Golden Shovel NAIOP 2023- 'The Bridge'

The Bridge

From Produce to Production

The Bridge unites the SF Market across the ground floor of two 410,000 sq ft. class-A facilities separately known as Bridge East and Bridge West.

Team Acknowledgement

Our vision for a new San Francisco Produce Market would not be possible without the contributions of so many public and private partners. We are deeply indebted to the insights of these many stakeholders, whose contributions have shaped our proposal. From early morning conversations with the San Francisco Market team to formal presentations with renowned professionals, we are so appreciative of all of your time and generosity. We owe a debt of gratitude for all we’ve learned in the process.

Land Acknowledgement

The Bears Real Estate Group acknowledges that the SF Market is located on the unceded ancestral homeland of the Ramaytush Ohlone, who are the original inhabitants of the San Francisco Peninsula. As the Indigenous stewards of this land and in accordance with their traditions, the Ramaytush Ohlone have never ceded, lost, nor forgotten their responsibilities as the caretakers of this place, as well as for all peoples who reside in their traditional territory. As guests, we recognize that we benefit from living and working on their traditional homeland. We wish to pay our respects to the Ancestors, Elders and Relatives of the Ramaytush Ohlone Community, and affirm their sovereign rights as First Peoples.

The San Francisco Produce Market

Jacqueline Armada, Jackson Liles Architecture

Brynn McKiernan, Emerald Fund

Robert Kelly, SKS

Prologis

Site Sponsors

Ken Rich Ken J. Rich Consulting

Michael Janis SF Produce Market

Sergio Solis, SF Produce Market

Financial Sponsor Judges

Amanda Monchamp, Monchamp Meldrum LLP, Jury Chair

Michael Mulligan, Mechanics Bank

Kelly Kline, Stanford

Sarah Dennis Phillips, Tishman-Speyer

Rich Ambidge, Ambidge Group

Miles Treaster Horizons Capital LLC

Fukang Peng, Goodman

Carson Goldman, Terreno Realty Corporation

Ed McFarlan, JRDV Urban International

Joe South, Cold Summit Development

Peter Sand Modular Science

Matt Tortorello, Goodman

Eric Harrison, Signature Development Group

Joey Weinstein Carnes, Bridge Partners

Lily Lorbeer Cruise

Chris Lynch, Jones Hall

Kyle Deshon, UC Berkeley (MBA)

Brent Clark, Sares Regis

Joe Euphrat, GreenRock Capital

Briana Harney, Northmarq

Luke Ogelsby, CBRE

Dennis Williams, NorthMarq Capital

Lauren Pressman, Hillspire

Alexandra Stoelzle, BCG Holdings

Charlie McEachron, Drawbridge Realty

Alysia Vigil, Shorenstein Realty Services

Anna Cole, Stockbridge

Alison Corley, NAIOP San Francisco Executive Director

Team Coaches

Client Advisors

Karl Hansen, CBRE

Jeanne Ho, JP Morgan

Jonathan Colton, JP Morgan

Don Kuemeller, PCCP

Brian Thorton PCCP

Thomas Reddy, Esquire

Ann Lauer, Ann’s Catering

Timothy Werby, Delizia Capital

Gary Boitano, Cushman & Wakefield

Bill Falik, UC Berkeley (Haas)

Courtney Bell Prologis

Ali Harandi, Prologis

Adebanke Abioye Prologis

Abigail Franklin UC Berkeley (Haas)

Matthew Anderson Cold Summit Development

Mary Murphy, Gibson Dunn

Nancy Wallace, UC Berkeley (Haas)

Carl Shannon, Tishman Speyer

NAIOP Graphics

Eli Zigas, SFM Board; SPUR

Brian Jiles, Jackson Liles Architecture

Chloe Hanna-Korpi, Jackson Liles Architecture

Daniel Benavides Berkeley

Warren Kleban InstaCart

Neil Sekhri, Gibson Dunn

Leo Ma Century Urban

Xinyu Liang, San Francisco Planning Department

Elizabeth White, San Francisco Planning Department

Daniel Gorczyca, Berkeley

Allyson Chavira, Sustainability Consultant

Zac Shore, Avenue Development

Brett Jones, Kilograph

Miriam Arias, Independent Contractor

Cynthia Miao, Independent Contractor

Public and Community Entities

Developer

Jack Woodruff | EWMBA ‘24

Jordan Doane | MREDD ‘23

Serena Lousich | MREDD ‘23

Esmeralda Jardines | MREDD ‘23

Marshall Slipp | MBA ‘23

and Investor Interest

Tenant Interest

Executive Summary

The Bridge envisions a future for the SF Market that integrates the ‘Bay Area’s Source for Fresh Produce’ with autonomous vehicle technology and a new center for community-oriented food and beverage production. San Francisco defines itself through the balance of preserving historical heritage while simultaneously fostering technological innovation. As an historical San Francisco institution on the precipice of redevelopment, this next phase of the SF Market will provide the facilities needed for the SF Market and its merchants to continue to build upon that history, while leveraging the full potential of their site to embrace new advances in technology and foster synergistic business to ensure the entire ecosystem of the SF Market expands and thrives into the future.

The Bridge is a multi-story industrial development that harmoniously combines San Francisco’s past, present, and future. This phased development:

Provides best-in-class facilities for the SF Market, exceeding CCSF redevelopment requirements

Maximizes the SF Market’s existing capital and uses it to catalyze both public and private money, decisively overcoming the development’s financial challenges

Features a unique, convertible industrial building design that unlocks development today while futureproofing the SF Market against major market or regulatory changes tomorrow

Centralizes and enhances community-based programming synergistic with the SF Market, its community, and its mission–all in the context of 24-hour activation

19.29%

Project Objectives

OBJECTIVES BREG APPROACH

With all stakeholders in mind, we have determined the following highest and best uses (all figures for total development, both buildings):

Built in 1962, the SF Market’s principal warehouses are in dire need of repair. Replacing and redeveloping this merchant space is the project’s primary objective. But priorities for this city-owned, nonprofit-operated site which is located in the heart of the historically marginalized Bayview Hunters Point, go far beyond simple warehouse replacement Determine the highest and best use for the SF Market’s 14.4 acre core

• 266,000 sq. ft of ground-story SF Market and merchant space (versus today’s 261,000 sq. ft), plus 26,000 sq. ft of central concourse space to draw in the public and increase merchant synergy

• 318,000 sq. ft of second-story, high-NOI fleet vehicle space, fully convertible to class A warehouse in future phases to respond to market or regulatory changes. 6,000 sq. ft of starter warehouse space is also included on the second story, with a leasing focus agtech

• 116,000 sq. ft of agriculture, food, and community-focused programming, including agtech companies, commissary kitchens, food product fabricators, and BVHP businesses and nonprofits to create economic synergy with the SF Market and benefit to the BVHP community.

The above uses will be achieved in a consolidated development of two buildings total (one on each side of the 280 freeway), saving on soft and construction costs relative to the planned four-building development.

Prepare a site development strategy

BREG’s site development strategy begins with entitlement via a Disposition and Development Agreement (DDA), a Development Agreement (DA), a Special Use District (SUD), and a Planned Unit Development (PUD) for the SF Market site. This entitlement approach will:

• Expressly allow a JV Partnership

• Achieve a 99 year lease on this city-owned land; leasehold to be conveyed via a DDA that will establish the multi-phase approach.

• Perit tax-based project finance by establishing an EIFD and a CFD

• Principally permit all proposed land uses and use sizes under the SUD

• Establish a priority parallel process for all associated development applications, site and building permits, and ancillary permits

From the entitlement stage, BREG’s approach is to accelerate development up to 10 years vis-à-vis the phasing timeline previously envisioned by the SF Market and CCSF. This acceleration is achieved by:

• Unlocking capital with permanent financing, first on the existing stabilized SF Market assets to finance Bridge East, and then on Bridge East to finance Bridge West

Prepare a site development strategy

• Including community-aligned small and medium-sized business uses to accentuate the shared interests of the SF Market, the selected JV developer, and (especially) the CCSF

The development itself incorporates infrastructural improvements for the SF Market, logistically-aligned alternate uses, and significant ongoing revenue.

Improved SF Market

• Introduces new central concourse space

• Integrates cold storage to complete cold chain for enterprise end-buyers

• Prioritizes the SF Market’s key requirements for produce market efficiency (see table below) and expands space for nonprofit programming

• Adds on-site energy sources

Aligned Alternate Uses

• Achieves financial feasibility via in-demand fleet storage, which is both cheaper to build and more profitable to rent than class A warehouse

• Fleet activity is anticipated to occur during daytime hours, complementing the SF Market’s nighttime operation

• The fleet storage space also fully convertible to class A warehouse to respond to future changes in demand or regulatory environment

• Tops the development off with daytime users in the food and agriculture sectors: caterers, small food fabricators, small batch brewing, and agtech technology developers

The feasibility of our development strategy is driven by:

• A capital stack of creative-but-tested sources

• A high-NOI alternate use attractive to the projects required JV partnership

• A bold-but-moderated entitlement strategy that stays within existing height and bulk limits and opts to keep the PUD requirement within the proposed SUD, allowing the Planning Commission their desired level of discretion

• A community engagement strategy based on significant enhancement of the BVHP community with accessible jobs, small business incubation, and new public engagement with the SF Market

Phasing Summary

Phasing

The Bridge will be built in two phases. (See Relocation for additional information). In Phase 1, Bridge East will be built on the Eastern Parcel replacing 1900 Kirkwood and 1901 Innes. Upon completion of Phase 1 in 2028, Selby will be a re-opened utilized street and Jerrold will be partially re-routed. Merchants on the western parcel will relocate into Bridge East and construction will begin on Phase 2 Bridge West. Expected completion 2030, seeing the completion of full re-routing of Jerrold Ave, and completion of street improvements on Innes Ave and Kirkwood Ave.

Table of Contents

The Bridge

Expanded, best-in-class facilities for the SF Market. A central concourse brings buyers and merchants together like never before.

A future-proof NOI-driver accessible by ramp, starting with fleet storage but adaptable to nearly any industrial use.

Maker space, food fabrication, commissary kitchens, and nonprofit space completes this public / private venture with benefits for all stakeholders.

NOTE: Glossary with key terms in appendix

Fleet storage leases for more per square foot in San Francisco than class-A warehouse. It won’t always be that way, but it’s that way now.

– Carson Goldman, Acquisitions & Asset Management, Terreno Realty

1 Context

In this section, BREG examines the historical and present-day context for the SF Market’s past history, present operations, and future goals.

The SF Market has a problem to solve, but is not solving it in isolation. Any proposed solutions must marry the SF Market’s redevelopment priorities, identified here, with its social, environmental, and political environment.

SF Market History

The San Francisco Wholesale Produce Market, or SF Market, is the largest dedicated wholesale produce marketplace in Northern California. Its roots as a thriving gathering place for independent produce merchants go back to at least 1962. Until that time, San Francisco’s produce wholesalers operated in the downtown area, but were displaced in the construction of Embarcadero Center. Pushed out by downtown development, many of the merchants worked with the City to find a suitable replacement site.

That replacement site is where the SF Market is located today, on city-owned land in Bayview Hunters Point. That land is now under its second long term ground lease to the San Francisco Market Corporation, a California nonprofit that acts as host and sub-lessor to roughly 30 produce merchant tenants.

The four warehouses of the site’s 14.4 acre core were constructed at the time of the relocation, with bond financing serviced by the merchants.

Today, the SF Market’s merchants work hard to ensure a reliable supply of fresh, healthy, and high-quality produce from California’s acclaimed agriculture industry to Bay Area restaurants, hotels, food preparation businesses, and grocers.

However, the SF Market’s four core warehouses are nearing the end of their useful life, are operationally suboptimal, and fall dangerously short of modern seismic standards.

At the time of their 2013 lease renewal, the City and the SF Market agreed that these core facilities, together comprising 247,000 sq. ft of warehouse and loading dock space, must be redeveloped. The development timeline codified in the 2022 Amended Lease anticipates a 2041 completion date of its a warehouse-by-warehouse replacement plan, with matching street improvements. BREG proposes a consolidated development that will beat that completion date by up to 10 years.

Market

The SF Market Existing Conditions

Bayview Hunters Point

Bayview Hunters Point

The Bears Real Estate Group also acknowledges the Bayview Hunters Point as a neighborhood that has been historically disenfranchised,and one of the last African-American neighborhoods in San Francisco.

The Bayview Hunters Point has endured disproportionate environmental and socioeconomic burdens for decades. It is important to acknowledge and address the historical context of development and industry in BVHP, and the cumulative impact that projects have had on the surrounding neighborhood. The Bridge is an opportunity address and course correct those inequities with concerted efforts to address potential noise, traffic, and air quality impacts through sustainable design, a comprehensive redesign and recirculation of existing operations to provide a safer private and public realm, and expand community amenities including a new San Francisco Product Market and community-oriented and supportive industrial uses on the upper floors. The project also advances City and community goals of generating jobs through the retention, creation, and expansions of modern PDR facilities.

Environmental Justice

The San Francisco’s General Plan Environmental Justice Framework, adopted by the Planning Commission in March 2023, identifies (BVHP) as an Environmental Justice Community. As part of the EJ Framework public outreach, it became evident that the main challenge relating to food was the cost of groceries, proximity to grocers, and lack of culturally-appropriate foods. Food justice became a citywide issue across the various surveys coordinated.

