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tv   Port Commission  SFGTV  October 11, 2022 3:15pm-6:01pm PDT

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please stand by for port commission meeting. [commission in closed session]
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>> at this time there are no members of the public on the phone wishing to make public comment. >> thanks, public comment is closeds. next items. >> good afternoon, president adams, vice president commissioners, port staff and members of the public. it sure is good to see a full room here in commission today.
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i'm executive director board of san francisco. i'm going to jump into economic recovery, i have a lot of history to report. i have a long report, bear with me. we had so much that has been happening and so much that will happen. sustain, we welcomed tens of thousands of people to the water front with events and we carry that momentum from summer to early october and plan to carry it forward so our water front is great place for visitors and as we know welcome water front is key to our economic recovery. so, we're coming off an incredible fleet week, week, i want to thank the commissioners for showing staff to celebrate our sea services enrich mater history. fleet week drought many visitors to the shoreline.
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we had a i very safe water front and i want to thank our maintenance, property managers, they all contribute to making fleet week really really great experience. they went way above and beyond. our water front was truly sparkling this weekend. and what a time our maritime had in september, you can buy fish and crab off the boats. and that's a great thing to welcome people to fisherman's worth. this is water front resurge enter and represent a model of
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sxhaount coming together with fun raising. another first for the port, we brought tens of thousands of people to our peer 80 to experience renowned musicians and artist at the portola music festival. we're proud to have been a contractor. the promoters connected with southeast and with vending opportunities. local favorites were there like any he's and africa kitchen and yeah, pudding. there was in noise complaints especially in alameda as noise echoed off the bay. but they did work to minimize noise. i'm thankful for our team to think about how to activate our water front.
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and crews continue to visit thousands and thousands to the city. we will have a record crews call with 1 19 calls. in september, we welcomed a crew ship. i waufpt to say that the 114 million investment would return so quickly and it has. open spaces are continue be to be well loved and active. with partners, we hosted the sun down cinema. this is the first for our park. in many ways, the success
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represents the people and the promise of what the water will be. very vibrant and innovative and equitable which brings me to equity. i would like to highlight more act vacation with our partners. we're looking very forward to hosting the harvest festival with foodwise and the city's human rights commission. they vent will be friday october 28 through sunday october 30. this is event is 1 in a quarterly series of events that celebrates and encourages black businesses. another series of with rec and park is the be education workshop at the echo center. the series began last saturday. they prioritized out reach and attention of bay view hunters point, age 18 and offer.
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this is a two-day equity focus event with the calls to action for increased access, support and economic inclusion for entrepreneur and business owners. discussion address youth appointment, we had some of the most thinking on transportation empowerment strategies and related impact. tony of our team attended. they highlighted our own partnership including all the work that this commission did during the pandemic to support our tenants. reminder 225 tenants totaling 13.7 million in rent differal for more than 500 tenants
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creating a million dollars 0 interest loan program to support our lves that were financially devastated and allowing water front to create 700 outdoor seats. our team highlighted our continued work for equitable cover' with activation and opportunities. we have a lot to be proud of, but we also have work to do ahead. we want them for executing this event and thank you to tony again and to vice president brandon for their work at the fairy building to support black owned businesses. finally at mission rock, we were the site of a major state announcement. the secretary of california labor and workforce, announced 25 million dollars state investment to remove barriers to women, non binary entering
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building and construction trade. mission rock was chosen because of the mission rocca cad maoe where we saw a grad you'd class into the trade that has women construction workers mainly bipoc women. congratulations to the giants. this is how the port program includes the success to our partners who are intentionally committed to getting equity results. now to resil yens, today you have a big item so i will not say that much. but i do want to say that we've come a long way with the resilience, we start withed a g-o bond to the earthquake and flood to the property with a commission support. that and with the commission support on forming a relationship with the army corps of engineers. we move this program from knowing the risk, to really understanding how to
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prioritize, safety improvements and now we're working with the army corps after 5 years of public engagement to refine what our flood plan will be and what our future water front will be to protect rising tides. there will be 7 adaptation strategies that you'll hear about today. these will be utilized to come up with a preferred plan to come up with the preferred. they will be picking different strategies that make the most sense for our future. this is a pivotal moment. it's a big transformation, this has been pushing and preparing for. we have moved from needing funding, needing friends, needing a way to get this done to having a real plan on reducing earthquake risk under the bond and now preparing to get a real plan on select protection.
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with federal government support for the project. so it's a big big moment for us in resilience so congratulations to all. i have more progress to share, i'm happy to report that the shoreline resilience has started construction. we're also including community engagement, local job training and bringing infrastructure activities, so this is a great project and i'm proud of the engineering division for getting that on the ground. and in closing, with much appreciation and excitement, i would like to recognize vice president commissioner kimberly brandon, she will be inducted into the san francisco state university alumni hall of fame and will be celebrated as the alumna of the year at chase
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center. and i want to thank you commitsinger brandon for your incredible leadership but to all of san francisco for your civic engagement. and i want to recognize the institution of making such a contribution to people's lives and to our progress and to our values in san francisco. so congratulations to you. >> thank you. >> and not to mention four out of our five commissioners are graduates of san francisco state. >> and finally with a heavy heart, the passing of michael hammond, he was a very strong add vo* cat and worked for the port and our advisory committees and part of the bay view community. he arrived in san francisco in 167, one--1967, working for the
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water front and passion for the port and bay view community. he was on our sac for 25 years. and on various public bodies and worked, work bodies, he had a passion for his own trade which was he was a contractor and he generously shared his understanding of that trade. he also worked diligently to ship the ship cottage number 250. le and he was a very gracious person and he was an artist and he offered his space for parties and convening. with heavy heart we will miss him and ask that the meeting be adjourned in his honor and that concludes my report, thank you. >> thank you, director.
