>> the director of the redevelopment agency is here to talk to you about the status of the current issues of the planning department. we will be able to answer questions and then we will be able to get into the discussion about treasure island after that. >> good afternoon, commissioners. i am from the redevelopment agency. i am going to try to give you the version of the story. i can speak for days on this. one version gives you a snapshot of what the governor is proposing. this is what the responses have look like -- looked like. particularly from the city and county of san francisco. we can finish up with a little

bit of conversation about the implications to san francisco. that depends on what actually happens. we will start within this proposal. there are a lot of pieces of the government that proposed to it get these redevelopment agencies. the first is the elimination of redevelopment agency's effective july of this year. the second is the abolishment that they have an existing complication. that is financial in danger. some are contractual in nature. there is a desire of going through the process of trying to underline the agreement. that would be difficult to do. the third component of the governor's proposal talked about

the creation of successful entities that would be responsible for carrying out the obligations of financial and contractual agreements. if you look at how this is put together, the success it is agreed viewed as a shell. the fourth piece is quite interesting. it has not gotten a lot of oxygen so far, in the media and the debate in sacramento. that is the notion that a local jurisdiction would be given the authority to go out to the voters and ask for new taxes in order to engage in economic development. they would be able to get those

funds and create these funding streams with 55% voter approval rather than two-thirds voter approval. there are other pieces in the proposal. those are the four major components. that proposal was released on january 10 of this year. i know because it was my birthday. there have been responses all across the board. the two main ones in sacramento are the california redevelopment association and the california league of cities. they took a pretty hard core line in response to the governor's proposal. they told their members not to negotiate. it was a bad idea and it was illegal and it was bad public

policy. the top 10 largest cities in the state took a more nuanced position. san francisco was included in this. in a budget climate where there is a $26 billion deficit, child- care, k-12, and other health and human services are on the table. the notion that redevelopment would be a sacred cow would be a tough pill to swallow. it would be tough to negotiate with the state. negotiating around the end of redevelopment. they ended up meeting with the governor. this was shortly after the proposal. they were coming up with alternatives.

our office, along with agencies that represented other cities spent quite a bit of time coming up with alternative proposals that spoke to three issues. one was an immediate way to alleviate the problem in regard to the state budget in the fiscal year. you think about ways to adjust the redevelopment that is financed in order to create longer term funding streams for the schools. there is a portion of property tax that gets diverted from schools would be alleviated. we have spent a fair amount of time talking about reforms. at the end of the day, a package was put together that refinancing could get more than

$1.7 billion to the state to this fiscal year. tens of millions to schools over the next few years. some reforms have focused in on affordable housing reductions, greater transparency, and limiting the size and scope of redevelopment in the state. that proposal did not get much momentum in sacramento for a variety of reasons. two of which are important to note. ironically, the proposition that was passed by the voters in november basically said that the state cannot take money from local governments in order to balance the state budget. it turned out to be a problem because we could not give money to the state for constitutional reasons. that was pretty ironic.

the state is not allowed to finance or balance the budget. beyond the constitutional issue on financing, it was made clear at the governor's office that they did not have an interest in financing the state budget. that became an issue that we could not work past. all totaled, in addition to the proposal, the big tent city mayors came up with, there were probably at 1.27-30 alternative proposals floating around sacramento. there are two that seem to be under consideration. one from the california redevelopment association and one from the city of long beach.

they mirrored one another in a couple of ways. they are both voluntary. they are both a two teir structure. another tier has to deal with the portion of redevelopment that goes towards affordable housing. this proposes a voluntary one- year breach direction of affordable housing at 20% directly to schools. the long beach proposal gives a longer-term of the reed

direction of the funds, a portion of which would go to the state to help balance the budget. another portion would go to a new statewide fund. the city of san francisco at this point has not officially gotten behind either one of those alternative proposals. i think the posture is to see if either one of those gains momentum. to see it if that will work for us. the two-tiered structure of the affordable housing component is the one that we have the most harbor around. we rely so heavily on that to produce affordable housing in the city. the real direction of those funds is a cause for pause for