In particular, BVHP is a community lacking options for grocery stores and BVHP residents must travel outside of their community for food options. Accordingly, a design that purveys SF Market’s healthy produce to members of the public is prioritized via the concourse that safely separates the logistics and freight activity from the indoor pedestrian activity. Additionally, when not in use by the SF Market, the loading docks and bays will accommodate food trucks of varying cuisine while activating the SF Market’s industrial campus, and the third floor will incubate and facilitate food preparation, catering, food manufacturing, brewing, and other food-related uses to further expand options and provide a home for local, small businesses to thrive.

The Bayview Hunters Point and environmental justice are top of mind at The Bridge, and the proposed redevelopment is positioning the SF Market and other onsite industrial uses with an equitable future in mind.

Bayview Hunters Point Area Plan

The Bayview Hunters Point Area Plan encourages maintaining industrial zones for PDR activities in the Oakinba subdistrict, where The Bridge is located, to strengthen the role of the Bayview’s industrial sector in the economy of the district, the city, and the region. Key objectives and policies laid out in the Bayview Hunters Point Area Plan are directly addressed by The Bridge.

The Bridge stimulates business, employment and growth within the existing land use pattern by resolving conflicts between adjacent industrial and residential areas. The redesign of the site mitigates traffic impacts between the SF Market, surrounding industrial uses, and other residential uses in the Bayview Hunters Point neighborhood; it also achieves this by vacating Jerrold Avenue and improving Kirkwood, Innes, and Selby. Together, these improvements enhance the transition between industry and residential areas in the vicinity.

Additionally, the Bridge fully aligns with the PDR-2 Zoning and provides a wider variety of efficient light industrial uses on-site with a more attractive building design as encouraged in the Area Plan. Further, The Bridge strengthens the role of the Bayview’s industrial sector by retaining the industrial uses, and expanding additional industrial uses on the second and third floors.

The PDR nature of the proposed project—multi-story industrial buildings that align with and synergistically support the SF Market and focus predominantly on foodrelated uses—is consistent with the objectives of the Bayview Hunters Point Area Plan.

African American Cultural District

African American Cultural District

The San Francisco African-American Arts & Cultural District works to preserve, strengthen and promote Black culture in the city’s Bayview Hunters Point neighborhood. The intent is to recognize San Francisco’s intangible cultural heritage, which includes non-physical characteristics, such as customs and practices, artistic expressions, beliefs, languages, folklore, traditions, and cuisine.

The AACD will serve to:

(1) acknowledge the importance of the neighborhood’s history;

(2) preserve the legacy, cultural assets, arts, and traditions uniquely born in Bayview Hunters Point;

(3) create a community-led and transparent initiative, driven by Bayview Hunters Point stakeholders;

(4) incubate homegrown entrepreneurship and artistic expressions, and;

(5) create an environment susceptible to sustainable businesses and economic vitality to improve quality of life for all residents.

The third floor across both buildings will provide the physical space needed to incubate local entrepreneurship; The Bridge hopes to work with the community to identify potential tenants during lease-up. Undertaking these efforts will allow The Bridge to create several sustainable businesses and expand economic opportunities in the Bayview Hunters Point.

SF Market Priorities

Per BREG’s interviews with SF Market personnel and consultants, we have identified the following features and priorities for any facilities redevelopment:

Minimized or mitigated disruption of existing tenant operations. Plan to retain and re-house all existing tenants.

Based on heavy emphasis from the SF Market Leadership, BREG has proposed a phased development plan to minimize impacts to the SF Market and its merchants. Additionally, BREG has created a generous relocation plan ( see section below) based on the number of tenants moving, their square footage needs, available warehouse space nearby, and financial feasibility.

See Relocation section below for more detail.

Maintain or expand the number of loading docks

Critical to the market’s operations are its loading docks. Constituting the interface between the market and the outside world, loading docks determine efficiency and drive merchant rents. The Bridge maintains all current merchant-specific loading docks while expanding the number of shared loading docks.

Maintain Ground Floor Operations for the Market

The SF Market currently operates entirely on the ground floor. In reviewing potential innovative solutions to rebuild and expand the market, BREG originally proposed vertical circulation via elevators. The SF anticipated operational difficulty with this solution. Therefore, BREG’s final vision prioritizes full ground floor access for the SF Market and its merchants.

Food Recovery Program & Plastic Recovery Program

The Food Recovery and Waste Reduction programs play an important role in connecting the market to the surrounding community. However, there is currently no dedicated space for these programs, and Plastic Recovery takes place in the common loading areas at the center of the Marshall Yard. The Bridge provides 3,520 sq. ft of dedicated space for Food and Plastic Recovery programs housed on the ground floor of the two proposed buildings in the development.

Additional square footage to host expanded

The SF Market expressed the goal of retaining existing merchants, and expressed some trepidation about overbuilding for merchants not yet present. Therefore, The Bridge replaces the SF Market’s current facilities on the ground floor and expands the total square footage of the SF Market by 5,000 sq. ft. Additional programming in the form of food recovery, shared loading docks, retail, and expanded marshall yard space were also prioritized in the design of the development.

Moderate

As exemplified by the recently-redeveloped 901 Rankin warehouse, merchants with modern forklifts can use the space for racking pallets on raised platforms for increased storage. BREG has thus prioritized racking-compatible ceiling heights as this practice is increasingly the norm in industrial and warehouse usage, and SF Market leadership is optimistic about adoption among its merchants.

Core to any market is the interaction between the merchants and their customers. The SF Market expressed that a concourse would be valuable to the ‘soul’ and vibrancy of the market, helping engage the broader public while also providing safe, indoor, conditioned space for merchants to interact. (The current buildings use the loading area for both logistics and sales—there is no dedicated sales space.)

However, SF Market leadership was vocal that dedicated concourse space would potentially waste precious real estate. Accordingly, BREG proposes a central market concourse underneath the dead space of the second-story vehicular ramp, realizing the benefits of a concourse with minimal sacrifice of usable square footage

The 2022 lease amendments between the SF Market and the CCSF expressly plan for the closure of Jerrold Avenue to the public and the re-routing of traffic to the flanking roads of Kirkwood and Innes. However, the CCSF would prefer that Jerrold Avenue remain in its current configuration, given the possibility that the entire site reverts to direct city control upon lease expiration in 2073.

Given our entitlement strategy which will entail an extended lease and the manifest financial benefit of centralizing the SF Market operations into fewer structures, the SF Market and BREG propose bifurcating Jerrold Avenue into two one-way easements at the northern and southern ends of the site boundaries. The area dedicated to Jerrold Avenue will primarily serve as truck circulation for the duration of the ground lease. However, both could be converted back to Jerrold Avenue at a point in the future with no obstructions to either roadway

SF Market leadership expressed that existing office space for merchants in the core site’s four warehouses is underutilized, as is the office space for SF Market staff in the 2095 Jerrold Avenue building. Accordingly, office space has been reduced in BREG’s redevelopment plan.

Raised ceiling height in merchant spaces.

Ground Lease

The CCSF, as ground lessor, and SF Market’s original corporate entity, as ground lessee, entered into a ground lease dated October 1, 1962 for the purpose of constructing, establishing and operating a municipal produce market on the merchants’ new site.

The 1962 ground lease allowed the SF Market to construct the market and enter into subleases to produce merchants and associated uses. The 1962 lease was also structured to provide that the sublease revenue received by SF Market would be used to service the bond financing used for site acquisition and development, establish reserves, pay the costs of operation of the SF Market, and cover repairs and maintenance.

This same essential structure of covenants between the CCSF and the SF Market exists today. Though the lease was renewed in 2013 (new expiry 2073)

and substantially amended in 2022 to allow for parcelization and senior payment priority for redevelopment lenders, it still provides for discounted rents to produce merchants, a flow of funds that allows the SF Market to cover all costs as well as save for capital projects (including redevelopment), and any remaining net rents to be returned to the city (in recent years, $1.5 - 2MM).

The existing ground lease contains important provisions wrought from decades of cooperation between the SF Market and the CCSF, and serves as an important starting point for any new legal and planning framework. However, the lease will require substantial updates to allow for the scope of redevelopment contemplated by BREG and required for project feasibility. See “Entitlements” below for more information.

Merchants displaced by construction of Embarcadero Center. Merchants form a corporation and in partnership with CCSF establish the San Francisco Wholesale Market on its current site, with bond-financed site acquisition and development. SF Market enters 50-year ground lease with CCSF

Expiration of ground lease; renewal of ground lease for 60-year term with codified plans and commitment for SF Market facilities redevelopment

In recognition of financing challenges of redevelopment, substantial amendments to 2013 ground lease approved by the San Francisco Board of Supervisors. Amendments allow for parcelization and senior payment priority for redevelopment lenders

Independent produce merchants operated in Embarcadero neighborhood

Neighboring Prologis Development

The global warehouse developer Prologis is requesting approvals for the San Francisco Gateway, a two-building, 2.16 million square foot industrial facility bracketing Interstate 280 in the Bayview

-the SF Examiner

Vital context is also found immediately to the south of the SF Market, where industrial developer Prologis controls 13 acres of land strikingly similar to the layout of the core SF Market site. Prologis is in the process of developing a multistory industrial project on that site known as the Prologis San Francisco Gateway, (“The Gateway”).

The Prologis development consists of:

• 2 Buildings on 13 Acres Bifurcated by the 280

• 97’ Tall 3-Stories

• 1,166,800 Sq ft. of PDR and maker space

• 984,800 Sq ft. of PDR support area including service and staging yards, vehicular circulation and parking

• 8,400 Sq ft of ground floor retail

• Accommodations for a variety of user profiles including manufacturing and maker space, parcel delivery, wholesale storage and fleet management. All

of which support the City’s production, distribution and repair (PDR) businesses.

• Streetscape improvements on Toland, McKinnon, Kirkwood, Rankin and Selby.

In short, The Gateway will have a significant impact on the area immediately surrounding the SF Market site, and it is impossible to consider the redevelopment of the SF Market without assessing the impending impact of that development. It will set precedent for multi-story industrial products, assist in improving the surrounding roads and infrastructure adjacent to the SF Market, further increase the frequency of vehicular traffic on Toland and Kirkwood Avenues, and set the tone for the future of PDR in the City and County of San Francisco.

BREG has analyzed the San Francisco Gateway project to understand what aspects of the project, if any, should influence the redevelopment of the SF Market.

• Acclimatizes CCSF to multi-story industrial in this area.

• Expands utilization of Selby Street for vehicular circulation to / from buildings

• According to Prologis development team, could create significant demand for fleet storage from users of The Gateway

• Exceeds zoning limitations of height and bulk area, requiring legislative amendment (as proposed, the SF Gateway exceeds the maximum height permitted by 50 feet). In part because an excess of buildings outside of height and bulk limits can generate community and city push back, The Bridge stays within zoning limitations of height and bulk.

• It is understood that the entry-level employment common to industrial uses such as the SF Gateway is less valued by members of the Bayview Hunters Point Community. In part for that reason, The Bridge prioritized third-story alternate use space with commercial kitchens, conducive to small and medium-sized businesses in the food and food products industry.

Ultimately, the SF Market must serve the needs of its merchants and honor the terms of a ground lease with the city. Prologis does not have these same constraints. In its development of The Bridge, BREG seeks to leverage the work Prologis has done in setting precedent on multiple fronts, while shaping itself around the challenges posed by The Gateway as presented in its development thus far.

2 Vision

The Bridge envisions a future for the SF Market that integrates the ‘Bay Area’s Source for Fresh Produce’ with autonomous vehicle technology and a new center for communityoriented food and beverage production. San Francisco defines itself through the balance of preserving historical heritage while simultaneously fostering technological innovation. As an historical San Francisco institution on the precipice of redevelopment, this next phase of the SF Market will provide the facilities needed for the SF Market and its merchants to continue to build upon that history, while leveraging the full potential of their site to embrace new advances in technology and foster synergistic PDR business to ensure the entire ecosystem of the SF Markets expands and thrives into the future.

‘The Bridge’

1,400 jobs maintained or created

2,100-2.500 One-Time Construction Jobs

293 Non-fleet Parking Stalls, on-street and on-site

160,000 Fleet Parking Stalls

The Bridge is proposed as a two building, phased construction of new facilities for the SF Market. The two buildings of Bridge East and Bridge West (collectively, “The Bridge”) consolidate all market operations into a cold storage ground floor facility oriented around a central concourse. The concourse provides an indoor, conditioned, safe environment for merchants to engage with their business customers and the general public. Through this 820,000 sq ft. development, the SF Market will provide an improved platform for its merchants, better serve Bay Area residents with fresh produce, and increase the organization’s capacity to serve as a steward of this 20+ acre site for the City and County of San Francisco. Perhaps most importantly, the design of The Bridge will allow the SF Market to expand on the traditional values of a public market as an integral center of community and gathering for the Bayview Hunters Point community in which it is located.

To deliver on this vision of the future, The Bridge will expand uses on this high-value site beyond the SF Produce Market’s traditional operations. Lessons from the neighboring Prologis San Francisco Gateway development inform the multi-story industrial approach to the design and proposed tenant mix. The sustained demand for fleet vehicle storage and management in San Francisco will be served through a second floor parking facility designed to minimize construction cost and maintain flexibility in use for potential future industrial tenants as the market or regulatory environment shifts. BREG and a variety of local commercial real estate brokers see strong interest from leading Bay Area autonomous vehicle organizations to lease the vast majority of the 168,000 sq ft. of Bridge East. Over time, the storage of these autonomous vehicles on-site will serve a synergistic role with the SF Market providing autonomous delivery of fruits and vegetables to restaurants and grocery stores in communities throughout the city.

