SAN FRANCISCO AIRPORT COMMISSION MINUTES

Transcription

1 SAN FRANCISCO AIRPORT COMMISSION MINUTES September 22, 2015 Special Meeting 9:00 A.M. Room 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 JOHN L. MARTIN Airport Director SAN FRANCISCO INTERNATIONAL AIRPORT SAN FRANCISCO, CALIFORNIA Minutes of the Airport Commission Special Meeting of September 22, 2015

2 CALENDAR AGENDA RESOLUTION SECTION ITEM TITLE NUMBER PAGE A. CALL TO ORDER: 4 B. ROLL CALL: 4 C. ADOPTION OF MINUTES: Regular meeting of September 1, D. ITEMS INITIATED BY COMMISSIONERS: 4 E. ITEMS RELATING TO ADMINISTRATION, OPERATIONS & MAINTENANCE: 1. Resolutions Authorizing Execution of the following Agreements with Hyatt Corporation: 4-8 Hotel Management Agreement-Contract Technical Services Agreement-Contract 50006A Pre-Opening Services Agreement- Contract 50006B; and Cash Management and Lockbox Agreement Contract 50006C th Supplemental Bond Resolution Designating a Proposed On-Airport Hotel as a Special Facility and Authorizing up to $243 Million Principal Amount of Airport Capital Plan Bonds and $225 Million Principal Amount of Hotel Special Facility Bonds to Finance or Refinance the On-Airport Hotel Award Professional Services Contract Program Management Support Services for the Capital Improvement Program - CIP Partners JV Accept Proposals - Terminal 3 Retail Marketplace Lease F. CONSENT CALENDAR OF ROUTINE ADMINISTRATIVE MATTERS: 5. Modification No. 14 to Contract 9048A - Design-Build Services for Terminal 3 East Improvements Project - Hensel Phelps Construction Company Award Two Contracts to Keenology Corp. dba CIPPlanner Corp. 11 Contract Design and Implement Contract Monitoring and Compliance System Contract 9225M - 3-Year System Maintenance Issue a RFQ/P for Contract Design-Build Services for Demolition of Terminal 2 Air Traffic Control Tower Project Minutes, September 22, 2015, Page 2

3 8. Issue a RFQ/P for Contract 9350A.66 - Design-Build Services for REACH -Customer Hospitality, Boarding Area A & G Project Re-Issue RFP for Contract 50000R - Development of SFO Zero Waste Management Plan Modification No. 4 to Contract Noise Insulation Consulting Services - C.Kell-Smith & Associates Seek Finding from Board of Supervisors that the Proposed Airport Shoreline Protection Project is Fiscally Responsible Lease Agreement with U. S. Government for Space in the International Terminal for Use by the FBI 13 G. NEW BUSINESS: Flying Food Group H. CORRESPONDENCE: 16 I. CLOSED SESSION: CONFERENCE WITH LEGAL COUNSEL. (i) Pending litigation as defendant - JRI, Inc. v. CCSF (ii) Pending litigation as defendant - A.J. California Mini Bus, Inc., d/b/a Airport Express v. The Airport Commission, et al. (iii) Potential litigation - Notices of Government Claim received concerning noise claims associated with SERFR ONE Area Navigation (RNAV) Standard Terminal Arrival Route (STAR). (iv) Potential litigation - One matter as plaintiff, unspecified to protect settlement posture. (v) Potential litigation - One matter as defendant, concerning the notice of protest of contract award to RFP No for branded hotel operator. J. ADJOURNMENT: 17 AIRPORT COMMISSION SPECIAL MEETING MINUTES September 22, 2015 Minutes, September 22, 2015, Page 3

