opportunity to get this developer to participate and potentially find a bond purchasers. whether it is the general contractor or another interested party, i will buy an rfd bond. when the increment is instead of a small portion of the public from getting built out, we could double or triple the size of the improvements. there is another advantage, it is not just that people will be able to improve and enjoy the public realm of the might be able to do it cheaper. we could do it all at once.

that is probably the simplest explanation of how this would work. we will be working in good faith with the project sponsor to see if we can achieve such an arrangement. the result would be a significant improvement in the conditions on rincon hill >> we have one speaker card. is there any public comment on this item? i wanted to express my gratitude towards the office of workforce development.

we are sort of an orphan plan area at in that there is no official representation. i am very pleased and happy that we are the pilot area and we hope that this is a great success. >> thank you. is there additional public comment? public comment is closed. >> i was able to hear a presentation last year when this idea came up to the board of supervisors. the time i reported this as a pilot project to see if this could create some of the infrastructure that is needed. there has been talked about getting rid of redevelopment and talk about would these be a possible financing source for infrastructure.

there is debate about whether some of that could be used for portable housing. i still support this as a pilot project. what i think that is being worked on is criteria. this is to fund infrastructure needs adopted in an area plan such as the eastern neighborhoods, the market plan. my concern is that there are always ways to abuse the best of tools and mechanisms. i want to show you a different map. i will pass out a letter that talks about this in great detail. the port land is in yellow, the rest of the site is in red.

a proposal is to create this for the project. this would take all of the land for the cruise ship terminal. they have projections of tens of millions of dollars. the fact that more than 20% would go to something other than the general fund when we are cutting programs desperately throughout the city. we're looking at the criteria for what is and is not in acceptable. i do not have a problem with this. i think that this will offer a laboratory for us to look at this mechanism. i wanted to raise concerns about the other project which i don't think are appropriate.

>> the use of the term we really raises questions for me. we seem to have abdicated these large projects. this is not the mayor's office, this is the office of economic development. it sounds like big plan areas have lots of slack to deal with big developers. the planning department is out of the flow. you have a presentation but negotiations, the work is done

between the developer and a staff member for an office that has the commission over it. this is a big problem as we are heading into an area where there is no redevelopment and that is coming. there is a lot more opportunity for the planning department becoming irrelevant. the big plans are done five, 8, nine years ago. the implementation is really not the focus of the planning department. we still do not have any transit. we will have parked next to the buildings that are finding them. they will benefit from the parks and they will have a nice park right next to their building. at some point, the public needs to be at the table and you are

at it right now. really, the seven of you. for whom will pay attention to how this all works out? we have 20 years of history. there was a lot of concern by the planning commission. we are now at a point where you approve buildings, a big buildings. basically, you walk away from it. the next round looks like it will be negotiated by an office with no commission and you will have occasional reports. he says that we will be negotiating and dialoguing with the developer, my question is who is that? >> thank you. it is there additional public

comment? >> i am the owner of the metropolitan. i want to follow up on what this lady has just said. when i bought into that tower in 2004 and here is the san francisco chronicle, the ideas on furled and then i have the original plan here which dates to november of 2003. this was very critical in my decision to purchase. i have paid over $40,000 in property tax. some of the things that i lot about it was a center block to allow us to get down to the embarcadero safely.

this was my decision. i am excited to hear what the previous presenter was talking about. and the next presentation, i will make some comments specific to the developer of the issues that they have on their previous project which is the metropolitan and serious unfinished business with respect to that. we have to do something to deliver to this.

people come here to make it a community and i am particularly concerned about first street. there is a divide between this project and the rest of rencontre hill -- rincon hill. >> it is there additional public comment? seeing none, public comment is closed. >> i have a question. we had this discussion with treasure island. i would assume that the 57 sense that we're able to utilize this is a product and we can utilize

a higher percentage if we were able to use these for -- is that true? >> we are in the best position of any city in the state. we have 57 cents to play with. many cities have even less. assuming that we development goes away, san francisco is actually in the best position to do the public improvements because most of the other cities don't have enough of a share. we're actually in better shape. this is applicable to any that

might occur within the city and county of san francisco. this is not just restricted to a certain one. that advantage exists anywhere in the city. >> there is an argument that we can increase the percentage up to about 64%. 65% if it is diverted before it is sent to the three special funds. this ranges from 57 cents to about 64 cents that we have to use. >> the timing might make it a higher percentage. you pointed out very well that

part of this will be specific to the area in question which is a large amount but then as time goes on, the funds flowed into the general plan which is the vast majority generated by the tax increment created becomes the lion share of what is produced. we are not doing this at the expense of the general fund and it allows us to divert a significant amount into the improvements. >> our fiscal impact study was done as part of the lengthy hearings which was peer reviewed by the comptroller's office.

and there is also the additional costs related to fire, public health. all which will be accretive for the city. we all sympathize on this. a portion of the money would have gone towards accelerating development of that public improvements, those trees, those parks and that sidewalk. i would like to say that the whole purpose of this partnership is to address what we believe is a deficiency. we have a great plan but we have not been able to implement much of the plan. this would address the concerns of the residents like that gentleman, jamie would occur, everyone else waiting for those changes.