146 Loading Docks

To benefit the community in which these vehicles sit, autonomous vehicles deployed from The Bridge will serve locations in Bayview Hunters Point before moving on to other locations in San Francisco. Furthermore, the flexibility of this second floor space will be proven out by Modular Science—an emerging Agtech company that produces modular machines for sustainable, regenerative agriculture. Modular Science will lease 6,000 sq ft. on the second floor of Bridge East to establish this development as a center of new technology seeking to improve the agricultural processes on which the SF Market ultimately depends.

The merchants of the SF Market and the autonomous vehicle fleets will be bolstered by a customer base situated directly above them at the top of The Bridge. The buildings’ third floor space will be accessed via a series of elevators spaced throughout the length of Bridge East and Bridge West. Each building is crowned with 60,000 sq ft. of space dedicated to PDR with a strong focus on food and beverage production. Commercial kitchens rented by local SF institutions such as Old Skool Cafe, La Cocina, Gus’s Community Market, and Proper Food will be used to produce food for stores and catering events throughout San Francisco. Catering companies and small food-related businesses will be incubated through the work of organizations similar to La Cocina. National bakery Milk Bar will lease space for its baked goods productions and leverage the seamless integration of the autonomous vehicles fleets to help in the delivery of its product locally, and ultimately throughout Northern California.

The Bridge takes the complexities and challenges surrounding the redevelopment of the SF Market and delivers a simple vision of integrated uses that will deliver on this site’s full potential.

Day in the Life, June 2027

Estuardo Rivas lives in a Bayview Hunters Point apartment with his wife, Tina, and two daughters. Evenings are always the best time, because that’s when the family can be together—Estuardo prepping for a night of directing operations at the SF Market’s Washington Vegetable and his wife and daughters winding down from a day of work and school.

After tucking the kids into bed and giving his wife a kiss goodbye, Estuardo heads out to the SF Produce Market at 10:30pm. As he drops his thermos into his car console and fires up his engine, he remembers some of his employees chatting about commuting via the free autonomous vehicle service offered by the cars upstairs. Estuardo doesn’t feel comfortable riding in a driver-less car just yet, but more and more SF Market workers are taking advantage. He has to admit, it’d be nice to save on gas and keep the car available for Tina at home.

As he pulls into a parking spot outside the new and well-lit market building, he reflects on the many transitions over the last couple of years. Relocating during the new SF Market’s construction was tough—it disrupted operations for weeks after each move. But

in exchange, Washington Vegetable had its entire rent paid for the two-year construction period. That was enough to cover overtime and even payout bonuses, which, he had to admit, helped them come out better than even. He exits his car and begins crossing the moonlit marshall yard towards the inviting and well-lit central concourse.

The new central concourse and the Washington Vegetable new merchant space was starting to feel familiar. Estuardo feels a sense of ease as he casts his eyes over the steel I-beams and sloped concourse ceiling forming the backbone of the new facility, now seismically safe. His forklift operators, having observed operations in 901 Rankin, were getting used to the higher ceilings as well, and were stacking pallets on upper racks. It was like having 30% more square footage than before.

As he grabs his clipboard and begins updating inventory, he felt grateful that he’d worn the extra layer—the new cold storage system was going strong. It was also helping pull in orders from bigger buyers, who are more concerned with shelf life and cold supply chains. Safeway was the latest buyer to bite.

And in a welcome twist, he was now fielding buyers from the new space on the third floor—three catering companies had set up shop there and couldn’t seem to get enough arugula. He had a lot of product to move tonight.

Estuardo’s ears catch the beeping of the forklifts mixed with the jokes and laughter of some familiar characters. He was in no mood to laugh: his clipboard was showing a shortage of eggplant to get all his orders fulfilled. He hated to disappoint buyers.

Maybe I can check with Cook’s, he thought—they stocked eggplant for buyers in Chinatown. He glanced across the central concourse to the Cook’s Company merchant space, and briefly recalled how they used to be separated by over half a football field. Now he could walk right over and check in.

Soon, loaded trucks from the Central Valley began to arrive and back into their loading docks. Movement began to pick up, and the din of prices shouted and pallets moving filled all ears. He scored most of the eggplant he needed, from What a Tomato rather than Cook’s. I owe them a favor, Estaurdo thought. The

night transitioned into day as receiving gave way to selling to familiar buyers and loading the Washington Vegetable trucks for distribution.

Finally, after the last truck was out and the final cleanup was done, Estaurdo stepped outside the concourse entrance and grabbed coffee at the small shop behind him—decaf this time, just for warmth. He took in the daybreak. Employees of the third floor businesses were arriving now, just as many SF Market workers were leaving, and the autonomous vehicles from the second floor were headed down the ramp and out into the world too—some of them carrying extra food from merchants over to Meals on Wheels, Food Shift, and the Homeless Prenatal Program. He wasn’t sure he’d ever get used to cars without drivers, but he certainly appreciated the ease of offloading their extra produce to people who need it.

Estuardo drained his coffee and walked back to his own car, thinking about all the restaurant and kitchen tables that would see his produce over the next hours and days. His was a special job—not for everyone—but the satisfaction with his work well done was worth savoring.

Estuardo Rivas

Estuardo Rivas

Washington Produce

Ops Manager

Jilian Sanctis

Catering Company

Owner on the Third Floor

Taylor Price

Bay View Hunters

Point Resident

NIGHT (8pm-6am)

Arrives at work [10:30pm]. Directs operations [through 6am]

MORNING (6am-12pm)

Finishes work [8:30] and stops for a coffee at one of the commissary kitchen food stalls

Arrives [6:15am] in time to make purchases from the SF Market

AFTERNOON (12pm-8pm)

Fulfills orders for customers; sends out delivery vehicles via loading dock near elevators with product. [End 4pm]

[8:45 - 9:15am] After dropping kids at school, Stops at SF Market and visits concourse and adjacent retail to pick up some groceries and inexpensive preprepped meals

3

Market Analysis

Highest + Best Use

A standard highest and best use analysis centers on profit maximization, and seeks the design and programming that maximizes a site’s economic potential. And without a doubt, the success of the SF Market hinges on a redevelopment that is legally permissible, physically possible, and financially healthy.

However, a standard, profit-maximizing highest and best use analysis is not sufficient for determining the future of this City-owned, nonprofit-operated site The CCSF and its master lessee, the SF Produce Market, will only align on uses that:

• Optimize for a thriving produce market for decades to come;

• Maintain and create abundant jobs for residents of Bayview Hunters Point; and,

• Meet CCSF goals for sector-specific job growth, and the transition to a post-Covid economy oriented around physical production and real things

The SF Market’s principal goal is redeveloping its warehouses into modern facilities that bring its merchants

and public programing to new heights of sustainability and success.

Public leaders of San Francisco, for their part, are grappling with an economic sea change that has transformed a civic shooting star into economic quicksand, all in the space of just three years. Therefore, in addition to the preservation of the 1,000 working class jobs already present at the SF Market, it is in the CCSF interest to steer development on its land towards the new frontier of economic growth and innovation.

In a moment where remote work has combined with macroeconomic turbulence to produce 30% office vacancies and a projected $728MM city deficit over the next two years, CCSF will prioritize a development plan that strengthens the SF Market and addresses the need for a post-covid economic shift.

With that stakeholders-specific view in mind, the following uses were evaluated for our proposed programming and design: Strong Market Demand

Fleet Storage (Future Flexibility)

Light Industrial (Inc. Agtech, Maker Space)

Cold Storage

Offsite grocer (e.g. GrubHub, Instacart)

Film Studios

Logistics / Last Mile Dist.

Commissary Kitchens, Catering, and Food Fabricators

Dry Storage

Vertical Farming

Life Sciences

Data Center

Key: highlighted green alternate uses prioritized for development.

Highlighted orange uses identified as high-likelihood uses under future conversion scenario

Use Selected for Incorporation

Fleet Storage

For a capital-constrained development, fleet storage presents an attractive blend of lower upfront costs and higher rents versus other permissible uses. As shared in the Vision section above, it also presents a surprising degree of operational synergy with the SF Market.

As prime clients, The Bridge targets autonomous vehicle giants Waymo, Cruise, and Tesla—all of whom seek space in the San Francisco area and some of whom are in the immediate vicinity of the SF Market. In addition to paying premium prices, the SF Market presents a golden opportunity for autonomous vehicle companies to prove the public benefit of their technology by using their AVs to deliver produce to community partners in the SF Market’s Food Recovery Program, and ferrying workers and from the SF Market at night.

However, beyond the well-known autonomous vehicle companies, fleet storage users include smaller companies, public entities and institutions, city departments, and major delivery services. When The Bridge is able to add electric vehicle charging capacity circa 2029, an ever broader pool of fleet storage users will enter feasibility. Lastly, should fleet storage not prove successful, fleet storage space is convertible to class A warehouse, which is projected to remain in high demand.

Commercial Kitchens for Catering and Food Fabrication Businesses

Commercial kitchens are permitted under PDR-2 zoning and bring clear economic and operational synergies to the SF Market. Commercial kitchen users generally keep operating hours of partial overlap with the SF Market, be they catering companies using 3,000+ sq. ft or smaller kitchen users with under 1,000 sq. ft each.

The benefits to the SF Market are clear: including commercial kitchens will bring a whole new class of onsite buyers for the SF Market, buyers who will be thrilled to realize the competitive advantage of unmediated access to the freshest produce possible.

Less obvious but no less important are the community engagement benefits attached to commercial kitchens. Industrial sector employers can sometimes present a lack of ownership and advancement opportunities. By contrast, catering companies are generally locally owned, small and medium sized businesses. Small food fabricators (condiment producers, etcetera) follow much the same pattern. As part of The Bridge’s leasing strategy and in accordance with the development’s location in an African American Arts & Cultural District, black-owned BVHP businesses such as Radio Africa & Kitchen and Camisha’s Cakes will be prioritized in marketing and outreach for these spaces, starting in the development’s entitlement and community engagement period.

Lastly, rents for this use are strong, reportedly over $3 per sq. ft. In short, commercial kitchens present an ideal balance of SF Market synergies, community benefit, and economic viability. For that reason, much of the third floor of The Bridge is dedicated to this use.

Dry Storage

Complimentary to catering and food fabricator space, a limited amount of dry storage space is contemplated for The Bridge’s third floor. Food provision businesses have small but significant storage needs for tables, equipment, and bulk foods.

Light Industrial for Agtech Maker Space

“Agtech” is a broad and growing sector with $10.6 billion of investment activity in 2022. The agtech sector consists of technologies that increase crop yield, improve farming efficiency and resilience, and provide financial resources for agricultural operations.

Agricultural technologies include software, biotech inputs, and hardware such as sensors and machinery.

Additionally, indoor farming technologies have raised significant venture funding, though this subsector has softened in the face of recent market turbulence even more than other agtech subsectors. The most obvious agtech use for The Bridge would be vertical or indoor farming, as this would provide a source of on-site supply for merchants. However, most vertical farms have not yet achieved profitability, making them risky bets for a specialized build out. Notably, industry flagship vertical farming startup Plenty closed its 200,000 square foot South San Francisco facility in March 2023, opting instead for operations in more affordable locales.

However, the SF Market presents a strong option for agtech ventures focused on robotics prototyping and image recognition. The site presents a unique marriage between the urban market for talent in robotics with connections to the agricultural ecosystem, including of potential users and customers. Agtech users—including Modular Science, an agtech robotics startup which has signed an LOI—regularly purchase produce to help train their image recognition systems and test their field robots. For these reasons, BREG has prioritized a small amount of square footage on The Bridge’s second story for agtech tenants who require drive-up capabilities, and will include agtech users in its leasing efforts for the third floor.

Future Uses (Conversion)

Offsite Grocer

Specialized warehouse space for an “offsite grocer,” which stores groceries in warehouse space and delivers them directly to consumers, is another natural complement to the SF Market in the context of PDR-2 zoning. When the SF Market evaluates the second story fleet storage space for conversion at key milestones over the next decade and beyond, offsite grocers should be considered.

Recently history bears this out. In 2021, Instacart, an offsite grocer with market capitalization of $10 billion and headquarters in San Francisco, came close to leasing space in the SF Market’s recently-redeveloped 901 Rankin street warehouse. Ultimately it was the SF Market’s exposure to CCSF decision-making under the current ground lease that dissuaded Instacart from leasing space, but under a more robust entitlement scenario, one designed for public private partnerships and with an extended ground lease term, Instacart or others may have high interest in this location.

As with commercial kitchen users, offsite grocer users would form a class of new, on-site customers for the SF Market’s fresh produce. And because offsite grocers serve consumers directly while the SF Market serves other businesses, there is little risk of market cannibalization.

Shipping Logistics

The multi-million dollar investment by Prologis in the multilevel industrial Gateway complex immediately to the SF Market’s south is just one indicator for the strong demand for shipping logistics and last mile delivery facilities in this area.

For these reasons, the latter phases of BREG’s flexible, convertible development plan allow for the addition of logistics and last mile distribution facilities, depending on market demand and other factors.

