authority. correct? >> i would say it is in excess of that, because there is the organizational -- supervisor kim: there is also the get to set was committed to before june 30, and are there any other amounts that we expect >> yes, there are, and i need to get back to you on that. it is another couple hundred thousand. supervisor kim: so what is planned on being advanced, the pledge of $1 million, that we would have over $9 million as of june? >> yes, i think 9.3, but i will confirm for you. supervisor kim: and this is how we expected to be for the fiscal year? >> yes, and i will get with them and see where they expected to be. supervisor kim: and i think you

mentioned this earlier. if this event happens, that we will be able to see the $30 million come forward, and i know that our share of the group has agreed to fund raising, so i think there are a lot of folks invested to make sure this is a success. the question i have, from our perspective as a city, the less we are expected to pay, it is not so much are we going to get $30 million over the time we are spending the money, but is it going to match up with our cash flow. that is a big concern to us. as you spoke about the mou, i am not sure this is a question for the comptroller's office, but i am interesting to see how our fundraising efforts in the next few years can match up with our cash flow. a thing that will be the next issue.

can we raise $30 million? i am hopeful, but will it matched up with the cash flow as we needed to? >> i would like to defer in part to the mayor's office on what they think their expense calendar will be, to have my answer that question. i am fairly confident that just as we walk through the numbers, we have the funds available or will by june 30 to meet the expenses. if you look at the way the calendar has been put forward with the events happening in august, there will be direct expenses relative to that, and we will see active fund-raising that comes from that as well that i would expect to match, and i think the second half of 2012 and the first half of 2013 should be relatively quiet on the expense side, and we would be ready to deliver the balance, and with that, i think i need to

defer to mike on what i think that will be. thank you. >> supervisors, mike martin again. i would underscore what she just said. not reaching the money budgeted this year, that was on controller reserve, and we touched a maximum of i think $150,000. just so, i think this is accurate for the fiscal year. there will be a ramping up for the 2012 events, much smaller profile spending, so there will be some there, and sort of war preparations for the 2013 to 2015 events, that begins after the start of the fiscal year. as you know, you have a two- year butting process. we have been in conversations about what the mou would look

like, and in part, we were looked at -- we were looking at the pledges to date. we will be happy to share that with you as the dialogue goes forward so you can understand. chair chu: i think that would be good because we are looking at spending over time. we might say we are going to get $30 million, we are hopeful to get $20 million, but that is a very big cash flow issue for the city to contend with, so i am wondering if the comptroller's office did speak about some ideas you are batting around in regards to an mou? >> we have talked to mr. martin about this. i think what would be ideal is a quarterly schedule that would speak not just to the cash but to the incumbrance needs because we have that.

it speaks by quarter and through the events. as you know, we're working towards for the first time a two-year budget for the city and county of san francisco that will cover not just the coming fiscal year but the fiscal year thereafter for the timing of the event, and as you were mentioning, chair chu, we would match the incumbrances to make sure we do not have imbalances with the city is fronting cash with a hope for a later reimbursement, so ideally, that is the form it would take from my perspective with whenever reports would be helpful to our office and the board of supervisors and to the mayor in terms of meeting these timelines on a more regular basis in the future. chair chu: thank you. so, mike, how far along are weight in the process? when can we expect to see what that would look like?

>> we can share a draft with you ahead of the next meeting. chair chu: thank you. supervisor kim? supervisor kim: many of this was addressed by your comments, but a realistic schedule of what our costs are, so we have some understanding of the cash flows, as chair chu mentioned, would be very important to me with the dda in a couple of weeks as well as a dollar amount this fiscal year to the city. chair chu: thank you, supervisor kim, and thank you to the chair of the committee and for your presentation. next, i want to turn it over i think to stephen berkley with the event authority. >> madam chair, supervisors.

