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 a future revenue from all? >> this is an exclusive negotiating rights. they have to prove there is a demand and put the money in improvements, so we are putting them in a situation to take the development risk of the project.

your point is well-noted. we're getting close to the end of my presentation. i would like to touch on item nine. >> would you mind touching upon your 30 and pier 300? -- your 32. they are needed for the a event itself. gooit seems there were controlsn place to make sure the costs do not rise. it seems there is no incentive to at all to control costs. that needs to be tightened incredibly for me to be comfortable about wanting to approve this.

>> i appreciate that comment, and that has been a concern since last february 13, 2010, and i would refer you back to what i talked about earlier about the practical cap. right now the reimbursement we put on the table has a potential. that is all we can recover, and at the moment those are the estimates for expenditures. one way to go get it is in the cost beyond what they are currently estimating have no source of reimbursement, so at that point, the discipline of making sure we control our own cost shifts to the of zandt authority, vico's there is no practical way it -- shifts their authority, so there is no practical way.

it limits their costs. i appreciate the concerns, because we share the cost cap. good parts of seems like a great deal of money to go into -- >> of seems like a great deal of the money goes into the investment, of but we do not know what the long-term use is going to be. we put under great deal of money, but we do not know what the alternate use is. it does not seem sufficient at this point. >> there is a developer risk. the developer has to be concerned about making money. i just wanted to make one last note before i turn it over to my colleague, the doing of policy analysis. there are obligations to establish ifds and these sites.

we feel it is an important step for us to bring forward this ifd number two. when we went through, an ifd like this has never been formed in the state of california. this is a relatively new process. when we consulted with the city attorney and outside counsel, it was deemed best to establish a district, and this is really just a form of notice to the tax paying entities, and we were told the best route would be to put a notice forward with all of the potential project herriot's -- project areas. these are subject to future project approvals. they have to come forward with their own financing plan to establish project areas.

we are bringing this forward specifically because you have seen here 30 am here 32 -- we have seen pier 30 and 32. this is just a notice. we have heard there are some concerns, because the project we are willing to accommodate and amend the resolution and attention to reform, because it was not our intention to bundle about anyway. good it was put in the notice. >> just a clarification. i want to be clear. good when you talk about the deal, is that truly the order, meaning we would have to exhaust all of the resources in one

category before moving onto the next? >> i would say one exception is the interim leases would very likely come into play before isfds are available. it is likely there will not be taxpayers corn and now five years. gooit is likely the parties will agree it will be a valid mechanism to recover and rent credits. one of the other comments that have come from budget analysts and from our commissioners as about -- is that we run a risk.

we have to either relocate or move out, and we will have to retenant these facilities. interim leasing has mutual benefits. good >> i think supervisor jim of limited to this earlier. i know part of our budget includes $6 million general contribution to the port, and given where we are with the budget, we are looking for ways to minimize that, so i am wondering, are there opportunities to make sure we are turning over facilities when we absolutely need here and returning those back as early as possible? >> i am going to turn this to my colleague. >> thank you. >> thank you, chair and

committee members. i am the project manager, and i would like to turn to the next slide, if possible your your -- if possible. this goes to the point supervisors shoe is just amazing. -- supervisor chiu is just raising. we were thankful the board approved this. we are providing in rent-free for a time generally going from june 1 until six months later a. this would require a significant

drop and would have been a problem for the port's financial stability. you can see in fiscal year 11- 12, we are estimating $8,000 in lost rent. we are seeing a number of tenants move out on their own on a voluntary basis. we have not instituted in the notice to tenants to get them out of the facilities, but that would be attending on board approval. in fiscal year 12-13, $3.5 million is the estimate, and in 13-14, that drops to about $2 million for a total of $6.4 million. in addition, the court is estimating security staffing and other related improvements would

give to avoid $5 million, and these costs would be reimbursed through fund-raising, but to the point you are making, there is a direct benefit of delivering these facilities later or having them returned to the court earlier, and for all of the facilities we estimate that benefit to be $190,000 a month, and if we get this direction from the committee, we will go back to the event authority and see if there is a more of efficient use of the facilities. we have to accommodate the event planned commo, so we want to mae are delivering, and now of we would take that back. goojonathan spent a lot of time talking about the improvements they are going to make.

the port is undertaking a lot of waterfront improvement of our really going to represent a pretty dramatic change to the waterfront. in the south beach area it has been a red flag area. when that is done, and they will undertake the wharf project. they have a composed completion date of june 1, 2013. seeing that accelerated is really going to help the neighborhood. we have already started the process of relocating.

it would be reconnected after the match along with phase two of the cruise terminal. the authority is contributing $2 million to that effort. toward staff has been before us on a number of occasions to talk about the cruise terminal. the plan would be to complete phase one by march of 2013, to deliver as part of the america's cup village improvements on a complex and. the court would undertake removal of this pier, which was previously used for parking. it is right between pier 1 and the ferry building. it would substantially improve the building a. we have talked about here is 70.

that is a project we hope to bring to this committee for your consideration, but that would have substantial air quality benefits for the southeast neighborhood. aport finance team with the help of others at the port has done a great deal of financial analysis. jonathan earlier talked about a total of land improvements that have a net present value of approximately $90 million, and i think the question some of you are asking is is it worth it to undertake that amount of work under this deal, so the analysis and now here is to look out whether there was no america's cup and we continue to collect rent from them, what would the revenues to the port

steve? -- wedgewood revenues to the port -- what would revenues to the port be, and we are looking at a total lost rent of 52 port $5 million, and for 26 28 cents, almost $15 million. -- 42008, almost 15 -- an four port 28, almost $15 million. we would like to talk about what would happen if there is no improvement. it has a 10-your use for life, and once it is red tagged and sitting there, it becomes an influence like you're 36, so we

have done some estimates, and we are seeing a cost around $41 million, and that would certainly improve the bay and remove the concrete structure, but it would provide no impact on the porch. this is another way of looking at the benefit on the courport. the engineering division does facility assessments for each of the peers. most of them were built 80 to 100 years ago. the engineers go out to assess whether or not the structure can continue to serve current use, and they will go under avathe

piers to assess the condition. the current estimate is the pier 26 would have 15 years, as would appear 28 -- pier 28. we estimate a 10-year lengths for the facility. pier 29 is in better condition because its substructure is tied to the other. if these facilities are developed and undergo substantial improvement, the life of the facilities would exceed 56 years, so they would continue to be useful economic assets far longer than without the america's cup, so i may just

go over a few components rather than going through everything. i think i will focus on benefits. you mention the capital plan and what support had planned in terms of the capital plan. in 2006 and when we first published this, it was just assessing the overall need. we were still in contract for " mental development, -- contract for developmenta. after that was determined not to be feasible, we have not programmed money in the capital plan. we do have a prioritization process we use in terms of

prioritizing the limited funds available to the port, and it looks of the revenue potential. it looks set whether or not it restores cultural resources, benefits the environment, etc., and we will be pretty are revised plan this year to the port commission meeting, and one of the great benefits of the america's cup is it addresses the need. we now have a solution we have not had in recent iteration of the plan. good >> at the time, you prioritize projects based on potential revenues. of what was the thought of the

time? in terms of potential revenue benefit at the site? >> the most recent iteration have not include a proposed capital upgrades. we have proposed other projects for financing, and we only run a capital project through the criteria of the court uses if we are proposing an upgrade, so there was not a plan to deregulate >> -- there was not alone. >> it did not hit the threshold to make it on the list of priorities in terms of what they did have its funding for? >> yes. >> yes. i would say it with respect to