However, BREG’s plan does not include this use in Phase I, nor does it require these uses in future phases. While lucrative and aligned with the site’s current zoning, the expense of building out the infrastructure for these uses is not currently justified when users are paying equivalent rents or more for cheaper-to-build fleet storage space. Furthermore, which logistics and last mile delivery uses will be in highest demand is likely only to become clear after 1-3 years of operation of Prologis’ San Francisco Gateway project.

General Warehouse

Well understood in the commercial real estate sector is that general warehouse uses continue to experience strong demand. Rental comps for BVHP show net rents of $1.80 - $2.20 per sq. ft., and this use falls squarely within existing PDR-2 zoning. Conversion to simple warehouse is relatively simpler and more economical conversion to other uses, and should be closely considered in any future conversion scenario.

Commercial kitchen space for caterers is extremely hard to find, and when you get it, you have to pay thousands to improve it. I think it’s a real barrier to the industry, which is pretty much all small businesses. Pre-built kitchens right next to a produce market would be of high value

– Ann Lauer, Ann’s Catering and Rick & Ann’s

Uses Ruled Out for Incorporation

Life Sciences

Even amidst a sea-change in the office sector, life science offerings in San Francisco continue to see high demand. A recent broker report places Q4 life science vacancies in the city at only 3.8%, a dramatic difference from the office vacancy rate of nearly 30%.

Moreover, there is recent and nearby precedent for a produce market redevelopment paid for by the addition of life science space: the Golden Gate Produce Terminal, located at 131 Terminal Court, South San Francisco. This site, also 26 acres, recently transacted with life sciences developer SteelWave, who reportedly contemplates a 2.2MM square foot life sciences campus for the site. Public information also indicates that a partial redevelopment of the Golden Gate Produce Terminal itself is a required component of the project.

However, BREG does not recommend a life sciences component for this site. Though in high demand, life sciences is not compatible with the SF Market’s PDR-2 zoning designation, which both the SF Market and the CCSF have pledged to uphold. And, while a Special Use District through a Zoning Map Amendment could provide a pathway to rezoning the site, using such a shift to significantly

alter the permitted uses is contrary to the vision of local political and community leaders, including Supervisor Walton. Per Ordinance No. 202-21, Supervisor Walton proposed and the Board of Supervisors approved the repeal of The Life Science and Medical Use District. As noted in the ordinance, the Life Science SUD was found to not serve the neighborhood and was inconsistent with the policy of the Eastern Neighborhoods Plan, specifically Policy 1.1.5, to create a buffer to protect against encroachment of larger office and life science research uses. The ordinance noted that there are office and life science uses that have been located in the SUD which do not serve or contribute to the neighborhood. These businesses also locate in spaces that may otherwise be available as PDR and maker spaces, resulting in less diverse uses.

Nor does a life sciences facility provide any economic synergy with the Market—the use is completely distinct from the Market’s offerings. Lastly, the lucrative rents of life science space of $7.50 / sq. ft4 are only accessed through a premium build cost. Given the SF Market’s upfront capital constraints, BREG proposes a phased construction approach that achieves maximal rents for minimal construction cost in phase one, with optionality to develop into further additional uses (though likely not life science) in the future.

Data Center

Despite the expense of urban land, data centers are sometimes located in major metros for latency advantages. Adding data center space to the SF Market could bring certain efficiencies and advantages. Cooling infrastructure for redeveloped SF Market facilities could be extended to cooling for this alternate use. Data centers, being very light labor, would mean less space dedicated to parking on the site.

However, while adding data center space is conceivable for later phases of SF Market redevelopment, BREG opted not to pursue its inclusion for Phase 1. While a data center might succeed in generating tax revenue for the city, it fails to meet city and community goals for this publicly-owned land with respect to employment. Additionally, while a data center may enjoy operational compatibility with the SF Market, it does not present any economic synergy with produce merchants in the way that commissary kitchens, catering, food processing, and agtech companies do.

Additionally, the Hunters Point PG&E substation is currently at capacity. Additional power will not be available until 2029. Given the electrical demands of a data center, it is not feasible to deliver a data center facility given the lack of power availability at present.

Film Studios & Sound Stages

California has historically been the global leader in film production, with Los Angeles at the center. However, numerous markets have become strong competitors in recent years. Overwhelming demand for film studios and sound stages has attracted a wave of institutional investor interest into this niche sector. According to real estate services giant JLL, this has driven a flurry of large transactions in recent months. Developers are racing to build additional stages in nearly every major production market. In Los Angeles, there are at least 120 sound stages that are currently proposed or under construction. Motion picture employment in LA has recovered 85% of the jobs lost during the COVID lock downs as production has ramped back up. Total consumer spend on content is increasing as access to digital content grows across the globe, which will drive sound stage demand well into the future. Rental rates for this product type have hovered around $2.15 / sq. ft

Recent developments in New York City such as the Wildflower film studio in Queens have introduced multi-story film studio space to the market on urban infill sites similar to the SF Market. Given the fact that the tax credits utilized to attract film studios and sound stages are issued at the state level, there is reason to believe that multi-story film studio space could be introduced in San Francisco.

However, while film studio and sound stages are possible, they would require a more expensive build-out and complicated operations than fleet vehicle storage. We believe that the space could be converted to film studio and sound stages in the future should the market for this use move north to San Francisco. However, for the purpose of Phase I build out we have chosen to not move forward with this use.

4 Strategy

The development’s strategy solves for SF Market infrastructural improvements in a phased manner, logistically-aligned alternate uses and community buy in. While also outlining the significant ongoing revenue required to involve a JV partner and their financial contributions.

Relocation

Phase Timeline Description

Entitlements:

DDA & DA + CEQA+TIFs

July 1, 2023 - June 30, 2026 (36 months)

Pre Development

July 1, 2026February 28, 2027 (8 months)

Phase 1: Construction of Bridge East

Phase 2: Construction of Bridge West Asset Management

September 1, 2026 - May 31, 2028 (21 months)

September 1, 2028 - May 31, 2030 (21 months)

• DDA & DA, EIR, entitlement (PUD), SUD, Building permits, LLA, ancillary permits, EIR, EIFD, CFD, etc.

• Relocation of tenants from 1900 Innes to 455 Toland and 2050 Galvez

• Permanent financing for 901 Rankin and 2101 Jerrold

• Closure of Jerrold Avenue

• Connection of Kirkwood Avenue to Toland Street

Any successful redevelopment of the SF Market must attend to the relocation needs of produce merchants. Merchants stand to benefit greatly from The Bridge, but cannot afford years of non-operation as the project is brought into being.

The SF Market has already worked to vacate the existing 1900 Kirkwood building on the eastern parcel, in anticipation of redevelopment. 1901 Innes is the only remaining occupied building on the eastern parcel with 5 merchants and 61,000 sq ft currently occupied. Bridge East will be developed on the eastern parcel first in a single phase in order to keep the majority of the SF Market’s

Market, Sergio Solis, BREG learned that this building was constructed at the same time as the current SF Market facilities and this building can function as merchant space. However, Sergio informed us that it will require a $300,000 upgrade of the roof. This cost has been accounted for in our redevelopment plan.

The second facility is located at 2050 Galvez Street. Growers Refrigeration is a family-owned business who are the current owners of this facility. BREG learned through conversations with Sergio Solis and Michael Janis that the owners of the facility are interested in a potential disposition of their property. BREG recommends leasing the

Joint Venture Partnership

Thank you for sharing your impressive project and JV proposal. Based on the framework provided, Cold Summit feels uniquely situated to bring our Cold Storage Development expertise, including deal structure flexibility, capital raising, design, entitlement, construction and leasing, to help the SF Market realize the full development potential for this site.

– Matt Anderson, Cold Summit

Undertaking a complex development strategy to bring additional uses to the SF Market site is essential for the successful delivery of replacement warehouse space for the SF Market merchants. However, the SF Market is a nonprofit organization without real estate development expertise. BREG’s recommendation is that the SF Market prioritize bringing on a joint venture (JV) partner, preferable as a General Partner (GP) who will help finance, develop, and lease the project. A JV partnership under the right terms unlocks the site’s potential, putting the redevelopment of the SF Market and new complimentary uses in reach.

Alongside their development expertise, a JV partner can help raise additional equity through capital investment directly from the developer in addition to equity contributions from any LP investors available through the developer’s access to capital markets. Debt-based financing may be available as well. As a nonprofit organization, the SF Market does not have a strong financial covenant, which may limit its ability to access favorable terms for its financing relative to developer entities. In addition, real estate developers that the SF Market should consider will have existing relationships with brokers, real estate lawyers, lenders, contractors, and other industry professionals that can help the SF Market navigate the complex development proposal for the site.

Throughout its due diligence process, BREG has explored numerous JV structures with real estate attorneys and market-leading developers, including both Prologis and Cold Summit Development. Based on our discussions and due diligence to date, there are multiple JV structures that would work well for the SF Market in the development of The Bridge. On the financing side, we believe there would be strong interest from JV partners offering debt financing with a long-hold amortized payback, equity that can be sold or paid off through refinancing, or both. However, for the simplicity of our proposal, we have focused on partnering

with a developer in a GP equity partnership structure.

The organizational chart below outlines a proposed JV structure with a developer as GP and equity partner. The chart outlines the separation of the SF Market’s two stabilized assets, 2101 Jerrold Avenue and 901 Rankin Street, from the JV partnership as the redevelopment focuses on the two parcels split by interstate 280, totaling 14.4 acres. The capital contributions to the project are split into three tranches: (1) SF Market equity contributions, (2) JV partner equity contributions, and (3) debt and alternative sources. Additionally, the proposed structure provides flexibility for the JV partner to bring in additional limited partners at their discretion, who will act as silent equity partners in the deal—please see Financial section for a discussion of the project returns under this structure.

Overall, this structure aims to provide the necessary expertise and capital to undertake the complex development project outlined with The Bridge while maximizing the benefits for all parties involved.

Our team has reviewed your proposal to engage Prologis as a fee developer and capital partner for the SF Produce Market redevelopment. The site plan creates modern facilities for SF Produce Market’s operations while building additional capacity for synergistic uses. Prologis is supportive of the SF Produce Market redevelopment and believes this location in the Market Zone area of the Bayview is the right location for investment in density of much needed PDR space in the City. The SF Produce Market is undoubtedly an important resource in San Francisco’s food economy and serves as a critical connection between growers and distributors.

Prologis shares the SF Produce Market’s desire to modernize its facilities to build resiliency in its operations and to continue to support and serve its customers and the community well into the future. We are interested in continuing a discussion with BREG to explore ways in which Prologis can support SF Produce Market’s redevelopment plan.

-Courtney Bell, Ali Harandi, Nick Noriega Prologis

Joint Venture Organization Structure

Community Engagement Strategy

The Bridge’s community engagement strategy will leverage strengths of the SF Market and its nonprofit programming to inform, consult, involve, and collaborate with the Bayview Hunters Point neighborhood. The Bridge will commence community outreach prior to any engagement with the City to explain the intent of the redevelopment, and identify how best to collaborate with the community. Thus, outreach will be coordinated via community meetings (BVHP Citizens Advisory Committee), workshops, design charrettes, job training and recruitment fairs, focus groups, surveys/polling, fact sheets, website and robust communications (in various languages) amongst other engagement efforts.

The community engagement strategy of The Bridge is built around the San Francisco Planning Racial and Social Equity Assessment Tool. This tool, provided by the San Francisco Planning Department, defines a process by which to guide development, implementation and evaluation of internal and external policies, projects, programs, and budgets to address a development’s impacts on racial and social equity. The intent is to implement explicit consideration of racial and social equity in development decisions.

TOOL 1: Public Participation Spectrum

INFORM

The Bridge will inform the public with balanced and objective information to assist them in understanding the problem, alternatives, opportunities and/or solutions as they relate to the development proposal. The Bridge will promise to keep the public informed through fact sheets (in various translations), project website (with translation toggling), and open houses.

CONSULT

The Bridge will obtain public feedback on analysis, alternatives and/or decisions. The Bridge Team plans to coordinate ongoing conversations and discussions by garnering public comment, creating focus groups (for BVHP community, potential or former merchants, wholesalers, distributors, small businesses, patrons, etc.), Issue surveys, and invite all aforementioned to public hearings.

INVOLVE

The Bridge will work directly with the public throughout the process to ensure public concerns and aspirations are consistently understood and considered. The Bridge promises to work with the public to ensure concerns and aspirations are directly reflected in the alternatives developed and provide feedback on how public input influenced the decision. The Bridge hopes to host workshops and deliberative polling for the selection of small businesses to occupy the third-floor community-oriented and communityserving industrial uses.

COLLABORATE

To partner with the public in each aspect of the decision including the development of alternatives and the identification of the preferred solution, The Bridge will look to the BVHP Community to advise and help innovate, formulate solutions, and incorporate their advice and recommendations into the decisions to the maximum extent possible. As previously mentioned, The Bridge will appoint a community representative to liaise with the BVHP CAC, focus on consensus-building, and lead participatory decision-making.

TOOL 2 : Per the Racial and Social Equity Assessment Tool, The Bridge will:

1)

Proactively seek to eliminate racial and social inequities and advance equity at the new proposed multi-story industrial facilities.

The Bridge will identify opportunities for job training workshops and local job recruitment efforts. In consultation with the Mayor’s Office of Economic and Workforce Development, The Bridge will comply with all First Source Local Hiring requirements. Additionally, upon negotiating and establishing lease agreements with prospective tenants, The Bridge will encourage future tenants to recruit, train, and hire locally to the extent feasible, and to create and host the aforementioned job training and recruitment workshops. Unless related to ground floor operations at the SF Produce Market, job fairs to be hosted on the third floor.

