Please be advised that the ringing and use of all cell phones, pagers and similar sound producing Electronic Devices are prohibited at this meeting. Please be advised that the chair may order the removal from the meeting room of my person responsible for the ringing or use of a cell phone, pager or other similar sound producing Electronic Devices. Please be advised that a member of the public has up to three minutes to make pertinent Public Comment on each agenda item unless the Port Commission adopts a shorter period on any time. Item 8, Public Comment on items not listed in the agenda. Is there any Public Comment . Seeing none. Item 9, executive directors report. Good afternoon, president brandon, rise president adams, commissioner woo ho. I am elaine forbes, and i am the ports executive director. First i would like to congratulate the hit toric pier 70 and the historic pier 70 and the orton project. On march 7th at 8 30, they will receive an award honoring their outstanding contribution and other outstanding winners. Id like to explain why they won this award. The award rationale is despite challenges, historic constraints, environmental and structural challenges, a complex capital stack, tax credits, these buildings were historically renovated and successfully leased, and they have served as a catalyst for the reextremity of the larger site. These revenues have been put back into rehabilitation for the port of San Francisco. These proud structures inaccessible to the public since their original construction can now be viewed, experienced, and appreciated by future generations. So congratulations to Orton Development, eddie orton, to plant construction, to the port team led by phil williamson, and i believe we have a representative from Orton Development here. Yes, hello. I think this is mr. Mora, would you like to say a word to the Port Commission . Youre not obliged to, sir. Come to the microphone, please. Hello, everyone. My name is everardo maora, andi thank you for this opportunity to stand before you and also for the opportunity to bring these buildings back to the community. Restoring them was a very meaningful, difficult project for us, and were happy to be on the final stretch with them. We also look forward to coming back within about two months once we finalize the project to give you an update on where the project stands overall, and we look forward to future opportunities on the waterfront. And just, you know, just want to really, really give a big thank you to the port staff at all levels, the port engineering department, the Environmental Review department, historic department, they all had an incredibly important part of our success, so thank you very much. Thank you so much. Congratulations, and thank y you. Thank you. Were extremely proud of this project. Id also like to update you on the status of mission rock. Since the Port Commission approved the transaction documents and accepted ceqa findings just at our last Commission Hearing on january 30th, the project team has been extremely busy. Last monday, on the 5th of february , the board of supervisors land use and Transportation Committee recommended the project to the full board of supervisors. They acknowledged the projects many public benefits. On tuesday, the next day, the 6th of february , the sfmta board approved the project Development Agreement and interagency cooperation agreement, complimenting the team on its careful approach to right sizing the future parking structure. The following day, the 7th, our team, led by rebecca benecini, and for the giants, fran wells, appeared before the budget over Sight Committee to explain the plans structure, and they approved the plan to the full board of supervisors. Yesterday, they received a positive recommendation on the projects financing mechanisms, which is vitally important to the projects success, and the project was forwarded to the full board with a recommendation today, cu culminating from 11 years of thoughtful presence and efforts, and thanks to a purposeful and thoughtful discretion of the board commission, the project is before the board of supervisors to hear the final approval. At the second the boreds second hearing, the project will occur on final read on the 23rd of february , and then, mayor farrell will have ten days to sign the transaction documents. The team is currently working with state Land Commission to explain the structure in a Firm Compliance with state legislation, leading to an april request for state Lands Commission approval. In may, my team anticipates approval of a major approval from bcbc for the projects permanent open space plan, and in october, we anticipate initial site work to commence, so were very busy and pleased with the progress weve made just since your last hearing. This room is going to get an audiovisual upgrade. After dealing with equipment that was put in in the late 80s, i believe, its time for an improvement. The upgrade will occur from february 26th through march 30th. The modernization will improve the quality and consistency of sound and the video experience in this space. It will also improve what the viewers see on channel 26, and the recording quality of the meeting for the public. Well also now have high speed wifi in the room, which will be a nice upgrade. During the upgrade project, were going to be relocating to pier 1 for our Port Commission hearing, and that means for the meeting on february 21st, march 13th, and march 27th, we will be in the bay side rooms at pier 1. We look forward to reconvening the Commission Meeting with full services here in april, and id like to thank all for skillfully overseeing the project, and that concludes my report. Thank you. Thank you. 9d . Oh, im sorry, any Public Comment on the executive directors report. No . 