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Budget committee backs Port lease to bring Teatro Zinzani back to waterfront
Summary
The Budget and Finance Committee recommended forwarding to the Board a ground lease with TZK Broadway LLC for Seawall Lots 323–324 to build a hotel, 30,000 sq ft theater for Teatro Zinzani, and public open space; staff said minimum base rent is ~$1 million with percentage rent rising from 3.5% to 6.5% by year 20 and commitments for local contracting and hiring.
Chair Sandra Lee Feuer moved the committee’s positive recommendation after a presentation by Rebecca Benesini, assistant deputy director for waterfront development at the Port of San Francisco.
Benesini described a proposed development on Seawall Lots 323 and 324 that would replace an existing ~60,000 sq ft surface lot with a four‑story mixed‑use project containing roughly 192 hotel rooms, a 30,000 sq ft theater (proposed as the permanent home for Teatro Zinzani) and a 14,000 sq ft public open space. She said the Port would enter a lease development and disposition agreement and, upon satisfaction of conditions, a ground lease that could run up to 66 years.
Under the terms presented, the lease would guarantee a minimum base rent of about $1,000,000 per year and a percentage rent provision that begins at 3.5% of gross revenues for the hotel and escalates to about 6.5% by year 20; Teatro Zinzani’s percentage was presented as 3.5%. Benesini said the Port would also participate in upside proceeds when the developer sells or refinances after a return of equity.
The project team committed to public benefits that include a 17% local business enterprise contracting goal and a 30% local hire target, and staff estimated impact fees and other one‑time revenues of roughly $8,000,000 and annual general fund revenues in the neighborhood of $4,000,000. Benesini introduced project staff who would respond to follow‑ups.
Supervisor Shamone Walton asked whether the city had a sectoral breakdown of the estimated 120 permanent jobs the team cited; Benesini said the hotel workforce arrangement was in negotiation with a local union and the theater jobs would be managed by Teatro Zinzani but that a precise sectoral split was not yet available.
Budget Analyst Sevin Campbell told the committee the Board of Supervisors is being asked to approve the ground lease, described how the lease is subordinate to the lease‑disposition‑development agreement that covers construction, summarized the rent structure and projections included in the BLA exhibit, and recommended approval.
Chair Feuer moved the item to the full Board with a positive recommendation; the motion passed without objection. Next steps are Board consideration of the ground lease and subsequent execution of the disposition and development agreement and related contract documents.
