Budget panel backs amendment to restructure Grand Hyatt SFO hotel bonds

The San Francisco Board of Supervisors' Budget & Finance Committee voted Feb. 3 to forward to the full Board an amended resolution that would authorize an amended and restated hotel trust agreement for Grand Hyatt SFO special facility revenue bonds.

At the committee meeting, airport officials said the trust amendment would defer debt service payments on the hotel bonds until April 1, 2023 and temporarily lower the hotel's interest rate to allow the facility to cover operating costs while travel recovers. “This will reduce near‑term financial pressures on the hotel so that it can continue to fund critical operating expenses such as payroll and remain positioned to generate revenue as demand recovers,” airport presenter Deanna Quizon said during the committee presentation.

Kevin Cohn, acting chief financial officer for the airport, told supervisors the department has identified roughly $185 million in operating contract reductions and scaled back capital spending as part of a broader strategy that reduced the airport’s capital plan from $7.4 billion pre‑COVID to about $5.7 billion. He noted the airport also maintains passenger facility charge reserves, which were reported at about $353 million in the current year and are governed by the Federal Aviation Administration for capital projects.

The Budget Analyst's Office (BLA) recommended approval with a request that the airport provide a report in May 2021 showing airport and hotel revenues and expenditures, status of outstanding hotel special facility revenue bonds, and annual debt service. Vice Chair Asha Safaei successfully proposed adding a requirement that the May report also include an updated status of major capital projects — specifically shoreline protection (the seawall), Terminal 3 and Terminal 1 North — and an explanation of how reserve accounts will be used in the airport’s financial forecasts.

Chair Matt Haney moved to amend the resolution to accept both the BLA recommendation and the committee amendment; the roll call showed unanimous support among committee members present. The committee forwarded the amended resolution to the full Board with a positive recommendation.

What's next: The airport will submit the requested May report to the Budget & Finance Committee and the Board, and the item will return to the Board of Supervisors as scheduled. The resolution as forwarded does not affect general airport revenue bonds held by public investors, per airport staff.

Representative quotes

"This will reduce near‑term financial pressures on the hotel so that it could continue to fund critical operating expenses such as payroll and remain positioned to generate revenue as demand recovers," — Deanna Quizon, airport presenter.

"We have reserves derived from passenger facility charges that are available to help offset fees the airlines pay in this lower passenger environment," — Kevin Cohn, Acting CFO, SFO.

Closing note: The committee’s action was a procedural recommendation to the full Board; any final change to bond documents or debt schedules depends on subsequent Board approval and related legal documents.