elaine and jonathan and monique in terms of calculating all of these potential impacts, and many of them have been detailed in the budget analyst's report. these are the impacts to the northern waterfront alternative if you add your 26 and 28 in as long term development sites. we project the bottom line is over the event, the launch to the port will be $8.7 million. that is down from about $14.5 billion in the original host city agreement, but it is still very significant and represents a sizable portion of the port's annual revenues. this table shows all related

city costs. i will discuss first be pier 27 cruise terminal. there's a synergy with the plans to develop a cruise terminal. we were excited when we started talking about pier 27. they want to have even viewing. they would like to have team hospitality sites where they are greeting some of their sponsors. meanwhile, we are planning to build a new international cruise terminal, and we appreciate your revenue funding appropriations to make this a reality. be our plan will be to conduct ceqa and build this and allow the event -- the authority uses for a limited time in 2013. the total costs are $75 million.

we have a shortfall of about $6.5 million that we would request that the city help us with. there are a tenant relocation costs of $1.5 million including claims and settlements. there is some debt issuance cost of about $800,000, and we project about $300,000 in staffing costs for a total of about $17.8 million in port- related city costs. supervisor mirkarimi: i think a number of us want to ask some questions about various variables on the math. supervisor elsbernd and -- i was going to wait until you were completely down, but you have triggered some interest, so we will delve in. supervisor elsbernd: the cruise terminal.

help me understand how entering into this agreement helps us get closer to the reality of a cruise terminal there and how if we do not, what that means. >> staff has been analyzing a number of alternatives for how to deliver the terminal at the site, and there are two options. there is a current very large shed now. many of you have seen it along the embarcadero. one plan would be to remove the front to create room for a major new waterfront park, and reuse that shed or portions of it as a cruise facility. the other plan developed by the city's consultant team and staff is to essentially take down that shed and build a new building. i think that the view of staff

is the the new building option at that site will provide a much more functional terminal that has a warranty associated with it. there are slightly higher costs to doing that new building. that plan will come before you in all of its detail shortly as planning to be heard at the commission on december 14. in essence, we think that' this plan to use the america's cup site here would help with the new building alternative in two ways -- one, the authority has certain infrastructure works required under it -- under the host city agreement. we program $7.5 million in authority costs to remove the shed to make way for the new building. that closes $7.5 million of our financing gap.

this $6.5 million city contribution would complete our financing needs. and the port has other plans, including security grants and related funding sources to complete the terminal after use for race-related purposes. we actually think this advances the cruise terminal projects significantly. it speeds the permitting process, and i think what staff are very excited about the prospect. it will create some issues for us in terms of how we handle close calls, and i can get into that later. supervisor elsbernd: how you handle crews calls over the next few years, but long term, this is how we get the world class cruise terminal that we deserve. >> and that we have been trying to get for the last several decades. ok.

overhead, please. we have a fairly specific staff recommendation for how to deal with some of these city costs under the agreement. the port has outstanding debts series 2010 a and b revenue bonds. we also have bond ratings. i think that director more year has worked very hard to try to improve the port for is a credit over the last several years. we recommend that the mayor and the board of supervisors approved a memorandum of understanding between the comptroller and the port -- between the controller and the port to cover some of these costs. we have submitted a draft for

review. we would hope to get that introduced to the board on monday and have it in your offices beforehand to review. essentially, the proposal would be that we would look at the rand the port would have received from the site if there were no america's cup. we would subtract any rent the port will be due from tenants that are relocated from the new sites -- supervisor mirkarimi: can you try to speak into the microphone? >> sorry about that. we would subtract from the rent that we would have received, any that we continue to receive from tenants who were relocated. and then we would subtract our increases in percentage rent. we do expect to see an increase in purchase a patient from restaurants at our retail sites and parking operators as a

result from the america's cup, and that will be a transfer to the city funds. by preserving that revenue stream, we are confident that the market will understand that the court is still a good credit. we estimate that payment to be $7.85 million over three years. the demo you would be binding pursuant to charter section -- the mou would be binding unless the port commission, the controller, and the mayor agreed to change it. the court will pay the tenant relocation costs, including leading costs. we estimate the cost at $2.6 million. we would also spend $61 million in bonds on the cruise terminal project that we just discussed. then, i talked about the $6.5

million city contribution to the cruise terminal project. we have done some fairly extensive work with our development staff and our independent consultants and bay area economics on trying to value development rights. you are going to hear more about this from ted ebit, so i'm not going to spend too much time on it. we look at a number of scenarios. i think it will be important going forward that we get appraisals of the subject property prior to entering into the long-term development agreement so that we have confidence about the valuation of the sites, but our estimates based on the scenarios that we

run, which we think are the most likely scenarios would total $61 million in likely development value, and you will note that under the northern waterfront alternative, they are spending about $55 million in infrastructure works, improvements to port property, so there is rough parity here. they are subject to commercially reasonable terms with a bad credit just like the exploratory and needs that came before the board within the past several months. this is the way that we'd normally structure our deals, and i think that staff can say with a high degree of confidence that we think that the port will be protecting the harbor fund in those subsequent negotiations. >> if i could pop in here, this

