Port of San Francisco

The Port of San Francisco is a public enterprise committed to promoting a balance

of maritime, recreational, industrial, transportation, public access and commercial activities on a self-supporting basis through appropriate management and development

of the waterfront for the benefit of the public.

Port of San Francisco • Burton Act 1968 - Authorized negotiation to transfer all title

and rights in land held by the San Francisco Port Authority to the City and County of San Francisco to be held in trust for purposes of commerce, navigation, and fisheries

• Port Commission may lease land for uses that the Commission finds to be in the public interest, with resulting lease revenues to be in the furtherance of commerce and navigation

Port Jurisdiction Port Commission and staff manage improvements, facility leases, 10 maritime industries, environmental and historic resources and real estate assets extending along 7½ miles, with over 500 tenant leases

CENTRAL WATERFRONT

Port Jurisdiction

Pier 70

CENTRAL WATERFRONT

Pier 70

Pier 70 Districts

Pier 70

• 28-acre site • Midpoint: 1.5M sq.ft. comm. • Midpoint: 1,600 res. units • 30% BMR ~ 480 res. units • 9 ac. Parks/OS • $260M infra ~$87 infra cost psf

Key Public Benefits 1. BMR. 30% of all units will be affordable.

Key Public Benefits 2. TDM Plan. 20% reduction in project trips through 3. Transportation Sustainability Fees. ~ $45 million 4. SLR: On-site improvements+elevated buildings+open

space = accommodate 66” SLR+100 year flood 5. SLR: New, long-term funding stream for shoreline

protection > $1.1 - 2.3 billion over the next 99 years. 6. Sustainability. 35% reduction building GHGs & 42M

gal potable water saved (onsite blackwater plant). 7. Open space. 9 acres of parks

Open Space

9 acres of waterfront parks (excluding Crane Cove Park)

A regional draw with new Bay Trail connections

Key Public Benefits

8. Economic Diversity. Local hire, LBE, First Source

9. Arts, Industrial Uses & Public Facilities. 10.Historic Resources. Rehab 3 key resources in

Union Ironworks Historic District.

Pier 70 Conundrums • How to fund $260+ million in infrastructure costs?

and • Deliver required public benefits?

and • Meet Developer’s return requirements?

and • Provide financial returns to Port?

• Captures growth in property tax revenue (“tax increment”)

Infrastructure Financing District (IFD)

• Captures growth in tax increment (affordable housing use)

Infrastructure and Revitalization Financing District (IRFD)

• Establishes special taxes that property owners and lessees pay

Community Facilities District (CFD)

• Developer advanced fund that earn an 18% annual return

Developer Capital

• Port advanced Harbor Funds earn a 10% annual return

Port Capital

• Revenues generated from the sale or lease of Port land • Revenue Sharing between Port (55%) and Developer (45%)

Land Proceeds

Funding Sources – Diversity

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• Encompasses 28-Acre Site and a portion of Illinois & 20th Street Parcels

• Captures future tax increment, growth in Local and State shares of property taxes

• 92% for public infrastructure, e.g. streets, utilities, parks, historic rehabilitation and shoreline protection

• 8% for other Pier 70 needs, including Irish Hill Park

Funding Sources – Infrastructure Financing

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Funding Sources – Community Facilities Levies special tax over Waterfront Site

Pays special tax ≈ future property tax

Benefits: • Established over the

IFD to create an early income stream

• Early public finance strategy to minimize use of Developer Capital

• CFD bonds are a higher credit than IFD bonds, lowering cost of issuance

Risks: • Vertical developer

default risk

Finances Horizontal Infrastructure

Facilities special tax goes away when properties are assessed and tax increment starts flowing CFD will also fund a portion of the Arts Building feasibility gap

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Funding Structure – Investment & Return

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Funding Structure – Investment & Return

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STRATEGIES TO MAXIMIZE REVENUE-SHARING

• Limit Developer Capital • Maximize Public Financing • Tax Exempt Debt • Port Capital

CFD – Ongoing Maintenance Tax Maintenance CFD Levies special tax over Waterfront Site on an ongoing basis

Benefits: • Ongoing income

stream protects the Port finances

• Provides high standards for services

• Allows for cost escalation

Risks: • Additional cost to

vertical developers and tenants

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Funds: • Public Space maintenance & repair • Roadway maintenance & repair • Security services • Administration

• Project includes on-site improvements, elevated buildings and open space to accommodate 66” of sea level rise

• Shoreline special tax establishes a new, long-term funding stream for shoreline protection

• Shoreline special tax will fund Port-wide investments, including ongoing needs at the Project site

CFD – Shoreline Special Tax

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Summary of Projected Returns

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NPV Returns to Port and Developer

Capital

Capital Repaid Pref.

Return

Profit Share

Total Dev ~18.3% IRR

Profit Share + Rent

Spec Taxes / IFD

Total Port

($150.0)

($100.0)

($50.0)

$0.0

$50.0

$100.0

$150.0

$200.0

Developer Port

+ Options to vertical development

Port of San FranciscoPort of San FranciscoSlide Number 3Slide Number 4Slide Number 5Pier 70 DistrictsSlide Number 7Key Public BenefitsKey Public BenefitsOpen SpaceKey Public BenefitsPier 70 ConundrumsFunding Sources – DiversityFunding Sources – Infrastructure FinancingFunding Sources – Community FacilitiesFunding Structure – Investment & ReturnFunding Structure – Investment & ReturnCFD – Ongoing Maintenance TaxCFD – Shoreline Special TaxSummary of Projected Returns