4 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: Hon. Larry Mazzola, President Hon. Linda S. Crayton, Vice President Hon. Eleanor Johns Hon. Richard J. Guggenhime Hon. Peter A. Stern * * * The Commission recessed it s meeting at 9:03 and went into closed session. * * * C. ADOPTION OF MINUTES: The minutes of the regular meeting of Sept. 1, 2015 were adopted unanimously. No * * * D. ITEMS INITIATED BY COMMISSIONERS: There were no items initiated by Commissioners. * * * E. ITEMS RELATING TO ADMINISTRATION, OPERATIONS & MAINTENANCE: Item Nos. 1 and 2 were called together. The items were moved by Commissioner Stern and seconded by Commissioner Crayton. The vote to approve was unanimous. 1. Four (4) Resolutions Authorizing the Execution of the following Agreements with Hyatt Corporation: Hotel Management Agreement (Contract No ) for a Term of Ten Years and Compensation Not to Exceed $19,945,420; Technical Services Agreement (Contract No A) with Compensation Not to Exceed $425,000; Pre-Opening Services Agreement (Contract No B); and Cash Management and Lockbox Agreement (Contract No C); and related actions Four (4) Resolutions authorizing the Execution of the following Agreements with Hyatt Corporation: Minutes, September 22, 2015, Page 4

5 No No No No (a) Hotel Management Agreement (Contract 50006) for a term of ten years and compensation not-to-exceed $19,945,420; (b) Technical Services Agreement (Contract No A) with compensation not-to-exceed $425,000; (c) Pre-Opening Services Agreement (Contract No B); and (D) Cash Management and Lockbox Agreement (Contract No C); and related actions. The Hotel Project is an activity within the scope of the San Francisco International Airport Master Plan Program approved by the Airport Commission on November 3, The Master Plan EIR prepared for the Master Plan Program, including addenda thereto, adequately described this activity and its potential environmental effects for the purposes of CEQA. Mr. Leo Fermin, Chief, Business & Finance Officer said when we started the hotel project two years ago, we actively sought to maximize the number of proposals, including those from Starwood, Marriott, and Hyatt, all of which have properties around the Airport. We made it clear that we sought proposals from all of these companies. All together our outreach efforts resulted in our receiving a total of 11 proposals. As a hotels surrounding the Airport are two and three diamond properties, we established a four diamond requirement to distinguished our hotel from other existing hotels in the Airport vicinity. The management contract before you that we have negotiated with Hyatt serves to protect this four diamond designation and the price differential that goes with it. Today, airport hotels are very hot. There recently have been a number of articles and publications such as Wall Street Journal, New York Times, and Global Traveler describing how successful airport hotels are. High quality hotels at airports create a halo effect on the passenger experience at an airport. For us, this is the right time to build and own a four diamond property. We have strong international travel demand as well as long haul domestic demand. Our risk from competition is mitigated by the high barriers to entry around the SFO hotel market. There are no other existing or planned four diamond hotels in the airport vicinity, and the cost and availability of land makes it difficult for new entrants. Item No. 1 before you awards four related contracts to Hyatt Corporation for a four diamond Grand Hyatt which will be built and owned by the Airport, but managed and operated by Hyatt. The first is the Hotel Management Agreement, a 10 year contract with one five-year option to extend at the Airport s discretion; the 2 nd Agreement provides for Technical Assistance services during the design and construction phase to ensure that we build the hotel to Grand Hyatt standards; the 3 rd is the Pre-Opening Services Agreement which covers services prior to the opening of the hotel, such as the development of a marketing plan, pre-bookings, testing equipment and Minutes, September 22, 2105, Page 5