is probably the piece of the puzzle that -- i not want to say concern, but these are two seriously valuable pieces of property. talk to me again. forget about america's cup right now. what has been the process with these two blocks? why is it even available? why has this not already been developed? >> 30/32, the court has made it number of efforts to try to develop that site. currently, about a 12.5-acre parking lot just south of the bay bridge. we have some real structural problems. in early 2000, leading up to 2006, the court first negotiated and then into a lease to develop

a mixed use cruise terminal on the site. it would have been a two-berth cruise terminal, authorized by state law, including some office space retail uses and parking uses to fund the cruise terminal improvement. after we had a fully entitled project, all the way through the major permit that i discussed before and approved by the board, our development partner took a closer look underneath the piers and found that they were in a really poor condition and that the early estimates of the substructure costs were far too low and that it was not a commercially feasible deal, that they would not be able to get their investment out, so they essentially walked away from a fully entitled project. supervisor mirkarimi: when was that? >> that was in 2006. at the time, because it was

fully entitled, staff tried to shop that project to local development interests to see if anybody would build it. this was at the time our plan to get a new cruise terminal, so we were highly motivated, and there was no interest in the site. if we think it would be great if we could take advantage of the america's cup to get development that delivers a major maritime benefits to the waterfront, provides new public open space out of this -- supervisor elsbernd: talk to me about the general requirements in terms of public accessibility. i think there has been some thought that the property was going to be turned over to the america's cup, and you and i are never going to be out there again. what happens? what could happen there? >> there is a negotiation with

ports-. they have been through this process and of with the ferry building, the ball park, and there is a desire to see some of the pier removed. we expect to negotiate those public improvements as part of the negotiation process. we have also required that a long-term lease it year would be subject to an administrative approval so that this is consistent with the public trust.

we will insist and the normal process. there is a very specific plan on how we would see this. there has been a permit issued. we have a great new open space. this is a lot that is -- and his removed the trust use restrictions. we estimate the land value at 33

million. >> did the port commission feel like they were getting a fair value? >> under the proposed a host city agreement -- >> under the waterfront agreement. >> we view of the sea wall lot as one of the primary ways that the poor will get paid.

-- the port will get paid. >> what will the dog you be? >> we estimate the lands of you at $33 million. we would come back to you with a long-term proposal which would have commercially you reasonable terms. we think the process is there to make sure the city gets a good deal.

hamapier 28 was envisioned as a venue site. we had entered with the board's blessing in an agreement with

the international women's museum which tried for a number of years to try to come up with a development proposal for pier 26. they ended up walking away from that set of negotiations. this is about $50 million for pier 26. we would use the same kind of structure and bring this all back to you through a feasibility and review by the budget analyst.

they would have to make all of the improvements as part of the deal because once you start work of that magnitude, you will trigger seismic load requirements. these for unfunded in the capital plan. prior to the america's cup discussions, we have no development for these sites either. there is available tax credits to help some of the costs here. we think it would be fabulous to

save these historic resources. >> procedurally, these are a late comer to the whole equation. did -- that is a formal recommendation to the staff? >> there was already some interest in the waterfront alternative. we rewrote the city agreements to consider those the new sites but we did not have an opposite team to negotiate that version. in doing that, we took out a

20-acre development site. in removing 20 acres, we thought it appropriate for the city to be willing to offer another smaller affordable development opportunities and 26 and 28 are the recommendation of court staff. i would reiterate that support staff are here to answer any questions. we're all committed to seeing this project through.

thank you. >> is this the right thing for the port and the future of the port? >> i believe that it is and i would like to elaborate. some very good questions asked

so far. when we brought you the term sheet, this was characterized largely according to put way the team is accustomed to doing business. the deal before you looks a lot like the deals and that the city is accustomed to doing. i feel like we are sitting on an opportunity not just to take several of our assets for which we currently have no plan and get them accelerated into an entity which is well capitalized, has the resources, to not only use those assets but

also do this in the next couple of years. it is amazing to hear about fund raising for the ports. i think that 30 million is too low but we will call that his practice run. we are having a conversation about pork real estate. the waterfront property is unequivocal in this world.

the people in the families who work in this buildings and those generations that have lost their lives delivering maritime businesses are now third generations restaurateurs or have a horse and carriage, you name it, those people, their families, they live in your district and they are really important to us. for the first time, we are talking about a development deal where we are not begging for a maritime use. i am very happy about the state of affairs that we are in. this is an amazing dream come

true for us. there are lots of great opportunities. i hope that that answers your question. yes. >> the long-term legacy celts -- sites, what are the

prospects? >> i think this is very tenuous, i really do. we just came out the best real- estate cycle that we will see in my lifetime. the values are still troubling. this is a great location. this is a $100 a square foot just to touch it. 30% must be public access. it has to be a narrow list of uses. you don't get to to owned it, you'd get it to grant it. it is a very robust economy to bring this back into something. we had identified peers with which we had no viable

development plan. this lot is definitely a prized possession. we knew that we would need that area to get things that we all want and will like. i am really comfortable. i desperately want a new cruise ship terminal here. this goes back to the days before the gold rush. >> one of the things that i find puzzling is that we had in negotiatg