public wish to speak -- any members of the public wish to speak? seeing no one, public comment this close. i had asked for the item to continue because the pop up on us in the morning the night before we pass the budget and i wanted to have a conversation with budget analysts about ways to make here with budget picture items being dealt with at this time through your extension. can we send this forward without

objection? that is the case. item number eight, please. >> item #8. ordinance authorizing the execution and delivery of certificates of participation evidencing in an aggregate principal amount of not to exceed $170,000,000 to: 1) finance the seismic upgrade of and certain improvements to the war memorial veterans building; 2) authorizing the building. supervisor chiu: today i urge support to bring these seismic upgrades to the war memorial veterans building. in short, this building needs help very badly. and he has a shoveler in he did drop with velvet in the

building. there are many unique steps -- sculptures and architecture within that building. the theater holds more performances and events annually than any similarly sized venue in the country. unfortunately it has significant seismic deficiencies. it poses significant life hazards to occupants in major earthquakes. i was told about certain chunks of the building that were very challenged in the 1999 earthquake. they are trying to make sure that no one gets hurt in that building in the future. then there is the current use of power that adds to the concerns we have. you will hear more in detail in a moment, but this would authorize the city to issue an

amount not to exceed $170 million in participation to finance these improvements by the middle of 2015. i want to thank the office of public finance, capital planning, and memorial staff for their work so far. with that, i would like to ask for the presentation. supervisor chu: thank you. i believe that we have [unintelligible] for this item. >> good morning, supervisors. not to exceed 170 in terms of financial improvements on the building. i will speak specific to the certificate of certification. this requires the city to

release the assets to the trustee. and then the asset goes back to the city. we have worked with at the department to clean up the two buildings and assets. that would be the opera house as well as the veterans building. they both exceeded the paramount of the bonds and are sufficient to act as collateral deficiency. we have lived with that assumption to capitalize interest, $168.4 million. with certificates of participation, investors require funding over the amount.

under state law you are required to fund a capitalized interest during the construction. . as you can see, the bond was felt in somewhere around 2012. we had planned to fund the project and made a few assumptions here in 2012.

through competition we can save up to $50 million. by approving this transaction we have allowed the department to spend the dollars, allowing them to use the commercial program to front costs without allowing us to sell today with the use of commercial paper that is very efficient at this time. in addition we have also added some documents. we ask you for that. we have looked conservatively at the numbers we are showing today. we have an interest rate of

5.6%. if you have any questions, i would be happy to answer them. supervisor chu: ok, thank you. >> a good morning. it is my extreme great pleasure to be here before you to present the veterans building project, which i have been working on for over 20 years. the department of public works manager, without the capital planning program we would not be

here today. we have a presentation that we have passed around for you. certainly the president did go over the historic significance of the veterans building. it is internationally significant as the birthplace of the united nations. the city and the state landmark, currently we have data that over 300 performances for year. we have city offices on the third floor and fourth floor. currently it is vacant due to damage.

from the top of the building to the bottom basement level, there are serious deficiencies. i think that the photograph on the right side shows a portion of the fourth floor. this was one of the beautiful san francisco museum modern art galleries to 95. currently it houses the offices of the law library. closed due to damage. the project does focus on the winds -- the ways of correcting these building efficiencies.

now critical to address the safety of building occupants, the portion of the project that is funded by participation focuses on safety. upgrades on improvements and facility preservation for this building. over the last two years the board of trustees has considered and develop a program for the utilization. the board of trustees has accrued capital funds to do upgrades and improvements over and above those funded by the c l p's. an expansion over the hearts theater facility for greater

attendance with a cafe of the first level, where they are producing. the san francisco opera currently has 78 facilities throughout the city. it is going to consolidate its operations and has made a proposal that the board of trustees has accepted to develop the fourth floor of the veterans building previously occupied by the museum of modern art. the seven cisco opera investment of $20 million will include construction of two new event and rehearsal spaces. one of which will be equipped to serve as a 300 seat performance space. under the terms of their proposal as accepted by the board of trustees, the opera

