they have experienced up to 20% declines in that time. it does not take into account all of the debts that redevelopment agencies have. they take into account obligations that have been taken out by the 08-09 year. taking another pass at what the number might be, they cannot with a figure that was closer to $900 million. that number is important because if you take that into account, the proposal that was put together by the mayors, the proposal basically suggests that

agencies would take on an additional 5% fee. that fee would translate into a revenue stream of about $250 million a year. the revenue stream could be secured and to finance the $1.7 billion. one proposal was an additional 15% pass through on tax increment achieved brought in that would go to counties and schools. it would increase the amount of money that would go to counties and schools long term. the third dimension of the proposal was a set of programmatic reforms. it would reduce the size and scope of redevelopment by

putting a 20% cap on the amount of overall property tax revenue that could go to the development activities. there is a second component that focuses on making sure that the moneys that are dedicated to the production of affordable housing are spent that way. the third dimension of the proposal is a set of recommendations that improves and enhances decision making. we have spent quite a bit of time in sacramento, but gov.'s office. and last friday, there was a contingent from san francisco that included the mayor lee. just a side note, it is called that because they decided they

didn't want to be a part of it. anything that required a constitutional amendment that would allow the state to take local money in order to balance the state budget was something that they wanted to be a part of. supervisor chu: not on the programmatic reforms, but the others, an additional 15% would go to schools? >> 15% of the increases of tax increment from the 08-09 base year would go to counties in schools. just to summarize, i don't want to go into great detail, the proposal was not very well received from the department of finance.

there were probably at least three reasons for that. the prevailing point of view from both of those bodies was that the 5% and 15% increases would violate prop 22. prop 22 was passed by the voters in november, basically prohibiting the state from taking local money in order to balance the state budget. prop 58 does not allow the state to issue debt in order to balance the budget. constitutional issues aside, it was made clear by the staff and the governor's office that even if those constitutional hurdles weren't there, they are philosophically opposed to

issuing debt in order to balance the budget. those are the big issues thatsid the senate budget committees thamet, the language was introdd that goes along with the governor's proposal. i have passed around a summary that highlights the key components. just to hit the high points, what the bill basically does is is t makes good on a proposal to eliminate agencies by july 1. it also freezes activities after the signing of the bill. assuming that it goes through

the legislature, it freezes redevelopment activity so that new commitments can't be made. it creates a successor entities that are designed to wind down the activities of redevelopment agencies that are already in place. what we have been working on a, it has been at our office along with the city attorney's office. the intent that has been expressed by the governor seems to be out of line with the language that has been proposed in the bill. existing commitments and obligations would be able to move forward. the bill language does not allow that to happen.

i can go into a bit of detail on that. for projects like the shipyard, mission bay, trans bay, where we have agreements with developers, we have contractual agreements that require us to issue debt in the future in order to meet those obligations. the language in the bill doesn't completely cover the existing obligations that we have. the language is not clear about whether or not debt can be issued in the future. whether we are able to issue debt or assume land-use control and make decisions with regard to design and other things, a development of each of those projects would essentially stop.

what we are working on is an amendment that would improve the bill that would allow for the kinds of things that we are hoping for. in early sharpening the definition of existing obligations and clarifying what the roles, responsibilities, and powers would be. that is what we are working on at this point. we are working to come up with other alternative proposals as well as ways to strengthen the proposal in order to make that a viable alternative. i will stop there. if you have any questions, i will be happy to answer. supervisor chu: a quick question from me. i understand the point about how the trailer language is not really clear about whether or not it follows the intent to

allow existing obligations to continue on. given where we are, let's say the amendments were made and it clarify as there are existing obligations. what projects are considered obligated versus not considered obligated? >> this is a -- i will try to answer the question as best i can. it is a little bit unclear. even under the broadest definition of an existing obligation, projects like that are in serious jeopardy. the treasure island project where we don't have a development agreement is in jeopardy.

the revitalization is funded only through its first phase. we don't have the ability to issue debt in the future. we don't have a disposition and development agreement with a developer with alice griffith yet. that is something that would be in jeopardy. there is a laundry list of affordable housing projects that are in the pipeline that are in jeopardy. even the rosy a picture of what an existing obligation is and what the role of the successor entity in might be. work on 6th street, 3rd street, leland avenue would go away.

establishing a redevelopment project area is a pipe dream. there is a lot that won't happen even under the best case scenario. supervisor chu: i understand that we have about $100 million and affordable housing funds that are available that could be used for future projects. >> the way the system works, we have money that we have set aside for projects in the pipeline that have not been completely obligated. we have projects where we have spent money on acquisition or spend money on pre-development but haven't committed the construction financing yet. we are working right now to

further obligation those moneies so they are not vulnerable in the process of a sweep. but the big concern for the affordable housing point of view is that we would no longer have a dedicated funding stream. if you severely curtail the responsibilities of successor entities and don't find the asset management functions associated with affordable housing, we would not be able to manage effectively the 11,000 affordable housing units we are currently managing and doing eligibility work on. nor would we be able to produce

affordable housing. the concern is that under the governor's proposal, it severely undermines our ability to manage and develop. supervisor chu: the last question on the timeline, it doesn't allow for future obligations? what is time period -- the longest time period they could continue on? >> i'm not sure i'll understand. >> it prevents or freezes redevelopment activity from occurring after it has been signed? at what point -- >> when the committees have reconciled, they have voted, and the governor signs.

at the earliest, assuming all of this moves forward would be april. maybe early may. in terms of some of the political analysis, the governor's office and the finance department are marching forward. it is pretty clear that the senate democrats are on board with the governor's proposal. the fight still exists in the assembly. various members of the assembly have not indicated that they are willing to go forward with the governor's proposal. they're looking for ways to get the $1.7 billion through methods other than elimination. supervisor chu: i think there is a question from supervisor kim. supervisor kim: thank you, mr.

