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, they would also contemplate having a tribunal at the state level. that would review the transactions that have been put together and also revealing the efficacy of future bond issuances. this group will be made up of the treasurer, the comptroller, and the head of finance that will review this process to

decide whether or not you can move forward those and issue bonds. the initial language is that they have the ability to undertake a review under a three-year window or statute of limitations. nobody is going to buy bonds when the state has three years to review whether they are legitimate. thank you. >> conjectural lay -- conjecturally, it might be helpful to bring some opponents to the table. there always has been the accusations of redeveloping being unfairly used in the past.

approvals that are horizontal could go forward. yet to be let out. vertical ones might have more of a problem being done. is that what your saying? >> yes. >> one was to eliminate three development and the property tax as to eliminating redevelopment. what is the slide in redeveloping property tax? >> under the gov.'s plan, he wants to read direct. he thinks that abolishing redevelopment frees up about $1.7 billion. what he wants to do is to redirect that $1.7 billion in

this fiscal year to pay for this. trial courts and the metical -- medical are not the kinds of things that you pay for it with property tax dollars. he needs a two-thirds approval to eliminate redevelopment and redirect the money in that way. if you focus on redevelopment and distribute tproperty tax dollars, and then he could just go forward. >> are just wanted to thank fred for being here. commissioners, there have been discussions with fred and other department leaders about the implications and what we know today. because the bill that the

governor proposed is silent on the issue of entitlements, the issue was to go forward. many of the entitlements would shift. there would clearly need to be legislation to make that happen. one of the things we will have to look carefully at is the issue of notification and the actual actions that you take. and if that those things are parallel or not. they are somewhat parallel in the redevelopment area. it is my line of work to make all of that happened. the july 1 statement, i was scared away. if it goes forward, it may have a fairly quick time frame that we need to work with. >> most intimate decisions are

noncontroversial. -- entitlement decisions are noncontroversial. [laughter] >> good afternoon and a good evening, commissioners. i am from the mayor's office on economic development. we can talk about the implications to treasure island. we have got a presentation. we are going to talk about what the implications are. this is a stand-alone redevelopment agency. it would have the same issues that the san francisco redevelopment agency has as far

as the governor's legislation. we will pick up on some of the aspects of the project that we had not talked about in our last couple of meetings. the first copy is in the financing districts. we made a decision to recommend, because of the uncertainty that fred talked about, we'd like to move from the redevelopment project to a project that is financed by bonds. there are a couple of key differences that we will highlight. some will be on land use authority. there is actually less funding available. that has got about $130 million of impact on the budget and how do we make up for that and how do we account for that? that is the crux of a policy

issue. you went to your last commission meeting and talked about outside experts. we have chris from the council. he has done a lot of work in financing. he is a bond underwriter. he is here and available for questions. a lot of this will impact housing and some of the recommendations. fred talked about this. the state has put forward a proposal to cut redevelopment. there is uncertainty, even at a project like this that has the project redevelopment area a doctor like this.

treasure island is even further back than this. we do not have a certified eir. we expect to be there in these next months. this makes this more complicated. there is an enormous amount of uncertainty on top of us being at that stage already. there are other steps to take on this redevelopment. there has been a history of mandating payment back from redevelopment. that led to prop 22 last year. obviously, we need to summarize these rules that are proposed in the governor's bill. treasure island could not go forward. given that amount of

uncertainty, whether this happens this year or next year or something short of that happens, it hurts the ability to move forward with the redevelopment project. the good news is that there is a path forward in infrastructure financing district. it is basically the same tool as tax increment financing. you take future property-tax increments and those funds can be used and bonded again. those can be used for public improvements by croats and sewer lines and water lines. many of the same things we are doing here at treasure island. you do not establish a redevelopment agency if there are no funds. under redevelopment, the 80 cent

increment you get from redevelopment, you are obligated to spend 20 cents for housing. we spend more than 20% housing. under this scenario, you are generally prohibited from using these funds for housing. there are two instances when you are allowed to. that is when the housing is publicly owned. the second is when you have a replacement housing obligation. what is important for treasure island, we can move forward with this, this is pretty similar to what we have seen over the last 10 years. we do have a replacement obligation. we are looking to demolish 1800 units of housing. this triggers our ability to spend in for structure financing and bond proceeds. this chart gives you a sense of

how property tax is distributed under the current situation. you pay your property tax. for every dollar of property tax under the first column, 50 -- about 65 cents goes to paying the general fund. 7.7 goes to the school district. 25 cents goes back up to the state to fund education. 2.3% goes to other taxing entities. under redevelopment, 80% of those funds are diverted to read development purposes. of that 80%, 60% is available for general redevelopment purposes. general infrastructure improvements. 20% is set aside for affordable housing. in san francisco, we have 60% set-aside for affordable

housing. the remaining 20% is divided up the same with the first column is divided up. it goes back to the city and other taxing entities. the end up getting less than they would. that is the crux of the issue with three development. the state is required to back fill that redevelopment. that has led to this contention between redevelopment and other taxes. there is only one mind that changes between this and the current allocation. that is at 646%. the city is able to do that -- 64%. the city is able to do that and issue bonds. while the state is concerned above redevelopment from other sources, we do not think there is that uncertainty with ifp's

at the state level. the governor in the legislature has pointed to these as a resolution to redevelopment. you can do the same kinds of projects. there is affordable housing set aside in redevelopment. there are funds on affordable housing. there are also some other minor changes. they will have impacts on development. that is the amount of time you can get them to pay off your bonds. we would seek to change those rules and make them work better for large-scale development. i want to talk about four changes generally between ifb's

