lease with Andre-Boudin Bakeries, Inc. Amendment No. 1 to the Lease with DFS Group, LP Amendment No. 1 to the Lease with SSP America, Inc. Amendment No. 1 to the Lease with Stellar Partners, Inc. Amendment No. 1 to the Lease with SSP America, Inc. Amendment No. 1 to the Lease with Joe & The Juice SFO LLC Amendment No. 1 to the Lease with Canonica New York, LLC Amendment No. 1 to the Lease with Stellar Partners, Inc. Amendment No. 1 to the Lease with Tastes on the Fly San Francisco, LLC Amendment No. 1 to the Lease with Elevated Tastes SFO Inc. Amendment No. 1 to the Lease with Bayport Concessions, LLC Amendment No. 1 to the Lease with Midfield Concession Enterprises, Inc.

Cheryl Nashir, Director of Revenue Development and Management presented on the item to seek authorization to extend the term of 30 leases by two years each. These 30 leases are for premises built since January 1, 2017, whose development costs exceeded what is standard on a healthy profit and loss statement for the type of concession operated. The Airport has seen an unusual amount of concessions redevelopment in the last two years. Of the approximately 150 stores and restaurants at the Airport, 60% have been released or are in the process of being released. Before Staff issue Request for Proposals (RFPs), they project sales and development costs. Those numbers help them set rent and term. They also help Staff make decisions about whether they need to bundle spaces together to make a financial deal work. Development costs for food and beverage locations were $684 per square foot when the Airport built Terminal 2 in 2011. They grew to $933 per square foot a few years later when the Airport renovated Terminal 3 West and Terminal 3 East. For the Harvey Milk Terminal 1, costs are averaging $1,568 per square foot. Likewise, retail costs have grown from $421 in 2011 to just under $1,000 this year. Staff have studied the construction costs, sales and assumptions they made in formulating business deals for all deals over the last eight years, and it is their determination that development costs for any project over $1,300 per square foot for food and beverage or $900 per square foot for retail make the profit and loss statement fragile. Those costs exceed what Staff used to set the rent and term of Airport leases. The amortization of costs that high exceed what Staff know to be typical and supportable. Staff are currently outreaching to new general contractors. Three companies do the bulk of the tenant work, but two more companies have recently picked up some tenant work. By adding two years to the base term of the 30 leases listed in this memo, the Airport will be providing some


relief to tenants who entered into business partnerships without anticipating actual construction costs. This is a revenue-neutral solution which Staff are recommending approval. Of these 30 leases, 14 have small joint venture partners and another 12 are locally owned.

Commissioner Johns stated it’s a great idea. She noted that Farmerbrown previously made this request for a lease extension and asked what had changed in the last few months that they are now a part of this along with the other 29.

Ms. Nashir responded that the opening of Terminal 1 is where the Airport saw costs increase significantly; this required Staff to take a more holistic view of everything build. Staff started looking at all costs starting in 2011 and found that in 2017 is where costs exceeded what was supportable. Staff hadn’t taken this holistic view when Farmerbrown first made the request. Farmerbrown’s request was based on terms commensurate with its peers rather than the costs of construction.

Commissioner Johns asked if Staff are putting these terms on new proposals. Ms. Nashir confirmed and added that the terms are about two-years longer than what has been done for the past five years. Staff is also doing more outreach to the GCs to try to get more competition at the Airport.

Vice President Crayton expressed her gratitude for the innovative solution.

Commissioner Yeung said he appreciated the equitable nature of the solution and that Staff looked at a solution for all Airport businesses. He inquired into the general contracting system. Ms. Nashir responded that the Airport does not certify general contractors, but Staff do make suggestions and introductions. Staff has also added more information on the Airport’s website about opportunities for construction work at the Airport.

Kevin Westlye with High Flying Foods, a partner with Farmerbrown expressed his appreciation that Staff met with them, listened to their concerns, and explained the Airport’s perspective. He is grateful for the outcome.

Deanna Sison with Farmerbrown echoed Commissioner Crayton’s comments. She said it is an incredible opportunity for the restaurant, and she appreciates the innovative and creative solution to help all businesses. She looks forward to many more years of serving at SFO.



Corina Monzón, Commission Secretary, called Calendar Items 3 through 7.

Item Nos. 3 through 7 were approved unanimously by a motion by Commissioner Guggenhime and a second by Commissioner Crayton.

3. Commencement of the Request for Proposals Process for the Harvey Milk Terminal 1 Airport Lounge Lease

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Harvey Milk Terminal 1 Airport Lounge lease.

