Airport approves contract increases and temporary rent relief for international concessions; both items sent to full Board

The Budget and Finance Committee voted to send two airport items to the full San Francisco Board of Supervisors with positive recommendations: a $7.5 million modification to an existing project‑management contract for the Courtyard 3 connector project at San Francisco International Airport, and a first amendment to an international terminal lease that temporarily suspends a $42 million minimum annual guarantee and replaces it with percentage rent during 2020.

Kathy Weidner, representing San Francisco International Airport, told the committee the modification to the contract with PGH Wong & Partners JV adds scope for structural and infrastructure work, a new elevator cab, net‑zero energy initiatives, relocation of a systems room, and the interim relocation of the airport security operations and communications center. Weidner said the additional services are design and construction management, project controls, cost estimating, commissioning oversight, field inspections and materials testing. The proposed change increases the contract by $7,500,000 to about $17,250,000 with no change to the term. "This contract is the result of the 2017 competitive request for proposals process," Weidner said, and the airport has identified the increased scope as essential.

Kevin Campbell of the Budget Legislative Analyst's office summarized the financial impact and recommended approval, saying the increase reflects added project management needs and documented details in the BLA report. The committee recorded the roll call and announced the motion to move the modification to the full Board with a positive recommendation.

On concessions, the committee considered Amendment No. 1 to the international terminal duty‑free lease with DFS Group LP. Weidner said that because passenger traffic and sales have fallen sharply amid the COVID‑19 emergency, the airport sought to suspend the lease's minimum annual guarantee (MAG) for lease year 1 (through Dec. 31, 2020) and accept percentage rent equal to 33% of gross revenues during that suspension. She explained that DFS's contract set percentage rent at 45% of gross revenues, which the airport now considers infeasible for the immediate period, and said the airport would return to the Board for any year‑2 changes.

The Budget Legislative Analyst office noted the amendment suspends the $42,000,000 MAG for April–December 2020 and reduces percentage rent from 45% to 33% for that period; anticipated revenues during the suspension were approximately $11.3 million and BLA recommended approval based on airport representations. Weidner characterized the concession change as temporary relief and said the airport could pursue broader relief for concessions if recovery projections warrant it.

Both items were moved to the full Board with positive recommendations and recorded ayes during roll call.

The Board is expected to consider these items at a future meeting; the committee record does not set final Board action dates.