they agreed to bring the america's cup to san francisco was quite simple. in terms of the repair of infrastructure, it was a very simple calculation. investment value would equal negative value. what that means is the amount of money that is a good day and would be paid back, and that was approved, a 11-0. sphene there was no talk about a cab or estimated cost. i will read out the actual words from the 14th of december document put in front of the board. gooif the investment value is me

than the legacy value, and it goes through a number of options. one, increasing the amount of rent credits the authority may claim. no reference to a calp. on the basis of that, the america's cup and was thought not -- was brought to san francisco. i will also talk about the other document. the words are very simple. if the investment is greater than legacy, increasing the amount of credits available, they are the same. the event authority feels very strongly that through the course of 2011 they have compromised.

we have gone from a position of no cap and actual cost to a position where we have limited our ability to recover actual costs. we went further three months ago when the mayor us both to limit it further because we could compromise the port. we did that. we have compromise even further. we have now taken out patients 29 and agreed -- page 29 and agreed. we brought the america's cup who's done francisco as part of the deal, and we have gone far enough's. >> first, as you know, what we

agreed on was not what you signed on december 31 of 2010. since the latter part of 2010, all of these have escalated. the infrastructure has gone up to $110 million. this is the cost has gone up to 51 plus. goowhat i hope we can do is shae the risk of managing where these costs need to go. if you want to rely on the november 2010 agreement, we had a sales participation but got taken out, so we are happy to go back to the. the question i have is if there are numbers to the value of

these assets, why can we add up these numbers? >> you do not want to go back to the 14th of december, but i do. prior to that meeting, you will recall the letter was sent to mayor newsom. a copy was given to you. words in that document, i will read them. if it is resolved by the board of, sentences go will not hold the right region win the right to hold the america's cup.

-- if it is resolved by the board, san francisco will not win the right to hold the america's cup. it was never agreed by the authorities. >> i appreciate your point of view. i do not agree with it. there was a robust discussion we had in committee about the assets used for reimbursement for the investments, and there seemed to be an understanding of where it was going to land, and for us to participate in this process of bringing items to this committee, trying to understand then and vote on them

and then have those agreements change after words, and we understand we are going through a useless exercise. i do not want to go through that. i want to agree today we are going through something that is best for all of us. you talk about how you were on have been -- you were on have been that day. -- were unhappy that day. i think there are ways to really come together on something that is going to work. we could make a commitment to see the language we would like to see. i think that is something that would be worthwhile to do, and i think it puts this city where

the city should be at and we can come together in a final agreement, but i do not think we are out of kuwait or we can get to this take-it-or-leave-it type of discussion. we have gone through an incredible investment. we can get to something, but it needs to be mutually agreeable. >> one thing that has happened is that san francisco was awarded the america's cup. it was awarded the america's cup on the basis of a deal, and the point that is being lost here is that after discussions of trying to put the meat on the phone, we are looking to change the deal, and i have to tell

you we are very uncomfortable with that. >> and we said what we could live with us a city by our decisions, and we expect five those are adhered to, but when we had changes the happened after december, i would like to get to a point where we can agree together about making the go forward. i know there are additional costs the did not come op. i would like to have the discussed again so we can have a better understanding about how costs may rise in the future.

>> i know that is a topic that is of interest to committee members, but i would like to stick to this topic so we can move through it methodically, because i think we have so much to go through. if we could talk about the issue. i think the question is about halcap and the issue about how d the investment get to where it is. we know a large part of it was the investment in pier 32, and i think the question is whether or not the functional cap on expenditures and reimbursements works like a cap, so i do not know if you have a quick response in terms of the expenses. >> i wanted to follow up on a couple of questions.

