is part of our plan in attracting a great deal of spectators, to make sure we are using all of our various resources and talents to make that happen. >> thanks, supervisor. i want to be clear that i do not think that there will be 5.4 million spectators. this was a conservative estimate. we will come back to you more information to describe more of the target, but, again, it's sort of an apples to apples sort of way, i just want to be clear that the numbers in the budget analysts reports are for the conservative estimate. we need to make sure we find the adaptive strategies so that if it comes in, we are able to right size our efforts. in addition, i think we have to look at operational efficiencies. this has not happened in a lot of other spectator events. we have been able to use the permitting process to have a thorough dialogue with the partners involved, not only in terms of security, law

enforcement, the agencies. everyone has really good ideas. based on past events. i think all of that comes together in the operational plans, because we have plans for the worst in terms of the most challenge, but at the same time, that great challenge represents the economic impacts that everyone wants to see, so i think if we have been adapted strategy, which still need to have what you were talking about to bring the dollars and the liver, but we also have to have a way to do it at the city level. a couple of other things on this slide i just wanted to cover, the budget analysts report, the projected fundraising program was implemented tax revenue associated with this event do basically match up with that conservative cost profile. i definitely understand the questions and concerns, and we are hoping to talk more about that today. i've still very strongly that

part of what we are looking forward to is if we are able to find an agreement that works for the board and we can move forward. i think that helps all of our fundraising efforts. looking forward to that part of the dialogue today, but we also understand that is part of the financial imperative to make this particular deal worked out. -- work out. i want to talk a bit about the legacy, and this will be the last piece in my presentation. i think legacies in a lot of past america's cup have been bricks and mortar. we are doing that for sure, with the cruise ship terminal project, which we are all very excited about. we are also looking at other improvements in terms of the waterfront access, as supervisor of all those mentioned, and we are also -- as supervisor

avalos mentioned. this also provide a legacy benefit of cleaner air force san francisco bomber force, even after the events are over. in addition, i have mentioned some of the intangible benefits. i have talked a little bit about the operational command and coordination, but i am also excited about the transportation, like the embarcadero rail line, serving other parts of the city like a waterfront, which is generally pretty congested, but we realize we have to get people out of their cars and onto transit and on to their bikes, so we are excited about that. and coming back to something supervisor avalos said, it is not just about building something and having people come. we have to work to win this economic benefit. i share the excitement or the

appreciation for the movement in terms of the work force development plan itself, but as i have said in past hearings, that is only one point of economic benefit that is coming in. our goal is to bring in spectators, racing teams, sponsors, and show them what is great about san francisco and all of its neighborhoods. we have technology and using web tools. we have had a number of members of the arts committee in meetings, talking about how we could join with them and bring their inspiration forward as part of the event, and we are looking forward to do that, as well, and then small businesses. i think driving these kinds of businesses in these neighbor corridors i think is something we think is vital, we think will improve the events, and we think will help bring all of san francisco forward to make this a civic event like none other, so with that, i will stop now. bobby is here to answer questions.

>> ok afternoon, chair chu, supervisors. i am jonathan with the port. good afternoon. i am going to present the facts and figures, and my colleague will talk about our policy analysis that we have done as part of negotiating this. so i want to start out reminding people of what we're talking about in terms of port property. there are a number of sites that will be used either as short- term and besides, only for the venue itself, and that long- term, which will be used for the event and will be improved and could also be the source of -- term development sites. the short term, the northern waterfront, including 27, 29.5, 29, which could become a long- term revenue side, 19, 19.5, 23.

in the southern and, at 80, and the long-term side, -- site, 26, 28, and others. chair chu: we have a question. supervisor kim? supervisor kim: the delivery dates for the facilities, i noted very. -- i note they vary. when they are delivered back? >> some of the short-term sites, they need to be delivered in march 2012, specifically 30, 32. many of the others are june 1, 2012 as a delivery date. most, almost all need to be returned to report no later than six months after the end of the match. there are certain exceptions specifically for 27, the crews terminal, with construction

under way, that has to be delivered back to us sooner within one month of the match so that we can get that project up and running. supervisor kim: just to clarify, everyone other than the one is within six months other than the completion? and does that include 29? >> that does include pier 29. these are for the venue leases to be clear. when we talk about the interim releases, the event authority has the right to be reimbursed to become the intra occupant of 29, 26, and 28, and 30, 32. in most of those cases, , -- most of those cases, 30, 32 --

in other cases, they would pay are parameter rents, are current market rents that reset every year at the port. supervisor kim: thank you. >> you are stealing some of my thunder for later. these are the sites that are contemplated. this shows 26, 28, 30-32. as you can see, these are facilities that are part of our historic district. they have been in service on the waterfront for a long time and are in need of repair. the port has struggled to find the right users and the right path way to improve them. both 30, 32, and 26 have been the source of partnerships in the past four potential deals that have not come to fruition.