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is there any public comment on this room with regard to report of director? seeing none, now remote participant. >> thank you, president. at this time we'll open the queue for anyone on the phone that would like to make public comment on the executive directer's report. please press star-3 if you would like to make public comment. others will go on mute. the queue is now open. please dial star-3 if you wish to make public comment. at this time there are no members of the public on the phone wishing to make public comment. >> public comment is closed. commissioner gilman. >> thank you for that great report and such a great outlook for us as we come out of this
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pan deposit i can, from our calls to visitors. the news reported that we hosted 1.1 million for fleet weening and italian heritage month in our neighboring community of northbeach. that really shows that we're coming back economically strong. and i had the honor to partner with every day. the head of the army corps of engineer, we had an opportunity to meet him on resiliency with our federal partners to make that possible and excited to go to the harvest festival here at the building. that concludes my comments. thank you. >> thank you. commissioner gilman. commissioner lee. >> no comment, just great weekend. xep for the blue angels, i could not see anything but with the water front looked clean and happy and crowded and
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traffic was terrible but hey, shows that everybody is coming out and spending money. it's good for the small businesses on the port and i'm very happy. >> thank you, vice president brandon. >> elaine, thank you so much for your report. we can see that we're on the road to recovery. and i think that is so wonderful. the past month the port has been, it's like we've been prepandemic with the crews calls and with fleet week and with all that we're doing along the water front. i want to thank the staff because they're doing an excellent job at keeping the water front, clean, safe and welcoming. thank you. and i'm glad to hear about the harvest festival and everybody should try to attend that will be great for the building and everyone that enjoys our
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farmers market. wonderful to hear about the $25 million investment to our women workers. i think the mission mock academy class of young women was just absolutely, there was just so much joy and hope for these young ladies. so i think that's a great investment. and i'm really sorry to hear about michael ham and his family is in my prayers. thank you for your report. >> i would like to say, vice president brandon, thank you for your 25 years of stellar service and being one of the longest-serving commissioner in the city and county of san francisco, your leadership and guidance. you wear san francisco, you are the port of san francisco on your sleevesed and you're a
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true patron and thanks for all of that you're doing. and glad that you're going to be inducted into the hall of fame. it's good and people to be hon ard when they're a lifed not when they're dead. >> i agree with that. [laughter] you can't hear the words or smell flowers when you're dead. i want to say too, i know the last several years has been tough. i know that we've all died a little bit with the covid and stuff like that. i heard people say that san francisco has seen its better days. that san francisco is not the same city well san francisco is coming out of it and things have changed. in life there are good and bad days. we're going to have 115 bookings. i'm glad that the noise is too loud in alameda, this is a
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port, right? that means the vibrant is coming back to the water front. used to have 20 million tourist a year. i'm glad to see that. the vibe is coming back and we will be coming out of this and new and refreshed and with a new vision. you've got to remember this used to be a city where the average age was 27 years old. i'm hopeful, grateful and i know this commission is all on board. and we appreciate the work of you, and the staff at the port. and i want to give a shout out to the staff in the front thank you so much for making this happen. and as we go into 2023, let's continue to give it all that we've got for the rest of 2022 and then for 2023 with a bang. carl, next item please. thank you. >> item 10 is consent calendar,
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10 a, adopt to allow certain members to attend meetings remotely during the covid-19 emergency. 10b request authorizing to award contract number 2842, 2022 through 2024 in an amount of 7,238,000 and 10% or 723,875 for afn advertise pated conditions for a total authorization not to exceed 7,962,925 that's resolution 2249. 10c request approval of retroactive license with san francisco fishing association. the california nonprofit corporation for 2424 square feet of shed space and 1202
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space of apron space on a month to month basis. that's resolution number 2250. >> commissioners. >> is there a motion to approve. >> there is been a motion and a second. we will take public comment. is there any public comment? please feel free to hit the mic please. is there any public comment? seeing none, jenica will provide instructions for member participants. >> thank you, president adams. at this time, we will open the queue for anyone on the phone who would like to make public comment on the consent calendar. please dial star-3 if you wish to make public comment. others will wait on mute until their line is open. commented will be limited. the queue is now open, please dial star-3 if you wish to make public comment.
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at this time there are no members of the public on the phone wishing to make public comment. >> thank you, we have a motion and a second. all in favor say aye. >> aye. >> aye. >> opposed? motion passes, unanimously. resolution 2248-2249, 2250 are adopted. thank you, carl next item. >> 11 a, presentation on adaptation strategy. >> thank you, director manager for water resilient program and our specifically water front strategies. which we're rolling out after nine months or more of very hard work with our partners.
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today i'm going to talk about the risk that's we're facing in the water program. what we heard over our previous five years of public out reach and engagement. what we're considering in terms of adopting the water front and go over the water front strategies across the water front before concluding. excuse me. so we're at a pivotal moment with this program. that's informed this program. the strategies are ready for public feedback. with a goal of reaching a plan preferred plan by next summer.
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as i mentioned we've been working closely, ssmta, under the climate initiative. as well, we have to develop san francisco water front coastal flood study which i'll say more about now. so we're partnering with army corps of engineers. it's a key federal partners with providing funding for flight risk production and could result through this process and significant federal funding for san francisco for our coastal flood defenses. scope may be browder which are focus on production. so we may have additional community benefit which is open space and access and other things that may be beyond what gets approved in the study.
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those will not be eligible through the study but they will be part of our local referred plan. so to move into the risk, we know that climate change is here today and has global impact across the nation and the world. we are seeing these same impacts here in san francisco as we know, we have longstanding seismic risks that we need to be cognizant of and prepare ourselves for. as well as we have coastal and inland flood risk meaning both storm water and rising ground water. and that's what we're addressing to the water front adaption strategies as these are only going to be increasing over the coming years as sea levels continue to rise.
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as you can see predevelopment, coming down to the water front, overtime, these inlets have largely been filled in to the shoreline that we know today. those are the areas that we're fwg to see the coastal flooding coming well as you all know, we have significant earthquake risks. many of those same are faction which is when the soil becomes liquid and loses its stability. and you see those in some of the same areas along the front and wetland areas. this map is showing a combined coastal flooding through the end of the century as well as the inland storm water and rising ground water flooding.
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this illustrates the complexity of the hazard that you're we're facing, needing to keep the coastal water out while allowing the inland floodwater to drain out to the bay. these are some of the challenges that help shape our strategies and i'll walk through that again with that cartoon drawings. so this is the showing of the city today. that will cause low lying areas of infrastructure. so we can share the shoreline of defense. this creates another risk where they would happen behind the bathtub or ponding conditions. and one way to address this would be with pumping or storage to reduce the flooding
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behind the raised shoreline. so we're really talking about these two related flooding inland and coastal flooding. and if we build our coastal flood defenses, you know, at or near the existing shoreline, we have a small coastal flood zone but we have a larger inland flood zone. if we build further inland, we'll have a larger flood zone where we'll have to adapt more. and reducing the need for pumping and other measures. so the strategies that you're going to see today rely on the combination of these two types of flooding or a dressing these two types of flooding. and all will aim to address all three of these risks.
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to support a vibrant water front. the court jurisdiction for here in head park to a cad i can park. very different from structural and perspective and it's helpful to think of them independently. we know that there are out there of the city, that are also in need of adaptation of the shoreline.