6 systems in the building, and the recruitment, hiring, and training of personnel. For these services Hyatt will not be paid a separate fee, however, the expenses will come out of the hotel s operating budget. The 4 th Agreement is the Cash Management and Lock Box Agreement which is a multi-party agreement among the Commission, Hyatt, and the Bond Trustee and Depository Bank. As with the Pre-Opening Agreement, there s no additional compensation to Hyatt for this. Item No. 2 establishes the bond authorizations necessary for the financing of the hotel. In a nutshell, the Airport would issue General Airport Revenue Bonds and Hotel Special Facility Bonds. The money we receive from the sale of the General Airport Revenue Bonds will be used to purchase the Hotel Special Facility Bonds. This accomplishes two important things: 1) We finance the hotel at the lowest possible tax exempt interest cost; 2) It enables us to legally carve out hotel revenues from overall Airport revenues and create a separate standard industry practice Lockbox Collection System and flow of funds with a bond trustee. With your approval, we will next seek Board of Supervisor s approval. Also, we just completed the RFP process for a Hotel Bond Trustee and we will come before you on Oct. 13 to seek award of the contract. In January 2016 we will seek award of the design build contract to construct the hotel. Mr. Junior Tejano: I have worked at the Fairmont Hotel for 45 years and have been a member of our local union for this period of time. Fairmont has been fair in taking care of their employees. Talk about Hyatt Hotel management, in my experience with the last two negotiations, Hyatt Hotel was never accommodating and always the last to sign any agreement. I believe if you re going to build a hotel at the Airport, Fairmont is best iconic brand to represent San Francisco. Fairmont is San Francisco. Fairmont has been a big part of San Francisco for over 100 years. Ladies and Gentleman, I have been a part of the Fairmont for almost half of those years. There is no hotel brand that will represent San Francisco better than the Fairmont Hotel. Thank you. Commissioner Mazzola: We have to be out of this room by 10:30am, someone else is coming in, so seakers, please keep it short. Mr. Peter John Sears: I am President of the America s for Hyatt Hotels. Good morning Mr. President, Ms. Vice President and Board members. Thank you for this opportunity to address you this morning. I also like to thank John Martin for his tireless efforts in getting us to this point today. Hyatt is a global hospitality company with widely recognized industry leading brands in a tradition of innovation and excellence. Our culture is based in stability of ownership and leadership that dates back to our foundation in 1957 here in California. We expect this level of stability, which is unusual in our industry, to continue for the next 50 years and beyond. We re attracted to this very attractive opportunity at SFO for several reasons. At Hyatt, we do business with the organizations, we try to find organizations who share a strong sense of culture and alignment with us. SFO s mission to be the most preferred airport among all of its stakeholders resembles the highest purpose. Minutes, September 22, 2105, Page 6

7 Although we re a global hotel company with over 600 hotels, we focus our attention not on being the largest, but being the most preferred for our colleagues, our guests, our owners and our communities. We therefore believe our goals align well with the SFO organization. We re impressed by SFO s commitment with this goal as evidenced by the quality of your facilities and your global reputation. It gives us great confidence that SFO will build a hotel that we believe will meet or exceed the standards of Grand Hyatt. We know and understand how important this hotel is to you and your long range plan. You will have mine and all of Hyatt s commitment to make sure that this property will always be a property that you can be proud of, both financially and reputationally. Thank you. Mr. William May: I have been a doorman, a proud doorman of the Fairmont Hotel in San Francisco for 29 years. The Fairmont is a luxury brand, it s over 100 years old, it attracts high end and local guests. I don t know the difference between a 4 star or a 4 diamond hotel. I know that Fairmont s reputation correlates directly with luxury. More importantly, there would only be one Fairmont at the San Francisco Airport. As an employee of the Fairmont, I consider my job a position, and with that said, I love to come to work with a team that cares about what the Fairmont stands for and what I stand for in my own personal life. I was able to go to school since I ve been at the Fairmont, graduated from U.C. Berkeley, and the Fairmont worked with my schedule. They do care about their employees. We have a consistent training program to keep refining our brand, and what the Fairmont would do for the Airport and the surrounding neighborhoods would be an asset because they care about community. They care about their employees and they care about their brand. So with that said, I want to thank you for letting me speak. Have a good day. Mr. Scott Emblidge: I with the Law firm of Moscone Emblidge. I m here speaking on behalf of the Fairmont and I m here to address the RFP and the radius restriction that your staff already alluded to. The RFP says there s a minimum radius restriction around the Airport of 10 miles, and it would apply to 4 star or 4 diamond products. This was a wise thing for the Airport to put in there because why would you want a competing hotel right down the road that could create an inherent conflict by that operator trying to figure out do I want to maximize profits of both Airport hotels or do I want to focus just on the onsite hotel. The Hyatt has a hotel right down the road. It s well within the radius restriction. It markets that hotel to the world as the Hyatt Regency San Francisco Airport. That s what it calls it and it tells the world that it s a 4 diamond hotel. That should be the end of the story. Why would the Airport want a similar property right down the road that s basically next door in violation of the radius restriction? Staff appeared to agree about this early on when they terminated negotiations with the Hyatt and then began negotiations with the Fairmont. Then, the attorneys for the Hyatt wrote an angry letter to the Airport and suddenly they went back to negotiating again with the Hyatt. I m not a hotel expert in this 4 diamond, 3 diamond thing, but what I do know is what the Hyatt tells the world. I have a handout here for you from three web pages that I found. Last week I Googled 4 diamond SFO, and Hyatt called themselves a 4 diamond hotel on one of the web pages. On the next one they Minutes, September 22, 2105, Page 7

