SAN FRANCISCO AIRPORT COMMISSION MINUTES

Transcription

1 SAN FRANCISCO AIRPORT COMMISSION MINUTES December 19, :00 A.M. Room City Hall #1 Dr. Carlton B. Goodlett Place (400 Van Ness Avenue) City and County of San Francisco LONDON BREED, ACTING MAYOR COMMISSIONERS LARRY MAZZOLA President LINDA S. CRAYTON Vice President ELEANOR JOHNS RICHARD J. GUGGENHIME PETER A. STERN IVAR C. SATERO Airport Director SAN FRANCISCO INTERNATIONAL AIRPORT SAN FRANCISCO, CALIFORNIA 94128

2 Minutes of the Airport Commission Meeting of December 19, 2017 CALENDAR AGENDA RESOLUTION SECTION ITEM TITLE NUMBER PAGE A. CALL TO ORDER: 4 B. ROLL CALL: 4 C. ADOPTION OF MINUTES: Regular meeting of December 5, D. ITEMS INITIATED BY COMMISSIONERS: E. POLICY: 1. Advancement of Sustainable Aviation Fuels F. ITEMS RELATING TO ADMINISTRATION OPERATIONS & MAINTENANCE: 2. Approval Lease Amendments to Extend the Term for Facilities in Terminal ) Amendment No. 1 to Domestic Terminal Food and Beverage Program Lease No with Bay Area Restaurant Group, JV (Gordon Biersch) ) Amendment No. 1 to Domestic Terminal Food and Beverage Program Lease No with D-Lew Enterprises, LLC ( Yankee Pier ); ) Amendment No. 2 to the Specialty Coffee Facilities in the Domestic Terminal Building Lease No with Gotham Enterprises, LLC (Peets Coffee & Tea), specifically the facilities in Terminal ) Amendment No. 2 to Electronics & Technology Stores in Terminals 2 and 3 Lease No with InMotion Group Entertainment Group, LLC Approve Phase C6 of Contract 9350A.66 - Design- Build Services for REACH - Customer Hospitality, Boarding Areas A & G Project - Webcor Construction dba Webcor Builders Award Professional Services Contract Project Management Support Services for Courtyard 3 Connector Project - PGH Wong & Partners JV, a JV of PGH Wong Engineering, Inc., CFWright Consulting, LLC and Avila & Assoc. Consulting Engineers, Inc Modification No. 2 to Professional Services Contract Project Management Support Services for Master Utilities Infrastructure Study - HNTB Corp Minutes, December 19, 2017, Page 2

3 6. Award of Two International Marketing Services Contracts in Overseas Locations Contract San Francisco Travel Assoc.; Contract Hill+Knowlton Strategies G. CONSENT CALENDAR OF ROUTINE ADMINISTRATIVE MATTERS: 7. Settlement with MBIA, Inc. MBIA Insurance Corp., National Public Finance Guarantee Corporation, and Jason Kissane in Bond Insurance Litigation: CCSF v. AMBAC Financial Group Inc., et al Correction of Commission Resolution No to Restate the Annual Rent for a Ground Lease with the United States Postal Service at Plot 10F H. NEW BUSINESS: DFS Lease I. CORRESPONDENCE: 15 J. CLOSED SESSION: Settlement with MBIA, Inc. MBIA Insurance Corp., National Public Finance Guarantee Corporation, and Jason Kissane in Bond Insurance Litigation: CCSF v. AMBAC Financial Group Inc., et al. 15 K. ADJOURNMENT: 15 Minutes, December 19, 2017, Page 3

