SAN FRANCISCO AIRPORT COMMISSION MINUTES May 16, 2017 9:00 A.M. Room 400 - City Hall #1 Dr. Carlton B. Goodlett Place (400 Van Ness Avenue) City and County of San Francisco EDWIN M. LEE, MAYOR COMMISSIONERS LARRY MAZZOLA President LINDA S. CRAYTON Vice President ELEANOR JOHNS RICHARD J. GUGGENHIME PETER A. STERN IVAR C. SATERO Airport Director SAN FRANCISCO INTERNATIONAL AIRPORT SAN FRANCISCO, CALIFORNIA 94128
Minutes of the Airport Commission Meeting of May 16, 2017 CALENDAR AGENDA RESOLUTION SECTION ITEM TITLE NUMBER PAGE A. CALL TO ORDER: 4 B. ROLL CALL: 4 C. ADOPTION OF MINUTES: Regular meeting of May 2, 2017 17-0102 4 D. ITEMS INITIATED BY COMMISSIONERS: E. ITEMS RELATING TO ADMINISTRATION, OPERATIONS & MAINTENANCE: 1. Designation of up to $31,662,000 of PFC Funds as Revenues in FY 2017/18 and Authorization to Apply Such Amount to Debt Service and Airline Rates and Charges, As Needed 17-0103 4-6 2. Adoption of FY2017/18 Airport Rates and Charges 17-0104 4-6 3. Modification No. 2 to Contract 8872.66 - Design-Build Services for Consolidated Administration Campus Phase 1 Project - Webcor Construction LP dba Webcor Builders, Inc. 17-0105 6-7 4. Award Professional Services Contract 50112 - Airline Liaison Office Consulting Services - Airport & Aviation Professionals, Inc. 17-0106 7-8 5. Issue a RFP and Enter into Negotiations for Contract 11211.83 to Modernize the Airport s Common Use Passenger Processing Systems and Services 17-0107 8-10 F. CONSENT CALENDAR OF ROUTINE ADMINISTRATIVE MATTERS: 6. Award Professional Services Contract 50134 - Concessions Consulting Services - AVK Consulting 17-0108 10 7. Modification No. 3. to Contract 9380 - Designated Aviation Channeling Services - Transportation Security Clearinghouse 17-0109 10 8. Modification No. 2 to Professional Services Contract 50007 - Provide Continued International Air Traffic Route Analysis - WJ Advisors, LLC 17-0110 10 9. Issue a RFP for Contract 50126 - Maintenance and Support of Baggage Handling Control Systems 17-0111 11
10. Lease Agreement with Alliance Ground International for Exclusive Use Space in Airport Building 648 17-0112 11 11. Accept Bids for the Domestic Terminals Automated Teller Machines Lease A 17-0113 11 12. Accept Bids for the Domestic Terminals Automated Teller Machines Lease B 17-0114 11 13. Amendment No. 1 to Intergovernmental Agreement with San Mateo County 17-0115 11 G. NEW BUSINESS: 12 H. CORRESPONDENCE: 12 i. CLOSED SESSION: Anticipated Litigation/Prospective Settlement CCSF v. AMBAC Financial Group 12 CCSF v. United Airlines 12 Cupertino Electric, Inc. V. Hensel Phelps Construction Co., et al 17-0118 13 J. ADJOURNMENT: 13 Minutes, May 16, 2017, Page 3
AIRPORT COMMISSION MEETING MINUTES May 16, 2017 A. CALL TO ORDER: The regular meeting of the Airport Commission was called to order at 9:00 AM in Room 400, City Hall, San Francisco, CA. B. ROLL CALL: Present: Absent: Hon. Larry Mazzola, President Hon. Linda S. Crayton, Vice President Hon. Eleanor Johns Hon. Richard J. Guggenhime Hon. Peter A. Stern C. ADOPTION OF MINUTES: The minutes of the regular meeting of May 2, 2017 were adopted unanimously. No. 17-0102 D. ITEMS INITIATED BY COMMISSIONERS: There were no items initiated by Commissioners. E. ACTION ITEMS RELATING TO ADMINISTRATION, OPERATIONS & MAINTENANCE: Item Nos. 1 and 2 were called together. They were approved unanimously upon a motion by Commissioner Crayton and a second by Commissioner Guggenhime. 1. Designation of up to $31,662,000 of Passenger Facility Charge Funds as Revenues in Fiscal Year 2017/2018 and Authorization to Apply Such Amount to Debt Service and Airline Rates and Charges, As Needed No. 17-0103 Resolution designating up to $31,662,000 of PFC funds as revenues in FY 2017/18 and authorizing such amount to be applied to debt service and airline rates and charges, as needed. Mr. Kevin Kone, Managing Director, Business & Finance... these two items are related because of the Passenger Facility Charges (PFC) that are designated as revenue to offset debt service in our operating budget. These revenues are collected under approved PFC Application Nos. 2 through 5. PFCs, combined with non airline revenues, offset total expenses and is part of the calculation of Airport Rates and Charges. In FY 2017/18 the Airport proposes to designate up to $31.7 million of PFCs as revenue to offset debt service. The Airport also Minutes, May 16, 2017, Page 4