Cheryl Nashir, Director of Revenue Development and Management, presented on the items to seek authorization to commence five Request for Proposal processes. The RFPs are for an Airport Lounge; food and beverage and retail locations located in Harvey Milk Terminal 1; and 2 locations in Terminal 2. There are 11 leases contained in the five RFPs. All the retail leases have 12-year terms, except the Terminal 2 bookstore lease, which has a 10-year term. There is less infrastructure needed here as it is not a brand-new terminal, and there is already a bookstore in the space. Rent is the greater of a Minimum Annual Guarantees (MAGs) or Percentage. The Airport Lounge lease consists of 12,000 square feet on the mezzanine level in Harvey Milk Terminal 1, post security. Rent for this opportunity is a per square foot rent, which is the same for other airlines’ clubs. The term is 12 years with two one-year options. On the Departure level of Harvey Milk Terminal 1, Staff is seeking authorization to lease a Gourmet Grab & Go Market; a Food Hall which also includes three Pop-Up Food Locations; a Sit-Down Restaurant; a Coffee location; and a Sushi or Poke location which are both designated as Small Business Enterprise Set-Asides. The lease terms here are 12 years with one two-year option. The rents are the greater of a Minimum Annual Guarantees or Percentage rent. These locations all open in Phase 3, which is currently scheduled to open in May 2021. The Food Hall is the one exception. It is scheduled to open with Phase 4, which is early 2023. Staff paired the Pop-Up food locations with the large Food Hall so that they can require the operator to manage Pop-Up food for the Airport. This operator would be required to change the concepts at least every two years and have a mentoring program for the owners of the concepts. In addition, there are three retail locations individually leasing in Terminal 1. They are a bookstore, an apparel store, and a “Traveler’s Retreat” where an operator can offer a gym, spa, sleeping rooms, or wellness services. Only the bookstore opens in the last phase of the renovation of Terminal 1, early in 2023. All others will open in May 2021. The two remaining retail spaces in Harvey Milk Terminal 1 are for specialty retail, which has been challenging to lease. Staff have paired them with a large retail marketplace space in Terminal 2. This single lease will have three locations. Finally, Staff are seeking authorization to issue an RFP for the Terminal 2 bookstore. This was a 10- year lease which started in 2011. All the Retail leases have 12-year terms except the Terminal 2 bookstore lease which has a 10-year term. There is less infrastructure needed here as it is not a brand


new terminal and there is already a bookstore in the space. Rent is the greater of MAGs or Percentage. In summary, we are seeking authorization to issue five RFPs which include 11 leases. We will come back to you for authorization to accept proposals later this year, after we’ve had an Informational Conference and presented these business opportunities to interested parties.

Vice President Crayton asked if there will be any high-end options for the sit-down restaurant in the Harvey Milk Terminal 1.

Ms. Nashir responded that there isn’t a specific designation in order to let the industry propose and let the evaluation panel decide what is complementary to what already exists in the building. Typically, high-quality but more approachable concepts have worked better.

Commissioner Yeung stated he was glad there will be a bookstore and asked for more detail on the current process of supporting pop-ups.

Ms. Nashir responded that there are currently two pop-up retail spaces in place since 2014, which has cycled through 10 different operators, with lease terms of one-year for retail; the Airport builds the space. This is the first time the Airport will have pop-up food locations. Behind the three “stalls” is a single kitchen, which would not be able to accommodate three separate businesses. The Airport will pair this with a larger lease and let them manage it. A large operator in the food hall will have to find up-and-coming food concepts every two years, form agreements, provide mentorship, and allow them to sell their wares from these three locations. The business arrangement, however, is up to the operator.

Commissioner Yeung asked if some element of the bid scoring can emphasize the pop-up program and rate it on a stand-alone basis.

Ms. Nashir confirmed it will be a part of the score.


4. Commencement of the Request for Proposals Process for Five Harvey Milk Terminal 1 Food and Beverage Concession leases in Phases 3 and 4

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for five Harvey Milk Terminal 1 Food and Beverage Concession leases in Phases 3 and 4.

Please see Item 3 above for comments.


5. Commencement of the Request for Proposals Process for Three Harvey Milk Terminal 1 Retail Concession Leases in Phases 3 and 4

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for three Harvey Milk Terminal 1 Retail Concession leases in Phases 3 and 4.


6. Commencement of the Request for Proposals Process for the Terminal 2 Retail Market and Harvey Milk Terminal 1 Specialty Retail Stores Concession Lease

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 2 Retail Market and Harvey Milk Terminal 1 Specialty Retail Stores Concession lease.


7. Commencement of the Request for Proposals Process for the Terminal 2 Bookstore Lease

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 2 Bookstore lease.


Item No. 8 was approved unanimously by a motion by Commissioner Yeung and a second by Commissioner Crayton.

8. Commencement of the Request for Proposals Process for the Terminal 3 Boarding Area E Pop-Up Retail Concession Leases

Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 3 Boarding Area E Pop-Up Retail Concession leases.

