for me to see a $12 million commitment by june 30. i do not -- it was not in the amillia that we would get reimbursed based on actual costs and we are exposing the city to a lot of risk with the dda that is moving forward. it would make me feel more comfortable that there was a cushion for general fund in terms of how we're protecting that. i would like to see the mou hammered out before we move this out. before it comes to the full board. supervisor farrell:. as a non committee member i have been given a number of the documents here. i imagine it is a last minute for one year. in terms of working on the committing with these folks. i spent a lot of time here. we are really lucky to have

kerry running this and have someone like mark buell chairing the committee. some of the press has been taking people to task that we do not have $12 million. i hope the board does not lose the forest through the trees picture. the fact that it is hard to raise $32 million or whatever the number is we're trying to raise here, not to say it will not get done or get down on time. -- get done on time. money does not fall out of trees here. this is private money. this is not something that is obligated. i want to make sure we understand we are not relying on volunteers. in -- a hope in our dialogue and

questions that is part of the picture we're lucky we have someone who is part of this. i have seen firsthand but i have seen in presentations. i want to make sure we have that part of the -- as part of the things going for. supervisor campos: thank you prater would like to ask mike martin to come up. much has been said about how we will mitigate the risk. i do very much appreciate the fund-raising efforts that have gone on but also that will be continuing for the next two years. one of the things i wanted to dig into was this issue of what is our risk. the number that we get to, the $52 million of expenses and why we get to $32 million. we're going to raise $32 million and will expect the city is going to receive tax benefits,

not to the economy at large but the city will receive $21 million and that gets us to the $51 million in expenses that we expect we will expand in order to carry forward with that event. that is scalable. i want to understand from the port's point of view, what will be the plans to scale down those expenses? should we need to? hsu reecy there is a marker in time when fundraiser does not come in the way we expect or there is a time when we see the event is not draw the crowds would hope to and not receiving the direct tax benefit. what are the plans to reduce expenses. i do not believe that is a hard cost. grex good afternoon. -- >> that afternoon.

thanks again for the thoughtful discussion last time and engaging this today. we have provided you with a lot of information and will try to help sift through it. i would like to stop and say the exercise of drafting an mou i find helpful as someone trying to manage the city's effort. we have been engaged with the ec a say in terms of fund-raising -- understanding their fundraising strategy. linking their fund-raising progress and our process and adaptive budget prices is going to help us deliver on the promises of an event that is not only a great social and economic boom but also successful for the city's finances well. if i could have the slides. i have -- what i wanted to look from from the no.

we see last time is playing out a couple of different scenarios. it wants to use the budget and -- analysis. i want to use their base case and also there will spectator profile so we can see how that sensitivity works and how the variable costs can be managed going forward. to start out with some assumptions, i wanted to prove together a number of fixed costs that we're taking as a given and sort of a conservative analysis. the first is planning and rep -- preparations which have to take it -- place to-have been here by -- we have talked about in prior meetings. to make sure we had training expenses to ramp up for the august 2012 events. if those fall in the fiscal

year, that is abuzz indeed we did not seem -- coming. you approved an mou for lost rent over the course of the event and in 2010 there was an estimate for cruise's general fund contributions $0.50 million. we have retained this even though we understand and want to make sure that everybody is aware, this is an ongoing benefit. also providing revenue to the city was the -- city's planning. i want to point out their revenues you see on the next slide do not include predictive levels to the events. they're not projection as the 2010 analysis. we're showing a consecutive nil -- analysis. there have been taiex with its

economic benefits. that is some thing to keep in mind. and his ruling out the cost items for operational rising of the events. mccall is that. running through the costs is we did a planned level estimate. that call for 5.4 million specters and we realize that is of high estimate based on what we see coming at us but wanted to do that to show you we can take a conservative outside envelope. these costs can be adapted to reflect the spectator demand. what we're talking about here is a living city services in a way that all eligible to move around and ask congress to continue.

the waste is the fifth step -- we need to do this to put our best foot forward. they are level of effort specific. in terms of norah buses. or the number drivers. a number of -- to make sure we have the barriers out to make sure there rose -- roadways are safe for bicycles and pedestrians and automobile drivers. ruhle see -- we will see a one- third drop in the spectator and racing syndicates profile. what does that reflect? these are flexing their will costs. we make the comparisons forelands lie. you see its will and christine at the top and support of the tax remains as avid-evidenced in

the november 2010 report. under 60 million in the lower scenario. after that i wanted to do a couple of things to show how old the fund-raising will allow us to succeed. in terms of pledges with that you have the $19.50 million. if you take the full $32 million target and combine it with general fund revenues, you basically get this $52.3 million number and a 47.9 #. that resulted in a surplus in each case between seven -- or $8 million. we have the whole $2 million in your -- forehand. allied to take another step and

talk about the local break-even need. if we realize the 12.5 then been pledged what we have a total of $11 million which is fairly reflective. i think we feel like we're on target list, you approved in 2010. we need to have continued vigilance. we also need to have an adaptive budgeting strategy so we do not over radar what -- over resources. that is my overall cost presentation but i am happy to answer questions about this before. supervisor chu: in terms of this slide that you provide did earlier which was set -- $27.6 million, those are the fixed costs that we need to pay in order to get ourselves a bear raid, right? this is constant would not able to walk away.

