DEPARTMENT Real Estate Services Division AGENDA NO. 7
MEETING DATE March 24, 2026
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
Calendar: Regular Calendar
Real Estate Director: Rosanna Russell
Award a lease for approximately 3.092 acres of Parcel No. 122
Summary of Proposed
Commission Action:
Award a lease for approximately 3.092 acres of Parcel No. 122 (Assessor’s Parcel No. 97-84-029) located in the City of San Jose to Tasman Zanker San Jose, LLC , for an initial annual
$348,152.89 base rent and a term of 11 years, subject to approval by the Board of Supervisors under Charter Section 9.118.
Background: The City and County of San Francisco (City), through its San Francisco Public Utilities Commission (SFPUC), owns real property in fee located in the City of San Jose, designated as SFPUC Parcel No. 122 ( SFPUC Property ), and identified as Assessor’s Parcel No. 97 -84-029. The SFPUC operates two subsurface water transmission pipelines in the SFPUC Property.
The City, as landlord, and Cisco Systems, Inc., as the original tenant (Cisco), are parties to a 40- year Right-of-Way Ground Lease dated April 1, 1997 (1997 Lease). The 1997 Lease expires in 2037. The SFPUC designated the 1997 Lease as SFPUC
Lease No. 3772a.
Under the 1997 Lease, the City authorized Cisco’s use of approximately 4.41 acres of the SFPUC Property (Original Premises) for parking, utilities, landscaping, and ingress and egress to and from adjacent buildings and driveways . Cisco has assignment rights under the 1997 Lease.
In December 2025 , Cisco sold certain buildings and ancillary parking lots on its own property located adjacent to the Original Premises to Tasman Zanker San Jose, LLC, a Delaware limited liability company (Tasman, or proposed new Tenant ). The former Cisco property is referred to as the Tasman Property.
As part of Cisco’s sale , and to separate and streamline the ongoing lease administration, the City and Cisco amended the 1997 Lease (Amendment No. 1) to bifurcate the Original Premises into two areas: the Remainder Premises, consisting of
approximately 1.22 acres, and the Assigned Premises, consisting of approximately 3.092 acres.
Agenda Title: Recommend Approval of Lease to Zanker Tasman San Jose, LLC Commission Meeting Date: March 24, 2026
Under Amendment No. 1, the City and Cisco agreed to remove the Assigned Premi ses from the Original Premises so that Cisco continues to occupy the Remainder Premises under the exact terms of the 1997 Lease, except for technical changes to reflect prorated economics, including rent, to address the fact that Cisco now only occupies the Remainder Premises.
Concurrent with Amendment No. 1, Cisco, with the City’s consent, assigned its interest in the Assigned Premises to Tas man by a Partial Assignment a nd Assumption o f SFPUC Lease No. 3772a dated December 17, 2026 (Partial Assignment). As a negotiated condition of the City’s consent to the Partial Assignment, Tasman is required to enter into a new 11- year proposed lease with the City for Tasman’s continued use of the Assigned Premises, on the City’s current form of lease ( Proposed Tasman Lease) . The Proposed Tasman Lease contains updated provisions protecting the SFPUC’s access to and utility use of the Assigned Premises.
The Proposed Tasman Lease would have the same expiration date as Cisco’s1997 Lease.
Tasman executed the Proposed Tasman Lease subject to award by this Commission and approval by the Board of Supervisors.
Upon final approval, the General Manager will have the authority to execute the Proposed Tasman Lease.
The business terms of the amended 1997 Lease and the
Proposed Tasman Lease are as follows
, noting that when taken
together, they are equal to or more favorable to the City than the business terms of the Original Lease.
Remainder Premises Assigned Premises
Tenant: Cisco Systems, Inc., a
Delaware corporation
Tasman Zanker San
Jose, LLC, a Delaware
corporation
Premises: An a pproximately 1.22
acre-portion of SFPUC
Parcel No. 122 (APN
97-84-029)
An approximately 3.092
acre-portion of SFPUC
Parcel No. 122 (APN
97-84-029)
Term: Commencement Date:
May 9, 1997
Expiration Date:
May 8, 2037
Scheduled
Commencement Date:
May 9, 2026
Expiration Date:
May 8, 2037
Agenda Title: Recommend Approval of Lease to Zanker Tasman San Jose, LLC Commission Meeting Date: March 24, 2026
Base Rent: Annual Base Rent:
$137,687.03 (being
28.34% of the current
Base Rent in the
amount of $485,839.92
annually)
Monthly payments:
$11,473.92
Annual Base Rent:
$348,152.89 (being
71.66% of the current
Base Rent in the
amount of $485,839.92
annually)
Monthly payments:
$29,012.74
Additional
Charges:
28.34% of the
Additional Charges
(as such term is defined
in Section 2.1 of the
Lease)
71.66% of the
Additional Charges
(as such term is defined
in Section2.1 of the
Lease)
Adjustment
Dates:
The 5th, 10th, 15th,
20th, 25th, 30th and 35th
anniversaries of the
Commencement Date
Next Adjustment Date:
May 1, 2027
Annually at 4%,
beginning on the date
that is twelve months
after the Tasman Lease
Commencement Date.
Use Parking lot, utilities and
landscaping purposes,
and ingress and egress
to and from adjacent
buildings and driveways.