>> i am happy to talk about the $55 million. >> either way, if you want to speak to the investment value quickly. >> i will use the tunnel was tables to help me do this. the $55 million ham-- comparingt is like apples and oranges. if you break down the 111, you will start to understand where we are. $59 million has a $10 million contingency for expenditures. there is no mention of the costs

on top of that we have basically found out about. dredging in the area around those areas, and then you come to a third expenditure, there is another $10 million contingency. if you want to compare costs, you will probably be looking at something more like $50 million versus $70 million, and it is my understanding is truly a reflection of the knowledge today, which we have an unprecedented amount of knowledge. >> if you would like to add something. >> i think we have a lot more about what is required, and much

like operational costs, we did our best to estimate the costs, anthere are things like dredging that was not part of that original estimate. there are other peers that continued to be held by the port, so there are a couple of things in play. we take this added knowledge, and we put a box around the reimbursements. while the cost go up, that is on the event authority and not support. >> i want to go across a couple of points.

i have met with the staff, and the message i get is to not worry so much about this being our hard cap. is your understanding of the issue is whether or not there is a cab to the same as the city attorney and that of support? you agree with everything they have said in terms of whether or not there is a cap? >> i will put it into my words, if the helps. we had an unlimited ability to recover the funds spent. we agreed to reduce that by limiting the places upon which they could receive their reimbursement. this is no incentive. there is a disincentive for the authority to spend any more

money and we can get back. currently the city has put their calculations at $88.6 million. we have not done that and do not intend to, because we are happy with the methodology that is put in place. we are comfortable with it. >> one thing that might resolve this issue, and i wonder if this is something the authority would like to do. would you be interested in waving your right on what the actual costs are? because if there is a waiver on the actual lawsuit, the issue is closed. is that something you would be open to? >> they are pretty articulate,

and how each one undertakes its actions if there is a dispute. i do not see us getting into the a out all. >> would you be open to having an express waiver? that would probably resolve the issue. is that something you would be open to? >i think that is part of the challenge. short of a waiver of says you are not going to sue us, that is a challenge. what the board approved was not eventually signed by mayor newsom. >> i disagree with that comment.

what was signed was exactly the same as what was put before the board in december with regards to actual costs and no cap. we believe we have not gone along way to protect the city and the general fund. we intend to have a partnership with the city. >> if i could follow with one additional question, we hidad a meeting about this. the rays this issue we have talked about, support has stated it is $88 million value, so we assume you will be receiving $88 million for the infrastructure work.

i suggested that particular number, and you said there might be a disagreement around the discount rate you might use versus what support uses and what the value is today, and there have to be a number about what you put into what you get out. let's say that is $110 million. that is what you'd expect to get out of this deal, right? >> i think the city attorney's response was right. the city attorney articulated a situation where we are looking into the future, and we are unsure about what the numbers would be. when we collectively did was limit the bucket so that once the bucket was empty, the bucket was empty. that got us around trying to come up with numbers where it was our crystal ball verses the

city's crystal ball. we have a bucket of is a fine. we have limited its from 44 gallons down to about 20, and we have done the with the partnership and we hope to have in years to come, so we are in the strongest position impossible to believe a cap exists, and we believe it will work. we do not believe there is lack of clarity. >> when we look at a crystal ball, i do not think we anticipated expenses going up to $110 million, and it seems to me the bucket has gotten a lot larger. i am looking at how large it has grown to that we could tell people this was level of

repayment they are going to get for it. >> i just want to respond a little to what you said. one of buckets is what ever they are able to develop. that is putting tens of million dollars into the structure. they are going to make it a money-making enterprise so they can get their money back. they have to go forward and come back. it is limited. the only thing to get them to build what we want to build are the things we enumerated today. i do not want the paradigm of

the growing bucket to obscure what we have been able to achieve here. >> could i bother you for the overhead? let me see if i can add a little clarity to my sense of comfort. you heard a lot of discussions about assumptions behind the numbers today. the beauty of what we have designed is physical assets and the cash that comes off that and nothing more. if we guessed wrong about how much the tax credits to generate and it does not generate enough, the risk is on the event authority. if we guessed wrong about how much they generate because it's part of later or the development program was less than we thought, that risk is on the event authorities. get all they have is what is on

