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 program. this policy of the board and otherwise that is in our past practices. not in the least, our professional staff does an amazing job. thank you. >> as always, a great presentation. supervisor farrell: i would like

to ask the city attorney. i suppose mr. blake would be the one. really, to talk about cop's in particular. if anyone has a more historical perspective, specifically how it works. >> my name is mark blake, and i am a deputy city attorney. my specialty is finance and the closure. my comments will be brief. certificates of participation are forms of long-term debt that provided interest in loan payments payable by a government agency.

cops are you less by the city only for the construction of capital assets. egiven the security concerns of investors, it covers the central government purposes only. in accordance, they are not issued for operating in the vicinity. all issuances must fulfil the public purpose of the city. courts will defer to the legislative audit. our view is that the city charter, in adoption up specific limitations and not enumerated powers, because in the charge section, the city entered into a

transaction. it is underlines. the charter does not require arrangements with full profit entities. it requires board approval for any contract or agreement, and in turn access ford tenures. that would require board approval. cops to not constitute debts, and just so that you know, the debt limit prohibits local government indebtedness or liability without a two-thirds vote of the public. the general rule is a vote of

the electorate is required to incur debt. but there are well established exceptions to the debt limit, one of which is the lease obligation, and that under lines any cop issuance. ed we have to ensure that no debt obligation is imposed on future use it revenues. the courts have construed this over and over, but the sum payable on the consistency -- contingency is not a debt nor does it become a dead until the contingency happens. -- nor does it become a debt until the contingency happens. lease payments are considered payable in consideration of the contingent availability of the

use and the equipment finance. the city does not require toupee that substance -- that subsequent year lease payments and as such it satisfies the pay-as-you-go rules codify the debt limit. . what that means is cop's are not voter approved. c.o.p.'s are issued, and as long as they are issued for public capital purposes, the interest is excludable from gross income. that is, it is tax-free. this permits the city to borrow at advantageous rates for capital borrowing projects.

there is a lease obligation payable for the -- there's no obligation to meet the next succeeding limit. a typical structure will consist of a lease where the land is leased to a third party. then the city makes annual lease payments for the beneficial use and enjoyment of that asset. the city's annual lease payments are assigned the two certificate of holders in the form of the security. as with any long-term debt offering, they would prepare a disclosure documents and perform

necessary diligence to make sure that this was accurate and not misleading. so long as the city has been official used and enjoyment of the assets, to the extent that the city did not have the beneficial use in the assets -- but i think the occurrence of an earthquake or other disaster, the city could not legally make payments without the asset. so, structural payments. the city has historical invalidated all transactions. in effect, the validation was additional for the bond counsel, and the bonds were duly

authorized against the city. just as a little bit of an historic backdrop, the use of these came into being after the passage of prop 13. courts have viewed in effect the strict application of prop. 13 and the debt limit as really constrained ability of local governments to foster economic growth and development. so, exceptions have been judiciously created. i think that generated the growth of c.o.p.'s. there was a time when council was not confident that they did not generate debts. i think that time has passed. the city has moved toward validation where once the matter

is passed by the board, we let it sit for 60 days, and if the citizen has a concern, they can challenge it, and then we would to get out in court. -- would duke it out in court. supervisor farrell: just quickly -- the state does not view this as debt. but when we talk about it, we talk about it as long term debt? >> it is dead. for atomic purposes. -- is debt. as a legal proposition, it is not treated as bad debts of by which we have been incurred -- encumbered. that is the legal definition of debt under the state constitution. supervisor farrell: it is because of the legal structure?

>> that characterization. if we undertook an agreement today to pay in a subsequent fiscal year a third-party $1, that would violate the debt limit. it is an accounting treatment compared to the legal treatment, if you well. supervisor farrell: legally, not debt, but for all intents and purposes -- fair enough. absolutely a debt. >> the other thing -- an additional protection is that we again employed outside law firms to basically died as through the debt issuance process, and they render important debt