4 AIRPORT COMMISSION MEETING MINUTES December 19, 2017 A. CALL TO ORDER: The regular meeting of the Airport Commission was called to order at 9:00 AM in Room 400, City Hall, San Francisco, CA. B. ROLL CALL: Present: Abent: Hon. Linda S. Crayton, Vice President Hon. Eleanor Johns Hon. Richard J. Guggenhime Hon. Peter A. Stern Hon. Larry Mazzola C. ADOPTION OF MINUTES: The minutes of the regular meeting of December 5, 2017 were adopted unanimously. No D. ITEMS INITIATED BY COMMISSIONERS: There were no items initiated by Commissioners. E. POLICY: Item No. 1 was approved unanimously upon a motion by Commissioner Guggenhime and a second by Commissioner Stern. 1. Policy on the Advancement of Sustainable Aviation Fuels No Resolution adopting an Airport Policy on the advancement of Sustainable Aviation Fuels. Ms. Julian Potter, Chief Administration & Policy Officer... we are excited and proud to come before you today with the Airport s Policy on the Advancement of Sustainable Aviation Fuels (SAF). SAF s are relatively new to the aviation industry yet have been tested and utilized by dozens of airlines worldwide for the past ten years. Currently there are five different types of sustainable fuels that have undergone rigorous testing and are certified as drop in fuels available to blend with conventional Jet A fuel. This past summer we partnered with Singapore Airlines for three months to pilot the longest flight, 16 hours, using a blend of SAF and conventional fuel. This was accomplished via fuel truck delivery on the airfield to the plane parked at the gate. Alternatively, at LAX United Airlines has invested in an Airport wide pilot program that blends fuel into the hydrant system whereby every flight leaving has a small amount of blended fuel. Either delivery option has Minutes, December 19, 2017, Page 4

5 proven that SAF fuel is ready for airline usage and provides a significant opportunity for airlines to meet their greenhouse gas emissions, reductions, targets as adopted by the United Nations International Civil Aviation Organization (ICAO). In fact, NASA estimates that SAF fuels could reduce CO2 emissions by up to 80% more than conventional Jet A fuel, which would improve the air quality for thousands of workers on the airfield and for our neighboring communities in San Mateo County. To date, SFO has focused on reducing our own greenhouse footprint... things that we control, our building systems, employee commute, passenger transportation, and we have been successful in reducing our emissions by 33% from 1990 levels, but these only represent 2% of Airport-wide emissions. So, to be truly impactful, we must create a partnership with the airlines and fuel providers to ensure that SAFs can be delivered in a timely, safe, and efficient manner to SFO. Therefore, we want to review and plan for infrastructure improvements, we want to set targets for fuel consumption and greenhouse gas emissions reductions, and we want to identify any operational, safety, or security protocols. Next year the California Resources Board is positioned to include jet fuels in their update of their low carbon fuel standard. We expect this action to become effective January This policy would create carbon credits that would significantly reduce the cost of sustainable fuels and make them price competitive with conventional Jet A fuel. Airlines currently have agreements with several sustainable fuel providers to purchase fuel when their refineries are fully operational. Your support for this policy on the advancement of sustainable aviation fuels will position SFO to be a leader in this exciting environmental development within the aviation industry. In the upcoming year, we will return to brief you on our progress and secure support for specific fuel use and emission reduction targets. Commissioner Stern... will the supply be sufficient if we decide to go wide and roll this out? Ms. Potter... it varies by fuel provider. There are a half dozen or more across the world. The biggest is probably Neste in Helsinki. They have a huge refinery and they re ready to switch to jet. We ve met with them several times. They currently provide 10% of alternative diesel fuel to California so they re already shipping and doing a worldwide distribution, but we have many small refineries that we ve also met with. We met with all of the refineries. United has an ownership in them. They are breaking ground on a refinery outside of Reno in the spring and they plan to be up and operational by 2019 when this credit comes in. We re at the beginning of a brand new industry. You know it s going to take years. We use a billion gallons of fuel at SFO. Worldwide production of every single refinery today is less than 1%. With this low carbon fuel standard, people are looking our way. We actually did an investment event... Ivar spoke with United and Silicon Valley companies trying to get them to invest in these companies. F. ACTION ITEMS RELATING TO ADMINISTRATION, OPERATIONS & MAINTENANCE: Item No. 2 was approved unanimously upon a motion by Commissioner Stern and a second by Commissioner Johns. 2. Approval Lease Amendments to Extend the Term for Facilities in Terminal 3 Minutes, December 19, 2017, Page 5