8 called it a AAA 4-diamond hotel, and on the last one they again referred to themselves as a 4 diamond hotel. That should be the end of the story. You should enforce the radius restriction and not have a competing hotel sitting on site at the Airport. Thank you. Mr. Tom Klein: I am the Regional Vice President, General Manager, Fairmont Hotels on the West Coast. I m here today not as Regional Vice President for Fairmont Hotels and Resorts, but as an international hospitality executive with 35 years experience in the industry, both in operations and development. Hotel brands I ve worked with... Carlton, Hyatt, some international, and Fairmont. I currently serving on many industry boards, including Vice Chair of SF Travel, Hotel Council, Vice Chair of California Hotel Lodging and the Super Bowl 50 Advisory Committee. I am here today to say that the RFP process on the Airport hotel project basically reflected that there are two winners. With a 2% margin and point allocation out of a total of 750 awarded points, Hyatt prevailed by 16 points. When a project of this magnitude and importance is in front of the City and the Airport Commission, and when the point spread is this close, I would think that it would be prudent to take a closer look at both brands and details within the RFP documents, which we believe were not done or considered. Is there a larger point spread when we stand here today and look at this again? If anyone thinks that Hyatt Regency San Francisco Airport will not compete with the proposed Airport hotel, they are seriously mistaken. The Airport terminated discussions with Hyatt earlier this year and entered into detailed discussion with the Fairmont as the winner. A few weeks later, when threatened with a lawsuit by Hyatt, decided it was best to discontinue discussions with Fairmont. Hyatt is currently investing $50 million plus in the Hyatt Burlingame, and this is to maintain their current rating status, which Scott already shared with you is 4 diamond/4 star. They will be competitors. I m here today to ask the Commission to disqualify Hyatt, and not to award it to Fairmont but to take the leadership role and put it back in the rebidding process and seriously consider engaging both brands in discussions. I would also like to suggest retaining PKF, a professional consulting firm, to truly get an understanding of how brands compete in the market. I believe, as I stand here in front of you today, that they will clearly show that the two Hyatt brands will compete. Thank you. (See attachment) Dr. Churchwell: San Francisco African American Chamber of Commerce, I d like to have you consider rebidding the contract so that the small businesses and the community developers can have a chance to participate in it. 2. Approval of Eighteenth Supplemental Bond Resolution Designating a Proposed On-Airport Hotel as a Special Facility and Authorizing up to $243 Million Principal Amount of Airport Capital Plan Bonds and $225 Million Principal Amount of Hotel Special Facility Bonds to Finance or Refinance the On-Airport Hotel; Approving the Form of Trust Agreement; and Related Matters No Resolution approving the Eighteenth Supplemental Bond Resolution designating the Minutes, September 22, 2105, Page 8

9 proposed On-Airport Hotel as a Special Facility and authorizing the issuance of up to $243 million principal amount of Airport Capital Plan Bonds and $225 million principal amount of Hotel Special Facility Bonds to pay construction costs and other expenses associated with the proposed On- Airport Hotel; approve the Form of Trust Agreement; and approve certain other related matters. The Hotel project is an activity within the scope of the San Francisco International Airport Master Plan Program approved by the Airport Commission on November 3, The Master Plan Environmental Impact Report (EIR) prepared for the Master Plan Program, including the addenda thereto, adequately described this activity and its potential environmental effects for the purposes of California Environmental Quality Act (CEQA). Item No. 3 was moved by Commissioner Crayton and seconded by Commissioner Guggenhime. The vote to approve was unanimous. 3. Award Professional Services Contract Program Management Support Services for the Airport s Capital Improvement Program - CIP Partners JV - $2,787,660 No Resolution awarding Professional Services Contract , Program Management Support Services for the Airport s Capital Improvement Program to CIP Partners JV, in an amount not to exceed $2,787,660 for the first year of services. Since the Program will be a multiyear, phased program, Staff estimates that the total contract amount will be $9 Million with a total contract duration of five years. Mr. Geoff Neumayr, Deputy Director, Design & Construction said items seeks award of Program Management Support Services to CIP Partners, a JV of Faithful + Gould, M Lee Corp. and Paslay Management Group. The first year of services is not to exceed $2.8 million. This contract will provide program level management support services for design and construction in support of the Airport s $4.3 billion capital program. The scope of services will include project scoping and budgeting, program level cost and schedule reporting, programlevel phasing and operations, coordination and oversight of cost and schedule management. Three proposals were received and a four member selection panel was convened to rank and score the technical qualifications and conduct interviews. All three firms were invited to the oral interview. Minutes, September 22, 2105, Page 9