will use those spaces for six months of the year. the memorial department will be able to rent them out for the balance of the fiscal year. they have also been working with the san francisco arts commission to consolidate the office of collection storage public gallery space in the veterans building. we are proposing to add an arts commission gallery on the first floor that will be freed and open to the public. we have known that these new programs as approved by the board of trustees are expected to improve our revenue generation in the veterans building by 50%. as to the project costs, they

are projected to reduce the project by 1,000,20455. the war memorial department capital fund of $6.3 million projects the arts commission capital fund for a tenant improvement in the latter half of the project by $1 million. in the san francisco opera they will be committing private funds of $15 million to $20 million. the sources of the funds, and i believe a further breakdown has been provided relevant to this report for the supervisors, it does out line the costs and how these will be used. hard costs for construction, soft costs include fees and

product management. for the items to be funded over and above sea o p -- c l p's. the war memorial board of trustees has completed its pre- design planning phase. currently we have completed achieve it -- two selections for the executive engineer and we plan to design the official design phase on august 1. we are proposing to actually close the building for construction by january 1 of 2013 for two years. we would like to open them on veterans day, 2014. during that time, from design to construction, the project is expected to create construction

and non-construction jobs and it will, of course, conform with the city's local hire ordinance. i would like to thank you for hearing our presentation. if you have anysupervisor chu: . mr. rose? >> madam chair, members of the committee, on page six of our report, we point out the office of public finance reports, using conservative estimates, the total cost of issuing the proposed to tickets of participation would be $316,280,000. that includes the project cost and related expenses, and

included the interest cost estimated at $148,165,000. annual interest rate of 5.63% on the cop's. average cost to the city general fund would be about $12,165,00 for a period of 12 years. the cost of financing the $132 million in improvements to the veterans building through the use of general obligation bonds would be an estimated $228,520,000. that is a $7 million less than the cost of funding and the

improvements using the proposed cop's. furthermore because general obligation bonds are financed through property taxes, financing would have effectively have no impact on the city's general fund, whereas the proposed cop's do not include a new source of revenue and require general fund expenditures of approximately $12 million per year. however, having said that, it is reported to us that under g.o. bonds, voter approval would be required. city officials that we dealt with, including the capital improvement advisory committee, stated needed improvement to the war memorial building but not be advised at this time. at these improvements are needed almost immediately.

we consider approval of the proposed ordinance. therefore, it would be a policy for the board of supervisors. supervisor chu: just a couple of questions, perhaps to nadia. with respect to the cop's being exposed, you break out the necessity for commercial paper, being able to take out what we anticipate from the commercial paper program. there is another line item for interest. could you explain the difference between the commercial paper program and interest related to that? what is that intended to carry us through? >> the numbers show that we used commercial paper, once the board approves this through 2012. as a result, we would use up to

$15 million or more to fund the project. in that case, because we are drawing down on commercial paper, it is the accrued interest on that commercial paper that is included in the $1.1 million, which represents accrued interest. supervisor chu: so commercial paper will be used during the planning phase? you can use that fund for planning, construction work? >> all of that. we are showing up to $23.9 million. the accrued interest associated with that would be $1 million. the way the program works is we would roll over the interest, and part of the takeout, it would be included in the payment stream to accrued interest on the commercial paper. supervisor chu: the difference between g.o.bonds and cop's. g.o. bonds tend to be at a lower

rate? >> that is correct. there is a tax increase that is the pledge. it is a higher rating than cop's. we estimate it at about 55 basis points spread between the two, but again, those are assumptions we are making. it depends on market conditions, supply in the market at the time that we enter. it could be lower. for the purposes of this analysis, it is a 55-point basis spread. supervisor chu: in terms of whether the board would approve this item, we would not be approving a tax -- property-tax rates. this would require the city to use existing funds to pay for the debt service? >> that is correct, but it allows us to delay that issuance as long as possible, because of

the commercial paper program. even with a g.o. bond, we would have to do it today. with cop's, you can draw down on commercial paper to come up with the funds. because we have used conservative assumptions, if we decide to use commercial paper through the completion of the project, the dollar amount comes even lower. you do not need the capital interest fund, and saving between a deal bond and commercial paper would be about 43 million. because you are required to have a reserve fund on the cop structure. supervisor chu: if we approve this item, we are expecting that our general fund would go up, and the amount we are paying for debt service, in the tune of $12

million. do we know what the city is paying, what percentage of our operation? >> we have the 10-year be have allowed ourselves 3.25% of our discretionary revenues. as we pay down these revenues, we will look and only one appeared with this track fashion in peru -- including, we are within the 3.25% of discretionary revenues. supervisor chu: even if we approve this item, we would be within our 3.25% of general discretion funds? >> correct. supervisor chu: thank you. are there any members of the public that would like to comment on this item? item 8. >> madame chair, supervisors, my name is tim.