6 No No No No Four (4) resolutions approving 1) Amendment No. 1 to Domestic Terminal Food and Beverage Program Lease No with Bay Area Restaurant Group, JV ( Gordon Biersch ); 2) Amendment No. 1 to Domestic Terminal Food and Beverage Program Lease No with D- Lew Enterprises, LLC ( Yankee Pier ); 3) Amendment No. 2 to the Specialty Coffee Facilities in the Domestic Terminal Building Lease No with Gotham Enterprises, LLC ( Peets Coffee & Tea ), specifically the facilities in Terminal 3 4) Amendment No. 2 to the Electronics and Technology Stores in Terminal 2 and Terminal 3 Lease No with InMotion Group Entertainment Group, LLC to extend the term for facilities in Terminal 3; and directing the Commission Secretary to forward amendments to the Board of Supervisors for approval. Mr. Leo Femin, Chief Business & Finance Officer... the Terminal 3 West renovation project is now commencing. Between 2018 and the end of 2020 renovations to the Terminal will require closing down and taking back the space occupied by five concessions. Attachment 1 to your memorandum shows the locations of these facilities. They are: Gordon Biersch restaurant in the frontal concourse near Gate 74. Yankee Pier restaurant near Gate 72 at the corner of the concourse leading into Boarding Area F. Two Peets Coffee stands. The one at the end of the Boarding Area F finger near Gate 86, and the one in the frontal area near Gate 73. InMotion Electronics in the frontal concourse also near Gates 73 and 74. Usually, we would issue an RFP for new leases but that s not feasible until after the Terminal renovation work is completed in each of these areas. We cannot issue an RFP if the spaces will be taken back within two years. A new tenant could not come in, re-brand and make the large capital investment needed within that short timeframe. The existing tenants only need to refresh their current finishes and not undertake new construction. Extending these leases allows us to make these facilities available to passengers until such time that we need to shut them down. The lease amendments also require the tenants to refresh and repair their facilities. Mr. Joe Alioto Veronese... sorry I wasn t at the last meeting, although I was able to listen to the recording. This is a new standard. I ve never heard the two year standard. I don t know if it s a law. I ve never heard such a law that you can t RFP if a contract is going to be taken back in two years. That is not the law. You have to follow the law. The law says, the Administrative Code... I sent you the letter in November. The Administrative Code says it has to go out to RFP. This was an agenda item two meetings ago. I highly suggest that the full Commission get briefed on the Brown Act. You cannot remove an item from an agenda without a vote. I believe that s the rule. I recently read the Brown Act. That s what it says. That item was removed and it wasn t placed on the next agenda meeting but it was Minutes, December 19, 2017, Page 6

7 placed on this agenda meeting. The rules are the same. You cannot do this, but as I understand it, you re going to take a vote and you re going to pass it. And I m assuming that the City Attorney has given you legal advice on this. I haven t seen the publicly noticed meeting where you had gone into closed session to discuss that legal advice so I don t know where that advice came from. But I m assuming you received legal advice on this and I m just going to allow you to vote and there s nothing more I can do. I sent you a letter, I created a record, this has to go out to RFP, there s no other way around it. You can t allow the Administration just to make up the rules. If you ask the correct questions, and I know that you re asking more questions and I appreciate that. But these leases are gong out to a select few. I know you have a rule that says only eight leases. We have seen, if you take a look, and I m going to create this. It s taking some work and I just got 1,600 documents from the City yesterday. If you take a look at the people that are getting these leases, you will see that they have more. Some of them have more. I believe that one of them has at least 15 locations at the Airport. Now granted it s small, it s less than eight leases but that s the work around that the Airport Administration is doing. They re lumping a whole bunch of locations into a single lease. I thank you for your time. Commissioner Guggenhime... does this need Board of Supervisors for approval? Commissioner Crayton... it does. Item No. 3 was approved unanimously upon a motion by Commissioner Guggenhime and a second by Commissioner Stern. 3. Approval of Phase C6 of Contract No. 9350A.66 - Design-Build Services for the REACH - Customer Hospitality, Boarding Areas A & G Project - Webcor Construction LP dba Webcor Builders - $10,484,376 No Resolution approving Phase C6 of Contract No. 9350A.66, Design-Build Services for the REACH- Customer Hospitality, Boarding Areas A & G Project, with Webcor Construction LP dba Webcor Builders in the amount of $10,484,376 for a new contract capacity amount of $39,653,671, and a corresponding contingency amount, and with no change to the contract duration. Ms. Judi Mosqueda, Project Management... this seeks your approval of Phase C6 for the award of Trade Package Set (TPS) 4 with Webcor Builders for design build services for the REACH Customer Hospitality Boarding Areas A & G Project. It will increase the contract capacity amount by $10.4 million, establishing a new contract capacity amount of $39.6 million, a corresponding amount of contingency authorization, and no change to the contract duration. The REACH Boarding Areas A & G Project will renovate and enhance the North and South Food Courts, coordinate 18 tenant construction spaces, concourse improvements adjacent to those concessions, development of a publicly accessible exterior terrace at the end of Boarding Area G, improvements to the hold rooms, Minutes, December 19, 2017, Page 7