stephen barclay. i am the director of the authority. thank you for giving me the opportunity to speak. and i would just like to round out the discussion that we just had regarding funding for the america's cup organizing committee. the event authority has in writing committed to paying $8 million in cash by the end of june 2012, and that is what we will be doing. supervisor avalos: could you pull the microphone a little closer? >> yes. bringing the event to san francisco, i suppose for us, the america's cup is really characterized by innovation, innovation in the boats,

innovation with what we're trying to do with the pictures and trying to make it look like a sports, and bringing it to san francisco and putting it on the bay extends that theme. you have heard people talk about that it will be fantastic, because for the first time, people will be able to stand on their short, be at their own windows in their offices and watch the races, but one thing that i suppose is being missed is that the events will be televised live. the helicopters that will have the television cameras in them will be facing the city. san francisco will be the backdrop for this race been broadcast live around the world. and that, in itself, is innovative, and i suggest fantastic for the city of san francisco, so we are really excited about the opportunity to bring even here in 2013.

chair chu: we are interested to continue to hear what you have to say. >> thank you. there are three requirements to be set aside for the the authority to be comfortable committing the funds necessary to host the event and to upgrade the piers. we have been consistently saying these three things ever since and even prior to the agreement, but certainly close to the agreement being signed in december 2010, and those three things are the revenue being raised to support the event. that is going to be a major determinant. the success or conclusion of the ceqa and other processes, and the third is long-term agreements that replicate the hosting of the new agreement that was signed in december 2010. with regard to the first of

those, -- i will go back. with regard to the seacor, we have been, i suppose, we have learned a lot, shall i say, about the process and how robust it is. i am amazed at the amount of work that we have got through, and i am actually proud of the work that has been created. howry objective is to be a carbon neutral event. our objective is to be a zero waste event. those things are fantastic, given the expenditure, the people involved, and those sorts of things, and so, as i stand here, i think we have made fantastic progress with regard to that. with regard to the revenue raising, it is fair to say that we got off to a slow start, but with the help of the group, we have met an excess of eight

corporations, and momentum is building. the america's cup is characterized by most of the money for the event coming in the last year, the year of the event. the fact that they have raised this money, the 12 million, prior to that, is really -- i commend them for that. we expect to get most of our money in the year of the cup, and as i said, momentum is building for us, so i am optimistic that the revenues to support the event will be there for us, so that is another. the third. is long-term agreements that replicate the host and the new agreement that was signed in december 2010. it now, we have made changes to that agreement through the course of 2011, and this changes have been made by mutual consent. the biggest change that i can talk to you about is the

authority agreeing to cap the places upon which it can use its rent credits for money spent, because the cornerstone of the deal was signed, a cornerstone on which san francisco was awarded the america's cup, was that the event authority would be reimbursed for its expenditures on actual costs. the mayor came to the event authority, came to me personally, and said, "stephen, we have a problem." "what is the problem?" and the problem was in a catastrophic situation where we had problems with the piers, we could potentially compromise the port, so he said, "we are going to have to limit the places where you get reimbursed for the money that you spent, and we agreed to that. we eliminated some piers and

also compartmentalized 26 and 28. we can only recover rent credits on those. we have shifted the risk, the majority of the project risk, from the port to ourselves, and i can tell me that we took a sharp increase in risk when we did that, but the point i am making is that we did it by mutual agreement. the second thing i will mention is the rincon area basin. part of the deal that was signed was that the authority would receive a long-term rights to that area, and that is one of the reasons, as i said, that san francisco was awarded the cup. once again, the mayor came and said," steven, we have a problem." and he pretty much said it was not going to work, so by mutual agreement, we eliminated those rights and transferred them to pier 54, miles away, having no

real linkage with some others, but, again, in the spirit of partnership, because potentially we will be partners for a long time, we looked for a solution. the point of raising all of this is only for this reason. any changes we make to the sign deal, the host an event agreement, must be done by mutual consent, because if they are not, one party has agreed, only one party is happy, and that is the point i would like to make. the final thing i would like to say is regarding time. the port and the city known that ever since we started discussions in 2010, we had wanted 2012 to be the year of construction for piers 30, 32, 27, and the cruise ship terminal. the current timetable

