report. prior to the amendment today, there was absolutely no legislation pending before the board of supervisors which requires that anyone contribute this to the america's cup. just as a quick analogy, the supervisors -- if the mayor cents over the annual budget, and said it was $32 million short in revenues, then the board should not worry because it is intended that the city will raise the 32 million for private donations. there is no way that the

comptroller can certify this. the budget would be out of bounds. supervisors, just today there are reports saying that the organizing committee has raised the $32 million in question. there is a letter related to a commitment of the $32 million. that $32 million relates to a memorandum of understanding. although i did not make a recommendation in my report pertaining to this 32 million, i am recommending that the board of supervisors amend any agreement of hosting the america's cup to require that america's cup organizing committee pay the city and county of san francisco $32 million to defray a portion for hosting the america's cup in san

francisco. i was unaware that the president was making a similar recommendation. another difference of the reports is that the office of economic and work-force development is cutting the event authority with making up to 150 million in infrastructure improvements in the original host agreement and now, $55 million in the subsequent alternative number waterfront agreement. let me state for the record that we'd knowledge and belief that the north and waterfront agreement is superior to the previous agreement we reviewed. there is no question about that. although the authority would initially invest 55 million under the alternative agreement, the budget and legislative analyst points out that such up-

front expenditures would likely be fully reimbursed by the city general fund over the next 30 years. this could occur because under the proposed waterfront agreement, incremental property tax revenue would be transferred to the as and authority and the city to reimburse them for the costs of the infrastructure improvements. since the city could end up with no infrastructure costs, all of the allowable incremental revenues would be available to reimburse the event authority and could potentially result in the full reimbursement of the $55 million by the city's general fund. therefore in essence, this is very important, the event authority could pay nothing for

and for chartres improvements for the proposed america's cup under the alternative waterfront agreement. we had previously suggested four options by the four supervisors and such options would apply to the north and waterfront agreement as well as the host city agreement. we changed option one listed on page 5 of our report which currently states "amend the proposed agreement to require the golden gate yacht club to be successful and thereby empowered me by the venue. this requirement can be tied to long-term development rights of four properties. the host city currently gives them the authority the option of using san francisco for the 35th america's cup if they are successful.

implementation of our current option to make returning this a requirement. we now suggest that instead of requiring that it be held in san francisco, the city should be provided with an option to hold the america's cup in san francisco as noted in our report. we suggest a set of the authority have an assumption, the city should be provided with the option. subsequent to the city having completed the evaluation and the final cost and benefits. the second is to amend the agreement to require that the event authorities played the port of the fair market value.

there's the possible consideration to providing the authority with the rent credit. option three is to consider creating a temporary assessment district in the vicinity of the america's cup -- there will be a huge benefit by holding this in san francisco. we estimate 1.2 billion. we estimate that the businesses that are going to gain and benefit should participate in some of the costs to the city. our option four is to structure an agreement to enable joint funding from nearby jurisdictions. similar regional financing was used in hosting the america's

cup in valencia, spain. this would result in a net loss of directly for the city's treasury and an additional loss from granting a 66-75 development rights to defend authority without charging rent. we considered that there would be an offsetting credit. we consider approval of the proposed resolution to be a policy matter for the board of supervisors. we believe that hosting the america's cup in san francisco is fiscally feasible. that is a requirement under the board's own laws. we emphasize that such fiscal feasibility is predicated on the city using its general fund and other money to pay for the cost being incurred directly by the city's treasury.

ha >> i have a summary of our report. there is the fiscal feasibility analysis of the proposal. >> we have heard most of this already today so i'll not go through the details. this is the agreement as originally submitted to the board of supervisors showing the civilities -- facilities timing and it is start as early as 2011.

this will end in september, 2013. we have reviewed the benefit from hosting the event as prepared by peak in economics with the bay area economic institute and we have made some adjustments but largely we are in agreement with what they can make with in terms of expenditures of 1.2 billion. the report was 1.4. we came out with 800,000 labor supported. that is different than jobs created. we are assuming that there are many jobs in place which would absorb some of the increased demand related to the event as well as some new jobs being created. we're not assuming 8160 new jobs. our estimate of $19.5 million in the city taxes were generated as a result. key variables are listed here

and this could make a difference in the estimate. we have seen 12 syndicates. if that goes up or down, that could affect the spending. the obligation in the original host city and fannie agreements are listed here. , but the city and the fed authority and has been mentioned, the cost to the port for relocating their facility on pier 50. other improvements and dredging costs were substantial. their cost to the police department, plan department of environmental review, preparation of the people plan to coordinate the movement of the businesses and spectators and to have the city security course area and with all of the state and local agencies which would be involved. the fed authority requirements

under the original agreement included construction of the breakwaters, the strengthening of certain pearce and other repairs teams necessary. also new expenditures for the city, $77 million. also those are not the cost of existing staff, existing cost that we are incurring any way such as contractor costs and other services. for the event authority, the original agreement was $150 million. that includes the construction of breakwaters, strengthening appears 30, 32, 50, and other repairs. this to allow some flexibility and determine some facilities to be used and repairs to be made.