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include adaption in its plan as well as in the shoreline park youth development also consider and adapt a shoreline to sea level rise. so they're planning outside of the boundaries of this study that we want to acknowledge or happening through other jurisdiction within the city. we're building on over r5 years that has really helped shape through asset mapping and discussion of values and priority across the three shoreline areas that i showed earlier about where we should be prioritizing our focus. we've done community focus groups over the summer and
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heard more information and more feedback specifically, you know in openness to really thinking big and the strategies that we can be using. concerns about feasibility and destruction as well a rehearing and connecting the city and the water front. so these scenes have come up as well. they heal the bay and ecology and enhance the city's connection to the water front and really to center environmental justice. we know that environmental justice communities are hit first and worse by these type of hazard. some of our lowest lying areas
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are within the eastern communities and we know we need to address other sea level rise in those areas. so now to walk through the range of solutions what we're considering and into the adaptation strategy. so when we talk about the draft we're talking about a myth of construction and policy efforts that will determine where, when, and how high to build our coastal flood defenses. where do we incorporate nature base, where is it appropriate to do other measures to specific infrastructure and what are the showneder changes that need to come a long with that, whether it's resilience planning and building code or emergency warning systems and other operational changes.
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we started shape about the changes that we make. what if we adapted with what if we adapt levels and what if we address consist apartment and recommended by californians and local guidans. and our 7th strategy, strategy a through g align to these different questions and i'll quickly go through each of these strategies. we're going to go out to the public and also going to be doing technical evaluation and cost estimating along with our
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army corps partners and these are going to be used as director forbeses mentioned to draft a plan by next summer. as she mentioned, it's not going to be selecting one of the strategies, it's going to be choosing the best elements of each and building the preferred and best strategy from the cost and benefit stand point considering associate and environmental impact and benefits. there is a quite a bit of information and i'll do my best. bear with me. so we're looking at two major time horizons. as you heard recently, other early projects that were presented last month. those are immediate changes to improve life safety and when we're looking for the adapt tation we're looking at a
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midterm adaptation by 2040 by what we see flooding. and then a longer term by 2090. and at 2040, we're looking at a very, the strategy starts to look similar to one another. these projections don't vary that much so we're trying to adopt to those kind of more than known sea level rise levels that we need to adopt to. by 2090, we start to see a bigger range of potential future and we start to see a bigger range of strategy solutions. this chart shows different levels that we're building to. these are the lower rate of sea level rise strategies.
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these are meet ing california state and san francisco guidance to adopt to 3 and a half feet of sea level rise by 2040 to last until 2090. so i'm going to start through strategy a through d. strategy a, our no action strategy. this strategy takes no action to reduce flood risks beyond projects that are already approved. strategy b, called the non structural option, this means not building a coastal defense system rather moving people away from the risk or using non structural to reduce the risk and allow the water to go where it wants and this is something that is required bit army corps
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of engineer for studying the costs and benefits of other actions that we may take. here are some example of what that action may look like. raising structures in place, doing buy out programs so that you're moving buildings, having warning system. these are all non structural options. lower, projection of sea level rise, that would adopt the shoreline to one and a half sea level rise of 2040 using structural and non structural measures, it would not be adoptable further. it's showing where you would
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need intervention to adapt to seawater rise. sea level d, allows that to be adapted hire by 2090. so in 2040, this is looking like strategy c. and in 2090 to adopt across the whole of the water front. this would require raising shoreline across the whole water front, would require pumping to let inland flooding out. and it would require elevating the bridges and connecting rows and rail over the creek. now i'll go into strategy e through g. which are on the higher rise. at a higher level it preserves
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the water front that works and functions by adopting the shoreline. this is responding to public feedback that we keep uses in place and kind of build on the existing shoreline as we have it today. including the port working land and the creek inland, this is require a significant amount of pumping to be able to pump the storm water and ground water out and reduce flooding, reduce inland flooding and also require raising the bridges and connecting rails and roads over the creeks because the water continues to flow through the creeks. in 2090, we would elevate that higher to sea level rise. and i would mention that we would propose to 7 feet immediately because of the
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complexity and destruction of the embarcadero. these have been flip through pretty quickly, kind of each of the three areas what it may look like. here's how the strategy may look along the shoreline of the inner creek of the creek. strategy f, also to the sea level rise. this would create a more active system by relying on machinery such as title gate and pumps. in 2040, we would build a three sea level rise.
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major is the addition of title. this would be utesed to protect the area behind the title gate, so we would not have to he will great the bridges or road would not have to elevate the shoreline of the creek. 20 the 0, we would elevate the shoreline to 7 feet of. we would move the coastal flood defense along to illinois street and am dor street. and what that means is that area and land would be adopted in place. some of those non structural measures that i showed, whether
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it's flood proofing, having emergency operations plans and the like. but they would continue to operate in place with those measures. artificial lagoon inside of the title gate. and finally strategy g, would adapt the water front to 7 feet of water rise. but work with pattern to flood proof some buildings and move other areas away from the risk. so again, in 2040, this looks similar to the other two.
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we would build to adopt three and a half feet of seawater rise along the water front. this would buy us time to make more significant changes by the end of the century. we would create floodable district with significant changes to building, infrastructure, roads and the like to be flooded at the ground floor but flood proof with certain changes. and along, the creek proposed to extend the creek channel and allow water to come through.
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effort to mitigate the businesses and the jobs and the people impacted in that area. here's an example of what that look like along the creek that same view point. over the fall and winter we're going to be technical analysis and evaluation with our army corps partners and we'll be coming back in spring with a revised set of strategies heading towards preferred strategy or draft water front
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adaptation plan with army corps called selective plan by next summer. community mixer, we have story maps and service embedded to them, we'll be presenting to organization during focus groups and other engagement opportunities that we welcome your participation and happy to follow-up on what that could mean. thank you, that concludes my prefntation and i'm happy to answer any questions. >> excellent, adam and i know brad is with you. let's open it up to public comment. is there any public comment in the room?
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if there is, please set the mic on this issue. seeing none, jenic will provide instructions for remote participants. >> thank you, president adams. at this time, we'll open the queue for anyone on the phone who would like to make public comment. please dial star-3 if you wish to make public comment. the system will let you know when your line is open. others will wait on you until your line is open. comments will be limited to 3 minutes per person. the queue is now open. we do have one caller on the line.
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>> commissioners, i'm francisco, deep understanding what the gentleman just presented to the commission. i would say before 2035, we would have to deal with the tsunami. thed tsunami will bring waves to about 35 to 50 feet. right now, you all know with a coming recession and the cost of building material, we will
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have to have at least 30 billion dollars to address the situation at hand. in the meantime, we can learn from what happened in florida, and some other countries. but the main thing is the tsunami. >> thank you very much, i appreciate your comments. >> at this time, there are no other members of the public on the phone wishing to make public comment on this item. >> thank you, public comment is closed. commissioner gilman. >> adam, thank you so much for the report. i really appreciate it.