9d, Port Commissioners report. Commissioners, anything to report . Commissioner adams . Vice president adams first of all, i just want to say to our president brandon, it was an honor to attend your 20th anniversary on the San FranciscoPort Commission, madam president , and a special howd o shout out to renee, to make that a very, very historical evening. For me, it was historical in the sense that this being black history month, and president brandons contribution to this community, and to see her friends and family. Corrine spoke, jack blair from the giants spoke, mayor brown, and then kims partner in life, mimi, and it was just an honor to be a part of that, so thank you so much for allowing me to be there and playing such a small part. And also, i would just like to say that madam president , when you get done speaking, could we have a moment of silence for madam secretary amy posadas mother who passed away . Thank you. Thank you. I, too, thank elaine and renee and all the port staff that had anything to do with the event last week. It was it was just so magical and memorable and just such an honor, and im just so humbled and thankful to have been able to take this journey with all of you for so long, so yes. In i really want to thank everybody. It was just a great event, and sorry that everybody couldnt attend. And i would like to take a moment of go ahead. No, i was just going to before you spoke, i was just going to say congratulations, not only on the event, but on which, unfortunately, i had a prior commitment, so i came at the tail end, and people were still having a great time and talking about how wonderful it was. But really, just congratulations on 20 years. That is, i think, extraordinary in terms of the amount of dedication and commitment that youve given to the port and the city of San Francisco, so just really want to thank you for your commitment to Public Service and service to the port and really just take a moment to reflect on how significant it is for somebody to give 20 years of service to a Commission Like this. Its no easy feat while carrying on all of your other Community Activities as well, but i guess it just goes to show, if you want something done, ask a busy person. Congratulations on 20 wonderful years, and perhaps 20 more. Thank you. Id just like to add, i think that everything should be said has been said, but just add my own personal congratulations. I remember kim when she came on the commission, she was really helpful to explain because she had the history, she had the knowledge, and she had the culture, and shes very persistent, so i have a tremendous amount of respect for what she has done and contributed for the commission, for her community, and for each one of us, and so its very appropriate that she also gets to celebrate this anniversary as she is president this year, so congratulation again. Thank you. Now, can we have a moment of silence for amys mother. Thank you. Items on consent, 10a, request approval for a member of the Port Commission to travel with port staff to attend the sea trade cruise global conference on march 5th through t8th, 2018 in fort lauderdale, florida. 10b, request approval for the Port Commission to travel to [ inaudible ] 10c, request approval for the port of San Francisco drone policy relating to the ports use of drones on port property pursuant to the city and county of San Franciscos citywide employee drone policy, adopted by the citys committee on information technology. May i have a motion . So moved. Second. Is there any Public Comment on items 11, 12, or 13 . Seeing none, all in favor . Any opposed . Resolutions 1811, 12, and 13 have been approved. Item 11a, informational presentation on the ports fiscal year 2018 through 2019 and 2019 through 2020 biennial operating budget. Good afternoon, im megan wallace, the ports manager, and im here today to present on the proposed fiscal year 201819 and 1920 budget. Today, ill really be focusing primarily on the operating budget, as our capital manager, anonda hirsch, will be presenting on the Capital Budget shortly after me. I also just want to note just putting together any budget is really a team effort, and i particularly want to thank tar anavarro and mayrilyn yates frm the real estate and maritime division. Margaret doyle, shes supported me, and its been an amazing experience, as well. So i guess, you know, just really quicking it o really kicking it off, the mayor office and staff do a rigorous review of the citys economic and fiscal outlooks, and what weve been seeing weve been on a really long growth period for our local economy, and were starting to get warning signs, so we need to be more conservative in our opening outlooks, and that is also being paired with, as youre familiar with the ongoing story of growing personnel in expenses, those two drivers are really putting a real squeeze on the citys general fund, and while we arent a general Fund Department and arent being held to the same requirement of cutting our budget, we are being held to control our personnel growth, given thats one of the key drivers of ongoing growth within our budget. So heading into the ports budget process, we really did try to take a fiscally prudent approach of controlling our expenses. You are going to see were recommending strategic increase increases. In terms of managing personnel, were asking more along the lines of substitution of existing staff, so we are not seeing growth in our ongoing support, but we are requesting a good number of funding positions, and theyre contingent upon project funds. So we really held to the budget instructions, and i think that overall, were managing trying to repair our budget