Cheryl Nashir, Director of Revenue Development and Management, presented on the item to seek authorization to commence a Request for Proposals process for the Pop-Up


Retail Program. The Airport has been leasing two pop-up retail locations in Terminal 3 since Boarding Area E opened in 2014. The Airport Commission had originally granted authorization to lease this program for five years as a trial of this new business opportunity. The pop-up leases are different than any other Airport business opportunity since the Airport constructs the spaces, provides basic furnishings, and limits the term to one year. Staff have learned a lot in the last five years and have adjusted along the way; including limiting those that can apply to entities of a certain (small) size and disallowing entities that have already operated at SFO. Staff recommend the term change from one year to two years because it takes approximately six months to really understand running the business at the Airport, getting to know how the customer behaves, and settling down staffing issues. A longer term would give them more time after they’ve optimized their operation. The other recommendation is to disallow proposals from entities which have operated at any airport. This will help keep the program as an incubation of businesses brand new to the airport environment. The lease term is recommended at two years, and rent will be the greater of 8% or $27,000 per year for Space 1 and $36,000 per year for Space 2. Additionally, each tenant will pay a fee to the Airport which represents reimbursement for the build-out costs the Airport put into the stores. In the next couple of years, Staff plan to seek approval to expand the pop-up program into two Pop-Up Retail spaces in Harvey Milk Terminal 1 and two spaces in the Terminal 3 West redevelopment program.

There were no questions from the Commissioners.

Item No. 9 was approved unanimously by a motion by Commissioner Crayton and a second by Commissioner Johns.

9. Award of the Terminal 2 Employee Café Lease to Sky Terrace, LLC

Resolution awarding the Terminal 2 Employee Café Lease to Sky Terrace, LLC.

Cheryl Nashir, Director of Revenue Development and Management, presented on the item to seek authorization to award the Terminal 2 Employee Café Lease to Sky Terrace, LLC. Staff conducted a RFP process and received six proposals by the due date of July 17, 2019. Sky Terrace, LLC was chosen by a three-member panel as the most responsible and responsive proposer. George and Lupe Issa, who were longstanding employees of various restaurants at SFO and became owners five years ago when they won the café lease in the Rental Car Center, have 51% ownership. Since then, they have also become owners of Marina’s Café in SFO’s Consolidated Administrative Campus building. Eric Barnachea, who is brand new to the Airport with an impressive resume as the owner of a catering company, a long-time executive chef and a former member of the Board of Directors of the American Culinary Federation, has 49% ownership. The employee café will be on the Terminal 2 mezzanine with pre-security access. The winning proposer has decided to


name the employee café the Sky Terrace Café. Sky Terrace refers to an observation deck the Airport is building one floor above the employee café. The public will be able to eat there as well. The lease term is seven years with one two-year option. There is an early termination clause in case sales are below a certain amount after the second year of operation. If they were to exercise the option, the Airport would pay the Tenant unamortized development costs. Rent is 1% of gross sales up to $3,000,000 and 2% of sales above that amount. The employee café is a concession near and dear to the Airport’s heart as one way in which it can positively affect the work lives of SFO’s large employee population (approximately 40,000 badged employees).

Vice President Crayton inquired into the makeup of the panelists.

Ms. Nashir responded that one is a former chief from the Airport Commission who knows the culture and the Airport’s interest in serving all customers. The second panelist is a property manager at a peer airport. The third panelist is the Executive Director of SFO TEC, which operates gates at the International Terminal.


Item No. 10 was approved unanimously by a motion by Commissioner Crayton and a second by Commissioner Guggenhime.

10. Approval of Phase C4 to Contract No. 11002.66, Design-Build Services for the International Terminal Checked Baggage Inspection System Modernization Program and Baggage Handling System Improvements Project, Skanska USA Building Inc. $11,247,541

Resolution approving Phase C4 to Contract No. 11002.66, Design-Build Services for the International Terminal Checked Baggage Inspection System Modernization Program and Baggage Handling System Improvements Project, with Skanska USA Building Inc., to increase the contract amount by $11,247,541 for a new contract amount of $81,300,305 and to authorize a corresponding contingency amount, with no change to the total contract duration.

Geoff Neumayr, Chief Development Officer, presented on the item to approve Phase C4, adding Trade Package Set No. 6 into the contract with Skanska for the International Terminal CBIS Modernization Program. The Phase C4 approval will increase the contract capacity by $11.2M for a new contract capacity amount of $81.3M, with a corresponding amount of contingency, and with no change to the contract duration. The Project will replace equipment and systems that are beyond their useful life and impact the reliability of the Baggage Handling System (BHS) within the International Terminal and associated boarding areas. The Project will also address the Airport’s passenger growth with


http:11002.66http:11002.66

improved reliability, redundancy, and capacity for the Baggage System. This approval will provide for Trade Package Set No. 6 to be added to the contract. Set No. 6 includes the BHS Original Equipment Manufacturer (OEM) and BHS Controls to facilitate Boarding Area G work. The forecast for this contract is $82.2M, which falls within the contract budget of $83.1M. The project remains on schedule to be substantially complete in July 2020. While there is no specific small business participation goal on this federally-funded Contract, the Airport has set an Airport-wide goal of 40% small business participation. Skanska is committed to meeting this goal.


Item No. 11 was approved unanimously by a motion by Commissioner Crayton and a second by Commissioner Yeung.