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this is not my field of expertise. so my first question is, you mentioned on the fly, you showed other planning efforts for parts of the water front, candle stick as illustrated example. are we coordinating with these efforts? do we have data sharing so we're all moving in the same direction? i would not want us to use strategy and they use strategy a? we are collaborating with them, in fact last week, they were at the capitol planning committee presenting our proposal, we're a bit out in front on kind what the city standard for reducing flood risk and what elevations to be adopting the city to would be and starting that conversation to make that a city wide conversation so that we're all working from the same
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standards. they built in the sea level rise protections at this time. we are working with them. on the question, adam, so for projects that are not most of these projects are not completed. if we were to go with strategy f, would we then compel the private developers to build to that standard. my concern is some of that construction is happening now.
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private development in 2040, or 2090, they're coming back to the city for support. i may differ, we would be tying in to the high ground created by the projects. so those projects would be lasting, we are built to last pretty far into sea level rise. also some of them have funding mechanism, we're rebuilding to tie into those developments. will you make a decision for one adaptation strategy for the whole water front area or use strategy f for embarcadero. >> yeah, they could be mix and
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match. they found the bestments within the different geography like, title gated working but this other feature isn't. we would be building the best that we can think of. >> incredible report, thank you for your coordination with the army corps of engineer. >> commissioner lee. >> the only comment i have, this is like watching a movie what is going to happen in the next 100 years.
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>> good question, we're not at the level but it's a good component when we get to the point of thinking about how they're built, what the engineering standards are. it's an interesting consideration. >> commissioner lee. >> i'm done. >> vice president brandon. >> adam, thank you so much for this very important presentation. this has been a historical journey for the port. and i want to thank all the
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work that the staff has done to bring us to this point. without them, we would not be in the position where we're planning flood protection for our entire water front. i'm glad to see that we're driving to that dap tation. they--adaptation. they will bring related public
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benefits to the entire water front. the commission stands ready to help as our port and city staff team engages deeply with the public. now as you head in your report, historically in your reports, often first hit and worse, are often hit first and worse by climate change. so i want to know how the port is brought to the table for decision making about the future of our water front.
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we're work on equity road map program so we can ensure that equity and social equity are viewed throughout the whole program. next step is to be evaluating both through feedback but also thinking about what the equity implications of doing these strategies. so we're building that equity which would like to bring at a future date perhaps in concert with port equity updates. so we can then sort of see what the benefit and burden from each of these different strategies and what is harming people and benefiting people and things like that. that will be a robust and central part of our evaluation
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of those strategies along with inclusive and public engagement that we're doing focus, significantly on the southern water front. but also thinking about communities that are often under represented and marginized. >> thank you, i appreciate that. so who is doing the engagement to ensure them. >> sensitive out reach, reaching out to community organization at the water front. as well as community out reach.
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so are they the lead consultants. >> they're all under our master contract with jacobs and our consultant in civic edge and the firms that i just mentioned. >> that's what i was just mentioning with equity evaluation that we would be doing how the strategies are working from a race and racial equity stand point. so we'll do the assessment? he quit practitioners and leaders from across the city agencies, also doing focus
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groups but we'll be doing that with our consulting teams and we have a equity group that involves the equity leads including the port. >> okay, how will this be incorporated into the decision making process? we're going to incorporate all the feedback and doing our best to reflect that along with evaluation. it will be coming back to the port commission, it will be going to other city bodies and commissions as well as kind of potential, you know, board of supervisors and mayor to have a sort of ultimately, you know, city preferred plan.
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so that will be our process, best evaluation and options and hearing the feedback from the public and the decision makers. and will our advisory committee be part of this. >> yeah. >> thank you. >> thank you, again. a lot of work has gone into this. and again i want to say how much i appreciate the army corps and all the support that they have given us throughout the process, the engagement and investment. we would not be anywhere where we are without them. and this is a city project and very excited that the port is in the leadership position. and i know we have a place to make it extremely successful.
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look forward to coming back next year if not before. what i really like is we're in the office, we're not waiting until something happens. i had an opportunity with vice present to go to new orleans after what happened down there when they had all the flooding. and it was billions and billions to know we're out front. i'm just impressed.
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the methoddical that is taking. i will not be in this commission when the project comes to an end. >> none of us will be. but to be part of this on ground level, thank you. i hope you understand, but right now, it's tedious work. it's not glamorous work. it's like being on the team. i want to say thank you both. ton of kudos, you're going big or going home. thank you.
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>> all right, carl next item please. >> providing an update on agreement with llc for the proposed mix use which includes 192-room hotel, theater space and public open space. >> my name is ricky, i'm with the real estate and development division of the port. i'll be making this presentation, rebecca are here to assist me with any question
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that i have at the end of this presentation. this provides a view of my presentation. today's presentation is to provide you with an update designed to achieve multiple objectives. including enhancement of music and music in this case, theatrical design and also some of the protective, post off and developer start last year, but covid-19 caused a delay. more on this later. as such to make this project a reality, asap.
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to help handle my presentation, i will invite to hand this presentation. as part of the background, the site here, 323 and 324, and sensory to be vacated. the location is at broadway and embarcadero and it has easy access to all sorts of transportation. the area of the site is approximately 59,000 square feet. and the current use is backing operation. design is a former pro tenant
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that very popular dinner, theater, on a a peer 27 and 29 from 2009 to 2011. in 2011, to accommodate the 34 america's cup port terminated, lease, and identified a portion as a potential relocation site. that enabled board of advisors in 2015 to true from the city competitive process. and in january 2020, approved the form of lease.
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key includes a schedule of performance, to the most completed before the port will allow escrow to close on the lease. that will be one year to close escrow and start construction. and provide up to 3 extensions in subject to a 25,000 extension fee.
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moved the close of escrow to september 2023. our report and close of escrow. covid-19 year 2020, covid-19 impacted a lot of businesses operations including this development. key impacts from travelers, tourism, decline, so visitors, check in place and plummeted
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from 320 dollars to $35 and present decline from rate of 90 to--some construction was postponed. invoke prohibition. allows for the tooling of time period when a party cannot perform due to conditions beyond their control and as we know the primary driver for hotel and revenue is booking the room and staying in hotel.
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this draft is detailing impact of covid-19 in the hotel industry. on this draft here is that red line and you can see to the left it's showing 80% and on 12 is occupancy, actually, occupancy in 2019 is a 90%. so those level where the level from 2019 and you see the wiggle line at the bottom is showing that impact of covid-19 how it drops in the occupancy.
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so these are recovers to normal level by year 2023 or 2024. in the interm, working on obtaining building permit.