for a potential downturn moving into the next two fiscal years. I think one great thing about the budget is it really is making policies, putting its putting our money where our mouths are in terms of our strategic objectives, and its really important that we look and make sure that we are investing in the areas that we want to see ourselves grow and improve in, and so when it comes to sustainablity, resiliency, also economic vitality, we are making some key changes within the structure of the department by consolidating real estate and Development Together so that we can have more a strategic approach to those leasing initiatives. We do have a new chief Operations Office to try to coordinate efforts between divisions more effectively, and really, just all of these efforts do improve the Overall Economic vitality along the waterfront and in San Francisco, we believe. But i think really the key focus for the budget, you would tend to lead to, is stability, and weve continued to really stick to our policies of we have a 15 operating reserve requirement to protect us in an economic downturn or other y uncertainties. We do meet or capital policy requirements, and as youll see in this presentation, as well as in the capital presentation, we really are making an effort to invest in our facilities to stablize our revenues into the future. So getting into the details of the budget, first, im going to start with sources, and not to site a bunch of numbers, i think it is important to note that the fiscal budget for 1819 is 192. 6 million, and this is compromised of approximately 160 million of ongoing sources and 32. 8 million from onetime sources, and this is a 46 million increase over yauall, really driven by fund sources and other things that werent in the prior budget. For fiscal year 1920, the budget is 161. 3 million. Thats a 31. 3 million decrease from the proposed 1819 budget, and thats because youll see that our Capital Program tends to be sort of lumpy, that were spending down accumulated finances from Previous Year in the first year of the budget. Were requesting general fund support in the first year of the budget, and so in the second year, you see a drop in those sources. And its important to note the ongoing sources primarily support our operation, so we really look to obtain Funding Sources to keep that going. So these pie charts show total funding over the twoyear proposed budget. As you can see, the largest source really are our operating revenues. Fund balance is the next largest source. Just quickly to note, fund balance supports or Capital Program and its the source for our operating reserve, but for our operating fund, that biggest piece, its mostly compromised of commercial and industrial rents from our 500 someodd leases along the waterfront, parking, and then our various maritime business lines that each contribute about 20 of ourov overall revenue operating revenue. I do want to mention were missing a familiar business name on the maritime line. This does not reflect ship repair. As you know our shipyard is currently closed, and we did not assume any funds in this line for the proposed budget. I yes. Do you mind. I know you didnt assume any on this line. Are you projecting out not seeing any revenue as we have to do some repair on that, as well. Yeah. I havent done a fiveyear outlook review. I think its time will tell . Ill look to our Deputy Director and see if hes like to be informed, but for budget services, we have not assumed anything. That would be an improvement if we get. Clerk s heading into the spring, its not too late to update the budget before we get it done before its approved through the board of supervisors, but for now were taking the conservative approach and not accounting for it. Thank you. So overall, you know, over the twoyear period, were looking for a net increase in revenues of only 2. 2 million. Thats significantly less than in prior years, and i think its important to note that the key drivers of that is actually some revenue lines that are pulling that growth down. Parking is one, as we see development coming in, were actually going to be taking some facilities offline. Some of them are shipping to commercialindustrial rent so that helps the growth on the commercialindustrial rent side, but overall, it does appear to be a reduction, but ship repair, cargo and cruise are all maritime lines, where weve either seen declines in business, such as in ship repair. Cruise, were adjusting our parking assumptions, and we are seeing some dips in passenger volume. Cargo, its important to note that our overall business is doing quite well, but we had to change the structure of how we budgeted for that business, so it appears that our revenues are going significantly down, but our but overall, its really just because we had to shift how were reflecting this revenue line. Our gross revenues continue to be very strong. And for the commercial industrial rents, i do want to note that while were being conservative on things like ship repair, were actually being fairly aggressive lion things like our projected less revenue, and thats really going to call on our staff to push and get these facilities ready for leasing and get them up and running with new tenants. And i think its important that we push ourselves. Were seeing some dips in our you know, some easing in our revenue growth, but i think bottom line, its important for our ongoing stability to knack suknack make sure that were getting these facilities leased. On the uses side, the again, the budget in the first year is 192. 6 million; in the second year, its 161. 3. And this is compromised of operating expenses, the Capital Budget, and our reserve. And you know, really just noting that while