proposes an increase of 4.9% in airline landing fee rates to $5.24 per 1,000 lbs of landed weight, and an increase of 4.9% in the average terminal rental rate of $169.03 per sq. ft. annually. Theses increases are projected to result in $483 million in annual revenue, an increase in 7.5% from the prior year budget. The airline revenue combined with the proposed PFC designation with prior year aviation surplus revenues of $37 million and non-airline operating revenues of approximately $501 million results in a balanced budget for the Airport totaling $1.05 billion. These rates and charges have been reviewed by the Airport s Financial Advisory Committee and our signatory airlines and both parties agree with the proposal. The resulting unit cost to the airline to operate at SFO, also known as Cost Per Enplaned (CPE) Passenger, is projected to increase by 4% to $17.54 in FY 2017/18. SFO s CPE continues to be relatively competitive to other large international gateway airports including Newark, JFK, Miami, Washington Dulles, Chicago O Hare, and Los Angeles. Projections done by an independent consultant show that SFO s CPEs are expected to remain relatively competitive through the current 5-Year Capital Plan. Commissioner Crayton... I was doing a little math last night on the landing fee rate and I m getting 5. I don t know how you re getting 4.99, and I did it several different ways. I agree with what you have here. I don t have an issue with the finances, I m just wondering because even that small percentage means dollars. Did I do something incorrectly, or did you round it down? Mr. Kone... you re referring to the $5.24? The $5.24 is a cost recovery analysis so there maybe some rounding involved there. Mr. Whitfield McTair... I am here today as a representative of SEIU, United Service Workers West, in reference to Agenda Item E1 regarding designation of PFC funds for the Airport s budget. But first I want to take a moment to thank the Commission for your leadership in improving service and safety for workers and passengers alike. SEIU represents airline contracted service workers at SFO and the nation. As you know, many airline contracted service workers often live in poverty despite the fact that the airlines who contract for their services are making record profits. As part of our national campaign to raise standards for airline contracted service workers, SEIU was has been working to monitor the ways in which billions of dollars in public monies finance airport development projects and to work to increase transparency and accountability in these decisions. Although we fully recognize that many projects funded with PFC monies are necessary and in the public interest, we are also concerned that at some airports development projects may intentionally or unintentionally favor large incumbent airlines over competitors. We have been in discussion with SFO staff about a recent amendment to a PFC application, which we feel United Airlines is a dominant player and share in the benefits paid by all of the passengers. I am further concerned because at SFO we have the most challenging dealings with United s contracted worker in addition to other airports. United has a troubled history with contracts. SEIU has long argued that this kind of low standard for workers can lead to disturbing results for passenger service and safety, as recent news reports about United Airlines emphasize. We hope Minutes, May 16, 2017, Page 5
that SFO will continue in its leadership in these areas by working to ensure that airlines that receive public monies have the same high standards of transparency and accountability. We appreciate the Commission for its ongoing efforts in this matter. 2. Adoption of Fiscal Year 2017/18 Airport Rates and Charges No. 17-0104 Resolution establishing Airport Rates and Charges for Fiscal Year 2017/18. Item No. 3 was approved unanimously upon a motion by Commissioner Guggenhime and a second by Commissioner Crayton. 3. Modification No. 2 to Contract No. 8872.66 - Design-Build Services for the Consolidated Administration Campus Phase 1 Project - Webcor Construction LP dba Webcor Builders, Inc. - $7,663,384 No. 17-0105 Resolution approving Modification No. 2 to Contract 8872.66, Design-Build Services for the Consolidated Administration Campus Phase 1 Project, with Webcor Construction LP dba Webcor Builders, Inc. to increase the contract amount by $7,663,384 for a new contract amount of $65,091,588. Mr. Geoff Neumayr, Chief Development Officer... this item seeks approval of Modification No. 2 to the Webcor Builders contract for design build services for the Consolidated Administrative Campus Phase 1 to increase the contract amount by $7.6 million and to establish a new contract amount of $65.1 million, with a corresponding amount of contingency authorization, and no change to the contract duration. This