reimbursement of the major themes. there are major categories of work. these are some of the projects listed by the general agreement and there is additional work that can be dredging, spectator vessels, both of these categories will mainly happen but they can also be deferred and there are some different authority infrastructures. hopefully, some additional work at pier 26 at 28. the authority has the right to do other works and hopefully we will get reimbursed for it but they have the right to do other work on property. that being said, there is the new dda which is similar to the presentation that we made.

this government and limits the way that the work is reimbursed. if they do this work, this would be about $80 million an improvement. these sources are reimbursed with a limited order of repayment and that is a really important point, that has been improved and a host of agreements. the deal is $55 million of improvement for the sale and a no cost police. after that, and there is pierced 30, 32, at interim -- and if

necessary, potentially long-term rights at pier 29 including a 66-yong term lease and improvement. if they do not pay them back at that point, the authority has a right to claim 50% up to the station rents and a form for a subsequent leaks. we presented this orally on december 16th and has not changed since then. this has a limited order of repayment options, whether they choose to perform that to be reimbursed, it starts off with long-term leases. thus began at $6 per square foot.

this is the next source of repayment and this goes beyond the 66 year lease. in this case, there is some hope that there would be other sources and if we provide these for historic rehabilitation, that would distinguish that the other way. they are starting to discuss what the planning department and others within the city which is some expansion of the transfer and development rights which is currently being used in the district and we are talking about expanding it to the port properties as well. there is a lot of details we have worked out from a policy level and from a details level. the other major work is dredging for spectator vessels and just to clarify, what would happen to reimbursed the dredging expenses

undertaking the additional work, the port authority can get exclusive agreements for one or two sites and long-term leases which will be a commercially reasonable rate termed lease with credits based on what they perform and additional work. the two primary names, we have some infrastructure challenges, substructure challenges that we would also give them the benefits. any work that has to be done to make the marin a work and the other thing is that the parties agree on a difference police. this is important because as we have found out, there is the opener water basins.

there are a series of other small changes. there is relatively minor and there are changes that are reflected in the memo. there are some of the termination provisions, that is one change. and there is the additional termination right. the authority has determination rise to be clarified the issues and the procedures for asking for additional news.

this is potentially possible that the crews could happen there and there is a procedure in the document. similarly, pier 80 is poured produce and we're also calling out the trust uses and commercial fishing as something that could happen even within the authorities water area. this clarifies assignments. it also be designates the works. we have undertaken the demolition and one of the core things we're doing and it really clarified the number of other terms and i covered almost all of them there. unless our questions, i was going to have this back over to elaine to discuss the financial analysis. >> thank you, jonathan.

the staff report that we issued on december 10th included in this concept of nonexclusive balancing meaning that there is always a core concept in the term sheet, in the signed -- that the event authority is repaid for improvements to our property. the staff report included a concept of nonexclusive balancing whereby the venue sides and this would be in a waterfall of repayment options. this focused a lot on buying out investment, different ways to handle that said that we could retain those peers because of the revenue generation which was stronger than the debt service. this does not include the

nonexclusive balancing and setting a defined set of repayment sources dramatically improve the financial impact and risks to the port considerably. i will show you that now. i will go over the short term revenue loss and event-related costs. the port capital projects that are the requirements and they go into the long-term development and what that means in terms of financial impact and briefly cover the budget analyst recommendation that the port was issued last week and will be in front of the finance committee tomorrow so i wanted the commission to be aware of the recommendations and then i will turn it back to jonathan to talk about the risks and rewards. the venue sides are going to be provided to the event authority rent-free and they generally have the delivery dates that

very and generally returned to the port. we can hook up shoreside power and there are also differences in peter 80. the general fund is reimbursing the lost rent under the mou and these are offset by the general fund. we estimate the cost to be $6.4 million and that will change either at the front end or the back and and get smaller and it would reduce it what the general fund pays us and that is what the budget analyst recommendations. the tenant relocation payments, security staffing, all of the short term project staffs not all of the short term project costs. we would be reimbursed contingent upon america's cup

organizing committee fund raising. we have included a port ride a fund for the project costs as a contingency but we may in fact be reimbursed. in short, the short-term impact as two funding sources. the capital projects that are required as a result are over and on the planned port projects. they include the pier 36 removal, we have a budget for that. we were happy that the requirements that are in the dda match the project we were planning to perform. we do have a new requirement which is to install shoreside

power at pier 70. this is required as a mitigation. this is a $5.7 million project and it is a requirement but luckily we found two good funding sources of surcharge on electricity and a potential puc incentive if we reach a certain rate of usage which will pay the project cost back. we will send that back to you with more details. this is a new project requirement but it also it advances and business theme of hours to enhance the shipyard and in an environmentally sustainable way. to get to the long-term development, jonathan has already gone over the different requirements but there are two

sources of repayment. one is infrastructure work, the other is the story work. all that is included is listed here. this is pure 30, 32. those are the rates needed to stage the race and those that needed for the development after the event. that can be deferred up to 10 years. then there are other related improvements for pier 29, short power, regulations, etc. included in that infrastructure work basket. here is the budget for authority infrastructure work and this includes both pre match and post match work. the total is 111.3 million. you'll notice on this chart that there are grayed out columns,

those are work that remain under the ports control. some are direct improvement to assets. we will continue to control. the net present value is $88.5 million. >> this has not change, right? this is the same as what we have seen before? >> this is substantially the same as what you have seen before. the port staff memo in december, there was an error in the calculation so it has gone up but it is basically a rounding error in terms of what you are seeing. how was the authority repaid for this level of investment? jonathan laid out the waterfall and i wanted to show you the value that is associated with that. this assumes the $111 million

investment but remember the net present value is 80.5 million. the sources of repayment, the interim leases >> interim lease at 29, and the residual on pier 30-steady to. the total, $88.7 million. you will note that the event authority's budget for. the infrastructure work is very close to the sources of repayment. 88.5 compared to $80.7 million. -- $88.7 million. this is work at pier 26 and 28, the total is $38.8 million. here, you will see a demonstration of the services of

the payment. the value is assisted with these sources. a 66-year lease. this is a historic tax credit, 20 million. and the residuals or another alternative. it is is explicitly stating that if we can find another presentation source like the financing tool, that would be extinguished. the net present value of the improvements the authority made on 26 and 28 are basically i known at this point but we know the value of potential repayment sources. what does this mean to the port in terms of our opportunity costs? we know what the repayment sources are for this large amount of private investment. i just wanted to briefly explain the methodology.