us. in terms of status, there has not been much action over the last couple of weeks. the reason i say there has not been that much action is that the governor has not voted to eliminate the redevelopment plan. this ended up one vote shy of the two-thirds that was necessary to pass the governor proposal on redevelopment. the way this is put together is that it requires a two-thirds vote. they could propose the elimination of redevelopment. they also proposed the redevelop -- redirection of tax dollars. in the senate, the governor is even further away. they could get to the 2/3 if

necessary. there is speculation that the governor may redrafted this bill if necessary to focus on the elimination of redevelopment and not affect the property tax dollars. that will lessen the financial benefits to the state in a scenario like that. it would be about whether they would lose the vote and get a majority under that scenario. where things are right now, we anticipate a pretty prolong state of uncertainty. in some ways, that is better than the elimination. in a lot of ways, and that is not a good scenario as well. the uncertainty, and just from a personal perspective, is very tough on the agency's staff that are wondering whether or not they have a job in the future. just as importantly, the

uncertainty creates a very difficult situation for us in terms of negotiating new deals and negotiating things we have already negotiated through the pipeline. the uncertainty is not good for the bond market. the uncertainty is not good for investors who are looking and at investing in projects with a public and private partnership. the uncertainty over the last few months has meant that we have to spend more time clearing out our pipeline then working out deals in the future. in terms of implications to san francisco, i think some of them are already coming to pass, even without the votes that take place in sacramento. in areas like the valley where we are in negotiations you can

see the development. that makes negotiations pretty difficult. negotiations with affordable housing developers and we have a large land area deals as well. i want to close by talking a little bit about where things currently stand in terms of the specifics of the bill that is associated with the governor's proposal. that has implications for san francisco as well. when i talked about in the beginning was the four components of the gov.'s plan. the two metal components is how the existing obligation is to find and talk about. as well as what the role and responsibilities are. i just raised a couple of examples.

if there is a very narrow door of obligations and commitments, which could see a situation where only portions that we are working on in the city and county of san francisco make it to the other side. i want to emphasize how important this is. we have gotten what we believe is an existing obligation in terms of commitment of the money for and tax commitments for infrastructure and things like that. what we do not have place are the subsequent dea's with non profit housing developers. we do not have in place right now, we have to bond into the future the affordable housing.

that is under that this position and development agreement. the worst-case scenario is a scenario where the project gets through the door. you can issue bonds into the future to meet our affordable housing obligation. that is a very important issue that i think is very important for everybody to understand. related to that is the powers and responsibilities of the successor entity. if they do not have the ability to bond or the language is so ambiguous that whatever gets adopted, it is unclear to investors whether the bond commitment can actually be met, the process has stopped. we will have obligations and contract in place. we will not have the mechanisms

to implement those contracts. the other thing that is important is the two issues that relate to this commission. they are completely silent on the issue of entitlement. if the entitlement is not clear, and development stops. there is still quite a bit of work to get done to make sure that if this is something that moves forward, it moves forward in a way that allows us to implement what we think is important and enforceable obligations that are currently in place. i will stop there. the implications are pretty broad for san francisco. there are no actions that are going to be taken within the next few weeks in terms of what we're hearing. the governor is focused on an extension of the tax rate. we will see this come up again

in june. thank you. >> thank you. that is very informative. a couple of questions in regards to successor entities. there is a provision that the governor is thinking about. they could still keep giving the interest out. there is some sort of provision where if some of these moneys were spent from successor entities as part of the completion of something that was existing, the governor has the ability to look back and disallow it. >> you are absolutely right. what is happening at the state level is that the it folks that are working on this stuff are

mixing a different kind of land use and contractual principal. they are confusing and vesting rights with contractual rights. for lack of a better word, the project. what they want is to be able to have some type of subjective way to look back at approvals that have already been made by the redevelopment agency to undermine some of those. this will result in quite a bit of litigation up and down the state if the move to do that. your point is right. in addition to having this review, t