private investors have backed out once they learned how expensive they were. so this largely covers the venue leases. it covers the rights and obligations of each party vis a vis construction and improvements for the property and then the reimbursement for the event authority for those improvements they are making to port property, but getting long- term development rights, with improvements on port property, so to start first with the improvements. there are several categories with improvements. generally, there is the infrastructure work, which is the primary work that needs to be done. 30-32 is the main site of that work. there is also $32 million for the relocation of shore power, which they are undertaking. they are doing the work. they have pledged to fund it. there are also regulatory conditions, approval, and

mitigation which was learned about during the course of 2011 as we went through the entitlement and printing process. these are all parts of the infrastructure work. some can be deferred, specifically the seismic strengthening of 32. there is also a category of additional work, specifically certain kinds of dredging, specifically for spectator vessels in the bay, and with 26 and 28, the supervisors may recall that this category was created in the venue agreement in november 2010 specifically because the dredging expenses were unknown and very expensive with our estimates at the time, some north of $20 million for dredging, so we thought it was important to pull this out as a separate category if we can get recovery, as a way of doing that, but as a way of right sizing that, to make sure the only did as much dredging as

appropriate. we created a separate category. 26 and 28 can be deferred until after the match. then, other than work that is necessary for the regattas, the infrastructure work, there is other work the authority can do. they can do other work regulated as minor improvements. that work is they are doing for their benefit and at their cost. so the cost has been a source of much discussion already. these are our current estimates of costs. the dda called for the reimbursement of actual costs, mainly for 2012, but i thought it would be important to review these costs. the authority infrastructure work happening in 2012 is estimated at just around $80 million.

some of that is at 30-32. there is some partial seismic strengthening. it is a big project. the project we have looked at before and struggled to make work. then there are other categories of work that needs to be done. many ofand there is a number of projects out here 23 for public access and the removal of files appear 64 and the southern waterfront. >> i just want to talk about some of the issues the were raised but we all read about, but these are tears the board had not been planning to spend

money on, and we made different choices. we are talking about $50 million expense of of 111. it is going to 91.4 million. this is a major driver of why we are having this discussion today. tell me why we are focusing on this. it seems we are asking the vent authority to put a lot of money in, double the amount of money and we anticipated in order to prepare for their long-term developments. >> this has been important for the port. we have made many efforts to get this developed a. there was a project we worked

on with this idea of cross subsidizing the reagan-maker was sold as part of the deal. we learned this is a very challenging site, and in the agreement and previously when there was a contemplation of a central and southern waterfront promenade of the venue for the america's cup, this was parts of the work we are going to do

it in 2012. this is a very large expenditure. it is an expenditure that goes well beyond what we estimated in 2010. >> there is a question as to why we were not able to understand what the full cost some would be pure good -- what the full cost would be. we initially thought it would cost $55 million. in order to cover the cost we have to ration out a number of real estate opportunities the city has, and that is what makes me uncomfortable. i am wondering if this does make sense to focus so much money on pierre sergey and pier 32 in

order to pay for the pure good -- to pay for the real estate rights. >> we understand that concern, and we have tailored the rest of the presentation to talk about house staff has made measures to control the risk. we will go further to talk about this. >> as the court have a plan prior to this coming to us in 2010 in terms of what appears they were intending to improve and strengthen and what value went to our city? >> the current plan has 2.22

$3.2 billion in need. it initially did not have a plan the specified how to deploy the capital resources to make those six shows. we have evolved over time to start programming the money. there are some tiers we have identified with those sources. you>> what year was the capital plan put together? >> in 2003 and in 2004 -- 2006. we updated annually. >> what were the top five priorities in 2006? >> we do not are retires in that way. we put them in categories of projects we think we would have funding for and but we have potential funding and projects we do not have funding for.