we looked at the assets and a bit remaining useful life according to our engineering department and the potential rent from our uses on these assets for authority infrastructure work, the opportunity costs to the port is $52.5 million and that is the rent we would have otherwise received from those peers with the existing resources, existing rents. if you think about that $52 million compared to the benefits and the investment of $111 million, you can see clearly that the benefits of the event, the development potential are greater than the opportunity costs of this lost went. for additional work come the ports opportunity cost is only

14.9 million and that is the rent we would have received for the useful life of those assets. the additional work is leveraged with lots of other sources. so, while the of that authority can be repaid 38.8 million coming up to the cost is only 14.9 million. one of the benefits of this project is the event authority will extend the useful lives of our assets. the purple color is the useful life for the port. 3:30 will extend into the far future the black indicates the time between their race and the

development. i purposefully made it that green because it is paid to the port, not a rent credit source. the gray is the long-term leases. the repayments sources. the blue indicates that tails. you can see graphically how the port under existing plans would not be able to extend the terms and we are maximizing value of repayment of this private investment. i spent a lot of time talking about the buyout option. i wanted to let you know how works. the port must notify the event authority of its intent to buy out six months after approving the scope of work. the buyout must be completed within five years of

notification. it does not eliminate expenses of the functional cap. this shows you the current cost estimate. it assumes a buyout of 10 million. just to give you a sense to buy back pier 29, we would need to get back because the buyout does not eliminate the sources you see in the chart next to it. the expenses would exceed the amount of the buyout.

it depends on the estimates of total costs whether it is beneficial to the ports to exercise this option. i want to go in to the budget analyst recommendations. that deal we initiated because of the non-exclusive options are off the table, we have balanced benefits with cost and risks and rewards. i wanted to tell you what they are. the first is to base costs on estimates rather than actual cost. this is an idea to contain cost increases. the budget analysts would like the board of supervisors to look at post match expenditure on 30-32 and require that we talked

to the board of supervisors about the most economically efficient way to perform that work, whether it is doing it ourselves, buying out the investment, or having them do the work and it reimbursing them. the budget analyst at recommends a cap on spending. we have a functional cap and recommend a hard cap on spending and recommend all short-term of venues immediately after the event. i would categorize all of these risk containment recommendations. this one, i would characterize as consistency least terms. they would have the same

methodology as pier 29 which is to escalate the base rents prior to the start dates of the long term lease. the next steps are to take the current proposal and returned it to the terms of the board of supervisors approved in 2010, which would eliminate the financial tables that go out 15 years after the long term lease. they recommend participation be put back into the deal which is specifically for a transfer fee equal to 1%. participation they are asking to require the authorities to retain peers 20 and 28 unless the authority expenditures don't require those assets.

this is a leasing risk and interest risk. their thinking is the port would have difficulty releasing those in the short term and we ought to be making payments to the authority infrastructure to avoid that sitting there and accruing at 11% per year. with that, i will turn it back to jonathan but i will be able to answer any questions that you have. >> thank you. starting from the budget analyst recommendations, i'm not going to go over this again but i want to reemphasize that these are a very sound recommendations in terms of thinking about financial risks. every real estate deal is a negotiated deal, so i would be happy to answer any questions about that. before i respond to any questions about that, i thought we should talk about the project

benefits and the extraordinary risk profiles. to me, that answers the questions of why there might be extraordinary terms, partially because this is an extraordinary deal. the event has a dramatic lift of benefits. they are also to the city or to the public and many of them have been hit on today. it has to do with the $111 million of improvements to the property and transfer to the capital plan costs that the support already has as we found out in the finance and budget section. we are finding sources for relieving port of some of those capital plan risks. there's also a benefit to the maritime histories. that is something we see as a key benefit. there are a lot of benefits you

can see from this event. the similar kind of benefits that accrue to the city overall. one of our primary industries city-wide is tourism and this is a flood of tourism and its own right and a lot of exposure and there is financial benefits. we have heard varying estimates of the overall dollars spent, but they are very high. all of them seem to be over a billion dollars. softer goals include the completion of redevelopment of the area of the waterfront. we have struggled to redevelop appears that are left. there are also a temporary jobs. almost 9000 jobs. these are significant benefits

and that is why the d.a. does not stand alone as a real-estate project. it is embedded within an event. there's an extraordinary risk profile which i would say there are extraordinary risks, but there are extraordinary opportunities. let's go through some of the normal risk profiles. these are the broad categories and there are some really good reasons it has shaped up this way. we don't know yet what is going to happen. the port commission contains those controls. that makes it the rest to the authority high. -- the risk to the authority high. they say we will get repaid by revenues but because they don't

know the uses or magnitude, this is a big risk they're taking. this is a risk profile that is advantageous. this gives them flexibility and they have 10 years to try it out. it is hard to assess. on the construction side, the normal side has to do with time and money and how much it's going to cost and time over run. i'm confident they will be able to perform even on the tight schedule that they had.

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