10 Based on the proposals scores, staff determined that CIP Partners was the highest ranked proposer. The final score included an LBE bonus of 7½%. Staff negotiated the scope, terms and conditions of this contract. The anticipated not to exceed contract amount is $9 million for the duration of five years. Staff will return to the Commission each year to renew this contract based on the consultant s performance. CMD approved a 20% LBE subconsultant participation goal and the consultant is committed to achieving this goal. Item No. 4 was moved by Commissioner Crayton and seconded by Commissioner Stern. The vote to approve was unanimous. 4. Authorization to Accept Proposals for the Terminal 3 Retail Marketplace Lease No Resolution approving revised lease specifications, minimum qualifications and proposal requirements, and authorizing staff to accept proposals for the Terminal 3 Retail Marketplace Lease. Mr. Fermin said we envision having a 5,200 square foot retail marketplace in the Boarding Area F Hub across from the food court. We took the opportunity with lease expirations and a relocation to merge four spaces into a larger format retail marketplace featuring multiple concepts and offerings under one roof. The vision for this space is a combined newsstand, specialty retail, and light food and beverage in such a way that it provides a new interpretation of the general store or airport version of a small department store. The RFP requires the concept to reflect San Francisco. We held an informational conference in July and had 20 firms in attendance. Five changes to the RFP were requested and we recommend two of the changes be made. One requested changes was to reduce the minimum requirements on operating a retail store in the past. The request was to lower the requirement from $5 million in sales experience to $3 million in sales experience. We recommend that you authorize this change to allow more parties to qualify. A local firm could pursue this RFP if it met the minimum qualifications, which will be lowered with your approval. Additionally, it could participate through a joint venture partnership, a sublease, or by licensing. After the informational conference, a networking event was held where large retailers met small local retailers and discussed possible business alliances. We expect that most or all of the proposals we receive will include a local partnership of some form. The previous lessees for these spaces were Sunglass Hut, Hudson News, and World Duty Free Group, none of which are small local businesses. Current sales on the stores within existing spaces covered by this RFP is roughly a little over $6 million a year. We project sales for the new concept to be between $8-$9 million. * * * Minutes, September 22, 2105, Page 10

11 F. CONSENT CALENDAR OF ROUTINE ADMINISTRATIVE MATTERS: The Consent Calendar, Item Nos. 5 thru 11, was moved by Commissioner Crayton and seconded by Commissioner Mazzola. The vote to approve was unanimous. Item 12 was removed from the Calendar. 5. Modification No. 14 to Contract No. 9048A - Design-Build Services for the Terminal 3 East Improvements Project - Hensel Phelps Construction Company - $9,171,000 No Resolution approving Modification No. 14 to Contract No. 9048A, Design-Build Services for the Terminal 3 East Improvements Project, with Hensel Phelps Construction Company, to increase the total contract amount by $9,171,000, for a new total contract amount not to exceed $223,921, Award of Two Contracts to Keenology Corporation dba CIPPlanner Corp. Contract No Design and Implement a Contract Monitoring and Compliance System - $1,258,309, and Contract No. 9225M for the Three Year System Maintenance - $207,594 No No Resolution awarding Contract 9225 to design and implement a Contract Monitoring and Compliance System in the not to exceed amount of $1,258,309; and Contract 9225M to Keenology Corp. dba CIPPlanner Corporation for the three year system maintenance in the not to exceed amount of $207,594 for a total amount not to exceed $1,465,903, for a maximum term of 18 months and three years, respectively. Commissioner Crayton... is that the same as Item No. 3? Ms. Julian Potter, Chief Administration & Policy Officer replied that they are very similar names but different contractors. 7. Authorization to Issue a Request for Qualifications/Proposals for Contract No Design-Build Services for the Demolition of the Terminal 2 Air Traffic Control Tower Project No Resolution authorizing the Director to issue a RFQ/P for Contract , Design-Build Services for the Demolition of the Terminal 2 Air Traffic Control Tower Project. Minutes, September 22, 2105, Page 11