contract provides for design build services for the design and construction of the Consolidated Administrative Campus Phase 1 which includes the construction of a new mix ed use office building that will consolidate Design and Construction, Planning, ITT, and the Museum divisions into one facility. The Airport Commission previously approved a contract amount of $57.4 million in which Trade Package Sets No.1-5 were awarded. This modification adds Trade Package Set No. 6 to the contract. This Trade Package set includes the scope of work for the exterior wall system and the man life operator in the amount of $7.6 million. The original budget for this contract was $61.7 million. The current budget for this contract is now $76.7 million, which has been increased to accommodate the cost of the Airport s Net Zero goals as well as unanticipated cost escalation. The Airport did provide for separate budgets for the Airport-wide Net Zero program, and now that the specific scope for this project has been identified, the appropriate budget transfers have been made. The Airport has also transferred funds from the approved capital program reserves to offset the unanticipated cost escalation. This project is funded from the Airport s approved Five-Year Capital Program and the current contract forecast remains within the revised budget and appropriate levels of contingency remain. Staff will return to the Commission for approval of all remaining Trade Package sets. The City s Contract Monitoring Division has approved a 25% LBE sub-consultant goal Minutes, May 16, 2017, Page 6
for design services and a 21% sub-contracting goal for construction services, and Webcor is committed to meeting this goal. Commissioner Crayton... do we use the same folks or do they go out and add to their participation so that other people can participate? Mr. Neumayr... this just adds subcontractors. The exterior wall makes up the majority of it. Ths is capital glass that adds to the Webcor contract. There s a preestablished fee. I don t know the specifics, but that was presented at submission time which was part of their evaluation. We just apply that fee and that s that. Item No. 4 was approved unanimously upon a motion by Commissioner Crayton and a second by Commissioner Johns. 4. Award of Professional Services Contract No. 50112 - Airline Liaison Office Consulting Services - Airport & Aviation Professionals, Inc. - $7,000,000 No. 17-0106 Resolution awarding Professional Services Contract 50112 for Airline Liaison Office Consulting Services to Airport & Aviation Professionals, Inc. for a term of five years at a maximum not to exceed amount of $7 million, and two one-year options to extend the term at the sole discretion of the Commission. Mr. Leo Fermin, Chief Business & Finance Officer... we have over 60 airlines at SFO and we have an on-going need to coordinate technical reviews of numerous capital projects for the airlines. Projects in the terminals and on the air side also need airline feedback. Airlines must also review various financial matters such as rates and charges, operating and capital budgets, and capital financing. The Airline Liaison Office (ALO) serves as a central point of contact with the airlines for all of these on-going matters and has been instrumental in completing airline reviews and obtaining airline input on a timely basis. Going forward, we will use the ALO to facilitate airline review and feedback on major projects in the capital plan as well as the bond financing we will undertake. We recommend you award this contract to the ALO for the next five years worth of services. Commissioner Johns... I m just curious why no one else proposed. Mr. Fermin... this is a very specialized service that s provided to airports around the country. All together there s only about four or five firms that provide this service and most of the other providers are one person operations working in airports on the East Coast in Florida and the mid-west at airports like Chicago. We believe that there s a lot of activity going on at all of these other airports and these other consultants that provide this service are booked solid on the work they re doing. We believe that s why only one proposal was received. Commissioner Johns... how large an operation are they? Mr. Fermin... this company has about 70 professionals. They provide services to Minutes, May 16, 2017, Page 7