we have fluctuations in attendance. >> correct. if they realize more percentage rents, that would reduce the calculation of what their lost rent is due to the events that there is now -- more reflection. if the rest of it is fairly static, -- in terms of the base case scenario that you laid out, the operational variable costs in terms of our police, fire, medics, many traffic, these are areas where you believe we can scale up or down depending on what we see in terms of record. >> i am not sure it will be adopted one-for-one. we have the exact same race sourcing. we're engaged in a detailed incident command planning

process with partners at the park service and partners at muni and the coast guard to make sure not only do we have everything covered but we're doing it in a way that is working. is it -- wasting expenditures are leaving a gap in our coverage. all that has to come down. that allows us to bring these adaptive management techniques forward. and weighed more by his -- will have to do that on a real-time basis. one of the things i want to note is -- this is a long duration of that. there will be peaks and valleys. some weekends with great weather and great racing and a maximum amount of people out on the waterfront. some weekdays with a lower profile, the much then the actor -- after that. we have to make sure how we spot these coming forward and how we will make sure we spend our resources wisely. supervisor kim: thank you. a question for the port.

in terms of spectators. one question that has been asked is will people come to the event? well it be like san diego? we do not have a crystal ball, from your experience and accordance with activities. what are your thoughts about spectators? >> if you do not have an opportunity to get down to the waterfront on a saturday, i would encourage you to do so. as one of most activated places because we have that promenade which acts as an ongoing street fair. as we continue to populate the peers -- before the events in 2013 we do have more that festival field. whenever there is something, some activity on the bay, whether it is the more grandiose

queen mary ii coming in in 2006 and the population turned out in droves to see that or whether it is one of the ships coming out of dry dog -- dock. people are engaged with what is going on. different from san diego, they do not have a kind of promenade or viewing platform and spectacle that expands the links of the embarcadero. as we -- one of our mandates has been to supervise public access around the perimeter. we're one of the only waterfronts we can get that close to the water over and over again. this places attract people to enjoy the waterfront when there is no activity. when there are vessels racing at the speeds they're supposed to race at, everyone will be coming out to see one tip over.

that garnered a lot of attention and has been repeated in the world series -- cities. there is a lot of excitement. we're doing better. we have tenants who are planning events to correspond with the events of the america's cup to bring in their international investors. san francisco fine arts museums are planning special exhibits. we now that the international arts festival is fund raising to try to do something. we're celebrating the 450th anniversary as the leadoff to that and we are ending with the opening of the bay bridge. 2013 is a year unlike any waterfront has seen and i am looking forward to a. supervisor kim: do you want to

welcome supervisor campos? >>supervisor campos: thank you. just having to get a little more explanation. the assumption behind the revenue. i'm not sure you talked about that the you can go deeper into how you came to where the assumptions that provide these numbers? >> they were taken from a november 2010 budget analyst report that made assumptions about how tax revenues will be collected. it was based on the bacon report. >> where are split between the general fund and many to make sure this was meted out the wrong -- right way. that was added by their analysis. supervisor campos: thank you. >> a question for the budget analyst? on the revenue assumptions that

were just provided. do you stand by these numbers? >> these numbers developed two years ago. for a report were provided on the feasibility. we look at them and worked with them as a benchmark. if it is not updated, it would take a review on our part to vet them at this point. >> there was detail about the expense projections. have you had a chance to look at those? >> i looked at those at it -- as it was provided right now. i cannot comment on them specifically. i know when i first spoke with mr. martin when we're playing the -- playing that. how those costs are broken out,

i would not able to give information. >> thank you. i know we have to work on the assumption of revenues. i have been looking at budgets now for -- before when i was a legislative aide and supervisor for three years, form -- for years almost. the projections are never right. we just have a six-month report. we have a surplus. over what we have projected. we have been under or over. i am not clear -- i could stand by it from what i am singer. the trend we have now is things are looking up in the economy. we have increased sales tax and a hotel tax and parking. we had a six month report that reports that. we could see that -- we could capture what that trend is but

it is not related to the america's cup. these are things that we do not have a certainty about. i am not clear how much want to give credence to the more not. that is something that i will move off to the side, looking forward. supervisor campos: thank you. part of the report also laid out some of the estimated costs of the city including the operational variable cost and give us something like $45 million with expenses. 26% being that operational relative costs. the key. supervisor campos? >> supervisor avalos:. i want to thank everyone who has a working on this. -- who has been working on this. supervisor avalos: reliance on

one part means the recommendations are made in other parts of the reports that have been issued, will be embraced and that is a sign we're moving in the right direction. i hope that is the spirit in which the alliance is provided. i do have a question procedurally in terms of moving forward with this item. i have not seen the mou that was discussed by the organizing committee. i know that a lot of information has been provided by them in the last there so and we appreciate that. it would be helpful for us to have an in-depth discussion about what is in the mou and whether or not that is sufficient to address of the concerns that have been raised. it is important for us to not conflict to issues. on one hand, i agree with what supervisor farrell had said in terms of the work that has been done by mcklellan.