25 years have passed since the loma create your quick and we have seismically updated or demolished all of the buildings near the civic center but two. the veterans building and the health department building. the federal building at un plaza is currently under reconstruction. the veterans building was damaged. no damages were repaired, but it was also seismically impaired. the next earthquake could cause incredible damage in the building and, particularly, damaged the theater. the engineering reports that are mentioned in your document talk about the building on a three out of 4 scale. in discussions with the engineers, reports, testimonies, the issue of whether the building should have

been closed was raised. they recommended, if the city had a plan to be -- rehabilitate the building, it would be safe to leave the building open until such time it was closed. if there was no plan, then the building should be closed and boarded up. today, we have a plan, one that is well conceived and well developed. although there is concern in the general public about the financing technique you are going to use, the alternative is to board up and close the building. that is with the engineering report basically says. if you have no plan, you should close the building. i would urge you to approve this and move on with this matter. supervisor chu: thank you. are there any members of the public that would like to comment on this item? seeing none, public comment is closed.

colleagues, one final question to the war memorial. with regards to the improvements at 6.3, arts commission, opera, are these identified funds, do we anticipate being able to raise these funds over time? >> for the war memorial, $4.3 million, inc. all ready for capital projects, which we have accrued over the past five years in anticipation of this major project. we have identified two sources for potential gift funds to augment that. weaverville confident about that additional $2 million. the san francisco opera is undertaking a fund-raising campaign for their $15 million to $20 million. we are meeting regularly with them and they do confident, at this point, about that amount. the parks commission -- arts

commission has not fully developed its plan yet. supervisor chu: all of these items, in terms of improvements -- the parts commisarts commisst identified yet, these are things that could happen after? >> yes, they would typically happen after the construction project. supervisor chu: ok. do we have a motion on the item? supervisor kim. supervisor kim: i would like to move it forward but just make a couple of comments. it was difficult for me to support just wanted to raise some of the concerns that i had but also to appreciate the presentation put together, the work done to bring this forward. clearly, this is a more expensive way of financing our seismic retrofitting. i know this may come up with the

few remaining city and public buildings. i did have concerns that this did not pass several years ago with voters and they may not see this as a priority. this is an incredibly expensive way to fund the retrofitting, but i appreciate the work that went into this, as well as staying below the 3.25% debt service. i understand this building has a lot of historic and important uses for the city that may not be recognized by the public, particularly, the use of the theater and the use by our veteran communities. i am excited there will also be a partnership with the sf opera. i think the concerns from the public are valid, but we need to move forward with this project. i wanted to thank everyone for their work on this issue. supervisor chu: thank you. we have a motion to send the item forward with

recommendations. colleagues, can we take out with recommendations? thank you. item 9. >> item 9. ordinance calling and providing for a special election to be held in the city and county of san francisco on tuesday, november 8, 2011, for the purpose of submitting to the voters a proposition to incur the following bonded debt of the city and county. to a record $48 million to finance the repaving, reconstruction of roads, rehabilitation, replacement of sidewalks, installation and renovation of curb routes, renovation of streetscapes to include pedestrian and bicycle improvements, and construction rehabilitation of traffic infrastructure, and related costs necessary that are convenient for purposes. supervisor chu: thank you. we have the department of public works. this is an item that we have seen before us.

i do not believe the underlying details of this proposal has changed, but i have asked the department of public works director to provide a brief recap of what we have seen. >> ed riskin, director of the department of public works. this item was before this committee and you recommended to the full board, which approved in june, a resolution for this bond. this was the board cost of finding that this was imminent capital need, and it was one that was in the public interest, one that could not be met through existing revenue sources. what is before you today is the board met at a place that measure on the ballot. it proposes to report it million dollars in general-obligation bonds that would do a number of things, but predominantly, the lion's