11. Award of Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project Schembri Construction Company, Inc. $7,950,303

Resolution awarding Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project, to Schembri Construction Company, Inc. in the amount of $7,950,303 with a contract duration of 365 days, and with a corresponding amount in contingency authorization.

Geoff Neumayr, Chief Development Officer, presented on the item to award the Construction Services contract for the Field Lighting Building 1 Electrical System Upgrade Project to Schembri Construction Company in an amount of $7.95M with a duration of 365 consecutive calendar days and authorize a corresponding contingency. The Field Lighting Building 1 is one of two field lighting buildings in the airfield. This building houses electrical systems that support the runways and taxiways. The current installed systems were installed in 1989 and are past their useful life and need replacement. This contract provides for the installation of new electrical systems and upgrades, the upgrade of the building systems and components to extend the facilities’ useful life, and compliance with current regulations. Three bids were received, and Staff has determined that the lowest bidder, Schembri Construction, was responsive and recommends awarding this contract to them. The contract was bid with four alternates, and Staff recommend including all four alternates as part of the contract. The base bid with alternates was less than the engineers estimate. This is a federally-funded project and up to 75% of the cost is reimbursable by the FAA Airport Improvement Program. Because this is a federally-funded project, no Local Business Enterprise (LBE) goals are provided for this project. The Airport has established a 6% participation goal in alignment with the Federal DBE program.


http:10555.61http:10555.61



12. Determination to Proceed with Energy Management Control System Project and Approval of Phase C2 to Contract No. 11068.66, Design-Build Services for the Energy Management Control System Project Suffolk Construction Company, Inc. $3,403,280

Resolution determining to proceed with the Energy Management Control System Project and approving Phase C2 to Contract No. 11068.66, Design-Build Services for the Energy Management Control System Project, with Suffolk Construction Company, Inc., to increase the contract capacity by $3,403,280 for a new contract capacity amount of $17,942,367, and $255,246 in corresponding contingency amounts.

This proposed action is the approval action for purposes of California Environmental Quality Act, as defined by Section 31.04(h) of the San Francisco Administrative Code.

Geoff Neumayr, Chief Development Officer, presented on the item for approval of Phase C2, with no scope revisions or changes, to the contract for Design-Build Services for the Energy Management Control System Project with Suffolk Construction Company, Inc. This will increase the contract amount by $3.4M to establish a new contract capacity amount of $17.9M with a corresponding amount of contingency authorization, with no change to the contract duration. This Energy Management Control System project will upgrade the Airport’s standalone Building Management, energy and water systems into a single interconnected Airport wide system. The Energy Management System will meter usage of energy and water, analyze operations, and cognitively learn and implement corrective actions to increase energy efficiencies across all facilities, saving the Airport $4.5M annually. The system also supports the Airport’s goals for a Zero Energy Airport. This contract provides Design-Build Services with the design and construction of the Energy Management Control System Project. This Phase C2 approval provides for Trade Package Set 1, which includes the building controls for the International Terminal. The approved budget for this contract is $66.9M. The current contract forecast amount is $61.7 and remains in budget with appropriate levels of contingency. The project is funded from the Airports approved five-year Capital Program. Staff will return to the Commission for approval of all Trade Package Sets. The Environmental Planning Division of the San Francisco Planning Department has determined that the Energy Management Control System Project is categorically exempt from the California Environmental Quality Act as a Class 1 exception.

Commissioner Johns asked for clarification on cost, scope, and how the project will work


http:11068.66http:11068.66

airport-wide.

Mr. Neumayr explained that, in the past, the setup has been localized control to buildings. The Airport has a central plan that does provide heating and cooling to all terminal buildings, but it runs off set times. Since all the buildings operate differently, there isn’t an effective way to monitor their needs in advance. This project allows the Airport to conduct heating and cooling at a more appropriate time and puts the individualized controls under one control system. The goal is to understand energy needs collectively and manage those needs appropriately.

Commissioner Johns asked if the system includes hardware or software.

Mr. Neumayr responded that the software platform will sit in the center and communicate to different systems. Right now, it’s all individual systems because there wasn’t an ability to centralize before. The Airport is one of the first to take on this strategy.

Commissioner Johns asked about fail-safes, clarification on the cost, and timeline.

Mr. Neumayr confirmed that there are fail-safes and the total cost is $66M for implementation of the platform. The project should be completed within a year-and-a-half. Currently, it’s focused primarily on HVAC but could include water use down the line.

Vice President Crayton asked for the reason for the variance of costs and how the high LBE rate will be implemented.

Mr. Neumayr responded that the initial programming and engineering projects were done in a more economical way than originally forecasted. The LBE goal is higher for construction than normal. The Airport sets targets with individual trade packages, which allows it to be more targeted towards a specific trade and exceed those goals; there is also reporting.



13. Approval of Modification No. 4 (Annual Renewal) to Professional Services Contract No. 11068.41, Project Management Support Services for the Energy Management Control System Project Faith Group, LLC $2,699,625

Resolution awarding Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project, to Schembri Construction Company, Inc. in the amount of $7,950,303 with a contract


http:10555.61http:11068.41

duration of 365 days, and with a corresponding amount in contingency authorization.

