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Committee backs Port lease with IDEO at Pier 26 annex after analyst flags noncompetitive history
Summary
The committee recommended a five-year lease (plus a five-year option) at Pier 26 Annex with tenant IDEO, noting $900,000 tenant improvements and rent terms; the budget analyst recommended adding a finding to address the lease's noncompetitive history and requiring a report at lease end.
The Budget and Finance Committee voted to forward a proposed Port lease at Pier 26 Annex to the full Board of Supervisors with the committee's recommended amendment after the Budget Analyst raised policy concerns about the lease's noncompetitive history.
Gerry Romani of the Port Real Estate Division summarized the proposal: the lease covers 12,360 square feet of existing office space and 7,074 square feet of expansion space to be renovated into offices. Rent for the existing space was shown as $32,136 per month (about $2.60 per square foot per month) and $8,135.10 per month (about $1.15 per square foot per month) for the expansion area. Romani said the tenant would be responsible for renovating the expansion area at an estimated cost of $900,000. The lease commencement date was estimated as Jan. 1, 2011, with fixed 3% annual adjustments and a five-year term plus a five-year option.
Budget Analyst Robbie Rose told the committee the proposed rental rate for the existing office space falls within Port Commission parameters but that the expansion rate is higher than comparable port 'shed' space. Rose noted this lease has not been competitively bid since it was first awarded in 1996 and recommended that, if the board agrees there is justification to waive competitive bidding, the legislation should be amended to expressly make that finding and require the Port to report back at the end of the lease term so the arrangement does not continue indefinitely on a month-to-month holdover basis.
Port staff explained the Port often does not competitively bid office or warehouse uses because such users need quicker negotiations than the city's competitive processes typically allow; staff also highlighted that the transaction would yield a $900,000 investment in public property and additional rent revenues.
The committee adopted the budget analyst's amendment and forwarded the item to the Board of Supervisors with the committee's recommendation. The full board will consider the amended resolution and the specific language establishing any finding about competitive bidding.