>> the requirement is that these improvements are made. you get those improvements at the front and rather than when the units are sold or these other things that had to do with it the earlier ways that infrastructure improvements were made. >> yes, we will try to get more of them on the front and through this partnership structure. our office along the comptroller's office, plan department, budget office, is who we mean by "we." >> i see that -- is included even though the entitlements occurred earlier.

i would assume that an existing project would not be part of the ifd. >> , only future projects. this is not within the area plan, it was a special used district. those people need sidewalks. it would be helpful for them to contribute towards the build out. that was a distinction i am trying to bring up because i remember this coming up as a separate entitlement. i think the concept here is that it would be included because it would be part of the ifd. it would do its part to

continue. we would need approval of the property owners and that is how these work and they have to vote over the residents. >> the property owners voted on this. when they approved the formation, there was also a vote that happened to be 100% approval. those for the 17 parcels that i mentioned. this has a lot of potential. i want to point out to the public, it is important to note that each one is specific to its area for this even if it does not preclude agreements that were made that only for the general fund but also in general, this is a means to direct its towards the area as

opposed to situations where moneys are taken out and used in other areas that might be adjacent to somewhere else in the city. >> this can only be spent on the projects that are outlined in the infrastructure financing plan which it serves as the constitution for this and that list that i showed you, those are the only projects that can get funded. those are the projects that this commission approved as part of the plan. >> we know from our discussion last week that these cannot be part of a redevelopment agency. at least they cannot become ifd's right now.

>> if you are in redevelopment area, either currently where in the past, you cannot form an ifd. >> can you clarify the bonding limit. is that specific to this? >> that is specific to the rincon hill ifd. there are estimates for our portion. we wanted to have a contingency. if the construction costs or more expensive, we would like to bond a bit more.

>> the 3.9 million associated, that would come out of the -- >> yes, that would count against that cap. >> the 3.5 million would go to the other improvements that are part of the plan. >> if you turn to page two of the memorandum i have given you, we're calling this a work in progress. this is one of the most important things to be done with the planning department leading which is prioritization of all of those facilities.

ultimately, it will be the city dictating which happens first. if there is a pedestrian safety need on the intersection of first and folsom, for example, we need to be able to prioritize how the bill that occurs based on independent criteria. that is actually part of the partnership and that work will be done by the planning department staff. >> if this was successful, we would be looking at doing this with other developers in the area. >> that is our hope. if we can get the first several projects moving forward, we would be very close to having completed the round. this is within five projects.

>> this sounds great. i would like to ask you about in the actual cost of this mechanism. you mentioned that the bonding would spend 30 >> depending on s it issued. the problem as they exist under the current law is that you only have 30 years from the date of the formation of the district and not even the issuance of the bond. if it took another five years for us to find a project and to find a bond purchaser, that bond would necessarily be limited by the light and it would only be 25 years to amortize the cost.

>> the real question is for me. there is the face value of the bond and at the end of the bond, there is the actual cost. how much in reality does it cost at the end? you have the bond and the save the value of these products. how much in reality is the actual cost of what you are buying? >> we have the infrastructure plan approved by the board. to give you an example -- by the way, this is a new financing mechanism and you are all aware of that. this situation is different than treasure island where you have a huge area that represents the

bond. what we don't know yet is the interest rate. the interest on that mortgage that a private bond buyer will pay. for most of our calculations, we have assumed an 8% interest rate. we have assumed that because we wanted to be conservative and not assume the better rate. part of the purpose of the partnership is to get some bond sales out there so that other investors can see that this is not that the novel of a concept. this is like a bee development bond. essentially, and investors can be like sheep. they want to see if someone else has done it. part of the partnership is to try to facilitate those early on sales so essentially the borrowing costs go down over time. the estimates we have for this

financing district, this is assuming about a $15 million total bond issuance. we anticipate that principle and in interest, the life of this district, the total cost would be about $31 million. >> that is relative to the high cost, there might be ways for you to lower the finish point. how many of these bond issues as urgent as we have other areas can any one city undertake at one time. is there a limit to that? >> the board of supervisors passed to approve the issuance. there is no technical limit. theoretically, if we had these

over the city, these could be issued as bonds as the increment develops. the paradox is the more of these bonds that are sold, the more marketable they are and the more competitive the interest rate. >> that is based on the belief system that you think that high debt is positive because you are showing results. >> anytime you borrow to buy now, you have to pay interest. implicit in any project, whether it is a revenue bond for a parking garage or a redevelopment finance bond. like any other financing

vehicle, there is interest involved. i think that the question is, would they be there it -- would they rather seen happen sooner rather than later? >> i appreciate you explaining. >> this is not a redevelopment area the types of funding mechanisms we're talking here is pretty typical of what we saw inside of the redevelopment areas to do these types of developments. i wanted to make sure that you knew based upon the earlier comments that the department is very much engage with this. this whole idea of this is a way to implement the department and the commission's plan and this is certainly a funding mechanism to talk about what many people in this room have been talking

about since i have been here or even longer. it is important for us to talk about how this will work. this is important that we are very much engaged in this discussion and these are the improvements that the plan calls for. >> this has been in place for quite some time. it looks like it is going away. there's great interest in this approach. >> there has been some uses of this, maybe not locally.

>> attack increment financing is a broad concept that has been used all of the country. this is used in canada. this is not a radical concept. this is one way of doing tax increment financing. other states have either lost. chicago uses a different form. tax increment financing is a very old concept. >> this has been in place for a while although not utilized widely. this is not like we are creating anything new. >> thank you. >> thank you.