blackwell for being here today. at the narrowest interpretation, we are looking at the first stage of the shipyard moving forward. what other planning areas do we noknow the narrowest definition? >> you mean the language that was introduced today, if it is not modified, what will move forward? the only thing that we think from a large scale development point of view is probably mission bay. that one is even on the line. the reason i say that is because there is language that suggests you might be able to issue debt on a go-forward basis.

they need more certainty than is in the language right now. there may not be a market for the debt that we would issue a given the language that has been put out there. it is not clear, the language is mushy. it has a three-year statute of limitations of where the state could review the issuance and say it's invalid. i would say that that project is the most likely to move forward. >> becausupervisor kim: becausef the debt is issued in thtat area? >> we do not have substantial

completion. supervisor kim: there is also discussion about excluding former military bases. >> there is a lot of discussion about that. the rumors that we are hearing out of sacramento is that they are not looking to provide those kinds of exclusions at this point. i think that there might be special cases where there has been a lot of work that goes into it. or where there is an environmental impact report, a project area that has been established. the idea of a blanket exemption is not something that has been very well received. supervisor kim: what has been the discussion around trans bay?

>> in our meetings with members of the senate as well as the department of finance and the governor's office, we raise that issue. we actually have property that was conveyed to us and the increment that is associated with the development of that property will go into development of the trans bay terminal. it is a project that is on the fence and we will be working to make sure it is clear. one of the things that is hurting us right now, as you have read, many agencies have entered into a cooperative agreements with cities dedicating huge sums of money. sometimes billions to obligate

projects rather than the agency take on those obligations. they are mentioning those kinds of activities as things that they will try to undermine or lemonade through this language. the reason why we get caught in the middle of this, they are agreements that look like they are between the city and the joint powers authority.

supervisor kim: that property is not encumbered? >> wheat to the developer and acquired the property. for architecture and things like that. the way the process works is that we commit the construction financing limited the tax credit and investors on board because it significantly brings down the per unit subsidy. because it is so early in the process, we have not had the ability to commit the construction financing because we have not done all of the work that would be required to do so. supervisor kim: i know that it is really hard to predict all of this. but what is going to be dead in the water so we have a good sense of what will continue?

probably the soma, the rest of the work. mid market, it is not even s a survey area yet. >> the best case proposal, the commercial corridor work would not go forward. under the best case scenario, it would not happen. we would not be able to move forward with mid market. we are working to negotiate opa with the developer of the site. if we are unable to do that, the project will probably not be able to move forward because it

requires a very significant investment in infrastructure. in the affordable housing project, it would not happen. supervisor wiener: thank you. just -- you've been involved with the discussions. in terms of what your gut tells you, if it looks like it will jeopardize projects like treasure island and trans bay that people assume are part of the future of the city in the region, have you think the governor is just so determined that this will move forward even at significant risk?

>> the reason why we have been working so hard on improving the language that has been released is that we believe the intent of the governor is not to extinguish projects like these. the governor's intent is for places that you've had agreement on things like this, those projects would be allowed to go forward. we have heard that directly from the governor's staff. the finance department objective is to capture as much money as possible in order to get the money into the general fund. what we are encountering is a conflict between the department of finance to be able to capture as much of the money and the governor's in 10. -- intent.

i don't think the governor is likely to bear down and not negotiate with us and be open to the kinds of amendments that we are talking about. when we raise amendments like these, they expressed a lot of openness and appreciation. supervisor wiener: is there a potential for simply having an exemption list of the following projects, and those that are -- >> they would like to stay away from an exemption list. and really move towards a constructive conversation about what obligations are and what the roles of the entities might be a as a way to capture as much as possible about what has already been obligated.

even for us. we are unique, not just because i think we are the best redevelopment agency in the state, but because we are a city and county. we make decisions in concert with this body, the budget office, that other agencies don't. we're the only agency that has a significant amount of tax increment on the table. that is regardless of what the work plan looks like. there is a lot of argument to treat san francisco differently. i have to commit that i have not seen a lot of activity towards really pushing legislation based on that uniqueness.

supervisor chu: thank you. i think those are all the questions. >> the controller wants to say something. no? supervisor chu: you have maybe one slide left ? >> one last slide to talk briefly about timeline. he mentioned must of these points. -- most of these points. the governor has asked and proposed a deadline of march 10 to the committee that all their work be done by the tenth. -- be done by the tenth. that is a very ambitious timeline. throughout the rest of the

spring, there will continue to be budget were. -- work. you asked previously about what might be on the ballot, here is a list of items that we think might be on the june ballot including the extension of temporary taxes. there will be an amendment dealing with realignment. and depending on what changes are proposed related to prop 10, there might need to be language associated with that. to work on scheduling a follow-up conversation. supervisor chu: thank you for your presentations. why don't we open these items up

for public comment. are there any members of the public that wish to speak on items 1 or 2? or on the update of the state budget? >> first, let me say that i am heartened by the questions coming from the chairperson of this committee. it shows a much better understanding of the budget process. i am optimistic about the future of this committee. i did not see any fred blackwell presentation. perhaps you see a nexus. i did not see anything abou this -- about his sales pitch. i would just say to mr. blackwell that if it is funding

projects like yoshi's, perhaps there be a different position. thirdly, i would like to see the projected deficit by the mayor's office, i would like to know what assumptions he made regarding the june ballot initiatives. are they based on the initiatives passing? and we can have a clear understanding of the validity of the deficit. supervisor chu: next speaker, please. >> i'm a district 6 voter as well as the chapter organizer for californians for disability rights.