the city costs estimated included poor facility investigations and costs for other city departments, marsha the police department and the mta. this resulted in a total 77.3 million in costs, new costs, and offset by the estimated revenues, primarily sales tax and hotel tax related to hosting the events for a net cost of 57.8 million. we also reviewed the long-term development rights entities have been discussed some what already today so i will quickly say how we approach this. we looked at 3 which would have been transferred to the event authority under the original agreement and they are listed

here. the term was that no rent would be paid to the ports. incremental property taxes would be used to reimburse the event authority for an least a portion of the $150 million required expenditures. recent the highest and best uses of the three properties as identified by the real estate consultants. these were the uses as assumed. pier 32 had a mixed use and this would occur after 10 years of releasing the facility's construction for the event which would be on a shorter-term basis. on pier 50, the assumption was a

hotel the assumption was the building which had been referenced today. our analysis was to compare those developments and the present felly of those and the new city taxes generated by with the benefits of doing nothing which is not have in the event of three takeover. instead of them to shorten the building wall on c-30, going through a competitive process would have the same results.

the results of analysis shows $66.1 million in value. we have some updated values that came out after the document was released which was increased to 72 million. the present value of the alternatives, not having the event of three takeover those properties amounted to $109 million and a net loss in value of 43.6 million which would be reduced to 37 approximately after adjusting for the new numbers. there has been a number of analysis of these long-term development rights that have come out and they show different numbers at different times. there is a common thread which is showing increased tax revenue different assumptions have been used by different groups that have done them and i

just want to point out that they're showing some additional value and additional revenue related to the development system by the advent authority. our conclusion is that the benefits are greater from not doing it than doing it. also, we have had some disagreements about including the value of the hundred $50 million expenditure that the event authority was required to make as part of the agreement and we did not include this very purposefully or belief that this was a benefit to be counted because the port under this agreement would not be receiving any additional remuneration because of the improvement to the assets. and least some of this would be repaid through the incremental property tax generally.

part of the assignment included a review of the fiscal feasibility analysis using the five criteria from the city's administrative code which requires an assessment of direct and indirect financial benefits. the construction costs, available funding for the project, long term operating and maintenance costs, and impact of the project on debt load. the results of the project are shown here -- direct and indirect financial benefits, as already discussed. that was the net cost to the city relative to the estimated new tax revenues. city construction costs of about $47.4 million, again, largely the port for the original plan. available funding has not been identified. the port had indicated that they could issue debt for about $25 million to cover their costs

through certificates of participation. that is the maximum they would be eligible for, so we identified that. the assumption for the rest is a transfer from the general fund, as is allowed by the administrative code. long-term operating and maintenance costs -- we identified none because largely, the properties are transferred, the new landlords would bear responsibility for it. not the landlords, lieutenants, excuse me. finally, on the debt load again, the potential $25 million certificates of for dissipation issuance would increase the city's debt by $25 million. we did get last week the proposed northern waterfront alternative agreement. of course, that was not including the amendments that came forward today. this was as advanced by the port

commission at their november 30 hearing. there are differences in what events and what facilities will be used. you have heard much of this already this morning. moving it to the northern waterfront. the properties that are proposed do not require as much repair and improvements to be used. the race timing would be approximately the same. some of the same facilities would be used as in the central waterfront plan, but to a lesser extent and therefore require less in the way of infrastructure improvement. some of the obligations, and as we showed for the original proposal, some of the obligations for both the city and event authority are listed here. what changed -- the big significant change is the movement of the dredging costs, which are estimated at $16 million from the original proposal are shifted to the event authority, and that is in

both the agreement that -- the no. waterfront alternative agreement as proposed by the commission, as well as the document you receive this morning. this is a comparison, then, as best we could do last week with the two agreements that we had before us. the $57.8 million is the net cost from the original host city and the new agreement that we estimated for the no. waterfront, and this is assuming that the event authority assumes the dredging costs, which is being proposed. i think it has been stated already today that this has not been endorsed by the event authority at this point, but it is in the draft agreement and is recommended by the port commission. if that occurs, the net cost would drop to $11.6 million. if it does not occur and the

dredging still is a city cost -- by the way, it would be higher at the northern waterfront alternative then it would be with the original plan -- then the city's net cost would be $47.6 million, assuming that the city incurs all the costs at the high end of the range of estimates from the port. for the long term development rights, the change. in the northern waterfront alternative agreement, there are ~ will properties instead of three that would be transferred. pier 50 was excluded. there are lease payments required now which were not required in the original. the lease payments, however, would be offset to some extent by the repayment -- the credit to the event authority for the $55 million that they are required to spend on infrastructure improvements.