3)

Engage community in decision-making processes.

The Bridge intends to work with the Bayview Hunters Point community to help identify potential tenants, organizations, and institutions that could occupy the third-floor communityoriented industrial uses, and obtain their insight on the second-floor tenants.

4) 2)

Identify clear goals, objectives, and measurable outcomes.

It is the intent of The Bridge to work with the Bayview Hunters Point neighborhood, SF residents, and any interested stakeholders to identify goals and objectives to periodically report back on.

To commence, however, The Bridge will begin by developing a Diversity, Equity, and Inclusion initiative at the site and will work with the SF Market, and any future tenants to encourage that they also embed DEI in their business practices.

To minimize environmental burdens, The Bridge will also provide a large rooftop solar system with production of 1.7MM kWh annually per National Renewable Energy Laboratory (NREL) estimates. It will commit to expanding renewable energy sources over time, and will measure renewable power increases to demonstrate impact.

5)

Identify who will benefit and who will be burdened by a given decision.

The SF Market, the City and County of San Francisco, and private entities will be the most direct beneficiaries of the proposed PublicPrivate Partnership (PPP). However, the Bayview Hunters Point and the City at large will be indirect beneficiaries of this PPP as all would be provided with expanded access to critical food infrastructure.

Identifies strategies to advance racial and social equity and mitigate unintended negative consequences.

The Bridge’s strategy to advance racial and social equity and mitigate negative consequences is to designate a community representative that can liaise with the community. Periodic presentations to the Bayview Hunters Point Citizens Advisory Committee meetings could provide a platform to publicly engage neighbors, visitors, and patrons of the SF Market. If concerns arise regarding any of the proposed tenants or uses, The Bridge could listen to and address concerns through that community meeting framework or through other convenings of community members.

Develop mechanisms for successful implementation and evaluation of impact.

The Bridge’s appointed community representative will work and liaise directly with neighborhood groups and community organizations to establish, schedule, and host the anticipated meetings, workshops, job training sessions/fairs, design charrettes, attend community hearings (ex. BVHP CAC), and other community-related events. Periodic rank polling will be distributed to the community to understand impact and reach of implementation measures, and to assess if efforts should be revisited or modified.

Leasing Strategy

The Bridge represents a rarely-seen instance of new cold storage, fleet storage, and light industrial development in BVHP.

Given the pre-existing tenants of the SF Market (not to mention the many produce merchants currently being displaced from the Golden Gate produce market, a larger institution 15 minutes to the south), little difficulty is anticipated leasing the redeveloped, ground floor SF Market space. However, the relocation plan for those tenants displaced by construction does require the SF Market to take a thoughtful and planned approach to re-leasing their space, as well as bringing in the right new tenants for the additional uses.

THIRD FLOOR ALTERNATE USE

• Early focus on catering companies and food fabricators. This tenant class is typically locked into 5+ year leases and will need lead time to consider The Bridge’s benefits as their next home:

• Unparalleled proximity to the freshest produce available

• Commercial kitchens pre-built for use by caterers and food fabricators; no expensive tenant improvements

• Access to loading docks and to additional storage space (dry storage) for tables, heating trays, and other catering equipment

• Easy access to autonomous vehicles for future delivery of food

• Secondary prioritization of community groups and businesses that have partnerships with the SF Market through its recycling, zero waste, and food recovery programs

• Third floor rents are provided at a discount to market rental rates as a result of elevator access only

SECOND FLOOR FLEET STORAGE

• Marketing to fleet storage tenants will focus on modernity and security features of this second story space, with controlled ramp access

• For potential operational synergies with the SF Market, large AV companies (Waymo, Cruise, and Tesla) will be prioritized. With potential to diversify with (UPS, FedEx, USPS).

• Preferred lease period is for a maximum of five years, to allow for potential convertibility of second story space, or renegotiation of lease after addition of car charging infrastructure circa 2029.

SF MARKET COLD STORAGE

• Pre-leasing will be a requirement for displaced tenants availing themselves of developer coverage of 100% of net rents, tenant improvement allowances, and moving expenses during the duration of their displacement

• Temporarily displaced tenants to pay their operating expenses to the off-site landlord only

5 Program & Design

The Bridge consolidates market operations around a central concourse, expands uses on this high-value site beyond the SF Produce Market, and introduces unprecedented flexibility to those uses.

Existing Conditions Analysis

Site & Parcel Analysis

The SF Market operates on 25 acres in the Bayview Hunters Point community. The site is bifurcated by the 280 into two parcels of nearly equal size to the East and West of the highway. These two parcels collectively comprise 15 acres and are the focus of the redevelopment of The Bridge. These two parcels comprise the ‘core site’. The properties on this site are reaching the end of their useful life. Jerrold Avenue also presents a challenge to the SF Market as it currently traverses the site as a public street from East to West. 901 Rankin and 2101 Jerrold are two additional properties developed in the last 20 years owned by the SF Market that sit outside the bounds of that ‘core site’. They are not part of BREG’s redevelopment focus. The site is situated in an industrial neighborhood within BVHP. While it’s infrastructure and buildings are aging today, a new Cal Trans stop a few blocks to the South of the site and the upcoming Prologis SF Gateway development will bring new infrastructure to the neighborhood.

The

Market Design & Precedents

The public market is the world’s oldest retail trading format. Markets are, all at once, a building typology, business model, and cultural reference point. Supermarkets, industrial distribution methods, and the internet among other inventions throughout history have forced markets to evolve on numerous occasions over time. Their continued presence in society speaks to the significance of their practical function and cultural relevance. No other format can truly reproduce what the market offers. Markets function as a place to exchange goods while also serving as vital centers of social and community life. As food production becomes increasingly industrialized, markets offer the opportunity to maintain a level of intimacy with food and those who produce it.

Neil Tomlinson was the architect for London’s famous Borough Market regeneration, and he is currently responsible for the New Covent Garden Market development underway. As an expert on the topic Neil has published Contemporary Market Architecture Planning and Design in which he states, “...contemporary markets demand efficient designs that can integrate the market as an essential piece of public realm space in diverse and mixed-use areas. Architecturally in addition to trading space, a market needs to facilitate engagement with communities and provide space for meetings and the exchange of information, as well as respecting health, safety, and hygiene requirements, and the need for sustainable food waste processing systems.” Additional design requirements include:

• Unobstructed vehicular traffic circulation pattern and effective parking control with adequate parking facilities provided.

• Maximum possibility for interaction between market users leading to optimum price formation.

• Building designs should avoid, as much as possible, different floor / road levels.

• Building design should allow the maximum amount of flexibility for change.

• Maximize market efficiency and reduce congestion by adopting an organized approach to traffic and pedestrian circulation.

• Separate pedestrian and hand-cart movement from heavy delivery vehicles.

The SF Market success stems from its unwavering focus on the community of merchants it has cultivated throughout the years. At this moment of reflection before potential redevelopment, the SF Market has the opportunity to revisit how its facilities can best serve its merchants, the Bayview Hunters Point community, and the City and County of San Francisco. Key precedents helped BREG shape our approach to the design of The Bridge. Those include:

The Philadelphia Produce Market introduced our team to the concept of a central concourse. A safe, efficient alternative to the current outdoor space that is used to ‘shop the street’ by customers of merchants at the SF Market. Given the tragic death of an associate of the SF Market on Jerrold Avenue, BREG views an enclosed central concourse as a key component of a new SF Market. Beyond saftey, the central concourse concept reintroduces the communal aspects of the market that are so key to their historical relevance in society.

Markthal in Rotterdam is a public market of various vendor types as opposed to a wholesale produce market. However, Markthal illustrates the idea of a market as an iconic piece of civic architecture. The Bridge’s design seeks to leverage its form to attract tenants. Specifically, tenants to lease the third floor commercial kitchen and other PDR spaces who might be excited by the iconic nature of the development.

Lastly, the New Covent Garden not only illustrates best practice in contemporary wholesale market design. It also indicates the potential large-scale redevelopment that can occur in a neighborhood by leveraging the market’s land as a resource to fund the development.

Philadelphia Produce Market

Markthal Rotterdam

The Bridge

The Bridge is comprised of two (nearly) identical buildings mirrored around the I-280 freeway. Bridge East and Bridge West are 500’ and 510’ long respectively and 280’ wide.

The 1st and 2nd floors for both buildings have a clear height of 26’. The 3rd floor has a clear height of 11’ to ensure the project maximizes its industrial potential while staying within our height limitations of 65’ per zoning.

‘Core Site’ Program Table

‘Redeveloped Core Site’ - Current & Proposed

Program Overview

• Solar on Roof

• Integrated Parking (On & Off Site)

• Small Park

• Bioretention & Raingarden

• Low Water Use Planting

• Food Truck Access & Seating

• Gated Truck Drive Access

• Bike Parking

• Multiple Types of Community Oriented PDR2 Space

• Commercial Kitchens & Storage

• Makerspace

• Brewery

• Food Production

• Event Space

- 8am

• Fleet Vehicle Storage with Ramp Access for All Vehicle Types (Including Semi-Trucks)

• Warehouse Space for AgTech

• Flexiblity to Convert floor to Other Industrial Use

- 8am

& 11am - 3pm Sun.

• Enclosed Refrigerated Loading Dock

• Merchant Storage

• Loading Positions

• Central Concourse Under Vehicle Ramp to 2nd Floor

• Retail, Mezzanine Office

• Plastic & Food Recovery

Future-Proof Through Design

The SF Market was born in 1962, and after over 60 years is still delivering on its mission to connect and grow the region’s food and agriculture community. BREG proposes a development that will support the SF Market in this mission, operationally and financially, for its next 60 years and beyond.

“Fleet storage leases for more per square foot in San Francisco than class-A warehouse. It won’t always be that way, but it’s that way now.”

- Carson Goldman, Acquisitions & Asset Management, Terreno Realty

As made clear by Terreno Realty, today it is more valuable to lease industrial land as a parking lot than to build and lease a warehouse on that same property. Given this predicament, BREG approached the design of The Bridge with a future-proofing strategy in mind. A key feature is the convertibility of the 360,000 sq. ft of second-story fleet storage space into class-A warehouse and / or introduction of EV charging for those stored fleets.

Bridge East will be built as simply as possible to accommodate storage of fleet vehicles. The second floor space will be have the following notable design and construction elements that will assist with the conversion of the 2nd floor at a future date:

Non-Structural Louver Curtain Wall Façade System

• Gaps between louvers provide necessary 50% airflow for the storage of vehicles on the second floor w/ minimal or no mechanical required.

• Facade system can easily be replaced with an alternative facade to fully enclose the second floor and convert the entire floor plate to class-A warehouse.

Column Structure

• Offset from façade to allow for ease of replacement.

• Organized to allow for both standard vehicles and semi-truck access and circulation on the second floor.

• Layout can be leveraged to easily partition the space in the event of a multi-tenant layout.

Ceiling Height

• 26’ clear ceiling height allows for rack system installation for future class-A warehouse use.

• Autonomous vehicles are not currently designed to utilize vehicle stacking technology. In the event that changes, clear height could accommodate 2-3 levels of stacked vehicles. (Weight load would need to be revisited to ensure structure could accommodate.)

Ramp

• 40’ wide ramp designed to accommodate semitrucks as the largest vehicle circulating on ramp.

A key decision in the design of the second floor was the decision to provide EV charging for a future fleet vehicle tenant or to simply provide secured storage. Ultimately, the decision was made to not provide EV charging for the first phase (Bridge East). The PG&E Hunters Point site substation is currently at capacity until 2029. Our team was not confident that Bridge East could pull the necessary power from PG&E to provide EV charging in the first phase of the development.

However, the layout of the space can accommodate the necessary electrical rises and distribution to various parking islands throughout the second floor. This will allow Bridge East to be easily retrofitted with EV charging at a future date. Should there be demand for EV charging at the point of construction for Bridge West the PG&E Hunters Point substation would have sufficient power to provide the necessary power at that point of construction.

Second Floor Option 1 - Single Tenant Fleet Storage

Second Floor Option 2 - Conversion to Industrial Warehouse (Facade Replacement & Multi-Tenant Layout)

Design Approach Construction & Sustainability

1. 3. 5.

Existing Conditions

SF Market underutilizes its space by locating marshal yard at center of site and buildings on edges.

Dual Purpose Ramp

Ramp to the second floor is inserted to provide access for fleet vehicle storage. The underside of that ramp is leveraged as a central concourse for the SF Market.

Introduce 3rd Floor & Vertical Transportation

Third floor PDR use promotes The Bridge’s ‘produce to production’ narrative. 3rd floor space is accessed via elevators w/ direct access to loading dock.

2. 4. 6.

Ground Floor SF Market

Two buildings are more efficient to build than four. Bring SF Market together on ground floor with marshal yards at perimeter.

The Bridge is designed to minimize construction expense, maximize future flexibility for building utilization, and thoughtfully integrate sustainable construction practices throughout the development.