Geoff Neumayr, Chief Development Officer, presented on the item to authorize Modification No. 4 for the annual renewal of the contract for Project Management Support Services for the Energy Management Control System Project with Faith Group, LLC. The modification will increase the not-to-exceed amount by $2.7M, revise the total not-to-exceed contract amount to $5.97M, and extend the contract through October 18, 2020. The forecasted amount of this contract is $6.2M, with a total contract duration of 42 months. Staff will continue to return to the Commission to renew the contract each year based on the consultant’s performance. The service for this contract is to provide Project Management Support Services for the Energy Management Control System Project. These services include design management, reporting, schedule monitoring, contract compliance, and oversight of construction. The City’s Contract Monitoring Division has approved a 21% LBE sub-consultant participation goal, and Faith Group, LLC is committed to meeting this goal.


Item No. 14 was approved unanimously by a motion by Commissioner Crayton and a second by Commissioner Yeung.

14. Authorization to Issue a Request for Qualifications/Request for Proposals for Contract No. 11422.66, Design-Build Services for the Building 710 Modernization Project

Resolution authorizing the Director to issue a Request for Qualifications/ Request for Proposals for Contract No. 11422.66, Design-Build Services for the Building 710 Modernization Project.

Geoff Neumayr, Chief Development Officer, presented on the item to authorize the Director to issue a Request for Qualifications and Proposals for Design-Build Services for the Building 710 Modernization Project. Building 710 is currently occupied by Commission Staff, consultants, and airline tenants. This contract will replace existing HVAC systems that have reached their end of useful life, make improvements to the electrical distribution system, and upgrade the Information Technology system. The Design-Build Services contract will provide design of the project scope and provide the construction services for the project. The contract is forecasted to be $4.4M with a duration of 550 consecutive calendar days. Staff will convene a selection panel to evaluate the proposals and conduct oral interviews with shortlisted firms. The evaluation scores for the cost proposal will be combined with the scores for qualification to rank the proposals. Staff will return to the Commission to recommend the award to the highest ranked proposer. The City’s Contract Monitoring Division has approved a 14% LBE sub-consultant goal for


http:11422.66http:11422.66

design services and a 20% LBE sub-contracting goal for construction services.


G. CONSENT CALENDAR OF ROUTINE ADMINISTATIVE MATTERS The Consent Calendar, Item Nos. 15 through 19, was approved unanimously upon a motion by Commissioner Crayton and a second by Commissioner Johns.

15. Approval of SFO Museum’s Revised Code of Ethics and Collection Management Policy

Approval of SFO Museum’s revised Code of Ethics and Collection Management policy.

16. Approval of Modification No. 6 to Professional Services Contract No. 9034.41, Project Management Support Services for the Demolition of Terminal 2 Air Traffic Control Tower and Terminal 2 Office Tower Modifications Project The Allen Group, LLC $600,000

Resolution approving Modification No. 6 to Professional Services Contract No. 9034.41, Project Management Support Services for the Demolition of Terminal 2 Air Traffic Control Tower and Terminal 2 Office Tower Modifications Project, with The Allen Group, LLC, in an amount of $600,000 for a new contract amount not to exceed $6,970,000 with no change to the contract duration.

17. Approval of Modification No. 1 to Contract No. 4105.76, Terminal Upper Level Viaduct Improvements Phase 1 Project Pilot Construction Management, Inc.

Resolution approving Modification No. 1 to Contract No. 4105.76, Terminal Upper Level Viaduct Improvements, Phase 1 Project, with Pilot Construction Management, Inc., to extend the contract duration by 256 consecutive calendar days for a new contract duration of 741 consecutive calendar days with no increase to the contract amount.

18. Approval of Modification No. 1 to Contract No. 50014, PFM Asset Management LLC to Increase the Contract Amount by $550,000 from $1,800,000 to a New Total Not-to-Exceed Contract Amount of $2,350,000 to Provide Investment Advisory Services

Resolution approving Modification No. 1 to Contract No. 50014, with PFM


Asset Management LLC to increase the contract amount by $550,000 from $1,800,000 to a new total not-to-exceed amount of $2,350,000 to provide investment advisory services, with no change in the contract’s original five-year term or scope of work.

19. Approval of Modification No. 2 to Contract No. 50078, Monitor Dynamics, Inc. Access Control System Maintenance and Support Services with G4S Secure Integration, LLC

Resolution approving Modification No. 2 to Professional Services Contract No. 50078, Monitor Dynamics, Inc. Access Control System Maintenance and Support Services with G4S Secure Integration, LLC, to exercise the second of two 1-year options to extend the contract through October 31, 2020, with no increase to the contract amount.

There were no questions or comments from the Commissioners on any of the items on Consent.

H. NEW BUSINESS: Discussion only.

There were no requests to speak from members of the public.

Vice President Crayton thanked Blake Summers for his presentation and overview of the SFO Museum’s Code of Ethics.