8 and replacement of LED monitors at ticketing and Customs. The Phase C6 approval will provide for the award of TPS 4 which includes trade packages from subcontractors for plumbing, mechanical sprinklers, and electrical work and selfperformed work for demolition, miscellaneous carpentry, ceiling tiles, doors, door frames, door hardware, drywall and concrete. The forecasted amount for this contract is $41.2 million and is within the contract budget with appropriate levels of contingencies. The City s Contract Monitoring Division has approved a 25% LBE subcontract requirement for design services and a 20% requirement for construction services and Webcor has committed to meeting these requirements. Commissioner Crayton... can you could provide a list of the major contractors like Webcor, the number of projects that each one of them currently has at the Airport. Ms. Mosqueda... I believe we have four major contractors with multiple contracts. Commissioner Crayton... I would like to see a list of our major contractors and their contracts in writing. It has nothing to do with that particular contractor, I m just trying to understand not only the volume but how the projects are completed when you have several different projects. One company has 25 projects, etc. and what s the decision making power around that? I have a spreadsheet but I thought I better ask about it and that way I could be better informed when I vote. Ms. Mosqueda... of course. What I can tell you is when contractors have multiple projects, they have different teams of staff assigned to them. Commissioner Crayton... I understand. Item No. 4 was approved unanimously upon a motion by Commissioner Stern and a second by Commissioner Johns. 4. Award of Professional Services Contract No Project Management Support Services for the Courtyard 3 Connector Project - PGH Wong & Partners JV, a Joint Venture Engineering, Inc. and CFWright Consulting, LLC and Avila & Associates Consulting Engineers, Inc. - $3,250,000 No Resolution awarding Professional Services Contract , Project Management Support Services for the Courtyard 3 Connector Project, to PGH Wong & Partners JV, a J.V. of PGH Wong Engineering, Inc. and CFWright Consulting, LLC, and Avila & Assoc. Consulting Engineers, Inc., in a contract amount not to exceed $3,250,000 for the first year of services. Ms. Mosqueda... this requests your approval of a contract award to PGH Wong & Partners, Joint Venture of PGH Wong Engineering, Inc. CFWright Consulting, LLC and Avila & Associates Consulting Engineers, Inc. for Project Management Support Services (PMSS) for the Courtyard 3 Connector Project. This project includes design and construction of a new pre-security and post-security connector between Terminals 2 and 3 as well as an adjacent building for office space, tenant lease space, passenger amenities and the new executive office suite. The PMSS Minutes, December 19, 2017, Page 8