highlights that the board of supervisors could approve the project on february 20 it. if this happens, the major permit will be issued around the middle of march, and construction will happen around the end of march, beginning of april. straightaway, we have compressed a year-long construction project to 9 months. the teams are expected to arrive and set up. we do not have any time to delay. a nine-month construction project that used to be one year, so i am pressing upon you the importance of time over the next couple of weeks, and i really hope that we get to the 28 and that we have a successful outcome because we're really looking forward to the project. thank you. chair chu: thank you very much for your comments. if there are no comments from

the committee at this time, why do we not go to the budget analysts report? >> good afternoon, a share, members of the committee. from the budget analysts office. the board of supervisors is being asked to approve two resolutions. the second one, it would affirm that the board of supervisors intends to form a financing district on the port, in resolution of intent. the other major one does several things. it adopts the ceqa findings and approves the project as described in the final eir. it approves a memorandum of agreement with the city and the event authorities and their respective responsibilities with ceqa, and it approves the agreement of the dda between the city and the america's cup authority, and there are certain

determination rights provided in the host and any agreement, and because there was this discussion about the $12 million and the provisions, i want to start with the discussion about the impact of waving termination rights. so page 9 of the resolution states that the board of supervisors finds that the america's cup organizing committee has made some of the in progress towards meeting its year-1 fund-raising target of $12 million, and waves the right to terminate per the host and venue agreement. there has been a lot of discussion about whether that has been met or not. i do not think that we can say affirmatively that that goal has been met. i will say that when we look at the cost projections, we found that there would be a net benefit. certainly, the city would break even in terms of its net cost and may have a net benefit if

this $32 million that has been pledged to the city actually arrives in the city. we looked at another scenario where we looked at the $8 million, which we believe based on the controllers analysis, is available in terms of pledges. out of the $12 million that has been pledged, there is a $4 million in operating costs that were subtracted out of that, so i just wanted to point than out as an important point about the rights to terminate the agreement. there is another important part on page 28, that the organizing committee is required to provide the event committing a letter of credit or shorten bond in the amount of $32 million. its intent is to protect the general fund from liability by providing a source of funds for the event authority to pay claims.

the deadline or the goal for this was january 31, 2012. the organizing committee, my understanding is that negotiations are ongoing at this time, but we do not have any information on what the status of that is or what the status is going to be, so if the board of supervisors does approve the agreement, and they do waive their right to terminate, whether or not the organizing committee has provided the sure to bond, so those are two pieces that are part of the legislation that is before you. the other piece, because i think a lot of discussion is about cost and changes in cost, so i want to focus this on our actual revenue that we presented in our report. basically, we recommend the proposed be redone, while

continuing to do this. we are recognizing be given authority is assuming some risk. and finding the improvements for the court. but we do have some non specific recommendations that we do have on page 29 of the report. first, under the proposed, even authority is reimbursed based on actual expenditures. i think this was alluded to by jonathan when he gave his presentation. our recommendation rather than recommendations, it would be from third-party, so there would be reimbursement for expenditures. second, estimated costs for 30 and 32, these are costs that happen after the event. $32.10 million out of the total

cost of over $100 million, so we recommend there be a revision so that the port reports back to the board of supervisors prior to the word beginning of the most fiscally effective options and also may be considered rather the city rather than the event authority make these upgrades. part of the consideration would be the reimbursement would be per year they may have funds that are less expensive, should they proceed with that. and then the port must pay precipitation up to 15 years after the termination for 32 and 26 and 28. this is a new provision. it was not in the post and the new agreement. the present vallium to the event authority is actually pretty negligible. it was not in the numbers that

the port estimate on the present value of their reimbursement, but it will impact report for 91 years into the future. fourth, we recommend that the board could consider imposing a cap on the expenditures to be reimbursed, and i know there is discussion on that today. next, the property transfers. this is something that was in the host and the new agreement that was approved by the board on december 14, 2010. our recommendation is to go back to that agreement, but this would be not the first sale of condominiums. it would be on the resale. the sec and with the net proceeds for more than 55% rights in any long-term leases, not on the force but on subsequent transfers.