I. CORRESPONDANCE: There was no discussion by the Commission.

J. CLOSED SESSION: There are no planned agenda items for a Closed Session for the current meeting.

K. ADJOURNMENT: There being no further calendared business before the Commission, the meeting adjourned at 10:15 A.M.

(Original signed by: C. Corina Monzón) C. Corina Monzón Airport Commission Secretary


Analysis of Airline Traffic Fiscal Year 2019 September 10, 2019

FY 2019 Total SFO Passengers

57.6 Million

FY 2018…

57.8 Million

Source: Monthly Air Traffic Activity Reports

2018 2019

Domestic vs. International 2018 2019

100% Total

24% = 14.8 Million = 13.8 Million 26%

76% 74%

Source: Monthly Air Traffic Activity Reports

New International Service 12 New or Increased Routes

• United: 6 new or increased services

• New: New Delhi, Melbourne, Toronto, Amsterdam

• Increasing: Auckland, Papeete

• Level: Barcelona • Norwegian: London Gatwick • Air Italy: Milan • TAP Air Portugal: Lisbon • El Al: Tel Aviv • Qantas: Melbourne

Source: SFO Airline Route Development Log 4

Jan – June 2019 Seat Capacity Changes Domestic Tapering

(300,000)

(250,000)

(200,000)

(150,000)

(100,000)

(50,000)

0

50,000

Seat Cap

acity

Increa

se (D

ecrease)

• Alaska responsible for more than half of the decrease (route rationalization)

• Followed by Southwest (growth mainly at SJC)

Source: Official Airline Guide 5

FY 2019 Monthly Performance Overall Enplaned Passengers down 0.7%

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY 2019

Domestic 3.3% 0.4% ‐4.8% ‐2.4% ‐5.7% ‐5.4% ‐4.0% ‐6.3% ‐3.3% ‐4.3% ‐3.9% ‐1.4% ‐3.0%

International 3.8% 2.2% 2.4% 6.2% 9.8% 8.0% 10.0% 6.7% 4.4% 10.2% 10.4% 8.1% 6.7%

Total 3.4% 0.8% ‐3.1% ‐0.4% ‐2.4% ‐2.2% ‐0.6% ‐3.3% ‐1.5% ‐1.1% ‐0.3% 1.0% ‐0.7%

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2,200,000

2,400,000

2,600,000

2,800,000

3,000,000

Total Enp

lane

men

ts

2018/19

2017/18

2016/17

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

6 Source: Monthly Air Traffic Activity Reports

Oakland and San Jose

Bay Area Airport FY 2019 % Growth

San Francisco (SFO) ‐0.7%

San Jose (SJC) 10.7%

Oakland (OAK) 1.9%

Bay Area Total 1.6%

Source: Data provided by respective airports’ staff 7

Near-term Outlook Aug 2019 – Jan 2020 Seat Capacity Changes

Aug‐19 Sep‐19 Oct‐19 Nov‐19 Dec‐19 Jan‐20 6‐month Average

Domestic 3.1% ‐7.2% ‐2.4% ‐0.2% 3.5% 5.0% 0.3%

International 7.1% 5.7% 6.0% 6.8% 6.5% 6.0% 6.4%

SFO Total 4.1% ‐3.8% ‐0.2% 1.5% 4.3% 5.3% 1.8%

OAK ‐7.8% ‐3.5% ‐1.2% ‐1.3% 0.5% 0.5% ‐2.3%

SJC 8.4% 13.2% 13.4% 10.9% 14.2% 11.9% 11.9%

International Growth


Year‐over‐Year 5‐year Average

% Cha

nge in Total Passeng

ers

Other International Gateways

Year‐over‐Year 10% 10%

5‐year Average

8.2%

6.1%

5.1% 4.9% 4.8%

4.0% 3.5% 3.5%

2.9%

1.5%

‐0.4%

8.3%

6.2%

5.0% 4.5%

4.2% 4.0%

2.9% 2.8% 2.5% 2.3% 2.2%

8%

6%

4%

2%

0%

8%

6%

4%

2%

0%

‐2%

‐4%

‐2%

Source: Compiled from websites of respective airports 9

Increased Aircraft Size Past 5 years “Upgauging”

Domestic

International

Overall

2015 2019

128 seats 142 seats

232 seats 246 seats

142 seats 159 seats


Increased Turns per Gate Past 5 years

Fiscal Year 2015 2016 2017 2018 2019

Domestic Terminals 6.9 7.0 7.1 7.5 7.4

International Terminal 3.1 3.3 3.6 3.9 4.1

Source: Monthly Air Traffic Activity Reports 11

12

Preliminary Year-End Financials Fiscal Year 2019 ($ Millions)

Operating Expenses $ 573

Debt 471

Annual Service Payment to City 49

Total Operating Costs [A] $1,093

Terminal Concessions $ 114

Parking 97

Ground Transportation (i.e. Taxis, TNCs, Rental Cars) 116

Other revenues 190

Passenger Facility Charges 63

Total revenues [B] $ 580

Airlines Pay [A] – [B] $ 513

Passenger Enplanements 28.6

CPE $ 17.93 Source: FY 2018/19 Preliminary Year‐End Report, August 29, 2019

CPE Relative to Other Airports Select International Gateway Airports – FY 2019 est. CPE

$0

$5

$10

$15

$20

$25

$30

EWR* JFK* IAD MIA ORD SFO LAX BOS SEA

*Based on latest available actual CPE with estimated increases in‐line with Consumer Price Index. Note: EWR, JFK, IAD, ORD and SEA estimates represent calendar year 2019 because the Airports’ fiscal years end December 31. 13 Sources: Airports' Official Statements, FAA Form 127 and various budget documents.