more than a dozen major airports throughout the country. They re SFO contract has been for the last five years. Commissioner Johns... we have one person or two, how many are there? Mr. Fermin... it depends on what is required at the moment. For example, for different kinds of capital projects they ll bring on different individuals depending on the expertise. Currently there s at least one or two full time persons that generally spend most of their time on airport matters. They also have staff coming from their other offices, such as in Florida, Hawaii and in other parts of the country on an as needed basis depending on the projects being reviewed at the time. Commissioner Johns... the two folks you refer to are here locally? Mr. Fermin... yes, they have offices in the terminal complex. Commissioner Crayton... we pay them $7 million for five years? Mr. Fermin... this is our not to exceed budget for the five year period. In the last 12 months we ve paid the firm a total of about $1.1 million. On average we incur anywhere between $90,000 to $100,000 in fees per month, depending on what s occurring at the time. Commissioner Crayton... I don t have any argument about the need to do this, because we definitely do. I know it s a valuable service. This seems to be a very specialized area but perhaps in time we might be able to add a little diversity. That s a lot of money that we spend. Mr. Fermin... we can certainly consider that. One thing to keep in mind is that often times the airlines prefer to have a third party intermediary interact between the Airport and the airlines. In that way there is assurance that this is an impartial go between, almost like a mediator. Commissioner Crayton... that s important. Item No. 5 was approved unanimously upon a motion by Commissioner Crayton and a second by Commissioner Johns. 5. Authorization to Issue a Request for Proposals and Enter into Negotiations for Contract No. 11211.83 to Modernize the Airport s Common Use Passenger Processing Systems and Services No. 17-0107 Resolution authorizing issuance of a RFP and to negotiate a five-year agreement for Contract No. 11211.83 to modernize the Airports Common Use Passenger Processing Systems and Services. Ms. Eve Cheong, Operations & Security... we are seeking approval to issue an RFP to modernize and update our Common Use System. Common Use Passenger Processing Systems are essential to our operations and to maximizing Minutes, May 16, 2017, Page 8
our utilization of Airport resources, such as our check-in positions, gate podiums, and baggage handling systems. These systems allow different airlines to use computers at check-in positions and gate podiums to access their own platforms and process passengers. This means that we can effectively have different airlines use the same equipment at those gates at different times of the day. They also allow for opportunities to share kiosks where passengers can check in on the same unit from multiple airlines and they integrate with our baggage handling systems to process and sort baggage to different areas of the Airport. As well, these systems collect and aggregate flight information from all airlines so that we can display them throughout the terminals for our guests. As the demand for gates in the domestic terminals increases, it will be more important for us to maximize utilization of our facilities. When Terminal 1 Boarding Area B gates are finished we anticipate a need for increased functionality at more gates to effectively manage our resources. We are seeking a new robust common use system that can meet current technology demands such as mobile processing as well as the demands from both international and domestic carriers. We also seek to ensure that through the life of the contract we re able to effectively update the system to meet the demand of new technologies and passenger processing, such as increased self service options or virtual access, and airline advancements. The required system will also include resource management software to assist in gate assignments and use of our resources. The contract term will be five years. We will convene a panel of experts to evaluate and score each proposal meeting the minimum qualifications. We seek approval today to issue an RFP for a common use platform and enter into negotiations with the highest ranked proposer. We will return to the Commission to award the contract after successful negotiations. Commissioner Johns... how will this common use platform integrate in an already designed and built terminal. For example, Terminal 2, or things that we have already designed. This is just the technology behind the counters? Ms. Cheong... it s the software behind it. We ve just updated the computer workstations. This RFP allows us to still be able to integrate that hardware into the new software platforms, so the backbone stays the