Teatro ZinZanni’s long-promised return to San Francisco’s waterfront just took a big step out of the tent and into the boardroom. The Port Commission has signed off on a hotel-and-theater deal that could deliver up to $38 million in public incentives to help turn a surface parking lot at Broadway and the Embarcadero into a permanent dinner-theater, a 164-room NoMad-branded hotel and roughly 14,000 square feet of privately financed park space. Developers say the assistance is meant to plug a stubborn financing gap in the roughly $182 million project, which stalled and was reworked during the pandemic. The package is not a done deal yet, since the lease and incentive agreement still need approval from the Board of Supervisors before the Port can ink final contracts.
Port Commission signs off
Port staff pitched the move as a financial tune-up on an existing deal, asking commissioners to bless revised lease terms and a new hotel incentive. According to a staff report, the commission adopted Resolution No. 26-39 at Tuesday's meeting, authorizing a fourth amendment to the Lease Disposition and Development Agreement, trimming initial rent in the early years of the lease and sending a proposed Hotel Development Incentive Agreement to the Board of Supervisors for review, per the Port of San Francisco.
Developer says incentives will bridge the gap
The project team, TZK Broadway, which pairs Teatro ZinZanni with Kenwood Investments, told commissioners that lenders insisted on contract tweaks and rent adjustments to make the deal pencil out. As reported by the San Francisco Business Times, the developer argued the incentive package is key to locking in financing for the approximately $182 million build.
How the incentive and financing stack up
Port documents say the incentive would come as a slice of new transient-occupancy tax revenue generated by the hotel, with a net-present-value cap of about $38 million measured over 20 years. The same staff materials outline an updated capital stack that includes roughly $90 million in senior debt, about $60.4 million in C-PACE financing and the balance in equity, along with new base-rent and percentage-rent relief in the early lease years to bolster cash flow for both lenders and owners, per the Port of San Francisco.
A long, stop-and-start path to the Embarcadero
City records trace a winding path for the project, starting with a 2016 term sheet, followed by a 2019 Lease Disposition and Development Agreement and several amendments as the team chased financing and reworked the program in the wake of COVID-era cost spikes. Those records sit alongside local coverage that highlighted early outreach, community review and prior Port sign-offs during the project’s earlier runs at approval, per the City Legistar file.
Next steps: Board vote and permits
With the Port Commission’s vote in the bag, staff will now send the lease amendment and Incentive Agreement across the street to the Board of Supervisors. The Port’s paperwork notes that any incentive payments would have to be appropriated each year from the city’s general fund and would not touch the Port’s harbor fund. A recent meeting rundown notes the commission backed the package unanimously, but the real headliner is still the Board, and future permitting and financing milestones will ultimately decide when shovels hit the ground and the circus finally comes back to town.