Thank you

091019 MinutesA. CALL TO ORDER:B. ROLL CALL:C. ADOPTION OF MINUTES:No. 19-0193. Special Meeting of August 27, 2019.

D. DIRECTOR’S REPORT:1. Analysis of Airline Traffic for Fiscal Year 2018/2019:

E. ITEMS INITIATED BY COMMISSIONERS:F. ACTION ITEMS RELATED TO ADMINISTRATION, OPERATIONS & MAINTENANCE2. Approval of 30 Lease Extensions for Concession Leases with Development Costs Exceeding Supportable Investment AmountsNo. 19-0194. Amendment No. 1 to the Lease 3 with Amy's Kitchen Restaurant Operating Company, LLCNo. 19-0195. Amendment No. 1 to the Lease 4 with Paradies Lagardere @ SFO 2018 (F&B), LLCNo. 19-0196. Amendment No. 1 to the Lease 1 with Bun Mee, LLCNo. 19-0197. Amendment No. 1 to the Lease with Soaring Food Group, LLCNo. 19-0198. Amendment No. 1 to the Lease with InMotion Entertainment Group, LLCNo. 19-0199. Amendment No. 1 to the Lease with Paradies Lagardere @ SFO 2018, LLCNo. 19-0200. Amendment No. 1 to the Lease with Skyline Concessions, Inc.No. 19-0201. Amendment No. 1 to the Lease with Tastes on the Fly San Francisco, LLCNo. 19-0202. Amendment No. 1 to the Lease with SSP America Inc.No. 19-0203. Amendment No. 1 to the Lease with HFF-BRH-SFO, LLCNo. 19-0204. Amendment No. 1 to the Lease with SSP America, Inc.No. 19-0205. Amendment No. 1 to the Lease with Canonica New York, LLCNo. 19-0206. Amendment No. 1 to the Lease with Amoura International, Inc.No. 19-0207. Amendment No. 1 to the Lease with San Francisco Soup CompanyNo. 19-0208. Amendment No. 1 to the Lease with Paradies Lagardere @ SFO, LLCNo. 19-0209. Amendment No. 1 to the Lease with Tastes on The Fly San Francisco, LLCNo. 19-0210. Amendment No. 1 to the Lease with Host International, Inc.No. 19-0211. Amendment No. 1 to the Lease with Black Point Coffee SFO, LLCNo. 19-0212. Amendment No. 1 to the Lease with Andre-Boudin Bakeries, Inc.No. 19-0213. Amendment No. 1 to the Lease with DFS Group, LPNo. 19-0214. Amendment No. 1 to the Lease with SSP America, Inc.No. 19-0215. Amendment No. 1 to the Lease with Stellar Partners, Inc.No. 19-0216. Amendment No. 1 to the Lease with SSP America, Inc.No. 19-0217. Amendment No. 1 to the Lease with Joe & The Juice SFO LLCNo. 19-0218. Amendment No. 1 to the Lease with Canonica New York, LLCNo. 19-0219. Amendment No. 1 to the Lease with Stellar Partners, Inc.No. 19-0220. Amendment No. 1 to the Lease with Tastes on the Fly San Francisco, LLCNo. 19-0221. Amendment No. 1 to the Lease with Elevated Tastes SFO Inc.No. 19-0222. Amendment No. 1 to the Lease with Bayport Concessions, LLCNo. 19-0223. Amendment No. 1 to the Lease with Midfield Concession Enterprises, Inc.

3. Commencement of the Request for Proposals Process for the Harvey Milk Terminal 1 Airport Lounge LeaseNo. 19-0224. Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Harvey Milk Terminal 1 Airport Lounge le...

4. Commencement of the Request for Proposals Process for Five Harvey Milk Terminal 1 Food and Beverage Concession leases in Phases 3 and 4No. 19-0225. Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for five Harvey Milk Terminal 1 Food and Beverag...

5. Commencement of the Request for Proposals Process for Three Harvey Milk Terminal 1 Retail Concession Leases in Phases 3 and 4No. 19-0226. Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for three Harvey Milk Terminal 1 Retail Concessi...

6. Commencement of the Request for Proposals Process for the Terminal 2 Retail Market and Harvey Milk Terminal 1 Specialty Retail Stores Concession LeaseNo. 19-0227. Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 2 Retail Market and Harvey Milk...