>> it is not based on the potential value for the city? >> it is raised on a number of factors. >> what was the potential use and value in 2006 in the capital plan? >> the capital plan really talks about the capital needs. it did not get into the capital budgeting side in terms of feasibility of potential revenues for the site. >> i understand it is a large site. i understand why it is important to the america's cup, but if we are going to pay to upgrade the site and improve it for the future, i feel like i have to have a good understanding for the future as to why we are doing ipsa -- why we are doing it. we are paying for these

improvements. whether the authority from is the money or not, we are paying for it, so there has to be a reason to do it other than the america's cup. it is over half the estimated cost for infrastructure. >> that is by far the of the biggest change. there have been a number of other changes, particularly in other regulatory costs and projects. the other thing i want to point out is we did not have a specific estimate. some of those estimates were north of $20 million, so one of the ways and we have looked to

control some of times -- some of the risks is to limit the way the various categories are reimbursed, and so specifically going to the infrastructure work. based on current estimates we have $80 million of 2012 expenditures saiand about $32 million. the sole way they could be reimbursed is from a waterfall of rights for interim leases or long-term leases. the next call is the tax increment proceeds for new developments. they keep debt coverage of the way to make sure it does not

have a balance sheet, and any interim rate or if necessary pier 29, and finally, a 66-year- old long term lease was a major basket of goods. there was also an unusual concept, which was a residual where if they had not yet been reimburse, they had to have a call for reimbursement, about would amount to about 50% sign of the furs and revenues from the subsequent release, and we have shown the pockets of the reimbursement and the residual is a very low number. when you take about $111 million estimate of cost, most of it

done in 2012 but a significant amount done in 2017, you get the value of $88 million. this is dollar -- this is also a similar number you get when you look at a maximum reimbursement that the waterfall and rights we described. this is of practical map of reimbursements, so we know these are expenditures we have looked at. we have looked up there engineering work, and our engineers have verified the estimates. they do make support accountable for actual costs. i think this would be a good time to point out one of the important factors when we considered this kind of a waterfall, a career of expenditures and future

expenditures, in the amount we do not -- the current expenditures and future expenditures, in the amount we do not pay back has been a subject of discussion. a 11% is a figure that would develop, because in trying to improve projects and recover their money, they are taking development risk, and they are taking a great deal of risk because they have not gone forward and look at actual development of some of these sites. there has been entitlement work including mixed development, but they have not yet approved step. they do not have entitlements for long-term rights. goothat will come back in the fm of approval for a long-term lease. they are looking at this as a

development deal. the 11% is a number we have been negotiating as a fair rate of return. that is the number and now they have not yet hit. a similar calculation, this work is estimated in the range of more than 25 million. there're other adjustments that go as high as 52 million. there is a limited way to overtake that these side starting with new releases for improvement year ago -- for improvement. historic tax credit would be involved when they did historic renovations of these

properties, and there would potentially be a residual value of 50%. we have had discussions of other historic and rehabilitation source those resources that could substitute for this value. did we have entered into discussions to see if it is possible to have some of appears enter into the transfer of development rights -- some of the piers enter into transfer of development rights. i want to point out that is something currently in investmenthe dda as either/or. i mention the cost of dredging was a concern when this came before the board of supervisors in december due 2010. we said if there is specifically

dredging for spectator vessels, if there is dredging necessary for the regatta's themselves, that is considered construction work, but for spectator vessels, any money they spend in 2012 can be through an exclusive negotiating agreement your your reaching a negotiated agreement. >> i have a question about why dredging was on the reimbursement schedule. your why is it considered an event, but spectator boat is considered a city of then and now democrats the regatta of under the category of structural work. -- considered a citi event? >> the regatta is under the

category of structural work. there were concerns of the cost could be very high. they said, you can undertake that work, but we will have a side arrangement. the idea is these are all separate findings. >> why is the dredging not considered a need solely for that event? why are weakness in reimbursing the cost of that? to me it seems to be just an of an -- just an event. >> the first line of dredging, which is $2 million, some of it is for the event itself, but this is specifically for pier 28, etc.

most of those are in the additional work category, and those will reimburse only through the marine rights. they are reimbursable but only through the second mechanism. >> why is this considered an expense the city needs to reimburse? >> the original thought was doing the dredging and making that available for other uses was of benefit to the waterfront, so if they could take the dreads -- >> r.o.a. spot at 1.3 ghraib >> we have not thought. i was qualifying it because there has been much discussion that in 2011 and one of the original locations was a water

basin, so we are not talking about long-term marina rights. we have transferred to development. we still believe the idea of commercial rights on the waterfront is a maritime use we would encourage. we made these representations >> they have some concerns about marina uses, but i think we need to evaluate whether this would be included in infrastructure work. i not convinced this is of benefit to the city. i think if we are looking at long-term leases, we have to have an understanding of what happens. is this something we would get