i am appreciative of that work. i do not think anything that has been said it be taken in any way to question that. we should be very grateful. to me, that is a separate issue whether or not we as elected body that represents 11 districts, what our responsibility is in ensuring the protection of the general fund. i think that the two are not paul this does not -- this does not mean we're not grateful. i want to make that clear. i do have a concern about moving forward this item out of committee today. given the fact that there is still some questions that

remain and i agree wholeheartedly with supervisor kim as i was watching the hearing who indicated that if there are those questions, the mou was the point that you were during to when you made this statement. it is important for us to resolve those questions in committee before we send an item out. to the full board. that is why we have this committee structured to make sure these items are fully vetted and given the complexity and the boot volume of the document we're talking about, we need to make sure that there is a full vetting of those items. if there is a question about the resolution of something, the place to resolve that is here in committee. that said, i think that it is important for us to note that procedurally, while we as a body are not able to change or amend the dda, it is important to

underscore that we as the board have to improve adda. we have to give approval and we as a body have every right to amend the document that has the approval. mine understanding and i wanted to be very clear is that even though we're not allowed to amend the dda, we are allowed to amend that resolution and include conditions for our approval. if i may ask the city attorney that question through the chair. supervisor kim: -- >> you described the board is not authorized to make amendments to

an underlying contract. that is before approval. what you're describing is the board establishing a document, resolution that approves an underlying agreement and sets out the terms under which the board is authorizing or approving the agreement. the best example i can give is it is as if the board is pre- approving an agreement that contains uncertain terms and if the department is able to get those terms from the person their contrasting with, as approval and a portion -- authorization has happened at the department may not come back to the board for approval of the agreement the board has described. supervisor avalos: thank you. in my view, we should proceed with approving the america's cup

going forward. in making sure that we provide other approval, we need to make sure that approval includes key conditions led going to protect the city. is not an all or nothing proposition that you have to take this. we have every right and obligation as we approve this event, that we include in the resolution, we will be granted our approval of the conditions that need to make. we have every right and of -- every obligation to do that. i would urge my colleagues that once we get to the point where we feel comfortable taking action on this item, i do not know if that is today, given that there are many questions about this item, that we can move our approval ford and condition that on certain protections be included and what

ever is ultimately agreed to by the parties. that, i think, is the approach i hope we follow. it is an approach that will ensure that we protect the citizens and taxpayers. it will make sure that we as a board approve this project and there are many reasons and the director of the port outlined the benefits. i think that we can move this forward without forgoing the need to have some basic protections and i hope we're able to have a discussion about what those conditions and the accrual should be. i have a number of items and i am sure that others of you have other items that should be included. the hope is that if the event authority is committed to having this event in san francisco, they will understand the need for us as elected officials to protect the taxpayers of this city and county.

when the time comes for us to discuss that can addition that should -- the conditions that should be included, i look forward to having that approval. i am -- lucky to have some items that were included in the december 2010 venue agreement that will prove that has been taken out. i think we need to make sure that we reinstate a number of the items that for whatever reason for -- when reason. i think the taxpayers of sentences go will be well served if saw those items are -- san francisco will be well served if we see those items reinstated. we want to make sure the interest of the taxpayers are protected. supervisor chu: thank you. why don't we move on in the presentation? the mou language is still an

open issue. i hope folks will be working with staff to make sure that language is tight. let's move to the purview of the recommendations and the report and i would like to invite mike martin back up and we will go through each of the items. we've seen a lot of different items and it has been moving along at. it is the volume of it. it is not the most ideal in terms of getting information. what i hope we do is to go through in detail what those proposed changes are so we're well aware and all the same page. >> thank you. i will run through a number of the items that were raised at the last hearing including the ones from budget and legislative analysis. i summarized this in a chart which we have handed out. there are other copies on the stand over there.

what we have tried to do is crystallize the issues we saw coming out of that where possible and where needed. we worked with our partner to strike a mutual agreement. we can come back and say this is something we are prepared to move forward with. hopefully this discussion can help peel apart some of these threadsbut we hope it can be und as we go through it. and one of the items brought up was pier 29 as referenced earlier in the hearing. we have come to an agreement about the removal of those rights. goomethodology is to replace the asset and the refined waterfall of reimbursement so the authorities can get