Committee delays vote on $6 million increase for Terminal 1 program-management contract amid revenue concerns

The Budget & Finance Committee declined to vote on a $6 million modification to a San Francisco International Airport (SFO) contract for the Harvey Milk Terminal 1 redevelopment and continued the item to the committee’s next meeting to allow for additional financial review.

Kathy Weidner with San Francisco International Airport explained the amendment would increase the T1 partners program-management contract by $6,000,000 to a not-to-exceed $38,000,000 and extend the contract through July 7, 2023. "The proposed modification increases T1 partners contract by $6,000,000 for a new total contract amount of $38,000,000 and extends the contract through 07/07/2023," Weidner said, and noted the project remains a priority even as some capital projects were delayed amid the COVID-19 revenue decline.

The Budget Legislative Analyst summarized funding sources and recommended approval in part because the contractor has been performing and some of the contract would be paid from existing revenue bonds and passenger facility fees. BLA also referenced availability of some CARES Act funding and noted an estimated airport revenue shortfall of about $200,000,000 in the current fiscal year.

Supervisor Shamann Walton asked how falling airport revenue would affect the capital plan and future contract requests. Airport staff said the $6 million would close out the current contract and that they had reevaluated capital plans, delaying or removing some projects to stretch the existing $1 billion capital authority over an estimated 18 months.

Given uncertainty about longer-term airline recovery and projected shortfalls, Chair Sandra Lee Fewer moved to continue Item 3 to the next Budget & Finance Committee meeting to allow staff to provide more detail on how the airport will meet revenue shortfalls. The motion to continue passed on a roll-call vote (Walton Aye; Mandelmann Aye; Fewer Aye).