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Port adopts maritime excursion lease renewal policy to guide long-term extensions
Summary
The Port Commission adopted a Maritime Excursion Lease Renewal Policy setting rules for long-term lease extensions for excursion and ferry operators, including renewal timing, tenant capital-improvement requirements, audit rights and revenue participation; commission voted to adopt the policy.
The Port Commission voted to adopt a Maritime Excursion Lease Renewal Policy that sets internal guidelines for extending maritime excursion and ferry leases. Peter Dailey, Deputy Director of Maritime, presented the policy and explained it is intended to protect the port’s maritime interests while providing a blueprint for operators seeking long-term renewals.
Dailey told commissioners the policy limits consideration of term extensions to proposals made within the final five years of an existing lease or when a tenant proposes capital improvements or tenant-financed maritime-use expansion. Capital improvements required as part of an extension must be completed at the tenant’s expense and in a timely manner. The port will continue to charge participation rent on concession revenues and retain audit rights to review gross revenues, subtenants and other revenue sources.
Dailey said the policy mirrors aspects of the existing retail leasing policy and is designed to ensure fair administration, revenue protection and continued maritime use: "This policy is intended to ensure that maritime excursion leases are equitably administered, fairly regulated, generate revenues to the port and serve San Francisco residents and visitors." The policy does not limit the Executive Director’s authority to act in the port’s best interest, and the commission reserved the right to waive or modify any portion of the policy at its discretion. Staff indicated that any lease renewal would be formulated with market rent based on industry comparables and site history and, if required, be reviewed by the City Board of Supervisors.
The commission carried the motion to adopt the policy. A commissioner recused themself on this item prior to the discussion. Dailey said staff and tenant discussions informed clarifications in the draft policy and that it would be put in place as of May 1 if ratified.
Next steps: policy implementation, continued tenant discussions and any necessary coordination with the Board of Supervisors for approvals if required.
