The Port of San Francisco will underwrite a hotel and dinner-theater project on the Embarcadero with an incentive capped at $38 million in net present value over 20 years. The Port Commission adopted Resolution 26-39 on 14 July 2026. The project puts 164 guest rooms, a permanent home for Teatro ZinZanni and a 14,000-square-foot public park on Seawall Lots 323 and 324 at Broadway Street and The Embarcadero.
The three agreements before the Commission
Three agreements came as one item: a fourth amendment to the Lease Disposition and Development Agreement with TZK Broadway LLC, a revised form of lease, and the Hotel Development Incentive Agreement.
TZK Broadway LLC pairs Teatro ZinZanni with Kenwood Investments. The site covers Seawall Lots 323 and 324 and portions of the unimproved Vallejo and Davis Street right-of-ways on the west side of The Embarcadero at Vallejo Street. Waterfront Development Project Manager Ricky Tijani signed the staff report on the item.
The Port's project page describes the hotel as a 164-room luxury property with a ground-level cafe and a roof-top bar. The Port factsheet puts the building at four stories on a LEED-certified design, and names Hornberger + Worstell as architect and DPR Construction as general contractor.
The room count fell from 192 to 164
The staff report states that the hotel remains as proposed and the room count is now 164 instead of 192. The Port Commission approved the 192-room scheme on 10 September 2019 under Resolution 19-36.
The brand
The staff report names Hilton Hotels as the brand and management company and states that Hilton has committed to manage and operate the hotel, branded as NoMad, its new luxury brand. Hilton is also guaranteeing repayment of part of the senior loan.
Why the financing gap opened
Construction cost rose from $164 million to $182 million between the 2019 approval and the 2026 vote. The staff report attributes the increase to labor, construction materials and financing costs. A funding gap of about $30 million had opened by mid-2025. The proposed incentive payments left a projected $14 million gap.
The lender proposed closing the gap by raising its loan from $60 million to $90 million. The capital stack now reads $90 million in senior debt, $60.4 million in C-PACE financing, $16.6 million in limited-partner equity, $9.9 million in sponsor equity and $5.5 million in EB-5 private equity, against $182.4 million in total sources.
The rent the lease now carries
The revised lease cuts annual minimum base rent to $500,000 a year in lease years 1 through 4, then $600,000 in year 5 and $700,000 in years 6 and 7. The 2019 structure set $1 million a year for the first two years. Percentage rent starts in year 8 at 2 percent and rises to 4.5 percent, against a 2019 range of 3.5 percent to 6.5 percent.
The tenant may defer part of the rent for up to three years when cash flow falls short of the senior lender's annual debt service, and for up to two years when annual hotel gross revenue falls below $60 million. Deferral applies to lease years 8 through 15. The Port capped the tenant equity eligible to earn a return at $80 million.
How the incentive is paid
The incentive payment is measured as a percentage of the new transient occupancy tax the project generates and the city receives. The Port pays only once the amount is appropriated from the city's general fund into the Port's budget. The harbor fund is not the source. The Board of Supervisors must approve the lease amendments and the incentive agreement before the Port signs final contracts.
The dates on the Port record
The Port's project page runs the schedule from the Exclusive Negotiation Agreement in 2015 and a term sheet in 2016, through entitlements and transaction documents from 2019 to 2025, to a financing search from 2021 to 2026. It lists construction in 2027 and 2028 and a grand opening in 2029.
The Board of Supervisors approved the lease on 14 January 2020 under Resolution No. 05-20. The Port and the developer executed the LDDA on 18 September 2020 and amended it three times. The third amendment extended the LDDA term to 17 September 2026. The fourth amendment adds up to nine months on a $25,000 fee for each three-month increment.
The venue beside the hotel
Teatro ZinZanni returns to the waterfront under this project. The permanent theater houses the company's historic Spiegeltent, which the Port factsheet places in a glass-walled gazebo. The park is privately funded and opens to the public.