order to help expand this concept. this is not like any other cbd. most have a timespan of 12-15 years when i put this on its training legs, this ia reduction of its time. seven years is half o fwhat most cbd's are. i will support this with great confidence. >> if i may, i think one thing that ihope we can do between the time that this comes or goes forward is to look at the issue of the make-up of the cbd. i don't know if we can condition the resolution on the promise that you can't have the representation more than one

individual from a specific business. i think making this clear may be one way. i would ask you work with the city attorney to put this in the resolution. i think transparency is very critical. the fact that this ordinance is not legally required to comply, this is not mean that the authorization of the creation -- that we cannot issue compliance with the ordinance. this is something else but i would ask that you consult with the city attorney to see if there is a way that we could condition this as part of the approval, compliance with this ordinance. i do not know that there is

anything that precludes us from requiring us to comply with the sunshine ordnance going forward. those are a couple of things that maybe, you can look into before the comeback to the board of supervisors. >> great. and are there any other questions or comments? we have a resolution in before the committee. there has been indication as the kinds of changes that we would like to see as the matter comes before the board. a motion by farrell with a recommendation. thank you to everyone wh ocame out -- who came out on the matter. >> can you call item six? >> a hearing on the debt structure and the non-voter

approved debt. >> this item has been introduced by supervisor farrell. he and his staff have spent time working on the item. the floor is yours. >> thank you, chair campos. and thank you to everyone who is here for this hearing. i want to thank the city attorney's office and the mayor's budget office, and the budget and legislative analyst for coming out today. one of the reasons i ran for supervisor last year was not only to help the small business grow in the city, but also fight for sound fiscal policy in san francisco. when i arrived here, i spent a lot of time with the members who are here today looking into the

infrastructure, and the debt is something that came to be concerned. the 1.3 $6 billion that i mentioned, this is a little bit of a misnomer. we have hundreds of millions of dollars of debt on the books, most in the form of certificates of participation. this is something i had not realized and something i want to talk about, publicly. in particular, i was wanting to talk about debt and what we do when they defeat the bond measures and how we promote the projects otherwise, and how we look at how we review the debt that we have on the books for the ongoing maintenance operations and capital expenditures. i want to thank everyone for

coming out here today, and what we will do, a number of people come up. we will talk about the overall that structure, the city attorney's office will talk about the legal framework, and also, we have the issue about the lease revenue bonds in san francisco. and how we define them, and how they impact the other debt. and we have the comparative analysis with other jurisdictions. the budget office will talk about this, and the other topical issues we have dealt with for years in city hall. and that will help us to go about that for years to come. thank you, chair campos. i would ask the comptroller's office. w e will -- we will chat about the

debt structure. >> in temrs orms of the $1.3 billion, do you have this breakdown? >> thank you. i would say i want to thank the supervisor for bringing this item forward. it is important for us to think about this issue, just looking enduing brief research on the internet, there are dozens of countries that actually have debts that are lower than $1 billion. this is a lot of money when you think about the city being in debt to a certain level. this is an important issue and i am have you brought this forward. >> good morning.

i am from the office of public finance. i would like to give an overview of the debt portfolio as it stands today. >> the following page outlines the debt portfolio as of may, 2011. if we have about $2.60 billion, in -- of debt. $1.40 billion is the general obligation bond. -- certificates of participation, with the san francisco redevelopment agency. and we have revenue bonds of $6 million.

the general obligation fund -- this is a required two-thirds vote, and this is a 60-1 votes with the majority. these bonds are approved by the voters. this shows up the shields and the constraints with those different categories for the general obligation bond. we're currently at 0.94%. this also creates another limitation. we have this at the 2006 level and we are currently below this.

we don't have a mandate but we do have a policy, requiring that the stays below 2.5 in the general fund. >> just to be clear, we're well below the capacity to issue these bonds. these are big numbers we're talking about. but we are well below what we could issue at this time. there is a 5% assessed valuation. >> we are below 1% right now. >> can you tell us about the other cities? i do know they have different variations, and this is very

robust compared to others. we have a large volume as we have heard from the rating agency. this is below market capacity. the next slide elaborates -- showing the same numbers. 28.5 is non-voter. this is 67% of the portfolio. it is interesting to note that looking at this and trying to put together what los angeles -- san jose, san diego, when you

compare this debt, only san francisco requires voter approval. what was clear is that most of the municipalities have less than 40% of the voter-approved debt. in their case, this is not approved by the voters. >> we have not had a chance to talk about this yet, this issue itself. we have to go to the voters for the lease revenue bonds. is there any feeling of dollar volume or percentage, which was the lease revenue bond? but we did not have the time for approval, just issuing these instead? >> the next slide will go into

this. but i have tried to do is focus on this portfolio. he will see that we have them in big categories, and this is a transaction -- and because this was issued, for instance, with $170 million we have outstanding for the construction of golden gate, we have this on behalf of the commission and they are responsible for the payments on the debt. this is considered so supporting because this is paid from the fees and fines of the courthouse.

we expect to receive reimbursement from the state to support this deadline. this is almost self supporting. at the time, we went to the board of supervisors for approval. and there was the gas tax pledge transaction. there were unexpected consequences. we changed venues rather than tax gas. >> to the others have gone to the voters as police revenue bonds? or not necessarily? >> as a policy, we have all these tools, and the general obligation bond. they have critical needs and timing issues allowing us to

consider this. we will use certificates of participation because of the timing. laguna honda, we did go there for a portion of the construction, but realized the cost of construction had risen above what was originally concentrated. we're working to fund a portion of this improvement. >> much of this is a timing issue, and i think part of what i want talk about the day is that this is the only jurisdiction that has to go to the voters for the revenue bonds. how helpful it be to have this ability and will ultimately be cheaper for us as a city, if we're want to talk about what kind of interest that we will pay on a police revenue bonds?