7. Commencement of the Request for Proposals Process for the Terminal 2 Bookstore LeaseNo. 19-0228. Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 2 Bookstore lease.

8. Commencement of the Request for Proposals Process for the Terminal 3 Boarding Area E Pop-Up Retail Concession LeasesNo. 19-0229. Resolution approving the proposed minimum qualification requirements and lease specifications, and authorizing Staff to issue a Request for Proposals and conduct an informational conference for the Terminal 3 Boarding Area E Pop-Up Retail...

9. Award of the Terminal 2 Employee Café Lease to Sky Terrace, LLCNo. 19-0230. Resolution awarding the Terminal 2 Employee Café Lease to Sky Terrace, LLC.

10. Approval of Phase C4 to Contract No. 11002.66, Design-Build Services for the International Terminal Checked Baggage Inspection System Modernization Program and Baggage Handling System Improvements Project, Skanska USA Building Inc. $11,247,541No. 19-0231. Resolution approving Phase C4 to Contract No. 11002.66, Design-Build Services for the International Terminal Checked Baggage Inspection System Modernization Program and Baggage Handling System Improvements Project, with Skanska USA Buildi...

11. Award of Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project Schembri Construction Company, Inc. $7,950,303No. 19-0232. Resolution awarding Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project, to Schembri Construction Company, Inc. in the amount of $7,950,303 with a contract duration of 365 days,...

12. Determination to Proceed with Energy Management Control System Project and Approval of Phase C2 to Contract No. 11068.66, Design-Build Services for the Energy Management Control System Project Suffolk Construction Company, Inc. $3,403,280No. 19-0233. Resolution determining to proceed with the Energy Management Control System Project and approving Phase C2 to Contract No. 11068.66, Design-Build Services for the Energy Management Control System Project, with Suffolk Construction Company...This proposed action is the approval action for purposes of California Environmental Quality Act, as defined by Section 31.04(h) of the San Francisco Administrative Code.

13. Approval of Modification No. 4 (Annual Renewal) to Professional Services Contract No. 11068.41, Project Management Support Services for the Energy Management Control System Project Faith Group, LLC $2,699,625No. 19-0234. Resolution awarding Contract No. 10555.61, Construction Services for the Field Lighting Building 1 Electrical System Upgrade Project, to Schembri Construction Company, Inc. in the amount of $7,950,303 with a contract duration of 365 days,...

14. Authorization to Issue a Request for Qualifications/Request for Proposals for Contract No. 11422.66, Design-Build Services for the Building 710 Modernization ProjectNo. 19-0235. Resolution authorizing the Director to issue a Request for Qualifications/ Request for Proposals for Contract No. 11422.66, Design-Build Services for the Building 710 Modernization Project.

G. CONSENT CALENDAR OF ROUTINE ADMINISTATIVE MATTERS15. Approval of SFO Museum’s Revised Code of Ethics and Collection Management PolicyNo. 19-0236. Approval of SFO Museum’s revised Code of Ethics and Collection Management policy.

16. Approval of Modification No. 6 to Professional Services Contract No. 9034.41, Project Management Support Services for the Demolition of Terminal 2 Air Traffic Control Tower and Terminal 2 Office Tower Modifications Project The Allen Group, LLC $60...No. 19-0237. Resolution approving Modification No. 6 to Professional Services Contract No. 9034.41, Project Management Support Services for the Demolition of Terminal 2 Air Traffic Control Tower and Terminal 2 Office Tower Modifications Project, with ...

17. Approval of Modification No. 1 to Contract No. 4105.76, Terminal Upper Level Viaduct Improvements Phase 1 Project Pilot Construction Management, Inc.No. 19-0238. Resolution approving Modification No. 1 to Contract No. 4105.76, Terminal Upper Level Viaduct Improvements, Phase 1 Project, with Pilot Construction Management, Inc., to extend the contract duration by 256 consecutive calendar days for a ...

18. Approval of Modification No. 1 to Contract No. 50014, PFM Asset Management LLC to Increase the Contract Amount by $550,000 from $1,800,000 to a New Total Not-to-Exceed Contract Amount of $2,350,000 to Provide Investment Advisory ServicesNo. 19-0239. Resolution approving Modification No. 1 to Contract No. 50014, with PFM Asset Management LLC to increase the contract amount by $550,000 from $1,800,000 to a new total not-to-exceed amount of $2,350,000 to provide investment advisory serv...

19. Approval of Modification No. 2 to Contract No. 50078, Monitor Dynamics, Inc. Access Control System Maintenance and Support Services with G4S Secure Integration, LLCNo. 19-0240. Resolution approving Modification No. 2 to Professional Services Contract No. 50078, Monitor Dynamics, Inc. Access Control System Maintenance and Support Services with G4S Secure Integration, LLC, to exercise the second of two 1-year opti...

H. NEW BUSINESS:I. CORRESPONDANCE:J. CLOSED SESSION:K. ADJOURNMENT:

FY 2019 Air Traffic Update_10 Sep 2019Maps for AC Meeting 09102019

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