Parking, utilities
approved by City,
ingress and egress to
and from adjacent
building and driveway,
and landscaping in
accordance with the
SFPUC’s Integrated
Vegetation
Management Policy.
Until this Commission and the Board of Supervisors approve the Proposed Tasman Lease , the 1997 Lease, as modified by the Partial Assignment, will continue to govern Tasman’s use of the Assigned Premises.
Environmental
Review:
This action does not constitute a project under the California Environmental Quality Act Guidelines Section 15378
because there would be no physical change in the environment.
Budget & Costs: No adverse budgetary impact
Description of
Agreement:
Parties to the
Lease:
City and County of San Francisco,
acting through the SFPUC as Landlord,
and Tasman Zanker San Jose, LLC , as
Tenant.
Purpose: Parking lot, utilities and landscaping and
Agenda Title: Recommend Approval of Lease to Zanker Tasman San Jose, LLC Commission Meeting Date: March 24, 2026
ingress and egress to and from adjacent
buildings and driveways , in accordance
with the SFPUC’s approval.
Annual Base Rent: $348,152.89
Location: An approximately 3.092 acre -portion of
SFPUC Parcel No. 122 (APN 97 -84-
029) in San Jose, California.
Expected
Commencement
Date:
May 9, 2026, but in no event earlier than
the approval of the proposed Tasman
Lease by this Commission and the
Board of Supervisors.
Attachments: 1. SFPUC Resolution
2. Proposed Tasman Lease
3. Map illustrating the premises of the Proposed Tasman Lease
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, The City and County of San Francisco (City), through its San Francisco Public Utilities Commission (“SFPUC), owns real property in fee located in the City of San Jose, designated as SFPUC Parcel No. 122 ( SFPUC Property). The SFPUC Property is identified as Assessor’s Parcel No. 97 -84-029. The SFPUC operates two subsurface water transmission pipelines in the SFPUC Property; and
WHEREAS, The City, through the SFPUC, as landlord, and Cisco Systems, Inc., as tenant (Cisco), are parties to a 40- year Right-of-Way Ground Lease dated April 1, 1997 (1997 Lease). The 1997 Lease expires in 2037. The SFPUC later designated the 1997 Lease as SFPUC Lease No. 3772a; and
WHEREAS, Under the 1997 Lease, the City authorized Cisco’s use of approximately 4.41 acres of the SFPUC Property (Original Premises) for parking, utilities, landscaping and ingress and egress to and from adjacent buildings and driveways. Cisco has assignment rights under the 1997 Lease; and
WHEREAS, In December of 2025, Cisco sold Buildings Numbers 8– 11 and certain parking lots on its property located adjacent to the Original Premises to Tasman Zanker San Jose, LLC, a Delaware limited liability company (Tasman); and
WHEREAS, As part of the sale, the City and Cisco amended the 1997 Lease (Amendment No. 1) to bifurcate the Original Premises into two areas: the “Remainder Premises, consisting of approximately 1.22 acres, and the Assigned Premises, consisting of approximately 3.092 acres; and
WHEREAS, To better facilitate ongoing lease administration, under Amendment No. 1, the City and Cisco agreed to remove the approximately 3.092- acre Assigned Premises from the definition of the Original Premises. Cisco will continue to occupy the Remainder Premises under the terms of the 1997 Lease except for a new prorated rent to address the fact that Cisco is now only occupying the approximately 1.22 -acre- Remainder Premises instead of the entire Original Premises; and
WHEREAS, At the same time, Cisco assigned its interest in the Assigned Premises to Tasman via that certain Partial Assignment and Assumption of SFPUC Lease No. 3772a dated December 17, 2026 (Partial Assignment). As a condition of the Partial Assignment, the City required Tasman to enter into a new 11- year proposed lease for the same use of the Assigned Premises on the City’s current form of lease for an annual Base Rent of $348,152.89 . The proposed lease ( Proposed Tasman Lease) will have the same expiration date as the 1997 Lease; and
WHEREAS, The SFPUC desires to enter into the P roposed Tasman Lease
because it is drafted on the City’s current lease form, updating several outdated provisions of the 1997 Lease; and
WHEREAS, This actio n does not constitute a project under the California Environmental Quality Act Guidelines Section 15378 because there would be no physical change in the environment; now, therefore, be it,
RESOLVED, That this Commission hereby awards the Proposed Tasman Lease to Tasman Zanker San Jose, LLC, a Delaware limited liability company, for an annual Base Rent of $348,152.89 and a term of 11 years, for an approximately 3.092 acre- portion of SFPUC Parcel No. 122 (APN 97 -84-029), subject to approval of the San Francisco Board of Supervisors under Charter Section 9.118; and, be it,
FURTHER RESOLVED, That this Commission her eby authorizes the General Manager to enter into any amendments or modifications to the Proposed Tasman Lease, including without limitation, the exhibits, and to enter into any other related documents, instruments, memorandum or other agreements reasonably necessary to consummate the transaction contemplated in the Proposed Tasman Lease, that the General Manager determines, in consultation with the City Attorney, are in the best interest of the City; do not materially increase the obligations or liabilities of the City; are necessary or advisable to effectuate the purposes and intent of the Proposed Tasman Lease or this resolution; and are in compliance with all applicable laws, including the San Francisco Charter.
I hereby certify that the foregoing resolution was adopted by the San Francisco Public Utilities Commission at its meeting of March 24, 2026.
Director of Commission Affairs
San Francisco Public Utilities Commission