>> and can use a little bit more? is there any other factor besides timing about when you go through this revenue route? >> on this slide, we have open public space and in response to your question, we have a debt policy. we itemize the conditions on these issues where we have success, that have been beneficial to us. and conditions from under which we issue -- >> i will talk about this to give you a breakdown, the certificate of participation in the portfolio. this is 26% of the portfolio. this requires we do the analysis that demonstrates that this is

beneficial for the city to homebuilding. in this instance, this is the savings of the general fund, with tens of millions of dollars. and we have the other big items. these are in the portfolio, a true general fund. the self supporting office space is revenue neutral, because the department's otherwise would have been renting. this really impact of the general fund. this is only 6% of the portfolio. >> supervisor, i see your question.

>> this is not considered it a debt, and the city has no legal authority to have this tax be paid. the only has the obligation to appropriate and the underlying asset is the collateral. state law requires that we have use and occupancy of the building. investors are concerned about this, the useful life of the asset, and this will continue as a goal long with the general funds to pay the debt. we paid the debt there city do not have any of these contracts. >> the next slide shows the results of what was discussed earlier.

you only require the projects fund and the payment fund, and on the lease revenue side, this is during the construction. we're using this during the construction to make the interest payments. we also have the reserve fund, and the investors require this. you can have about 10% and if you cannot make payments, those will be drawn up to be replenished immediately. >> i know that these numbers fluctuate over time depending on the debt markets, but the spread between the interest rates -- >> the ratings agencies + 1 or t

w zero notches depending on the rating agency. what we see before 2008, we had access to insurance, and there was not much of a rating differential. but now we see this and we see on average, 40 or 65 basis points. the next slide, this talks about the debt policy. the web site was done in 2004, for the board of supervisors and the treasurer. this needs updating, but basically, what we see is that

this is used to acquire the facilities that result in savings to the general fund, and they can also be used when the general fund matches the money available, and it does not hold the transactions i mentioned earlier. this also applies to juvenile hall, and the courthouse. those of the circumstances we have used about this. the next slide, it talks about the processes and issuing debt. we have the delicate process with the consultants to give our opinions about the taxes in the project and the capital.

we would not use these for operating expenses, we do go to the capital planning committee for approval, the board of supervisors, and the case of the certificates of participation, we do not have the reproval but we do have the judicial process for the bond, for 120 days. this is finding of this is constitutional before we can proceed. we have been using reverse validation, and i do have mark blake. he is from the city attorney's office. the next slide talks about the same project. you can see the projects that

were completed, at 525 golden gate. >> very quickly, we talked about this yesterday. we have the opinion that this is not for the ongoing maintenance? >> i will have him speak to this. this is exempt from taxes, and part of this is because of the due diligence, to make certain that this is not operating. i can have him speak to that. >> thank you. the next slide just shows you certificates of participation,

and to answer your question, we have 740 currently outstanding and the rest of that is in interest. you ask about the breakdown was, and we have about 740 in principles, and about 571 in interest. this is just a short -- a chart showing you this. the next slide is focused on the true general fund, taking out everything that is self supporting, and the debt is about 229 maximum. 21.2 million.

>> this is the general fund, the debt service. >> correct. >> the first chart shows the entire portfolio for certificates of participation, and this is for the true general fund. >> this is north of $20 million? >> the next slide has a calendar of certificates and participation that the board of supervisors has adopted and approved, for which we are using commercial paper, and we found out that this was more efficient to use this for funds like planning, to delay the issuance

of what was approved for the project when construction was happening. this is the entire issuance. the board had approved of this project, last year. they were setting up the improvement for $45 million. this is a project with part of the funding for the entire program. and we have the authority by the board for $150 million, to help fund the project. >> just so we get a sense of this, we are delaying issuing the cops.

being in construction, we have relatively historic interest rates. does this translate into the interest rates on the cops. it is a very cheap time compared to the traditiona ltime to issue debt. >> we have noticed this. it makes it a lot cheaper. we are getting .20 basis points on the variable rate, weekly. we do this analysis each time. the next slide is part of the 10-year growth plan. we do have the commitments of using certificates of participation to improve the

were more -- war memorial, for all 130 million. the board has not seen the process of these documents, and the plant also proposing using this for $128.2 million. and again, when the board approved this proposal -- the next slide shows when you take into consideration, the proposals on the private -- prior page, it takes us over a threshold, and this requires 3.25% of the general fund

revenues. that is the proposal as it is on the table. >> we are going to go from 3.25 -- >> a hall of justice is pushing this over. i do not have that on me. but this is something that we will have to discuss. the next slide is showing the difference between our credits for the three rating agencies, because gao bonds are higher. on the last slide, i thought i would share this as well. estatewide, it is the dark bar s

san fran. we, the city and county, really use this tool. we do participate in a small portion of that. ei will be happy to answer any questions. supervisor farrell: i think what i want to make sure is i got a lot of calls for 10 minutes from my constituents and other people. i hope to make clear what a great job you to managing this great job you to managing this program.