9 consultant will provide overall management expertise and oversight of the project, including design and construction management services, project controls, contract administration, cost estimating services, and field inspection. Four proposals were received. Based upon the selection panel s evaluations of the proposals and interviews, the highest ranked proposer, PGH Wong & Partners, Joint Venture is recommended for award. The contract amount for the first year of services is $3.25 million. Staff estimates the total contract amount to be $11.5 million with a contract duration of 40 months. The City s CMD approved a 21% LBE goal for this contract and PGH Wong & Partners Joint Venture is committed to meeting this requirement. Commissioner Guggenhime... has AGS ever won a contract at the Airport? Ms. Mosqueda... as the prime? Commissioner Guggenhime...in other words PGH Wong is No. 1, AGS is No. 2? Ms. Mosqueda... what I can tell you with certainty in the moment, and I can respond more accurately, AGS is working on campus but they may be a subcontractor to a prime. I m not sure if they have a prime contract. Mr. Geoff Neumayr, Chief Development Officer... they may have been a joint venture partner as well. I m not sure. Item No. 5 was approved unanimously upon a motion by Commissioner Stern and a second by Commissioner Johns. 5. Modification No. 2 to Professional Services Contract No Project Management Support Services for the Master Utilities Infrastructure Study - HNTB Corporation - $5,050,000 No Resolution approving Modification No. 2 to Professional Services Contract No , Project Management Support Services for the Master Utilities Infrastructure Study, with HNTB Corporation, in an amount of $5,050,000 for a new contract amount of $7,950,000 and a new contract duration of 24 months. Mr. Neumayr... this proposed resolution authorizes Modification No. 2 for Project Management Support Services for the Master Utilities Infrastructure Study with HNTB Corporation. It will increase the contract amount by $5.1 million, revise the total not to exceed amount to $7.9 million and extend the contract to February 9, 2019 for the second year of services. The forecast amount of this contract is $9 million with a total contract duration of three years of service. Staff will continue to return to the Commission to renew this contract each year based on the consultant s performance. The Airport s Underground Infrastructure consists of water, sanitary sewer, industrial waste, storm drainage, natural gas, electrical power, telecommunications and aviation fuel systems. The Airport is also planning a new recycled water distribution system. Much of the existing infrastructure has been in service for many years and is approaching either maximum capacity or is at Minutes, December 19, 2017, Page 9

10 the end of its useful life. In order to meet the long term demands of our underground infrastructure we have been undertaking an Airport-wide utilities study that addresses current needs as well as the needs of the current capital program and plan for the future implementation of the Airport s long term development plan. The scope of these services will continue to provide assessment of the Airport s existing utilities system, perform field verification surveys to document existing utilities, perform engineering analysis to determine the need for these utilities system improvements as well as plan for future Airport utilities system requirements. The scope will also include documenting all studies and developing a composite plan within the Airport s CAD system as well as the Airport s Geographical Information System as part of a holistic approach to infrastructure information management of these systems. The City s Contract Monitoring Division has approved a 25% LBE sub consulting participation goal and HNTB is committed to meeting this goal. Commissioner Crayton... does HNTB also consult with the City generally since my understanding is that the infrastructure is City wide in terms of the various departments within the City. Is that how that s done... they re the general kind of company that does this for everybody? Mr. Neumayr... I m not aware for a City wide program. This starts at our borders and comes inward so we re only addressing at the points of connection where we attach to the City utilities, PG&E, etc. Once we complete what we have, there is a plan on the last year of services to maybe look back upstream and see what needs to be addressed. At that point we would have to return under some other kind of program and work with the rest of the City or the utilities to see what that looks like. That s going to require a different type of analysis to get there. Commissioner Crayton... so, we re building a hotel and is this the group that s going to decipher infrastructure. I know the Hotel is separate, but the utilities or infrastructure is the same as it is with the Airport, or is that a separate entity. Mr. Neumayr... at the boundaries of the Airport we make the connections into our major utilities but we re responsible for the distribution of those utilities that I discussed in the proposal including sewer, water, power, telecommunications. This study takes into account the initial assessment of what s in the ground. It takes into account all the current capital programs, including the hotel as well as their ADP so we can have a consolidated plan as we move forward. The purpose of this is so that as we take on any kind of construction, such as the hotel, when we dig and put something in, it s ready for the future to take us all the way through to the end. It builds in that resiliency so it supports the hotel. Item No. 6 was approved unanimously upon a motion by Commissioner Guggenhime and a second by Commissioner Stern. 6. Award of Two International Marketing Services Contracts in Overseas Locations Contract No San Francisco Travel Association - $3,600,000; Contract No Hill+Knowlton Strategies - $600,000 Minutes, December 19, 2017, Page 10