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and to complete financing to close escrow. now in analysis and progress of development. this graph is showing the adr average daily rate of rotes and occupantly that are part of the training positively. an example is in this shown on this slide from marcos 2022, they're trending ufp for many reason and detail in the report. for that 12 move month peer by
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is may of last year to the may of this year. that construction will continue. it has element, and comparable in the embarcadero and mission is doing great. so we are expected to do a lot better. this side is showing the next steps.
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a quick about this benefit. new jobs along water front our program. i will now invite jay to come up here and make some remarks. after his remarks, that will conclude our presentation. thank you. >> thank you, ricky. welcome jay. ?fm hello commissioners,
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president, commissioners jay wallace, gck broadway nice to see you in-person. i don't have much other data other than to tell you that we're still committed to the project. i hope i got that right. i sometimes say it wrong. even his team on the building permit, ricky to johnny and josh and rebecca continue to be great advocates and help on the project. financing has been a challenge as you may imagine. interest rates are crappy, we're in a tough time globally but remain committed. we're seeing a little bit of movement. so our optimism is growing by the day. and we're convinced and committed to get it done the way he described it. happy to answer any questions, i just want you to know that we're here standing and ready to go and we will not have give us. this new hotel theater will be in the water front soon. >> thanks.
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>> anyone that would like to speak on the issue. seeing none. jen ca will provide instructions for public comment. queue is now opened. please press star-3 if you wish to make any comment. we have one caller. i will open up that line. >> sounds good. >> speaker: good afternoon, port commissioners, cynthia the local 2. we are the union representing hospitality workers. and we can confirm that the
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developer of the hotel continues to be a model partner as most port commissioners presently have heard this developer came to us early on in the process with and work for this side of the agreement, will guarantee that when the hotel workers come to exist they will enjoy a neutral process by which to decide to be represented by the union. and which look forward to seeing this hotel come online. thank you very much. >> thank you. >> and at this time there are no other members on the phone wishing to make public comment. >> thank you, public comment is closed. commissioner lee. >> i know it's been tough, especially opening up a hotel. but i really miss this venue.
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being formerly entertainment commissioner for two years. i got stuck in the same position when covid hit. and i understand with the shortage of supply and labor, you're now starting, it's going to be bubbling a lot more than anticipated.
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how does that look? >> financing world is very difficult. there is a lot of interest. a lot of assumptions that we made back in 2018, when we were moving the process, we lost the two years. by 2024 when the hotel is opening, i'm anticipating that we will have the adr occupancy rates. we're very optimistic. as ricky said, our location is
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our best asset. is a number of investment group private? there is plenty of interest and we're working to complete the project for the city of san francisco. the thaetr will be housed there. the hotel will use it from time
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for weddings. we have paid attention that times do change. so we're hope owe to do the theater for other venues as well. the magic shows theater shows and other things that can go in there as well. entertainment venue. >> great, look forward to it. if you need any additional, let me know. >> thank you. >> thank you, quickie i have a question for you, sorry. >> if you for this report, i've been important for my observation as a northbeach
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resident here in the community engagement and commitment to being part of the community. listing, it showed us the schedule from september of 2020, to 2022, and it was showing the costing flat, so construction and predevelopment is 142 million and you just did a 160 million. i appreciate that and good luck getting that financing.
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went' went crazy, they have started maybe dip a little bit but labor and commodity inflationary have been very extreme. so we're motivated to get this as quickly as possible to stop that flood. >> i think that part is easy, nothing is easy but that is doable. probably 18 to 24 months. it could be shorter. >> can i do a quick comment. >> go ahead. >> commissioner, the reason we have that development cost in there because of the number that goes in there for 160,
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that's almost a 20 million dollars increase, we will need to see the other thing which means, we will more or less be going back to say we want to open this up. so when we approved it, if there is any changes, before we close, either requirement that the phone need to be balance but they will not alone so we do want to get into all of those things that number will change. i assumed you would come back with the numbers, i noted in the report i was just trying to figure it out.
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thank you for presentation and update on this item. operational cost will stay the same. operational cost, you know, labor costs have gone up. so we have labor costs have gone up. but we're seeing, adr, average daily rate and the revenue ver available room as well as occupancy. san francisco started in the summertime they have travel come back and it was a strong summer for those that have already been built. hotel called the one in the strong summer with higher adr rates that anybody had anticipated. they're now charging somewhere in the $500 a room night.
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but we are committed to getting it done, we know we can accomplish it, we just have to have some help from the lending community to loosen up and release dollars and get started on that basis. >> thank you, is are they still in operation? >> yes, well, they're opening up a brand new show in seattle as we speak. they have great presales, they got hurt bad by the recession, because entertainment was closed as commissioner lee attested and all of us know that for a fact.
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looking forward to bringing the show back to san francisco. >> i really appreciate getting an update on this item. and i'm keeping my fingers crossed and knocking on wood that this time next year, we're in construction. and that we have a hotel coming up on that lot, that has been looking for a hotel for as long as i've been on the commission. so i'm so happy that we're still working with you and really encourage you to ask that, port staff for help where ever you need it to be able to get that shovel on the ground. >> commissioners have all been on point. i appreciate the patience that you've shown. you've been very measured in trying to get this done. i appreciate your commitment to
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labor. san francisco is a union labor town. and we need to venue on our water front. and i've been to sunnies in seattle and i know you know joe toro, so i talk to joe quite often. i just want us to continue to be patient, let this commission that we have some heavy lifting to get it done. and this will add to the splender of our great water. this will be that one of the missing pieces of this crown jewel that we have in the water front. that we need, we need that kind of entertainment, we need that kind and we appreciate it and like i said, please don't, don't give up some will come to this commission, we want to help you. and to a person on this commission and the staff, we're all committed to seeing this getting done, thank you. >> carl, next item please.
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>> item 12b informational regarding a new lease, for approximately 30,500 square feet of space. for a term of 12 month with a 12-month option to extend subject to board of supervisors approval. >> i'm don senior property manager for the board. and i'm making informational presentation about a new renewal lease for auto desk at peer 9. credit for almost 20,000 for improvements that they made at
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the beginning of their term. what they're leasing is pier 9 for mechanical device that's do a lot of technological things. they invested a lot of money in the space. in addition to the lease, there are a couple of other associated agreement, one is a license for about 6600 space of solar panels. and the other is a maintenance agreement for access area which you're aware that look like the seating structures. and auto destination is to support 3000 in one for the port to maintain that. so we have a proposed new lease which is in draft form, it's pretty close. what it does, it increases the
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rent to current parameter rent which caused quite a bump. and we're adding the access the maintenance fee, we're including that as well. so the increase in rent is fairly significant from, from 54, i think it was 54,000, 51,000 almost 124,000 a month. we're going to terminate the agreement and incorporate the term into the new lease so we don't have three leases to administer.