Structure

The SF Market site is located in a liquefaction zone and The Bridge will be required to withstand a significant live load in order to store vehicles on the second floor. In order to accommodate these conditions, Bridge East and Bridge West would likely be built on a 12-18” mat slab foundation. The ground floor will be built as cast-in-place concrete to maintain a thinner slab profile in line with the proposed design. Steel frame structure will be utilized for the second and third floors. Six oversized cores will line each building - two at both ends and two in the middle. These core conditions will minimize the need for moment frames and lateral bracing. The building will have 18” columns on the exterior underneath the overhang condition, and 12” columns space throughout the interior. Column spacing has been specifically laid out to maximize strength while ensuring columns do not interfere with market operations, drive aisles, or future partitioning of the second or third floor space

Maximize Second Floor

The second floor should be designed for maximum revenue generating potential. Massing optimized for scale, parking layout, and partitions for multi-tenant scenario.

Lastly, sheer walls will be located in key locations throughout the building specifically around the front retail / office and around the back of the ramp. The building is designed to have an even distribution of its weight across the site to maximize stability.

Ground Floor & Cold Storage

Parking Construction on Second Floor

The Bridge is designed to minimize construction cost for the part of the building that will generate the most potential revenue. The second floor will be designed as a flexible warehouse space that will be used for fleet vehicle parking / storage in its first iteration. The materials will be concrete from the slab conditions that frame the floor. It will be clad in an inexpensive louver facade system that is 50% open to the exterior. This will provide sufficient airflow through the space to not require additional mechanical systems on the second floor further reducing cost. Vertical risers and sleeve locations for future mechanical system will be fit out to accommodate conversion of 2nd floor to class-A industrial space.

Third Floor & Vertical Transportation

The third floor will be accessed by 12 freight elevators (6 per building) located along the length of each building. Freight elevators provide direct access to loading dock to ensure third floor tenants have the ability to move product with ease. Third floor will have a window wall facade system, landscaped outdoor space for tenants, and significant system rough ins for commercial kitchens increasing the cost of construction for this space.

Cost Effective Sustainability

‘The Bridge’

The massing of The Bridge integrates the SF Market with fleet vehicle storage, and PDR businesses synergistic with the market’s activities.

The ground floor of The Bridge will be a cold storage facility. This will allow the SF Market’s merchants to maintain the cold chain for their product longer than they are currently able to in the existing SF Market facilities. The Bridge will employ a single stage, lowcharge, ammonia system for the refrigeration system. This system is known for its environmental safety standards and competitive price point. Potential JV partner Cold Summit has found this system to be most effective for their own cold storage projects. However, it will require an ammonia detection system similar to one designed to detect CO2.

Given the budgetary limitations on the project and the proposed uses, sustainability will be found through thoughtful sourcing of materials and introduction of solar power on site. Steel will be sourced from Nucor steel in Seattle who prioritizes sustainable steel manufacturing in the western United States. The production methods include recycled steel and electrical construction equipment. The proximity of the steel to San Francisco and a concrete strategy to cure over an extended period of time to reduce the cement needed in the mix will reduce the embodied carbon. Solar will be introduced to the roofs to leverage the buildings’ scale. There is currently a need for power while the Hunters Point PG&E substation is upgraded. Solar will help offset electrical costs for tenants.

Circulation & Open Space

Circulation

Vehicular circulation is paramount to the success of the The Bridge. All trucks and other vehicles accessing the SF Market will circulate along the perimeter of The Bridge. Each side contains a 20’ drive aisle and 55’ to allow semitrucks to complete a single-point turn into a loading dock positioned at a 60 degree angle to the building. There are 146 loading docks across both Bridge East and Bridge West. All vehicles accessing the second floor of the building will do so via a ramp at the rear of the building (1:12 slope). Those vehicles will turn into the ramp via Selby Street. Selby Street will play a vital role in vehicle circulation through the phasing of the project and will largely remain free of parking.

Open Space + Landscape

Industrial and thoughtful landscaping have not always been known to go hand in hand. At The Bridge BREG has prioritized creating a beautiful and functionable exterior site. The landscape design aims to buffer and screen the logistical nature of the building and site, helping to make sense of the scale of the proposed building. It was important to create comfortable spaces for workers and adjacent community to come gather by designing small pocket parks and shared courtyard space on the roof. Green space and planting has been utilized not only for its aesthetic but for its functionable purpose to treat and retain water on site during rain events. The planting choices are to be low water use and hardy to withstand the uses of the site with time.

Parking

While The Bridge incorporates dedicated fleet storage space, sufficient parking for the SF Market and other uses on site remains a priority. Parking stalls are critical for merchant workers, SF Market employers, produce buyers, and others. Not counting its fleet storage space, the redeveloped SF Market will have 293 parking stalls directly accounted for in this redevelopment plan. 129 of those parking stalls will be on-site and 164 created along Innes and Kirkwood While this number falls in the middle of the standard range given the parking maximum requirements per the square footage of the site, the SF Market’s varied use pattern and 24-activation mean that peak activity for all uses will never overlap.

Vehicular Circulation

510’ 280’

500’

SF Market Truck Circulation

Pedestrian Entrance/Exit Car Parking

2nd Floor Fleet Vehicle Circulation Into Building via Selby Street

Pedestrian Circulation

6 Entitlement Strategy

BREG will pursue a comprehensive entitlement review process that is anticipated to be completed in three years. Executing this expeditious review and approval process will require partnering with the City and County of San Francisco and its various agencies including: the Board of Supervisors, Planning, and the Mayor’s Office of Economic and Workforce Development. This will also require a robust community engagement and outreach plan. The proposed project will require several analyses including a Fiscal Feasibility, Disposition and Development Agreement, Development Agreement, Special Use District, a Planned Unit Development, two tax increment financing districts including an Enhanced Infrastructure Financing District, and a Community Facilities District. All aforementioned reviews are assumed to require an Environmental Impact Report.

Approval Avenue: Agreements, Entitlements + CEQA

As envisioned and proposed, The Bridge contemplates a Public-Private Partnership that will allow the SF Market, the City and County of San Francisco, and private entities to align land, resources, capital, and goals to provide world-class industrial facilities for the City and County of San Francisco, the Bay Area, and beyond. The industrial center has been designed to comply with the San Francisco Planning Code, meet all local and state building, energy, and related codes, as well as satisfy and achieve the various objectives and policies defined in the Bayview Hunters Point Area Plan, the Bayview Hunters Point Redevelopment Plan, and numerous General Plan and associated Elements.

The Bridge also directly aligns with the Commerce and Industry Element, Transportation, Air Quality, and Environmental Protection Elements. A comprehensive list of specific objectives and policies that are satisfied through The Bridge as it relates to industrial uses, freight, transportation, and safety is included in the appendix; the aforementioned are located within The Bridge’s Preliminary Project Assessment application.

To achieve the aforementioned goals, The Bridge must undergo a holistic, thorough, and adequately vetted entitlement, legislative, fiscal, and environmental analysis. The steps that follow provide a timeline of how The Bridge will facilitate “produce to production” at the San Francisco Market, and by extension, future-proof critical food infrastructure for the region.

These timelines mirror what CCSF would delineate for affordable housing in San Francisco, and as such, the team recommends the same be coordinated for this affordable industrial. BREG has consulted a former City Attorney, the County Assessor-Recorder, the San Francisco Planning Department including Current Planning and Environmental Planning Divisions, and deems the proposal a compelling project that would garner CCSF support. As requested by the Planning Department, the team is agreeing to retain the Planned Unit Development process under the SUD.

1) Fiscal Feasibility Analysis at Board of Supervisors

Disclose a copy of forthcoming new lease recommendations, financial analysis (ex. proforma), and plans to pursue tax increment financing (90-days)

6) Interdepartmental Project Review Meeting

Planning, DBI, PW, SFMTA, SFFD, SFPUC, etc. (2 weeks)

2) DDA & DA w/ City and County of San Francisco

Overall review 24 months, resolution adoption 6 months conveyance of land (99-year lease), agreements between all interested parties

3) EIFD/CFD Tax Increment Financing Districts

6 months after EIR certification

7) Project Application (PRJ)/ Environmental Application (ENV)/Planned Unit Development/Zoning Analysis/ Special Use District (24 months) w/ Planning and Legislative Team

12) Neighborhood Notifications and Outreach:

a) Pre-Application Meeting;

b) Bayview Hunters Point Citizens Advisory Committee, and ongoing outreach throughout the project’s development process, during lease-up, and thereafter;

c) Neighborhood Outreach (Public Notice per PC 311);

d) and Notification of a Project Receiving Environmental Review.

5) Pre-Application Meeting

w/ neighbors in the vicinity and registered neighborhood groups (2 weeks)

8) EIR

lot merger to be folded under CEQA but will be separately submitted to Public Works Subdivision and Mapping (24 months)

4) Preliminary Project Assessment w/ Planning (60-Day review)

9) Building Permit Applications

Parallel review w/ PRJ/ENV (24 months) Simultaneously submit Demolition and New Construction permits

11) Lot Line Adjustment lot line adjustment for lot merger (24 months); simultaneously running while project applications are being reviewed including CEQA.

10) Ancillary permits from Public Works, San Francisco Municipal Transportation Agency, San Francisco Fire Department, Public Utilities Commission, etc.

Parallel review with PRJ/ENV 24 months: street trees, sidewalk legislation, grading, etc.

Fiscal Feasibility Analysis at Board of Supervisors (BOS). Per Administrative Code Chapter 29, the project requires a Fiscal Feasibility Analysis before the Board of Supervisors. The Bridge will utilize the fiscal analysis process as an opportunity to disclose forthcoming plans to pursue tax increment financing, a new ground lease request, and subsequent legislative resolutions to process the DDA, DA, and SUD with BOS.

Enhanced Infrastructure Financing District (EIFD) and Community Facilities District (CFD) Feasibility and Legislation: The Bridge will prepare a project financing plan including a preliminary proforma. Forming tax increment financing districts include:

• Resolution of Intention approval by the BOS

• Approval of the Resolution of Formation

• Approval of special tax etc

• Land owner election (assuming no registered voters live within the boundary of either district). This is contemplated to occur after The Bridge’s entitlements, and after the EIR has been certified.

DDA: Because The Bridge hopes to negotiate a new 99-year ground lease, the longest possible tenure under state law (Civil Code Section 719); it will also pursue a Disposition and Development Agreement for the conveyance of land and to memorialize a multi-phased approach to the redevelopment of The Bridge. It is the intent of the DDA process to clarify that the City and County of San Francisco would remain as land owner.

DA: Per Administrative Code Chapter 56, Development Agreements are contracts between the City and a developer that define development rights and commitments; project rules and regulations; additional public benefits of the project; and implementation.

The Bridge envisions a PPP with the SF Market, the CCSF, and private entities to facilitate a JV partnership for the redevelopment of the site, establishing an EIFD and a CFD, an SUD, and establishing a priority parallel review process for all associated applications, permits, and legislation.

Planned Unit Development (PUD) and Special Use District (SUD): The Bridge will establish a SUD through a zoning map amendment that will principally permit all proposed uses without use size limits. Currently, some uses such as retail sales and service and grocery stores are limited to 2.5K GSF.

Proposed uses include: non-residential retail sales and service uses as well as agricultural and beverage processing (breweries, dairy products, plant, malt manufacturing or processing plant, liquor distillery, etc.), catering, industrial, wholesale sales, wholesale storage, automotive uses (parcel delivery service, electric vehicle charging location, fleet charging, private parking garage, vehicle storage garage, etc.).

Lot Line Adjustment (lot merger): The LLA process will be concurrent with PUD and EIR. Right now, there are 16+ parcels associated with the SF Market. Core parcels to be merged to accommodate the multi-story industrial buildings, record the vacation of Jerrold Avenue, as well as to simplify the annual property tax (possessory interest tax) assessments and facilitate the tax increment financing that is envisioned for the site.

CEQA (EIR): The Bridge is a new and expanded scope of work that was not previously analyzed under the previous Mitigated Negative Declaration (MND) or two subsequent Addenda; therefore, an EIR is required.

New Ground Lease

As San Francisco’s preferred and common framework for structuring private investment on public land, BREG reaffirms its expectations that a DDA and DA will be readily accepted by the CCSF as master framework, with a SUD to follow.

However, as a back-up entitlement strategy, BREG notes that the currently-active ground lease (“Lease”), substantially amended in 2022, could, with substantial further amendments, be made to accommodate a Joint Venture partnership such as the one proposed for The Bridge.

Further, to the extent that language from the Lease may be reemployed under a DDA and DA, certain lease provisions will need attention and updating in any entitlement scenario.

For the above reasons, BREG provides the following discussion of selected Lease provisions for amendment.

Multiple Mortgagees

Section 44.1(c) limits the Project to one mortgage lender per parcel at a time. Given the multi-layered capital stack recommended by BREG for the development of The Bridge, this provision will need to allow for multiple creditors per parcel in any renewed contractual relationship with the CCSF.

Express Permissibility of a Joint Venture with Third Party

For the avoidance of doubt, the Lease needs to explicitly contemplate JV partnership and establish its permissibility. This could be accomplished in §45, which is titled “No Joint Venture” (though notably only in reference to the Lease itself and without current reference, negative or positive, for JV agreements with third parties). Additionally, in the same way that the current Lease allows for Lease assumption by lenders, an amendment must similarly allow for assumption by a JV partner under appropriate circumstances.

Security for JV Equity Investment

Having been recently amended to provide security

for creditors to SF Market construction, the current lease contains the provision necessary to secure a JV partner’s debt financing only, including parcelization and seniority of debt to the city in and out of foreclosure— comprehensive mortgagee protections can be found in §44.