11 No No Resolutions awarding two International Marketing Services Contracts in Overseas Locations: Contract No to San Francisco Travel Association in an amount not to exceed $3,600,000 for an initial period of three years with two one-year options; and, Contract No to Hill+Knowlton Strategies, in an amount not to exceed $600,000 for an initial period of three years with two one-year options. Ms. Potter... I m here representing John Ballesteros, Chief External Affairs Officer, to ask that you award two contracts in support of International Air Service Development. These contracts will pay for international marketing, SFO brand development, public relations, and travel industry outreach. Last month you authorized the Airport to enter into contract negotiations with the San Francisco Travel Association and Hill+Knowlton Strategies. SFTA serves as the umbrella agency for our international marketing efforts. We have agency representatives in growth markets including China, India, Europe, and Japan. These foreign representatives are charged with increasing SFO s brand awareness via trade and tourism events, press trips, creating social and digital media presence. Next year s new service to Hong Kong, Madrid, and Lima will all be promoted using this contract to ensure that the flight is full and when possible, increase the frequency moving from three times a week to daily. This contract has been increased annually by $300,000 to reflect the growth of international carriers serving SFO. In the last five years we have gone from 26 international carriers to 37, a 42% increase. These are new carriers that are popping up all around the world and we need to promote SFO s brand up against other airports, our competition from the Bay Area and other West Coast airports. The second contract, Hill+Knowlton, is very strong in public relations and critically important when we need crisis communications with foreign audiences. This is a much smaller as needed contract of $200,000 per year and it will also target outreach for our new Australian and Tahitian flights. With your approval we will execute these contracts before the close of the calendar year. Both have a base term of three years with options for two, one year extensions. Commissioner Stern... when we have smaller consulting firms in a regional capacity, do they roll up directly to the Airport or governance around strategy, or what s the collection of all of these different consulting contracts? Ms. Potter... they re all managed through SF Travel, so it s our relationship with them. We have gone overseas, we meet with different agency reps, introduce ourselves so we have interaction with them, but they re contracted to SF Travel. Commissioner Crayton... we ve always been in arrangement with SF Travel in regards to this, is that a true statement? Ms. Potter... I don t know if always is accurate, but they re contract ends at the end of this year so they have been our incumbent three to five years. I don t know if they were before that. I m not sure. Commissioner Crayton... have we used Hill+Knowlton before? Minutes, December 19, 2017, Page 11

12 Ms. Potter... yes. They have been our more strategic communications firm, always on call, again, for the last three to five years. I m not sure if we had these big contracts before the previous one. G. CONSENT CALENDAR OF ROUTINE ADMINISTRATIVE MATTERS: Please be advised that Agenda Item No. 7 and the Closed Session Item are the same matter. If a member of the Public would like to comment about that Item, they should do so now. If any Commissioner requests consultation with Counsel prior to a vote on Item No. 7, the matter may be heard in Closed Session as provided in the Agenda. The Consent Calendar, Item Nos. 7 and 8, was approved unanimously upon a motion by Commissioner Johns and a second by Commissioner Stern. 7. Settlement with MBIA, Inc. MBIA Insurance Corpo., National Public Finance Guarantee Corporation, and Jason Kissane in Bond Insurance Litigation: City and County of San Francisco v. AMBAC Financial Group Inc., et al. (S.F. Superior Court No. Case No ; JCCP 4555); Proposed Settlement: Approximately $37,970 paid by MBIA to the Airport No Resolution approving a proposed settlement in the amount of approximately $37,970 to be paid to the Airport by MBIA Inc., and related parties in Bond Insurance Litigation: City and County of San Francisco v. AMBAC Financial Group Inc., et al (S.F. Superior Court No ; JCCP 4555) and recommending approval by the Board of Supervisors. 8. Correction of Commission Resolution No to Restate the Annual Rent for a Ground Lease with the United States Postal Service at Plot 10F No Resolution correcting the annual rent for the ground lease with the United States Postal Service, as approved in Resolution No , from $1,445,600 to $1,497,000. H. NEW BUSINESS: Discussion only. This is the Public Comment section of the calendar. Individuals may address the Commission on any topic within the jurisdiction of the Airport Commission for a period of up to two (2) minutes. Please fill out a Request to Speak form located on the table next to the speaker s microphone and submit it to the Commission Secretary. Mr. Veronese... Thank you Commissioners. Again I apologize I wasn t here at the last meeting but I was able to listen in. I did want to comment on one of the agenda items that you did cover and that was the lease to DFS. I appreciate that there were two questions asked in the granting of that lease. That s one question for every billion dollars in the lease. One of the questions was, I believe, from Commissioner Johns Minutes, December 19, 2017, Page 12