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of however we would like to you to know that we're incorporated to this new lease. that's the extent of proposal to this point. we would welcome questions and we intend to bring this back to the approval once we finalize with auto desk. now let's open it up for public kaoment. --room. did you have something to say. seeing none, we will now jenica will open the lines for any other comments, for remote participants. >> thank you, president adams. at this time, we will open the
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queue for anyone on the phone if you would like to make public comment on item 12b. please dial star-3 if you would like to make public comment. the system will let you know when your line is open. comments will be limited to 3 minutes per person. the queue is now open. please dial star-3 if you wish to make public comment. >> thanks jenica public comment is closed. >> super smart to have a coterm for all the other leases. with the legacy leases for anyone's for off thes i think for any office. the solar fee too, so you have
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left to administer. i know it's parameter rent, we didn't come up with it for them but it's nice for us, it's almost 100% increase and about 6, if i'm doing my math wrong. >> thanks commissioner gilman. commissioner lee? >> i don't have any comments, i think it's a good lease, good tenants. thank you. vice president. thank you so much for the presentation, auto desk has been a great tenant and i'm happy that they're staying with us for another couple of years, if not longer. i support this. thank you. >> thank you.
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>> i'm supportive too, don, i think this is the first time that i met you,. nice and sweet. thank you. thank you, commissioners. >> item 12c is fashion al presentation on multi use leasele building 49 located bit ymca in san francisco. >> good afternoon, commissioner, jamie hurley with the ports real estate and development team. outline what i'm going to be discussing today. i'll revisit how this aligns with the port's strategic plan and timeline on this project. and then we'll get into the meat of the presentation which we'll be talking about the key lease terms and then a review
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of the community benefits and diversity inclusion plan. so again in terms of strategic plan, we have been talking about these strategic goals where this project fits in. which then lead into a proposal project process.
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through that rfp process. this commission did award the ymca of san francisco, this lease opportunity back in october of 2021, so just almost a year ago. le and since then, we've been sort of parallel tracking the lease negotiations with the line with you know, further due diligence, mainly by the ymca but also working in conjunction with port engineering in particular to understand what was required in termds of further improvements to the building to be able to execute their program and their vision for the building.
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what we plan to do is spend the next six to five weeks and bring it for approval. this will be subject to approve due to the length the amount of term. in addition to the ymca there are two sub tenants that are part of the team and will occupy portions of the building. grab and go food. so together, the program would be focused on water community
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water sports and educational experiences and with a commitment to new and under served communities of the bay. and gun we'll talk more about the benefits a little bit later. the central part will be occupied bit ymca of san francisco and sort of eastern portion of the building closest to the bay and closest to the beach will be occupied and that's about 2000 square feet that would be the aquatic center.
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in terms of the investment it's substantial, it's going to be, the all land budget for the base line improvement, scope of improvements is 5 plus millions as you can see on the top line of this slide. seismic improvement to the building and we've been meeting with them, we've met a couple of times with the engineering staff with their consulting engineering staff. and i think the clerk's position, we also agree na it's a good idea to perform those, that seismic work. and i'm going to talk about that in the another slide.
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the total budget is north of 6 million dollars. and that leads into this slide, with such substantial cost comes the need to advertise the cost over a long period of time. so the term that we negotiated would be a ten-year term. and then a series of extension options, there will be four or five year options followed by two-two-year options bringing the total possible term if they were to exercise those options to 34 years and 9 months. the 9 months is to cover the construction of the project.
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the initial would be 9 2000 500 per year, that would increase 3% for that initial one-year term. the lease that we negotiated also includes a participation percentage rent component for the four profit sub tenants. so, if they exceed their face rent share or their share of
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base rent, if their revenue. if 6% of their revenue exceeds that, we'll get that revenue, that additional percentage revenue. so it's 6% of gross revenues. and then i mentioned construction of 9 months and we proposed to abate the rent during that construction period. the tenant is responsibility including the restrooms that will serve not only the facility but patron of businesses occupying but to the tenant at large and those in park. in exchange for taking on that responsibility, that maintenance and responsibility, we have offered to provide them with a rent credit of 2000 per
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month in the initial year. and improving the seismic of the building. the way that we're framing this and the way that we have negotiated with a tenant is that if we mutually agree na the work should be carried out, this structural improvement with estimated cost of a million dollars, that we will split that cost. 50/50. subject to a maximum of 500,000 for the poor share. and again, preliminary our review of the analysis that the ymca has done on this, we agree
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that this work would be a real benefit to the building. just to summarize the components, the investment of the building at least five and up to 6.4 million dollars and then depending on the rent and depending on whether we elect to go forward with the seismic work. and then i mention the publicly accessible restroom maintained by the ymca, again a real
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benefit in something that we know the public is interested in. and then the facility itself, it will offer food and beveragages. it will offer water recreation and rentals and it will offer community wellness facility. i'm going to mention the next steps, we'll want to spend the next six to 8 weeks before bringing it for approval. so with that, i want to
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introduce from the ymza to talk about the community benefits. >> hello commissioner, it's an honor to talk about this amazing project that we're excited about. for all generation, we're guided by our commission, building strong community where you can be the law and become. in fulfilling our vision and commission, the y aims to champion an accessible connected and resilient and just bay area.
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expand opportunities in advance, a safe collaborative and sustainable future. they have prioritized diversity inclusion as well as equity consistently for over a decade. and anti racism strategy with 8 areas of focus. daily driver, are in line with equity goals which evident in community benefits. the y serves over 30,000 each year wellness offerings. 35% of our members receive
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financial assistance, assessity for our membership. with over 100 sites, the y are attracted to diversity of city wide and users allows access to all wide facility regardless of their home branch. therefore, will have access to a mearad opportunities. because of our nationwide membership, we've expanded this opportunity members may visit
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any ymca in the united states as well as paourt rico at no additional cost. not only do we want to ensure that our communities have access but we partner with agency sxz community base organizations to ensure that they also have access to this valuable asset. we're looking to partner as jamie indicateds we're talking about maritime ensuring that we're accessing water sports. partnering with pat lz we're opening new opportunities for
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water supporter access, to under served communities. as we're providing a diverse component of fitness and recreation activity for holistic offerings. seeking safe and healthy outdoor activities on the coast. they also provide summer and after school programs. as it relates to our parks and open spaces, our contribution to park will activate and en liven visitors.