especially because participation and proceeds would not occur with the first transaction, but subsequent transactions, it does not significantly reduce the amount of the reimbursement to the event authority and would provide a fair return to the port. since the event authority should return short-term venues at the end of the event, instead of six months after, the port would be able to lease those properties out and get revenues from those properties immediately, helping with port cost. the event authority should retain piers 26 and 28 between the end of current leases and commencement of future releases. under the of which will host and the new agreement approved by the board, there was not this -- under the original host and the new agreement approved by the board -- and venue agreement

approved by the board, the port would lose that source of rent revenue during that period. 8, in the event authority should return pier 29 to the port at the close of the event. as it is, they can maintain it for up to six months, not entering a longer-term lease. finally, there should be rent considered by the consumer price index. there is a significant delay in the start of these leases. this is particularly radical. it is already there for pier 29, but is absent for 26 and 28. supervisor kim: i was wondering

if you could articulate further -- from your perspective as the budget analyst, what exactly is the risk that the event authority has taken on in this agreement? i have an understanding of the risks the city is taking on in improving -- in approving the cda, but it is not clear what the event authority is taking on as a risk. >> madam chair, to answer this question, i think that would be best answered by the port, or the oewd. as we have looked at development agreements in the past, the belt -- the developer assume some risk in terms of return on their investment. supervisor kim: that is fairly clear to me. but in this case, the event

authority will be reimbursed. there is a schedule put in place to reimburse them for the expenses they made for the infrastructure. for example, if the ifd is enough, they can go on to the 10 year lease. it keeps going. the only risk ic for the event authority is that it is a time at which they will get paid back, the length of time it takes for reimbursement. the city has to pay an 11% interest rate on the amount. i am not sure. that negates some of the risk on the event authority. i keep hearing the event authority is taking on risks. that is not clear to me. nobody has been able to articulate to me what that risk is. >> jonathan stern, from the port. i received a similar inquiry from the port commission.

i had prepared this slide on the screen. in the interest of time, we did not give a full presentation like we did the port commission. there are a number of risk factors, if i could have the slide above these -- up on the screen, the we have talked about in terms of development. the first test to do with it -- taking this out of order, to cut to the construction and costs risk we of talk about, the budget analysts have pointed out a number of ways and the supervisors have pointed out the ways there are cost risks and cost reimbursement risks, and whether the standards should be a practical cap. based on the estimates we are showing, that balance between $88 million in the present value on the engineering estimates for cost, which third-party

engineers have already verified, it looks like the practical cap of what is offered for reimbursable sources, for all intents and purposes, cover those costs and no other costs. any cost containment is essentially achieve as a practical matter in the dda. that is the construction risk at the bottom. there are other risk factors we discussed with the port commission. the first is entitlement risk. i touched on this earlier. the way they are reimbursed, for the most part, is through development rights. seawall lot 330 is a piece of property with a certain appraised value that is part of the host agreement. that is relatively certain. in other cases, it is steps -- is that the real value of reimbursement for the real costs that will occur in 2012 was a

future development value, based on what they can get improved and built. the entitlement risk is high. we acknowledge they have not yet come up with a plan. we do not know if it is something they can get approved, or will really make enough money to meet the estimates we have put up there today. supervisor kim: in terms of the development rights for the sea wall lot 330 -- is it 330? there is something that are building and a risk there will not get their costs back through the sale of the condo units. in terms of the actual costs the event authority is committing to today, they will get reimbursed by the city through the schedule we are putting forward. i would like to see a more equitable distribution of the equitable distribution of the risk.