13 and that question was in regards to the interviews. I sent a letter to the Commission. Hopefully you all received my letter. It detailed some of the shortcomings of that process. I have copies of that letter here with me today in case you didn t receive it. The question in regards to the interviews, yes, that was a good question. While it s true that all three applicants received interviews from five panelists. A follow up question would have been great and that question would have been is there any one applicant that wasn t treated equally? The answer to that is yes. The people that came in No. 2 actually only got interviewed by five panelists, while the rest of them were interviewed by all six. The other question that was asked, I believe, by Commissioner Mazzola and that question was about the 45.8% MAG. Anyone who has run a business knows that taking 46 cents out of every dollar, out of the pocket of the business and giving it directly to the Airport, is unsustainable. DFS evens knows that. If you look at the top three contracts it has entered into in the last two decades, San Francisco, Hawaii, Los Angeles, every single one of those contracts was renegotiated. Every single of them. Hawaii sued them. That number is not sustainable. They front loaded this lease. There s no question about it. But what s become clear to me is that this is not the venue for this. This is just not the venue for this. I implore those applicants to take this to a different venue because, I think, only there will they be able to get the right answers, will they be able to get an equal playing field. This contract needs to be looked at. It s a $2 billion contract. Thank you, Commissioners. I appreciate your time. Commissioner Guggenhime... a point that you made regarding another Commission, you re saying that an applicant comes in, makes a high bid, gets accepted and, correct me if I m wrong, returns a year later and asks to re-negotiate the contract. Is that correct? Mr. Veronese... if you look at the historical record, DFS has done exactly that in the top three contracts on the West Coast. Let s just talk about San Francisco alone. That lease was amended in the last lease, they came back with a MAG of 15%, that was the lease they got. This MAG is 45.8%, that s 300% more. Is that sustainable? It s not sustainable and they know it. That lease was amended nine times in the term of that last lease, nine times. And, in fact when the extended lease was given, the MAG was only 30%. So, no I don t believe they re going to be held to the standard, absolutely not. They haven t been held to the standard in the three contracts they ve entered into, the three largest contracts on the West Coast. They front loaded, in my opinion. The Commission needs to guard against the front loading if they re going to sign that contract. You need to hold them to that 45.8% contract for the 15 years and make sure there are no loopholes. Make sure that the bond is a 15 year bond not a year after year bond that renews itself. And regarding ACDBE, they only met the 20% standard while the other two applicants bent over backwards to meet the 30% standard. Is that fair? Absolutely not. I don t believe they re going to be held to the standard. I think they re going to come back a year from now. That s what I predict. Commissioner Crayton... I take exception to some of your remarks because you ve taken liberty to decide for yourself how it s going to go. That s problematic for me for people that are not here to actually speak to that. I know the length that the Airport goes through because I m checking on things all the time. What they have done in terms of people that make it to the end has not been an easy route. If you re upset over something and you decide to get up and speak and give my opinion, that s fine, but I like to give an opinion of people when I know that they re there and they can defend themselves. I find that a fair way to do it. I respect your ability to come up and Minutes, December 19, 2017, Page 13