12 8. Authorization to Issue a Request for Qualifications/Proposals for Contract No. 9350A.66 - Design-Build Services for the REACH -Customer Hospitality, Boarding Area A & G Project No Resolution authorizing the Director to issue a RFQ/P for Contract No. 9350A.66, Design-Build Services for the REACH Customer Hospitality, Boarding Areas A & G Project. 9. Authorization to Re-Issue a Request for Proposals for Contract No R Development of the SFO Zero Waste Management Plan and to Negotiate with the Highest Ranked Proposer No Resolution authorizing re-issuance of a Request for Proposals for Contract 50000R for development of the SFO Zero Waste Management Plan and authorize Staff to conduct negotiations with the highest ranked proposer. 10. Modification No. 4 to Contract No Noise Insulation Consulting Services to Exercise the Second of Two One-Year Options and Increase the Not to Exceed Contract Amount - C.Kell-Smith & Associates, Inc. - $330,000 No Resolution approving Modification No. 4 to Contract No with C. Kell-Smith & Associates, Inc. for Noise Insulation Consulting Services to exercise the second of two one-year options and increase the not-to-exceed amount of by $330,000, for a new total contract not to exceed amount of $1,400, Authorization to Seek a Finding from the Board of Supervisors that the Proposed Airport Shoreline Protection Project is Fiscally Responsible No Resolution authorizing the Director to seek a finding from the Board of Supervisors that the proposed Airport Shoreline Protection Project is fiscally responsible under San Francisco Administrative Code Chapter Approval of a Lease Agreement with the U. S. Government for Space in the International Terminal for Use by the U. S. Federal Bureau of Investigation Resolution approving a Lease Agreement with Minutes, September 22, 2105, Page 12

13 the U. S. Government for office space in the International Terminal to be occupied by the U. S. Federal Bureau of Investigation and directing the Commission Secretary to forward the Lease to the Board of Supervisors for approval. * * * 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. Ms. Romina Loreto: I represent SEIU, United Service Workers West at the Airport which includes cleaners, janitors, agents, exit guards, lobby agents, baggage handlers, and the people who clean aircraft. As you may remember, we came to you regarding the bug infestation of our vans, the lack of break rooms and general unsafe working conditions. My first comment is of appreciation for assisting us in getting a break room as well as holding AirServ accountable for unsafe employee working conditions. I also wanted to let you know that OSHA had made an inspection last May 28, 2015 and I m expecting the decision from the OSHA Inspector within a week or two. We have to thank you for that. Also, I am here to support the workers who prepare airline food. Like us, those are mostly women, people of color, and immigrants who face daily challenges for safety, forced overtime, low wages, and intimidation. I urge you to help them get a more humane workplace that respects the rights of these workers and treat them with the dignity that they deserve. Thank you. Ms. Cui Qin Zeng: I have been working at Flying Foods as a Station Attendant for 12 years. I m a resident of San Francisco. Back to 2002 I start work at the Flying Foods and I was making $8.50 per hour, and at that time San Francisco s minimum wage was $5.25. Today, I only make $11.45 per hour and San Francisco minimum wage is $ So, the last contract proposal offer our wages increased for four years was only $2.05 per hour, which means in 2018 I only make $13.50 per hour. There s no change in healthcare. I only insure myself in the plan and I need to pay $110 per month and my yearly deductible is $5,000. Unknown Speaker: The company offers too little over too long a period. We need to get there fast. I m on the union committee in Flying Food Group. My coworkers and I are not satisfied with the proposal last Friday, September 18, We took a vote and 85 of us did not accept management proposal, and 82% willing to authorize Local 2 to call a strike. We work hard to put right food for airlines and now airline company are making record profit, but we are left behind and we re prepared and willing to fight. The airline need to pay their fair share so we can have a living wage. Ms. Shelley Kessler: You just heard... Flying Foods took a strike vote and it was just a year ago when there was another strike at the Airport because of food service workers. Strike is the last thing people want. It s not done because people want to go on strike. It s done because people feel they have no other option but to put the companies on notice that they re serious. You ve heard testimony both today and at Minutes, September 22, 2105, Page 13