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also commit today maintaining the public restroom as jamie indicated. to ensure thed people who live and serve the community also have those opportunities for employment. thank you and we welcome any questions you may have. >> thank you. >> i think i'll just close and i wanted to mention in keeping with the, talk about community benefits, this place will be subject to water front benefit and beautification policy. so six and a half percent of the port lease revenues will be
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dedicated to that fund and varieties in way in which the ymca and partners will support the goals of that policy and i think she touched on a lot of in her remarks. so that concludes the presentation, thank you commissioners, we look forward to your questions. >> thank you, jamie, i appreciate very much. i have a speaker, last name hicks. >> i'm the driver of daily driver, we make amazing bagel and cream cheese with milk that comes down from our farm and our neighbors farm up in marin. i'm a clinical psychologist and much of that operation is about bringing youth and educating people will our local food system.
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so when y approached us about partnering it looks like an amazing opportunity for us to like, do more in doing patch and essential water front. and we really feel like we have matched values. i came to this thinking oh what is this going to be about? thank you for all the work that you do to the port. we moved the peers a couple of times today and i reminded me of how much, i love san francisco and i just, so appreciative of the work that you do for the city and i don't know why i'm emotional.
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it makes me happy when i go back. we're very excited to be part of that. >> thank you for working in our community. is there any more public comment in the room. >> thank you, president adams. at this time we'll open the q for anyone on the phone that would like to make public comments on 12c. the system will let you know when your line is open. others will wait on mute when their lines are open. the queue is now open. please dial star-3 if you wish to make public comment.
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at this time no public comment. >> thanks, public comment is closed. commissioner lee. >> you know the partnering with the ymca is such a great thing. i've known them for years. and to have a small business like the daily driver there, are you going to offer any classes that make these bagels for the community. there ought to be an extra benefit. you know, small business, especially small business guys, you know, we try to do anything to help the community and bring more people for training. especially the job market is so tough. so it will be great to see some classes at your place and the people that come to the y.
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and it's a good revenue driver for the port too, the y is such a national organization. thank you commissionerry h lee. >> we've been excite since y won the award and so excited to coming in the clean coxer park and paddle folks. i'm super excite beside this. and i look forward to a
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community party where we all eat bagels and cream cheese and work at the water front and work it out by going to the gym. thank you for coming to park. >> thank you, commissioner gilman. vice president brandon. >> jamie, thank you so much for the presentation. i've always been a friend of the y. i think this is going to bring a lot of excitement and people to the water front to have the site activated and actually have tenants there that will bring more people, more activation, a lot of exercise a lot of good food.
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so do the sub tenant pay rent to the y. >> the ymca will be responsible for paying all the base rent. so the sub tenants will pay the y and then the y will pay their portion. there will have to be a
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calculation to figure out, does 6%. gross revenue for the two tenants is that higher than their due basement. but at a minimum we'll get the base rent that we mentioned about 8,000 a month. and for some reason if something does not workout, it will be up to the y to replace those tenants? how does that work? >> we would need to work together on that.
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so this is a long term lease. if they were to access oftensings. i think start out he's a great tenant they do a great job activating the park in the area. thank you. >> thank you. this is the port of our mission statement.
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this is something that we have an opportunity to do something and it, it's, it's inspired people. thank you so much you're one of those unsung heroes and we appreciate it. the next generation and all of us will benefit greatly for it. thank you. >> china base and park and other areas of the mission rock site found by china base and
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channel and san francisco bay. >> thank you, carl, good evening, president adam, i'm william son, project manager. i'm pleased to be with you this evening recycled water agreement. you may recall we presented a overview of recycled water back in march of this year. tonight, i'll be covering the first portion of the presentation and then handing the podium over to josh to bring you up to speed and up-to-date with our negotiations with the project team.
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we completed the foundation for parcel f a couple of weeks ago. and started to see the process start on that site in the next couple of weeks. project is doing, despite construction costs and of course the increase and interest rate. extremely active in helping to build the project.
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fully committed to this core value approved by commission in 2018. in 2019 you approved a revised budget that did not include the recycled water but rather gave your support for the formation of a private not a profit utility, or mru, opening a pathway for private operator model, allowing for financing outside of the project limited public finance dollars.
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the agreemented to reach our goal, of reaching non portable water that they need. we're leading by example and we note that the city is updating its action plan to include a new chapter on water that is focused on the multiple faucets of water use. by resolution in 2019. and treatment plan now being trukted in pan sell c.
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and my last slide is a flow chart, and high level summary, the system collects and treats it onsite at parcel b and contributes back to the building and open spaces for all the purposes including irrigation and cooling water tower and toilet use. the noertable water can be directed if it's needed for that purpose. thanks and good evening.
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before i go into more of the specifics of the agreement itself, it will be one of the largest water recycling recycling in san francisco and when fully built helps, serving all customers in all phases. it will be treating upwards of 60,000 blackwater each day, that's the used portable water. the reason i bring that up is that only happensed on a district scale, what this makes this unique is not one building a collection of community of property that are all in this together.
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and reality is, it's more extensive up front and as customers come line and phase in, it will become less. so the burden will spread going forward. so the emphasis on the district is really important. so started to indicate that the purpose of this agreement is for us to have a contract with mission rock utilities, who is the owner of this facilities and will be hiring the operator. for the port able to purchase, that is going to be per irrigation at the park and for the other open space, non pedestrian right aways that the port will be posting and owning. the management of the park is predominant use. they will also be used for public toilets.
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the parcel, efg--they will use a non portable generator for flushing toilets. we're a little bit phases saving 1.5 million dollars per year. that will increase up to 1.9 million. we're strong user that will go down on basis as more customers come online.
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why we're going to execute this early, we're going to port commission because of the term, it will define and execute, but it will not take place until we accept the park. now we have this agreement to purchase water to buy the water to fulfill our needs. i do want to say that the term on this, this is a long term relationship. this is a 30-year term on the agreement to purchase water. that tie into the fact that there is private financing on this. so we have a 30-year term on there for that purpose. so let's go to the next slide, where we're looking at two expenses.
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one that is caused a flow chart. you can think of these as a fixed ebbs pence. so the fixed expense are items like the debt service, maintenance, you know, insurance things like this that are cause the facility. and then there is a flow charming that will be as a port buys this water that's what it's paying for. i do want to say, these numbers are pretty high. you're looking at a number for 550,000 per year. the usage itself is a lot less. these estimated of course, because the point of this is that, mission rock opportunities will be operating this at an actual costs. these costs will be passed on directly on a prorate basis. that's a note on here, where we say that the note to operate is funded by payments by the
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customers. so this is one contract with mru and one parcel itself. and they're going to be doing the same thing so they're kind of in this together. i made a note that the capacity charges in particular will decrease in future phases. one nuance of this new and part of it is because of the nature of the port and municipal agency, we have an actual caps on our expenditure and our o blig aces per year. we don't know what the costs are going to be but we estimated, and the port to make sure that the harbor is not encumbered. that amount will be appropriate in the budget as necessary. however, i want to clarify, we're hoping that we don't need to spend the dollars as it goes. i believe everybody is familiar. we're intend to go enter into a long term lease.