14 give information. Sometimes when you give information it will trigger something in my head and I ll ask questions and see if maybe we haven t covered that, but for the most part this staff keeps me abreast of things. Believe me, you ve got a group of Commissioners here that are dedicated to doing the right thing and checking on information. This is not an easy route. I respect what you re doing. I m not quite sure which lane you re in now because you keep jumping in different lanes. But I do respect that. I want you to know as the Acting Commission Chair today that when this stuff is brought to us and we don t just get up here and vote without having already gone through a lot of this. I really want you to understand that. And I expect to have more dialogue with you. Mr. Veronese... Commissioner, I respect and honor your service. You have no idea how I honor the service of every Commissioner, of every elected official, of every department head in this City. But the reason that I m here is because I acknowledge my first amendment right to stand up here. Commissioner Crayton... of course. Mr. Veronese... I acknowledge the Sunshine Ordinance and I know that you re a big proponent of it as well. I accept any challenge that anybody gives me, especially in this field here. If you challenge me on the facts, I will give you the facts. I want you to have all of the facts. I have asked the City Attorney to provide the documents to me. Just last night I got 1,600 documents in regards to those last leases and I expect to get more documents. My job, as I see it as a citizen of San Francisco, is to provide you accurate information. Commissioner Crayton... we re getting it from the City Attorney. Mr. Veronese... you re getting it from the City Attorney, but please accept my challenge as I accept your challenge, and you know my right to give you information is correct and I intend to continue that. I m in only one lane, Commissioner. My lane is the lane to the right. Commissioner Crayton... and mine is also. We are in the same lane with you. Mr. Veronese... while my feet is tired my sole is rested to quote Rosa Parks I believe. And my feet will continue to be tired. This is what I m about, this is what my family has been about. Commissioner Crayton... well I m going to fight with you. I want you to know you ll see me everytime. Mr. Veronese... stand with me on it. Let s enforce the policy. Commissioner Crayton... I m standing with you but I m standing here because this is the Commission that I m on. Mr. Veronese... I respect that. Your comment in the last meeting was in regards to ACDBE. This Commission set that policy at 30% and for some reason there s no 30% in this contract. I m just pointing that out, just pointing that out. I think that ACDBE is the backbone of this City. I think they need to be promoted. I won t belabor this anymore. I appreciate your comments. I respect your service and I appreciate the opportunity to be here as well. Commissioner Crayton... thank you so much. Minutes, December 19, 2017, Page 14

15 Mr. Veronese... you re welcome. I. CORRESPONDENCE: There was no discussion by the Commission. J. CLOSED SESSION: CONFERENCE WITH LEGAL COUNSEL EXISTING LITIGATION/POTENTIAL SETTLEMENT (a) Public comment on all matters pertaining to this agenda item. (b) Discussion and vote in open session pursuant to the Brown Act (California Government Code ) and the Sunshine Ordinance (San Francisco Administrative Code 67.10(d)) on whether to invoke the attorney-client privilege and conduct a closed session to confer with legal counsel. ACTION ITEM. (c) [PROSPECTIVE CLOSED SESSION] CONFERENCE WITH LEGAL COUNSEL regarding existing litigation (Government Code (a), Administrative Code 67.10(d)(1)): City and County of San Francisco v. AMBAC Financial Group Inc., et al., San Francisco Superior Court Case No ; JCCP Material term of the proposed settlement: The Airport would receive approximately $37,970 from defendant MBIA Inc., MBIA Insurance Corp., National Public Finance Guarantee Corporation, and Jason Kissane as part of a larger settlement involving numerous plaintiffs. Discussion of proposed settlement and resolution recommending approval by the Board of Supervisors. ACTION ITEM. There are no other planned agenda items for the closed session. In the event of any urgent matter requiring immediate action which has come to the attention of the Airport Commission after the agenda was issued and which is an item appropriately addressed in closed session, the Airport Commission may discuss and vote whether to conduct a closed session under the Brown Act (Government Code (b)(2) and ) and the Sunshine Ordinance (Administrative Code 67.11).) (d) [RECONVENE IN OPEN SESSION] Discussion and vote whether to disclose any or all discussions held in closed session (San Francisco Administrative Code 67.12(a)). ACTION ITEM. K. ADJOURNMENT: There being no further calendared business before the Commission the meeting adjourned at 9:40 AM. (Original signed by: Jean Caramatti) Jean Caramatti Commission Secretary Minutes, December 19, 2017, Page 15