14 previous meetings from these people who showed up. They re not making living wages, they re not making enough to survive in our community and in our region. So what we have asked, and what we hope that you ll find someway to help us with, is to hold the contractors accountable. These sub-contractors who provide food, aircraft cleaning, baggage handling, all those people get paid by United Airlines, American Airlines and all these airlines are making lots and lots of money. So what we re thinking is that you could look at opportunities to hold the primary contractors accountable for what their subs are doing. That s where the buck stops. So, we re really hoping that you can take a look at some opportunities that may come up. Legal staff has been working with other staff here at the Airport and we re looking forward to finding a resolution. We appreciate all the work that you re doing and the support that you re giving to these workers. Commissioner Crayton: You said that they took a strike vote, so is there a timeline? Ms. Kessler: KC would be happy to come up and answer that question. There s someone here who could actually give you an explanation on what that means. Commissioner Crayton said the contract actually falls under what? Ms. Kessler: So, here s the problem with the three providers of food at the Airport. And KC can more accurately describe this, but let me just tell you. Two of the contracts are under what s known as the Railway Labor Act so for those people that are covered by transportation issues, and this goes back to Aeroground a long time ago. A court case that got settled. A third party contractor, some of whom will claim that they fall under this national legislation that says any contractor, anything that you have to do happens at a national level. Flying Foods on the other hand falls under the National Labor Relations Act, which is something that can be dealt with locally. And even though it s a national company, they have the ability to work out arrangements for collective bargaining agreements at the local level. And that s where the strike is pending. So, people want to settle a contract. And I can tell you just from our Airport Labor Coalition meetings, both the flight attendants and the pilots who fall under the Railway Labor Act, are very concerned because when a flight attendant opens up that cart... they never know exactly what that s going to be and we, as members of the flying public, want to make sure that it s good food prepared in a safe, clean environment with people who are not exhausted, overworked and underpaid. Those national labor laws are problematic for some of these folks, and I appreciate you asking the question, Commissioner Crayton, because for the local folks, this is really where the bottom line hits and that s why it s important for the airlines to be held accountable because they contract with these people across the country. This is not just at SFO, this is a behavior of these people across the country and these airlines need to be held accountable to do the right thing when they come to our town. Thank you for your time. Ms. Virginia Canizales: I ve been working at the Airport for the last five years and also I ve been a union member. So, I m just here to support Flying Foods because I know of San Francisco Airport workers... which strike on December for two days and we won a really great contract. I m just here to support them, but if the Flying Foods workers go on strike, I think most of the SFO workers, we gonna support them and we re going to stay in the picket line. Thank you. Minutes, September 22, 2105, Page 14