the incremental property-tax could also be used under the terms of the property agreement for repayment of the $55 million, said that would also have some impact on the city, but we do not have the comparison of this alternative versus not transferring the properties to the event authority as there were some details that still are not available or at least had not been worked out by the time we produce our report about these amounts and how that would be structured, so we can include the lease revenue that will be coming back to the report. that is the summary of our report. i can answer any questions. supervisor mirkarimi: i think we will reserve our questions. thank you very much. we understand there may not be too much to weigh in right now from your perspective. is there anything you would like to speak too quickly? >> yes, thank you.

we did do a report, which we issued this morning, that attempted to measure the fiscal impact of the original host city agreement, and the version of the northern waterfront alternative that was approved by the port commission last week. that is not the version that is before you, and our conclusions that we drew in that report were on the basis of modeling two proposed agreements that are really no longer in place. the consequence -- with your forbearance, what i would prefer to do is take a few days, see how the new agreement affects our model, and issue a report at that time. i would be happy to answer questions then. supervisor mirkarimi: we are discussing whether we hold a special on monday or somehow facilitate additional information for our board meeting on tuesday, so we will hopefully know that before the end of this committee hearing. and on controller, same thing?

anybody would like to speak? no? ok. >> leo robinson, budget and analysis division. i deferred to ted begin on this in terms of waiting for his updated report. supervisor mirkarimi: very good. think the moment most everybody here is waiting for is on public comment, so i'm going to read the comments as they were handed to us and corrected. [reading names] just come up one after the other. do not hesitate, and i recommend may be standing in the aisles so that we are able to expedite this. >> good afternoon.

supervisor mirkarimi: if you could start the time now. >> yes, i was born and raised in san francisco. i'm a member of the golden gate yacht club and the st. francis yacht club and the st. francis -- san francisco yacht club. i have been part of five america's cups, and in the mid- 1980's, i was the general manager of the first challenge for the america's cup. this is a very historic and exciting opportunity. set aside what you know about the grand 159-year history of the america's cup because its san francisco gets to host the america's cup, in our city, we can transfer the america's cup on the most exciting, popular, financially viable america's cup

ever. there are three reasons why this is the case -- our natural a minute, our reliable wins, and a spectator-friendly, spectator- oriented race course -- our natural arena, our reliable winds. this is a great contrast to the offshore races, which have been characteristic of the america's cup until now. the races are all 20 miles offshore. a spectator could ever see them. secondly, reliable wins. in newport, about 40% of all the races were canceled. in valencia, half of all the races were canceled. by contrast, the reliable wins in san francisco, averaging 20 knots on a summer day, permitted a schedule of summer

race days. reliable race days would present a media coverage, generate bigger audiences, improve sponsorship a dissipation and potentially enable more teams to compete for the america's cup here. lastly, our spectator from the course. by creating a spectator- oriented course along the northern waterfront and essentially keeping boats so they could not go below san francisco, we could have a media-friendly event, which would make this the biggest in the america's cup history right here in beautiful san francisco bay. supervisor avalos: thank you very much. next speaker please. >> i'm with latitude 38 sailing magazine and have been sailing on the bay and enthusiastic supporter of of course having the cup here. i just want to make note -- it has been noted several times, we know the greatness of having a championship team in town. sanford's is good giants just

prove what value having a championship team can be, and we now have a championship sailing team in town, and i would like to know what it would be like if we had delayed any thought of not hosting the world series here or what if we had not be it -- built that beautiful ballpark. these facilities become great assets for well into the future and you do not know when they are going to come into use. the giants just prove that. also, we had just a few days to plan to host the world series. we have two three years to plan to host the america's cup, and that leaves a great time to create the economic benefit. lat 38 works with a few hundred small businesses, of which we are one. we all know the economy is tough. it has been tough for all of us. this could provide a huge shot in the arm for our businesses and many businesses be on the waterfront, and we all look forward to the approval of this process.

also, i would like to note with the three years coming to plan the cup, that there is numerous people that come from around the world there already has a place to start business. the san francisco bay area is a huge creator of new businesses, and all they need is a green light. there are loads of on the burners, and people that we hope when $1.4 billion is on the charts as a projected income, that we can blow by that number. i think the san francisco area knows how to create businesses, and i think the city and supervisors have done a great job, and the mayor's office has done a great job putting this together. we look forward as businesspeople in the bay area to take full advantage of the opportunity, you very much, and i look forward to watching the america's cup. supervisor mirkarimi: after this next speaker, please line up. [reading names] >> good