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under this agreement to the park tenant. so essentially, we would never take over this agreement, we would take our rights to purchase and our obligations and sign it to that tenant on day one. but this is a large obligation to buy this water, the big annual expense but it was
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contemplated in the formation of mission rock. taxes will be starting next year for operation of parks that will be built out and the water purchase associated with that. so, what that is, it's a guaranteed revenue stream if the port needs it. and they would need it if they have these obligations to purchase it. so it sits waiting until the time that the port needs it. we call it a springing service tax. and it's mentioned that it's not the money that hits the harbor fund, it's paid bit vertical parcels. so there is a back up if we don't enter into this park place.
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plus up to 650 of purchase obligations. we will always have a proportion of the special service tax to cover this water service obligation and then the rest will be used to vanish the park. so a lot in these slides and we also very technical agreement. what we've been negotiating to make sure that it's there.
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queer looking for feed bafjt i believe it's suppose to be up and running later this year which is a huge accomplishment for the team. i believe we have maggie on the line. do we have anybody calling in? >> hi, yes i'm here. >> we have maggie. >> and we have michael. >> michael ahanersinger, he represents every green energy. and they're going the operators through mission rock utilities. so they can be give you explanations about recycled water.
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otherwise i'm just available. >> so maggie, josh, you triple team this one. you didn't leave anything on the plate. at this time, let's open up to public comment? is there any public comment in the room? seeing none, at this time, jenica will provide instructions for remote participants. >> at this time, we'll open the queue for anyone on the phone who would like to make public comment for 12b. please dial star-3 if you wish to make public comment. we will let you know when your line is open. comments will be limited to three minutes per person. the queue is now open.
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please dial star-3 if you wish to make public comments. at this time there are no members on the phone wishing to make public comment. >> thank you, public comment is closed. commissioner gilman. >> first of all, very impressive and thank you for the lesson on recycled and blackwater. yeah, well i just want to make sure that there is a finance part. so this utility is making amazing work. we will actually never spend a dime unless we're managing the park because we're going to contract somebody to manage the park and they're going to have access to the special tax?
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>> yes, and no. the first answer is yes, the intention would be to assign all the obligation of that tenant. however, if it's a park tenant affiliate of rock partners which is what we're intending, we would not spring this special service tax. they would instead and maggie correct me if i'm wrong. this he would manage the park, special events plus operation plus the purchase of recycled water operations. that would never come to the port directly. we can then kick this tax into gear.
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>> that's right. >> okay, you answered my question, thank you. sth. commissioner lee. >> i think recycle, treatment water is the way to go for the future, it pays for itself. you know how we break even on this thing. a lot are doing for recycling the water, i see them come up in new buildings. i look forward to see, it's still a process. and then, hopefully it pays off, but i think this is the way to go for the future. thank you. >> thank you for that. and yes you're correct, that's the way to go. legislation that's been passed to support this. the 12c recycled water ordinance from a few years ago,
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was to apply to specific projects like this. not every project is able to comply with that. we made a statement back in 2019, we have to make this work, we go forward with it. we're a little bit an early leader which has some cost but it's what san francisco does, especially when it comes to sustainability and the future of this. it cost more and it pays off in the future. >> vice president brando not. >> is there any risk to the port? >> some risk could be if the
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whole system fails and goes in the water and collapses. >> and just for general knowledge can you tell us the benefit of portable versus non portable water? >> so portal water is water supplied bit puc and it's pulled in and michael, feel free to expand upon this when i'm done. and once it's used, it goes onsite.
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it's avoidance purchase of having to bring in that 5.1 million. we're treating it with the existing water onsite. but then it's being treated. it's taking that water and treating it and including the blackwater in there. that's what is really different. not just recycling rain water it's taking all the water generated from the site including the blackwater. so portable use for drinking. portable can be used for anything but it's a little bit, it's a limited resource.
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i think that last statement is making sure that we're using the limited resources and we're using that recycled water for purposes where we can continually reuse and reuse it. >> got it. so because of this, the cost is much more intensive than what the puc does at the original source.
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project saved significant money by running it rather than putting it through the project that would have an 18% return. all of that is avoided because of this structure. so there is a higher price point but if you factor that in, it is less because of the cost of what it would have been if it was in the project. >> thank you. >> one more comment. this would relief a lot of pressure from, if we don't get rain in the future, i'm sure. one of the first to go. so this system gives it, even despite restrictions, portable water, there is no real reason you put restriction on non portable use. the portable we're trying to conserve.
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we're creating a non portable. >> thanks. >> thank you. looking forward to coming back. i've got water on my hand, it's shrinkable. >> item 13 a is informational presentation on financial matters including board's proposed policy. >> hi commissioner. i'm nate cruz, i'm the acting deputy directer of finance administration. i'm here tonight to talk to you about some financial matters, specifically our debt coverage policies and our operate be reserve policy.
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there has been a lot of happy news today about the recovery and how well things are going and coming back especially in the heel of fleet week. but for the context of this presentation, it's important to go back to july 2020, fiscal year 21, that was the first fiscal period that we were en shirely of covid. we lost money that year. we had to halt a lot of capitol project and services. we maintain the critical stuff but also had some ramification. so we're back in time, fiscal year, 21.
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so, as part of our bond, part of our contract with our bond holders, there is, you know, scores and scores of requirements on everybody, including these debt coverage requirement. and there is two specific tests. one is that we make enough operating income in a year, and that's revenue less expenses, such that the operating income is greater than or greater our annual amount. we have enough profit to pay our debt bill, it's pretty simple. the second test is a little bit of a new nuance, but now you add in that nuance, we can add our fund balance to that number and that combined amount needs to be equal or greater than 1.3 times the annual amount. so you can see on the right, there is a red total on the
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bottom, that's an excerpt and that year we lost financial statement, about 44 million dollars and because of that, we failed the first test. and the scale helped us pass that second test. we saw this coming, very early in the second year. look, we had never seen these conditions before,ser but we were forecasting this we're not going to pass the requirement. we did that, because it's important but it's important to also note that this is not a de
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fault, there are 7 particular things that are like, big default with a capitol d and have financial ramifications. we made all of our debt service in time and in full. but the failure, one time does have some obligations. the first is to adjust the practices as the market recovers to phase out state
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credit. and we ended almost all the program except for the office sector which is struggling with the slow return to the office. so this category of suggestions is more on going efforts. and we'll continue to adjust as the market adjusts. the second category is interagency savings. significant portion of our expenses is to pay other agencies for their services. and some specific recommendations came out and where we begun conversation to see if there are efficiencies to be had there. that's a long term conversation. but right now weco