15 Rev. Ben Myers: Thank you for your efforts. I m happy to be here again to show community support and to thank you for the efforts that you ve made already towards food service workers rights. I just want to say that I think we need to make clear that the cost of doing business at SFO should include the cost of the dignity and worth of the standard of living for the workers who bring such luxury to those who depend on their service, and who profit from their labor. This morning CNN came out with the Reuters Report that announced the $29 billion profit which is an 80% increase from last year that the airline industry has and now enjoys. We need to bring the cost of the quality of life back to these workers as it was on September 10, After the tragedy of 9/11 when the airline industry went to their workers and said in order to survive you need to freeze your wages and your salaries. In compliance with that and in solidarity with the business and their patriotic duty, indeed they did. But they ve now been left behind and this is not right; this is a question of dignity for our workers. This is a question of the fabric of our community being able to take care of itself so that workers can enjoy the quality of living that they did before. The money is there, 4 diamond, 4 stars, that should be shared because they re the ones who make it possible. Thank you for your time. Mr. Mike Casey: I know you re pressed for time. Last Friday, as our Secretary Treasure mentioned, our union voted on two matters: 1) A proposal by the company was voted down by 95% of the members as the proposal was inadequate. 2) The question on the ballot was will you vote a strike? Ninety-two percent authorized a strike. It s no wonder as over 50% of the workers at the Flying Foods facilities are making under $11.00 an hour. Forty percent of the entire workforce makes under $10.00 an hour. At the last meeting you heard about the conditions where workers are working in degree temperatures. There s no retirement plan when you have $5,000 deductibles; there s effectively no healthcare that workers can afford. That was for a single coverage. For a family coverage it s hundreds of dollars a month, so when workers are making $11.00 an hour they re can t afford healthcare. The overwhelming majority of our members do not have affordable healthcare. The long hours of overtime are there because the company can t hire new workers at subminimum wages. Workers only make a living wage if you consider $15-$17an hour a living wage when they work overtime. So workers work overtime endlessly, and I m talking about 6-7 days a week,10-12 hours a day regularly. That s the only way to make ends meet. We appreciate President Mazzola s to the catering companies, but the real people who should be called upon to raise the standard is the airline industry. The airline industry, as Reverend Myers just said, is expected to make about $29 billion this year. That comes down to a profit of $18 per passenger across the country. Our researchers estimate that the cost of raising the labor cost by $1... right now labor costs average around $15-$14 per hour. When you roll everything up, wages, whatever they have for healthcare and maybe taxes, it s about $15 per hour. If you raise that by $1 per hour, it will cost about 5-10 cents per passenger. So, if we want to raise these standards by $10, which really should be a minimum, it won t cost the airline industry more than a $1 out of that $18.12 that they re making per passenger on profit. We talk about safety and security, I don t know anyway to guarantee greater security and safety than making sure that the men and women who are producing the food that goes on planes don t have to work 12 hours a day for weeks on end, 6-7 days a week. Last Friday the workers took action, they voted to authorize a strike. We re going to be looking to Director Martin, as you ve cooperated and worked with us in the past. We understand that when workers strike at the Airport, Minutes, September 22, 2105, Page 15

16 that we have a right to communicate and talk to passengers and stuff and you cooperated with us in the past and we are going to be having to communicate with those airline passengers again. Your next Commission meeting is October 13 th. I very much hope and expect that at that meeting you ll be able to vote on making sure that workers in this industry start to get a living wage and no one in the airline catering companies should ever make ever less than $13.52 per hour, which is what the Quality Standards Program provides for. I know we have legal issues and everything. Quite frankly I am not concerned about how we get there, I just hope that we will get there and that you re able to vote on October 13 th. I appreciate the time. * * * H. CORRESPONDENCE: There was no discussion by the Commission. * * * I. CLOSED SESSION: The Commission voted unanimously to go into closed session, which began at 9:30 AM. CONFERENCE WITH LEGAL COUNSEL (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 ) 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 LITIGATION. (i) Pending litigation as defendant (Government Code , Administrative Code 67.8(a)(3)): JRI, Inc. v. The City and County of San Francisco, et al., California SuperiorCourt, County of Alameda Case No. HG , filed June 17, 2010 (served October 5, 2012). Discussion of proposed settlement and resolution recommending approval by the Board of Supervisors. ACTION ITEM. (ii) Pending litigation as defendant ((Government Code , Administrative Code 67.8(a)(3)): A.J. California Mini Bus, Inc., d/b/a Airport Express v. The Airport Commission, et al., United States District Court, Northern District of California Case No. 15-CV LB (served July 15, 2015). DISCUSSION ONLY. (iii) Potential litigation (Government Code (b), Administrative Code 67.10(d)(2) and (e)(3)): Notices of Government Claim received concerning noise claims associated with SERFR ONE Area Navigation (RNAV) Standard Terminal Arrival Route (STAR). DISCUSSION ONLY. (iv) Potential litigation (Government Code (b), Administrative Code 67.10(d)(4)): One matter as plaintiff, unspecified to protect settlement posture. DISCUSSION ONLY. (v) Potential litigation (Government Code (b), Administrative Code Minutes, September 22, 2105, Page 16

17 67.10(d)(2) and (e)(3)): One matter as defendant, concerning the notice of protest of contract award to Request For Proposals No for branded hotel operator. DISCUSSION ONLY 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 (b)(2) and ) 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 (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 went back into open session at 9:46 AM and voted unanimously not to disclose the nature of the discussion. The public portion of the calendar commenced at 9:46 AM. * * * J. ADJOURNMENT: There being no further calendared business before the Commission, the meeting adjourned at 10:30 AM. (Original signed by: Jean Caramatti) Jean Caramatti Airport Commission Secretary Minutes, September 22, 2105, Page 17

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