Sale of $36.6 Million in Port of San Francisco Revenue Bonds

Mayor Gavin Newsom announced today that $36,650,000 in Port of San Francisco revenue bonds have been sold to financial investors with the transaction expected to close on February 3, 2010.

The sale of the revenue bonds will provide $10,000,000 for the design of a state of the art international Cruise Terminal at Pier 27, $5,000,000 for urgent repairs to the Port’s current cruise terminal at Pier 35, and $8,000,000 for improvements to the Pier 90-94 Backlands, among other projects.  The Series 2010 Revenue Bonds represent the first issuance of new-money bonds by the Port since 1984.

“These investments will stimulate local job creation, position San Francisco as a premier cruise destination, and build the Port’s revenue base,” said Mayor Newsom. “The Pier 27 Cruise Terminal and a new, 2-acre public plaza along the Embarcadero will welcome local residents and cruise passengers, allow visiting vessels to berth emission-free while plugged into the Hetch Hetchy power supply, and enliven the City’s waterfront.”

Mayor Newsom made the announcement at the Maiden Call for the Cunard Line’s Queen Victoria cruise ship at Pier 35. San Francisco previously welcomed Cunard’s flagship, the Queen Mary 2, in 2007. The Queen Victoria is the second largest Cunarder ever built, and her 99-day westbound circumnavigation will continue on to Hawaii. Queen Victoria’s Maiden Call to San Francisco, is her only U.S. inaugural call during her current world voyage.

Specifically, Mayor Newsom highlighted that the sale of the bonds will fund design and renovation of cruise ship terminals at Piers 27 and 35:

Cruise Terminal at Pier 27 – $10,000,000 – This project will fund the design of a renewed state-of-the-art, LEED-certified cruise terminal at Pier 27 that will serve as a special event facility on non-cruise days. The project also includes a new 2-acre Northeast Wharf public plaza serving the people of San Francisco and the Bay Area, as required by the San Francisco Bay Conservation and Development Commission’s Special Area Plan for the San Francisco Waterfront. Construction is anticipated to commence the second quarter of 2012 and be completed by the first quarter of 2014.  The estimated project budget is between $60 million and $80 million, of which $10 million, to fund planning and design costs and the installation of equipment and related hardware needed to provide utilities for visiting ships, is expected to be financed with proceeds of the Bonds.

Pier 35 – $5,500,000 – This project funds urgent repairs to both the substructure and superstructure of Pier 35, the Port’s current primary cruise terminal, including new ADA accessible restrooms in the terminal’s main entrance/reception area. Pier 35 will continue to function as the Port’s secondary cruise terminal when the Pier 27 cruise terminal is completed.

On July 1, 2009, the Port made the final payment on revenue bonds originally issued in 1969, 1971 and1984, thereby retiring the last of the bonded debt required by the State’s transfer of the Port to the City in 1969. Anticipating the new debt capacity created by that repayment, the Port Commission selected and approved projects to be funded with a new revenue bond. The Board of Supervisors approved the project list on an 11-0 vote in November 24, 2009 and Mayor Newsom signed the legislation in December 2009.

The three rating agencies, Moody’s Investors Inc., Standard and Poor’s Financial Services and Fitch Ratings, assigned their municipal bonds ratings of “A1,” “A-“ and “A,” respectively to the Bonds for the Port.

 “The assigned credit ratings of the Port of San Francisco are a testament to the hard work and commitment of Port staff, the ability of the Port’s waterfront to support diversified uses and the business acumen of our tenants,” said Monique Moyer, Port Executive Director.  “We’re excited about the opportunity to renovate Pier 27 for modern cruise ships, building on one of the Port’s strongest maritime business lines, and to make strategic investments in the Port’s infrastructure.”

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