However, for an equity JV partnership, the lease would need to allow for variable returns, dependent on asset performance, to a JV partner based on their initial investment. Accordingly, §8.2 would need to explicitly provide priority for payments to an equity partner in the manner it currently does for a lender’s assignment of rents.

Assignment of Lease to JV Partner Under Foreclosure; Terms

§8 permits the assignment of the lease to an external financing entity or purchaser at a foreclosure sale. The assignee would nevertheless be subject to all terms of the lease, including adhering to the permitted use (a produce market) (§4.1) and not building any new structures (§18.1).

Accordingly, the permitted use provisions in §4.1 and construction provisions in §18.1 would need to be broadened to allow for principal uses beyond “operation of a produce wholesaling and distribution” and construction of structures other than those “to replace or restore those previously existing.”

Additionally, §8.2 gives a lender’s assignment of rents priority over the CCSF’s rights to those rents, but upon termination of the lease requires a lender to turn over to the city any rents previously collected by the lender under its assignment of rents to the extent of unpaid ground lease rents, effectively making the CCSF whole from a lender in case of SF Market default. This provision requires amendment to allow a lender to keep contractually collected rents even in the event of SF Market or other sublessee default to the CCSF, provided the lender had no operational control with which to influence the SF Market’s compliance with paying rents due.

7

Financing + Implementation

In this section, we will analyze the financial hurdles faced by the SF Market, present proforma projections at the project level, evaluate the returns for both the SF Market and joint venture partners, and explore ways to mitigate risk. To bolster the financial viability of the project, we have included Letters of Interest from prominent developers in the Bay Area.

Financial Challenge

Prior to the Bears Real Estate Group’s involvement, the SF Market and CCSF had planned a phased redevelopment of the four existing warehouses. The plan involved executing the redevelopment warehouse-by-warehouse, starting in 2024 and completing by 2041. As outlined in the 2022 Executed Amended Lease, the plan did not include any additional uses or proposed financing structures for the development.

The original redevelopment plan has become infeasible for two main reasons. First, construction costs have increased significantly in the Bay Area, with labor and material costs rising by over 20% since 2020. This has made the region one of the most expensive places in the United States to build. Additionally, rising soft costs such as legal fees and architecture need to be factored into the phased construction plan.

Second, the SF Market has just $20M in equity available for the redevelopment, while the redevelopment of the first building (1900 Kirkwood) is expected to cost ~$60M. According to the ground lease terms, all cash flows from the site above operating costs and debt service are to be passed through to CCSF. The lease allows for all cash flows to be diverted from the City to a Project Development Account

(PDA) until completion of the redevelopment. However, it would not be possible to raise the funds required for the SF Market and CCSF original development plan this way due to the overall cost (~$240M + escalations based on the cost for 1900 Kirkwood) and limited cash flows from the site due to affordable rents for the merchants. Our proposal includes several recommendations that lower costs and offer financing mechanisms to facilitate the project’s funding:

Consolidate four existing warehouses into two multi-story buildings, resulting in reduced construction expenses. Minimize soft costs by streamlining the entitlement process, employing uniform building designs on both sides of Interstate 280, and phasing the developments consecutively to minimize downtime.

Leverages the parcelization process outlined in the amended ground lease to obtain permanent financing on the two stabilized assets (2101 Jerrold and 901 Rankin). Incorporates financing mechanisms for public infrastructure projects, namely Community Facilities Districts (CFD’s) and Enhanced Infrastructure Financing Districts (EIFDs). Brings on a JV partner to act as GP for the development, contribute additional financing, and help achieve the site’s highest and best uses.

Entitlement & Development Cost

Based on discussions with local developers and contractors, hard costs were estimated for each type of space throughout the building. Working with Cumming Group cost estimators, BREG developed space specific hard cost pricing (cold storage, central concourse, retail, office, parking, commercial kitchen, etc.) resulting in a weighted average hard cost of $264 / GSF used for our underwriting. Cold storage warehouse space was modeled at a premium of $320 / GSF to account for development complexity and increased material costs compared to the second and third floors. We have included a 5% contingency for both the hard and soft costs to account for unforeseen conditions, and have also included 3% annual escalations to account for potential increases in materials and labor costs. As noted, the Bay Area has seen significant increases in labor and material costs, and we believe including 3% annual escalations is a prudent step to mitigate the potential risks associated with rising costs. The table below includes development costs based on actual dollars spent at time of construction for each phase.

Land Costs

Entitlement Costs

Infrastructure Imrovements

Demolition Costs

Hard Costs

Soft Costs

Development Fee

Tenant Relocation Expense

Financing Fees

Interest Reserves

SF Building Permit Fees

SF Public Utilities Commission Fees

SF Planning (Building Permit Fees)

Public Works Subdivision Mapping Fees

Planned Development Agreement Fees

Environmental Review (CEQA)

Public Works Improvement Fees

Transportation Sustainability Fee

San Francisco School Impact Fee

San Francisco is known for having some of the highest entitlement costs and development impact fees in the US. We understand that CCSF is undergoing its review of development impact fees. However, BREG has underwritten these costs as noted in the most current fee schedules for each individual city agency’s fees and the city-wide fee register. As noted in the entitlement and development impact fee breakdown, the exactions are vast.

The projected returns above highlight the strength of BREG’s development proposal, and the 19.29% IRR underscores the attractiveness of the project for prospective JV partners. The development spread of 163 basis points assumes a 5.25% cap rate, which is in line with comps for the BVHP sub-market. However, BVHP has seen minimal new industrial construction in the last 15 years, and there are no comparable products to our development proposal in the area. Given the strength of The Bridge, BREG believes a 4.50% - 5.00% cap rate could be justified upon stabilization, further improving projected returns.

One strategy to mitigate costs is that for applications where both phases could be incorporated such as the environmental review (EIR), the entire project is reflected under those applications (some applications require each phase or scope of work to be submitted separately, which has been reflected in our underwriting). The principal impact fees applicable to BREG’s proposed development are:

Jobs Housing Linkage Fee

Transportation Sustainability Fee

San Francisco Unified School District (SFUSD) Fee

There is no fee for the project as the proposed scope of work will retain the existing Production, Distribution, and Repair; another benefit to complying with the PDR-2 Zoning.

The fee is substantial, but as a 501(c)(3), the SF Market will apply for the TSF tax exemption as noted in PC 411.3A (b)(7). We are conservatively assuming only the sq. ft. associated with the SF Market may be exempt; thus, we will negotiate keeping the remaining fee within The Bridge’s SUD boundary through the DA and SUD process

The Bridge will also attempt to negotiate relief from the SFUSD fees because a percentage of the possessory interest tax (.04503343%) of the value of the site is allocated for the SFUSD.

The proposed proforma makes the conservative assumption that fee relief is not granted. However, after negotiations with CCSF, we trust subsequent updates will reduce costs and further increase the project’s returns.

Capital Stack Project Equity

BREG will raise equity from pre-existing structures of the SF Market, permanent financing of stabilized assets held outside of the development proposal, and with a joint venture agreement with a well-capitalized developer.

• $20M cash from the Project Development Account

• $4.1M capital campaign for the SF Market

• $24.6M proceed from permanent financing of 901 Rankin and 2101 Jerrold

• $48.7M equity contributions from JV Partner

EQUITY

Equity Sources

Project Development Account (PDA)

The ground lease with CCSF allows for all cash flows to be diverted from the city to a PDA until completion of the redevelopment. The current balance in the PDA is ~$20M.

Capital Campaign

BREG’s redevelopment proposal includes a small portion of equity that is raised by the SF Market through a capital campaign oriented around the new development and its community benefits

The development includes 3,520 sq. ft allocated to the SF Market’s expanding zero waste and food recovery programs, and 4,000 sq. ft of office space specific to the SF Market. If we take the SF Market’s proportional share of development costs, this square footage represents 1.3% of the leasable area for the redevelopment. BREG is proposing that the SF Market raise the proportionate share of development costs ($4.1M) through a capital campaign.

Funder of the Alameda County Food Bank, a beneficiary of the SF Market’s expanding Food Recovery Program. Similarly aligned with the SF Market

A large family foundation with a specific focus on building food security in the Bay Area, Stupski makes donations exceeding $1MM

An civic institution, the San Francisco Foundation would be an appropriate partner for this city-level food infrastructure project. Grants exceeding $1MM are common

Bay Area family foundation with Health program focus, including on healthy food provision to the underserved.

Our proposal for the capital stack of the SF Market redevelopment includes equity, debt, and tax increment financing.

ENTITLEMENTS COSTS + DEVELOPMENT IMPACT FEES

Stabilized Financing Proceeds

We are treating the proceeds from financing 901 Rankin and 2101 Jerrold as a source of equity as these assets fall outside of the scope of the JV for the redevelopment and are 100% owned by the SF Market. These two assets are currently fully stabilized and free and clear of any debt sources. Loan fees associated with the permanent financing will be included in our proforma, but the debt will be serviced outside by the stabilized assets. BREG expects to raise $28.7M through financing these two assets, but ~$4.1M will be reserved to cover operating shortfalls for the SF Market during the redevelopment, leaving a balance of $24.6M to contribute to the project.

Joint Venture (JV) Partner

As discussed in the ‘Strategy’ section of our proposal, BREG will be bringing on a JV Partner for the development. We expect the JV Partner to contribute the same total equity amount of $48.7M as the SF Market.

Capital Stack Sources

Tax Increment Financing Community Facilities District (CFD

BREG plans to raise ~$13.1M from tax increment financing bonds and additional funds through future tax increment that will service long term debt payments.

• Community Facilities District

• Enhanced Infrastructure Financing District

Current Property Taxes - Per the September 2022 possessory interest taxes published by the County Assessor-Recorder’s Office, the existing annual property value for the SF Market Site primarily assessed on 901 Rankin Street, 2101 Jerrold, and 2095 Jerrold Avenue reflect an annual valuation of $1,193,401. With an ad valorem tax plus additional taxes, the corresponding current tax rate is 1.18248499%, as outlined in the table below. For the purposes of the tax increment, if 2022 was considered the base year, one could capture everything above and beyond the aforementioned $1.1M, and could then assess Countywide, CCSF, Community College of San Francisco, SF Unified School District, and Bay Area Rapid Transit District possessory interest taxes on the updated property value.

Property Taxes %

City and County of S.F Debt Service

S.F. Community College District Debt Service

S.F. Unified School District Debt Service

S.F. Bay Area Rapid Transit District Debt Service Total

A CFD is a special district created by local governments to finance public infrastructure within a designated area. Local governments create a CFD by passing a resolution that defines the boundaries of the district and the services to be provided. The CFD issues bonds (or other debt) to finance the construction of public facilities such as roads, sidewalks, and parks. Property owners within the district pay a special assessment, which is a property tax added to their property tax bill. The assessment is used to service the debt and to fund ongoing operations and maintenance of the public facilities.

As part of our proposal we plan to approach CCSF to create a CFD surrounding the SF Market site. Total public infrastructure costs for the SF Market site, including re-routing Jerrold Avenue, are ~$20M. An additional ~$15M of improvements included in our proposal qualify for CFD financing, bringing the total to $35M. CFD bond financing is capped at 33.3% of total improvement costs, allowing the development to raise $11.7M. Further, CFD financing allows for two years of capitalized interest, increasing the bond principal to $13.1M prior to amortization.The CFD bonds outlined would lead to a special tax assessed to all tenants of the SF Market equivalent to $0.11 per sq. ft per month. This is equivalent to a special tax of ~0.25% for all buildings included in the CFD.

Capital Stack (cont.)

Enhanced Infrastructure Financing District (EIFD)

Similar to CFDs, EIFDs are a type of district established by local governments to fund public infrastructure projects through tax increment financing. EIFDs can also be used to fund private industrial developments, as long as they meet certain criteria such as creating jobs, improving access to goods or services, and or seismic resiliency projects. The tax increment for EIFDs is not created through a special assessment like CFDs. Rather, to determine the tax increment for EIFD financing, the local government establishes a baseline year for tax revenue within the district - typically the year prior to the EIFD creation. Once the baseline tax revenue is established, any increase in property tax revenue resulting from improvements within the district is considered the tax increment. A specified percentage of the tax increment is then used to finance public infrastructure improvements - a percentage that is determined through negotiation with taxing entities in the district. EIFDs can issue bonds, but can also be used to repay financing used to fund public infrastructure projects. BREGs proposal includes the formation of an EIFD around our site, with the tax increment based on precedent projects in San Francisco. The tax increment earned through the EIFD will be used to service alternate debt sources for our project, including C-PACE.

Permanent Financing (East)

Upon completion of Bridge East (phase 1 of the redevelopment), BREG proposes that The Bridge obtain permanent financing on phase 1 to unlock additional capital to fund the development of phase 2.around our site, inclusive of 901 Rankin and 2101 Jerrold, with the tax increment based on precedent projects in San Francisco. The tax increment earned through the EIFD will be used to service alternate debt sources for our project, including C-PACE and construction financing.

Key Proforma Assumptions

RENTAL RATES

Ground

Demand for cold storage will increase with the introduction of modern facilities. However, this figure represents a conservative assumption on produce merchant rents, in keeping with the SF Market’s mission to provide affordable rents.

SF Market retail rents were tied to the rents set for SF merchant space. The SF Market retail space will be allocated to some of their nonprofit efforts in addition to a potential Makers Market for the merchants.