this paper. that is all we can give. that leaves us free to do what we want to do with the portfolio and other sources, so that is why the port is more comfortable than anything we have had. >> what would be wrong with the board providing and clarifying language that makes it clear in a way that meets the concerns that have been articulated here. certain things around the reimbursement, whether it is making sure there is no use of the general fund, i do not know what the limitations are, but what is wrong with the board having language that i extra protection beyond what you have

included the talks about and aggregated amount? what is wrong with that? >> i am not going to say it is right or wrong, but we are talking about the ability of the port authority to compel the city to do anything with respect to the fund, so if you reiterated that language, i think you are at the same place. >> you also heard from the event authority, they are not willing to waive the right to sue with respect to this issue. that is what they said. i understand the reasons, but that is not necessarily a comforting thing to hear it, so why not create language that provides extra protection to the taxpayers of san francisco what

is wrong with that? >> i do not think we were commenting on what was right or wrong. we are talking about what was read into the record earlier. if you reiterate it again, i think that is perfectly fine. >> are you uncomfortable with the resolution? >> i am comfortable with what we have. supervisor avalos: just some clarity on the general fund, what it means. i guess i heard there could be a payment with certificates of participation. i want to make sure that is not an option. >> participation is simply a

debt vehicle. they are issued by the city because of the credit of the city. the source of the payment could be the source of revenues. it could be whatever is determined at that time. what we are trying to do is have the maximum flexibility that if we see a dead vehicle cheaper them what is on the table right now, all we would never do we see us -- if we see a debt vehicle cheaper than what we have right now, we could use it. >> i am wondering whether i want to ok something like abouthat. is there a way to say we could borrow from the general fund but pay back to a different source? that is not possible.

>> i have to think about the longer. >> what we are hoping to do is have flexibility and makes this decision later. if you want to make this decision now, we would urge you to not foreclose the ability to use a city that vehicle. i think you're concerned -- your concern is with repayment. you could make those choices then if you are uncomfortable by about when you could do it now. we were hoping for maximum flexibility. >> thank you. and we have talked about the cap, and i am sure we may return to it. we can move on to the next item.

>> moving on to no. 3, the budget analysts pointed out that the reimbursements should be based on estimates provided by a third party engineer. what we have done is to propose a revision that would specify there would be a peer review of this proposed item. in addition, this highlights the number of the engineering review board that calls for a non- linear time sensitive analysis that will go a long way to the finding the most efficient solution so we feel very confident that the combination of those provisions will allow us to make sure what is being done is what is required to reach for the peers are safe but

not beyond that. >> next item. >> moving on to item number four, prior to the upgrade of 30 and 32, in dovetails with the situation we just had. at the time before the second phase of work, to a evaluate the financing option. >> i think we would all agree to that. >> to define this a little more, we are calling this details. what is is a participation in 50% of the revenues in these sites for the first 15 years, and this was done as a way to

make sure the projected expenses match the assets in the reimbursement stream, so this was the last one that was going to top it off and make sure we match the projected expenditures. as part of last week's discussion, there was a discussion of the potential of pursuing development rights on properties. this talks about the fact that if such a refinancing tool is identified, who in amounts that would exceed the net present value of the tail, the tail would be extinguished. if that comes into a play, it most likely would be in an amount that would distinguish the tail. the net value is tiny. we have got that already, and we are hoping it does work are.

if it does work out we would like to say there is additional value beyond what is needed to knock out the tail at those sites. we have the same size bucket, but it is a way to work towards the thing describe last week that would benefit these priorities and to limit the reimbursement need who for the porch. requiring the return of short- term revenues to the port immediately after bands. this would highlight the mitchell compromises that were locked out. the event authority, there in a challenging position. they do not know how long it will take to break down the installations there doing four things like