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Port Commission approves first amendment to Pier 70 negotiation agreement with Forest City
Summary
The Port Commission approved a first amendment to the Exclusive Negotiation Agreement (ENA) with Forest City that adjusts interim leasing, increases developer contributions for staff and non‑port costs, and clarifies performance milestones; commissioners probed cost caps, the developer’s 18% preferred return, and whether ballot measures count as force majeure.
The Port Commission voted to approve a first amendment to the Exclusive Negotiation Agreement (ENA) with Forest City Development California Inc. for the Pier 70 waterfront site, authorizing changes to interim leasing, negotiation fee schedules and cost‑recovery provisions and reaffirming the project’s performance schedule.
Ricky Tidani, development project manager in the port’s planning and development division, told the commission staff and the developer have been negotiating adjustments after due diligence showed the complexity of the project requires additional funding and new terms. He said Forest City has already paid about $700,000 for the initial negotiation phase and staff now expect larger costs for phase two, so the amendment revises how negotiating fees and non‑port costs are handled and how staff time is reimbursed.
Tidani said the amendment recognizes that some tenants will remain on site during development and includes provisions allowing the developer to terminate interim leases, require tenant waivers for relocation benefits, and secure access for due diligence. He described the fee structure and cost recovery mechanics and said non‑port city department costs (city attorney, planning, SFPUC, OEWD, DPW) will be the developer’s responsibility and may be repaid from project cash flow once the developer recovers its initial investment and an 18% preferred return.
Commissioners pressed staff for clarification on several financial and schedule points. One commissioner asked whether the port’s non‑port costs of $3,500,000 are subject to an 18% return; staff replied that those non‑port costs are treated as predevelopment expenses that are recoverable to the developer and are subject to the 18% calculation. Another commissioner asked for the extension fee amount; staff said the extension fee is $100,000 and expected to be applied per six‑month extension (staff said they would confirm the precise period and report back).
On incentives and risk allocation, staff described the basic deal structure: the private partner provides capital to entitle the project, pay for CEQA and infrastructure, and receives an 18% preferred return; after that threshold any excess proceeds are split 45% to Forest City and 55% to the port. Staff said that structure provides a financial incentive for the developer to move the project forward rather than land‑bank it.
Commissioners also asked whether ballot measures would qualify as force majeure under the ENA; staff said they would consult the city attorney and report back, because the contract contains multiple force‑majeure categories and legal interpretation is required.
After questions and a public comment period, a motion to approve the recommended first amendment was moved, seconded and approved by the commission (Resolution 14‑3). The resolution will allow staff to continue negotiations under the amended ENA terms and provide periodic updates to the commission.