We will target neighborhood-serving retail that will provide an amenity for merchants, produce buyers, and visitors to the SF Market.

SF Market office rents were tied to the rents set for SF Merchant space. The SF Market office space will be allocated to the operations of the nonprofit and management of the ground floor merchant warehouses.

C-PACE (Commercial Property Assessed Clean Energy)

The residual amount of capital required for the project will be raised with debt financing and includes permanent financing on phase 1 of the redevelopment, C-PACE financing, and construction financing. is a financing option designed for commercial property owners to fund energy efficiency, renewable energy, water conservation, and seismic improvements to their properties. C-PACE will enable the SF Market to secure a loan from a private lender to fund specific portions of the development associated with energy efficiency, and provide a cheaper cost of capital than traditional construction debt. C-PACE can typically cover up to 55% of hard costs in industrial development, and is available for a wide range of improvements, including building envelope upgrades, heating and cooling systems, lighting upgrades, and solar panel installations. The repayment of C-PACE loans is through a special assessment on the property, which is collected as part of the property tax bill and repaid over a period of up to 35 years. It is important to note that the C-PACE special assessment is tied to the property rather than the property owner, which means that if the property is sold, the C-PACE loan is assumable. For the SF Market, we are targeting a C-PACE loan for 25% of total construction costs for the redevelopment.

Construction Financing

The debt slices of BREG’s proposed capital stack prioritize cheaper, publicly-facilitated financing whenever possible. However, a small amount of traditional construction financing is included as a residual to complete the required financing.

Mezzanine

Office space will be prioritized for merchants that are interested in leasing additional office space outside of their warehouse space. If merchants are not interested in renting additional office space, the space will be offered to third floor tenants, or other market tenants. Based on feedback we have received in the market, fleet storage is commanding some of the highest industrial rents in the SF market. Further, we believe there is potential to increase these rents with infrastructure upgrades for fleet charging long term.

Third floor light industrial space was priced at a 15% discount to market rates of $1.80 due to the elevator only access for the space. BREG believes there will be significant interest from alternative uses as outlined in the proposal for this space.

Key Underwriting Assumptions

Many of the underwriting assumptions below have been discussed previously throughout the proposal. These assumptions are based on market comparables and data received from leading developers in the Bay Area. We have assumed a sale at the end of year 10, two years after stabilization for The Bridge, to project returns for both the SF Market and our JV partners.

Key Underwriting Assumptions

Key Proforma Assumptions (cont.)

Loan Terms

BREG has had extensive conversations with lenders regarding The Bridge. Despite record inflation and a high interest rate environment, we have received strong interest in and terms for the financing of our development. This is due to the strength of the industrial market, the low LTV for the first phase of our project, and the overall vision for The Bridge. Below is a breakdown of the debt terms we have received from market lenders.

Tax Increment

As part of negotiations with prospective JV partners, BREG has proposed the exclusion of The SF Market from the waterfall structure for the GP developer and additional LP partners. With 50% of the equity contribution, the SF market will receive 50% of the distributions at the project level, as outlined in the table above. We believe this is an equitable arrangement with the GP developer for multiple key reasons.

• The SF Market is contributing 14.4 acres to the partnership. This land is prime San Francisco PDR-2 zoned land, valued at $220M+, currently under ground lease until 2073. Without the SF Market, developers would not have access to this land.

• The SF Market has strong relationships with local community groups and CCSF, which is accepting of the need for alternate uses on site and is highly motivated to see the site redeveloped.

• The SF Market in partnership with BREG has completed significant due diligence and prepared an entitlement plan and redevelopment plan that will allow the GP to expedite the redevelopment of the site.

• The SF Market has secured 150,000+ sf. ft. of cold storage tenants with their existing merchants at the market.

• In addition to the land, the SF Market is contributing 50% of the equity required for the development.

The first table below includes a proposed waterfall structure for our GP partner and their LP equity partners. However, it should be noted that any GP partner will have the flexibility to negotiate the appropriate promote structure directly with their LP partners. The second table highlights the projected returns for both our JV partner and all LP partners. BREG believes these are strong returns that will attract leading developers and equity investors to The Bridge.

Sensitivity Analysis

Construction Cost Sensitivity

The hard costs included in the table are based on weighted average hard costs for the project and are stated in current dollars. The hard costs listed include a 5% contingency, and the proforma underwriting includes 3% annual escalations to account for increase in material and labor costs. Account

Construction Costs Sensitivity ($/GSF Today)

Rental Rate Sensitivity

Cap Rate Sensitivity

as discussed in the Financial Challenge, BREG has underwritten The Bridge at a 5.25% cap rate, which leads to strong returns for the project. However, given the strength of the proposal and a lack of comparable product in the market, we believe a 4.50% - 5.00% cap rate could be justified upon stabilization.

Hard Cost / GSF $264.0 $269.0 $274.0 $279.0 $284.0 $289.0 $294.0 IRR 19.29% 18.93% 18.60% 18.27% 17.94% 17.61% 17.28% Multiple 2.19 2.16 2.13 2.10 2.07 2.04 2.01 Profit Margin 31.00% 28.73% 26.72% 24.77% 22.88% 21.06% 19.27% Rental Rate Sensitivity Avg. Rental Rate $1.85 $1.90 $1.94 $1.99 $2.04 $2.09 $2.14 IRR 17.07% 17.83% 18.57% 19.29% 19.91% 20.66% 21.40% Multiple 2.02 2.08 2.13 2.19 2.23 2.30 2.36 Profit Margin 21.15% 24.44% 27.73% 31.00% 34.30% 37.58% 40.86%

Hard Cost / GSF 6.00% 5.75% 5.50% 5.25% 5.00% 4.75% 4.50% IRR 16.33% 17.28% 18.26% 19.29% 20.36% 21.43% 22.54% Multiple 1.97 2.04 2.11 2.19 2.27 2.39 2.52 Profit Margin 14.57% 19.58% 25.04% 31.00% 37.58% 44.82% 52.86%

Risk Mitigation Strategy

Bay Area construction costs escalated over 20% during the pandemic period alone, and are currently projected by industry experts to continue rising by 3.0% annually. If rates continue to increase at the same pace as the pandemic period or if our development experiences any significant delays it may become prohibitively expensive to break ground the project.

• The bridge is a consolidated development of two almost-identical buildings (one on each side of the 280 freeway), saving on hard and soft construction costs relative to the planned four-building development or other variations.

• The convertible fleet storage second floor use achieves high rental rates for less upfront construction cost.

After decades of low rates, development of The Bridge now confronts an elevated rate environment, raising costs and constraining takeout financing on current assets

• The use of both C-PACE, EIFD, and CFD financing, provide more favorable loan terms and interest rates than traditional construction financing.

• Macroeconomic forecasts suggest more a normalized interest rate period upon the permanent financing stages for both Bridge East and Bridge West

The CCSF has strict requirements for development and because it is discretionary, it is susceptible to political interventions at multiple stages, from entitlement through construction. The project could be blocked or significantly delayed by discretionary decisions or political opposition.

• The SF Market has committed to the continued provision of strong blue collar jobs and an expansion of its nonprofit programming (Food Recovery Program, etcetera). BREG anticipates that CCSF will support these outcomes and will be motivated to facilitate expeditious negotiations, agreements, entitlements, and permit approvals.

• Mitigate risk with a DDA and DA process to stipulate terms including land ownership, land tenure, what can occur on CCSF-owned land, and how to legally use said land. Thereafter, executing a new lease agreement with all desired terms agreed upon is vital—see Appendix section “Lease Amendments’ for more detail. Rules, regulations, and responsibilities noted in a DA can shield against political opposition.

• A DDA & DA will establish the rules and regulations for all interested parties. The existing ground lease does not stipulate the regulatory approval process; instead, it defers to respective agencies’ reviews. However, a DDA, DA, new ground lease, and SUD which are contemplated for The Bridge will set rules, regulations and expectations. If The Bridge’s code-compliant proposals, including an entitlement (ex. PUD) or any associated permit, were to be denied, CCSF could be in violation of the aforementioned agreements, and The Bridge could seek legal recourse.

• An SUD can also shield against future legislative changes including interim controls (see discussion regarding Supervisor Walton-sponsored legislation relating to parcel delivery service in the appendix; where principally permitted, the interim controls now require a conditional use authorization).

• A thorough geo-technical review will be required as part of our entitlement review process and prior to breaking ground on the first phase of construction.

ENVIRONMENTAL

Related to political entitlement risk, community members in San Francisco hold significant power over the fate of any development, such as with building permit appeals even after CPC has issued permits. The project could be blocked or significantly delayed by direct community opposition, or even litigation

• The Bridge’s community engagement plan leverages the SF Market’s strong and valued presence in the BVHP community and provides for substantial input from, and benefit to, key community members and organizations. Community engagement will be proactive and guided by the framework of the San Francisco Planning Racial and Social Equity Assessment Tool.

• A broader suite of uses than produce wholesaling is needed on site to achieve financial feasibility on the project, but this expansion of scope is mitigated by bringing community-alignment to those uses. For example, The Bridge will harness AV fleets for community benefit by delivering produce from the SF Market to partner organizations. The development also emphasizes space for small and medium sized businesses (catering and food fabrication especially) on its third floor.

Local legislation could preclude some of the intended uses on site, with fleet storage at particular risk. For an example, see Ordinance No. 202-21, proposed by Supervisor Walton and approved by the Board of Supervisors, which repealed the Life Science and Medical Use District previously applicable to the site. On the state level, legislation such as the proposed AB-1000 or “Good Neighbor Policy” may also impede industrial development in urban or peri-urban settings.

• A targeted SUD that builds in permissibility of the uses contemplated on site will protect against future legislative intervention. However, a more ambitious range of uses requested under the SUD may slow its approval.

• State policy intervention is difficult to mitigate, but BREG recommends that the SF Market use its strong relationships with state legislators, such as Scott Weiner who recently secured $5MM in state funding for the redevelopment, to advocate for policies conducive to SF Market success.

The Hunters Point PG&E substation is at capacity until 2029, so substantial increases in power will not be available until that time.

• The Bridge postpones charging infrastructure for its fleet storage space until 2029, when PG&E plans to provide additional capacity.

• This milestone coincides with the construction of the second building, Bridge West. At that time, the SF Market and its JV partner are encouraged to evaluate the efficacy of fleet storage space versus conversion to class A industrial. If demand for fleet storage (and especially fleet storage with electric vehicle charging) is strong at that phase, The Bridge can elect to retain its fleet storage space and add charging infrastructure at that time.

When the ground lease expires, the land and any improvements on the property revert back to the CCSF as landowner, resulting in the loss of the SF Market’s investment in the property, as well as that of any JV partner still invested at that time

• Under the sought DDA & DA, BREG expects that the term of an updated ground lease will be extended to 99 years, which all but eliminates this risk for the SF Market and any JV partner

• By client request, BREG did not include an analysis of potential environmental challenges on the site. However, the contingency expense built into our proforma assumptions would be available to help address additional expenses in this category.

• Should the SF Market fail to secure the lease extension, BREG is still confident that the involvement of JV partners is more than feasible given the 50 years remaining under the existing term. Our JV partnership options include the possibility of an early take-out for a JV partner, as well as a long-term (30 year) hold for preferred debt payments and amortization

A Future-Proofed Marketplace

As cities around the world continue to rapidly evolve, the civic institutions that have defined urban life over generations are increasingly forced into moments of self reflection. How do these institutions define themselves in an environment that has changed so drastically over the years? While certain institutions might fade in relevancy over time, others find a way to adapt and thrive under new conditions. Public libraries are one such example. Many thought the advent of the Internet would bring with it the demise of the library – a central source of information grounded in the physical world. On the contrary, libraries have served as a shining example of institutional evolution. Cities around the world have turned to public libraries into a center of community gathering and resources. Information sharing is still core to all libraries, but the design of their physical space has adapted to

accommodate other societal needs.

Public markets are experiencing a similar revolution. The rise of supermarkets, advances in distribution methods and speed, improvements in the cold chain, and a lack of space in urban centers have driven the post-war decline of public markets in urban centers. The merchants of the SF Market themselves experienced these trends when displaced in 1962.

And yet, the SF Market continues to thrive and play a critical role in a region’s food infrastructure. It provides over 1,000 working-class jobs in an urban center where those jobs are increasingly hard to find, and facilitates California’s superb produce—the envy of the world—to reach hundreds of thousands of individuals throughout the Bay Area, including, given the SF Market’s nonprofit mission, those with least access.

The challenge the SF Market faces, then, is not of relevance. Rather, the challenge is spatial and economic, and one of allowing for growth rather than managing decline.

The SF Market has the benefit of stewardship of physical space in the City and County of San Francisco where land is increasingly scarce. But to sustain itself economically long term, the SF Market must rapidly reinvent its physical space to enable its core operations, but also to answer to other societal needs—transportation, small business development— much like the public library has done over the past few decades.

Doing so will require the market to future-proof its site: embracing an uncommon public-private entitlement structure and including uses that bring the SF Market’s traditional activities into a future of

accelerating technological change. It will also demand the financial ingenuity that will enable $20M in equity to become an 820,000 sq ft. development.

The Bridge offers a new vision for the SF Market: one that spans the founding spirit of 1962 into a present filled with thriving food-based small businesses and a future of safe, equitable, and sustainable transportation. It’s a vision that ensures the SF Market expands and thrives into a future that it helps create.

The SF Market 2023

The SF Market at The Bridge 2030