and redevelopment in the treasure island scenario. there would be a couple of highlights. there will be no change under our project to the project that we propose by moving from this scenario to the ifb scenario. your staff has worked on this and endorse this. the impacts that have been analyzed in the eir will not change. at the same residence will be used. the transaction structure will remain the same. it will continue as a nonprofit corporation then enter into the transaction. it would remain a trustee of the state lands. it would enter into the

agreements that we have talked about in the past. two major changes. and derby development, you would take land-use controls and the redevelopment agencies have a land use authority. this is a city agency. they would use the planning commission and the planning department. there is a little bit of a new ones. from the trust property, it would remain with the trustee. the board approves projects on the waterside. the other change is the reduction and the increment in a reduction of the proceeds. the other two sources, and we

have talked about this before, the project costs approximately $1.5 million. about a third of that money will come from tax increments or tax increment bonds. that will be reduced. there are two other sources. private equity would remain unchanged. taxes assessed would remain the same about $500 million. how bonds are issued and what? the bonds remains the same. bondholders should not have much of an issue between ifb bonds and government bonds. what? those bonds is the same stream of property tax revenue. you have to look at what is behind them.

it is the same thing comment from property taxes and properties from development on the island. that would have paid for redevelopment. i should note that san francisco is unique in its ability to convert from a redevelopment model to an ifb model. they get more of a share of the property tax than other cities. most cities only get about 10% or 20% of that. it is not as easy of a transfer from redevelopment. it reduces project funding. by about $130 million. we believe that there are 6 costs that we cannot change. there are $15 million in payments and participation. we need to replace all of the

utilities. we need to stabilize the island. we need to compact the soil. there are areas where we can make up for that. the most notable being the transportation community facilities. we'd like to make a recommendation. how we make up for the difference. we also talked about other options. we are asking policymakers to consider. we are having numerous discussions. we are meeting privately with interest groups to get their response and reaction to the proposals on the table. after much thought and looking at how the deal is structured and how it works, our recommendation is to make a reduction in the affordable

housing component of the project. 2400 of the total 2000, to 25%. there are numerous reasons we look at the affordable housing area to make these adjustments. it is one of the larger components of our budget. the affordable housing makes up about 24% of the total cost of the project. the other major one is an infrastructure. some other areas is transportation, parks, they are all below 10%. you basically get a one to one savings. for affordable housing, it works differently. we have got 24 designated in the projects. that converts to a market rate lot. that generates revenue.

there are still proceeds that can be put back in from that lot when it is sold. there are also additional proceeds from that project. you basically get $3 for every dollar that you cut in affordable housing. that is an important aspect of the transaction. to get more detail into the proposal, we would recommend this reduction in affordable housing. to remind you, we have three components to affordable housing. the other was 435 units. that was to serve the homeless individuals. the fourth was the general, one hunter% affordable projects on the island. we also make this

recommendation with the recommendation that we put in our agreement that we do get an additional tax increment. we agree to go back to the state and lobby for changes. i think that is already happening in san francisco. this is the response to the elimination of redevelopment. we will look to try to capture even more revenue beyond the 65 cents. if we are successful, we have the ability to get back to 30% affordable. the land that we converted to market rate. that was done fairly early in the projects before. this gives you a comparison of the redevelopment scenario. you increase the number of

market rate units by 4000. you'd decrease the number of affordable units by 4000. the inclusion. units go up a little based on the fact that you have more market rates. the general affordable units decrease by about 450. they think that is the most significant change to moving to this scenario. the land use remains the same. we maintain the overall economic feasibility of the project. the general fund contribution remains the same. we have showed you before that we can pay for these services and the general fund will remain the same. we should know that we do intend

to go seek changes. one that would work for better and large-scale projects. this is for bonding purposes. also to get additional increments to find affordable housing. we are working with our state legislative team as well as the affordable housing team and charting the course on how to do that. there is a lot happening with ifd legislation. at least four pieces of legislation before the state legislature that talks about ifd and makes them work better for large-scale projects. the mayor is on record saying that he wants to find affordable

housing. there is that limitation on affordable housing. you cannot find affordable housing and ticket% -- take a percent of affordable housing. in the senator's bill, there is a 20% requirement to spend money from the ifd. well that is the recommendation, we do want to show you various options. you could actually get more than 20% affordable housing. some require cuts to other portions of the project. we do not think he would recommend this. we think all of these are feasible. this is the place we have tried to create. the first option is to eliminate

that requirement for 5%. this is to house folks that have higher emi levels. these are within market rate projects. there is a proposed 316 units of affordable housing. they could actually add back up of 400 units of inclusion mary. you could get -- inclusionary. you would gain of 40 units, about 440 units, bringing us up to about 280 affordable units. the second option would be to eliminate in other areas of the

development. while we are presenting one scenario that we think it's feasible, there are numerous. we call up the elimination of the northern park. that is a major part to the north on the island. this is not to say that we would not build these overtime. we will look for other funds to build them. this would not be a requirement. we to partner with the little league or the gaelic football group to rebuild those parks. they are required to rebuild the ferry terminal and pay a $30 million subsidy. we can cut that in a third.

we would have built into that budget about a $10 million contingency, which is high. we know we are trying to fund ferry service in five, 10 years. we would like to make sure that we have the ferry service. you could cut the general community facilities. that is used in day care and the senior facilities centers. you could take these other cuts as well as deferring developer contribution. this is $10 million. you could defer their payment for 10 years. you could save about $40 million, which would get you back 100 units of affordable housing. we think this is thought a

great cut, but one that is feasible. this is the resulting number of units. you would still have 316 inclusionary units. the first option combines the first two. they make the same cuts. this gives you 22 units of affordable housing. this is the resulting program associated with that. these are the options and how to bridge the gap. we are in discussions with many other policymakers in the affordable housing communities and other residentss that have participated over the years.