same on how the information is sent out to those workstations. It s just the software that integrates with the carriers. It helps them to display or use their own systems at those gates. Commissioner Johns... I understand how it works in the International Terminal, and we ve had that for quite sometime, right? The different airlines can use existing counters, etc., but I didn t know if it was occurring in Terminal 2, 3, or 1. Ms. Cheong... up until now we ve had limited common use gates in the domestic terminals. We have a common use gate in each terminal which gives flexibility for carriers if they are a little bit over their schedule, or we need to schedule another carrier into a United gate. For instance, United has a gate open and a carrier has a flight that needs to come in. Having this common use system at those gates will give us a lot more flexibility for different carriers to use those same resources. Commissioner Johns... one at each domestic terminal? Ms. Cheong... it could be up to 10% right now in our current Lease and Use Minutes, May 16, 2017, Page 9
Agreement... up to 10% of our gates can be assigned on an annual basis as common use. We believe, right now moving forward, especially with Boarding Area B, as we add gates that have international and domestic capacity that we will need more of this in the domestic terminals. Commissioner Johns... I was trying to figure out how the infrastructure works with the technology. Ms. Cheong... the wiring stays the same, it s just the platform and the mechanism behind the scenes that helps carriers to use their own systems on that platform. F. CONSENT CALENDAR OF ROUTINE ADMINISTRATIVE MATTERS: The Consent Calendar, Item Nos. 6 through 13, was unanimously approved upon a motion by Commissioner Crayton and a second by Commissioner Guggenhime. 6. Award of Professional Services Contract No. 50134 - Concessions Consulting Services - AVK Consulting, Inc. - $300,000 No. 17-0108 Resolution awarding Professional Services Contract 50134 for Concessions Consulting Services to AVK Consulting, Inc. in the amount of $300,000, for a three year term, with one two-year option exercisable at the sole discretion of the Airport Commission. 7. Modification No. 3. to Contract No. 9380 - Designated Aviation Channeling Services - Transportation Security Clearinghouse - $450,000 No. 17-0109 Resolution approving Modification No. 3 to Contract 9380, Designated Aviation Channeling Services with Transportation Security Clearinghouse to exercise the option to extend the contract term for two years and to increase compensation by $450,000, for a new total contract amount not to exceed $1,407,464. 8. Modification No. 2 to Professional Services Contract 50007 - Provide Continued International Air Traffic Route Analysis - WJ Advisors, LLC - $100,000 No. 17-0110 Resolution approving Modification No. 2 to Professional Services Contract No. 50007 with WJ Advisors, LLC to exercise the first of two one-year options to extend the term through June 30, 2018, and to increase the amount by $100,000 for a new total not to exceed amount of $400,000 for continued International Air Traffic Route Analysis Services. All other terms and conditions of the contract remain in full force and effect. Minutes, May 16, 2017, Page 10
9. Authorization to Issue a Request for Proposals for Contract No. 50126 - Maintenance and Support of Baggage Handling Control Systems No. 17-0111 Resolution authorizing issuance of a RFP for Professional Services Contract 50126, Maintenance and Support of Baggage Handling Control Systems and negotiate with the highest ranked proposer. 10. Lease Agreement with Alliance Ground International, LLC for Exclusive Use Space in Airport Building 648 No. 17-0112 Resolution rescinding Resolution No. 16-0190, which awarded a lease agreement with Alliance Ground International, LLC for approximately 39,678 square feet of exclusive use space in Airport Building 648; approving, in its place, a lease agreement for approximately 40,778 square feet of exclusive use space in Airport Building 648; and directing the Commission Secretary to forward the lease agreement to the Board of Supervisors for approval. 11. Authorization to Accept Bids for the Domestic Terminals Automated Teller Machines Lease A No. 17-0113 Resolution authorizing Staff to accept bids for the Domestic Terminals Automated Teller Machines Lease A. 12. Authorization to Accept Bids for the Domestic Terminals Automated Teller Machines Lease B No. 17-0114 Resolution authorizing Staff to accept bids for the Domestic Terminals Automated Teller Machines Lease B. 13. Amendment No. 1 to the Intergovernmental Agreement with San Mateo County No Change to Dollar Amount No. 17-0115 Resolution amending Intergovernmental Agreement with San Mateo County for the cost of dispatching emergency medical services and ambulance transportation to the Airport. Amendment No. 1 clarifies the methodology for calculating the Airport s proportionate share for the cost of 911 dispatch calls received by the County s Public Safety Communications Dispatch Center. Minutes, May 16, 2017, Page 11
G. NEW BUSINESS: Discussion only. This is the Public Comment section of the calendar. Individuals may address the Commission on any topic within the jurisdiction of the Airport Commission for a period of up to two (2) minutes. Please fill out a Request to Speak form located on the table next to the speaker s microphone and submit it to the Commission Secretary. H. CORRESPONDENCE: There was no discussion by the Commission. I. CLOSED SESSION: CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION/ PROSPECTIVE SETTLEMENT The Commission voted unanimously to go into closed Session upon a motion by Commissioner Crayton and a second by Commissioner Mazzola. The Closed Session convened at 9:30 AM. (a) Public comment on all matters pertaining to this agenda item. (b) Discussion and vote in open session pursuant to the Brown Act (California Government Code 54956.9) and the Sunshine Ordinance (San Francisco Administrative Code 67.10(d)) on whether to invoke the attorney-client privilege and conduct a closed session to confer with legal counsel. ACTION ITEM. (c) [PROSPECTIVE CLOSED SESSION] CONFERENCE WITH LEGAL COUNSEL regarding existing litigation (Government Code 54956.9(a), Administrative Code 67.10(d)(1)): City and County of San Francisco v. AMBAC Financial Group Inc., et al., San Francisco Superior Court Case No. 08-480708; JCCP 4555. Material term of the proposed settlement: The Airport would receive approximately $115,627 from defendant Ambac Assurance Corporation as part of a larger settlement involving numerous plaintiffs. Discussion of proposed settlement and resolution recommending approval by the Board of Supervisors. ACTION ITEM. CONFERENCE WITH LEGAL COUNSEL regarding existing litigation (Government Code 54956.9(a), Administrative Code 67.10(d)(1)): City and County of San Francisco v. United Airlines, Inc., United States District Court for the Northern District of California Case No. 16-cv-05234-MEJ (EDL). Material terms of the proposed settlement: United would pay the Airport $165,000; each side would bear its own fees and costs; the City would dismiss its complaint with prejudice; and the parties would enter a mutual release. Discussion of proposed settlement and resolution recommending approval by the Board of Supervisors. ACTION ITEM. Minutes, May 16, 2017, Page 12
CONFERENCE WITH LEGAL COUNSEL regarding existing litigation (Government Code 54956.9(a), Administrative Code 67.10(d)(1)): Cupertino Electric, Inc. v. Hensel Phelps Construction Co., et al., San Francisco Superior Court Case No. CGC-14-542331. Material terms of the proposed settlement: The City would contribute $75,000 to a settlement pool of $1,400,000; all complaints and cross-complaints would be dismissed with prejudice; the parties would enter a mutual release. Discussion of proposed settlement and resolution approving settlement. ACTION ITEM. There are no other planned agenda items for the closed session. In the event of any urgent matter requiring immediate action which has come to the attention of the Airport Commission after the agenda was issued and which is an item appropriately addressed in closed session, the Airport Commission may discuss and vote whether to conduct a closed session under the Brown Act (Government Code 54954.2(b)(2) and 54954.5) and the Sunshine Ordinance (Administrative Code 67.11).) (d) [RECONVENE IN OPEN SESSION] (i) [IF APPLICABLE] Report on action taken in closed session required by the Brown Act (Government Code 54957.1(a)) and the Sunshine Ordinance (San Francisco Administrative Code 67.12(b)). (ii) Discussion and vote whether to disclose any or all discussions held in closed session (San Francisco Administrative Code 67.12(a)). ACTION ITEM. The Commission reconvened its meeting at 9:45 AM and voted unanimously to disclose the approval of Cupertino Electric, Inc. v. Hensel Phelps Construction Co., et al upon a motion by Commissioner Crayton and a second by Commissioner Mazzola. J. ADJOURNMENT: There being no further calendared business before the Commission the meeting adjourned at 9:46 AM. (Original signed by: Jean Caramatti) Jean Caramatti Commission Secretary Minutes, May 16, 2017, Page 13