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 paid by for their investment. there is either a payment of funds or another appear that would be subject to court commissions of the board of supervisors approval in an amount of $12.3 million, and the was negotiated based on the volume. we showed neuse the discount.

relationship, and it allowed us to continue to focus on the place where they can get their reimbursement, and it becomes a significant improvement on the document you saw, which had an amendment to deal with the cost of improving the tears. -- piers. i will cause if we want to talk about 51. >> thank you. i appreciate this movement. i am wondering if there has been in a particular assets considered moving forward. has there been any discussion of

our range of assets? >> there were a lot of different assets in the document we pulled out. that includes 19, 19 and the house, and 23, so those have the same challenges as pierre 29 those, so we have looked up and down the waterfront for potential opportunities. we need to really event that, but what we have is reflective of the basic structure, which is that the city can always choose to buy out the improvements, and that is option 1. gooas they allow us to buy it ot and not have that, that is fine. and we have another way forward, but we want to preserve the basic structure and moving ahead

with the events and thinking about what is the right development that is going to make sense to all those players. >> just to be clear, in terms of the concerns raised by the committee, this condom place and -- this contemplate removing herpier 21. support has the discretion to pay it off by cash payments, some kind of loan, or another option is to identify another source for a grant credit, but that would have to come back to the board of supervisors before we would say where that would be. >> they would have to agree to the alternate option. >> supervisor campos, i think

you are on the roster. >> one of the documents indicates there is a willingness to roomier who -- to remove pier 29 so long as the cost structure is in tact, so i am wondering what the condition is. >> this has been agreed to with the provision i just described. we wanted to make sure the functional cap remains in tact, so because the was a specifically negotiated set of options, to take pier 29 out undermines the structure. good >> was the agreement the

board approved in december? >> there was a negotiation to match cost with other rights. >> i think the question is if we did not approve something that was initially added, why should we approve providing additional value for about something when it was not even included in the original document? >> there was a legal question about the document, but i want to come back to the comment, which is this is a significant approval, but now the courts obligations are of effectively capped. their reimbursement only comes from these places, so what we are providing you with is a greater security for revenues than you had.

>> the issue about whether or not there is an actual cap remains an open question, so i will get to that as the presentation continues. >> in terms of the removal, there is not a condition of the removal. we are removing it at the moment, and what we are saying is the value is going to be made up with an option to buy out that amount or to identify it a future stream of rent credits, but that would have to come back to the board for approval i want to be very clear. the italicized languages is what has been agreed to by the authority. there are no conditions. that is what has been agreed to.

>> i know this was a major item you cared about. if there are no questions on this item, why don't we move on to the next one? >> the next item is total expenditures by the court. by defining a finite set of new reimbursement not options, we have limited obligations to find other assets, so we want to strengthen the language that describes the waterfall, so what you see is the italicized language is what has been agreed to. this so be limited exclusively

to revenues derived from the following sources. we listed the ones last week. we are happy to run through those again, but the focus on our part is not limiting the authorities cost. we want to put as much money into them to make them a productive part of arlin economy. good -- part of our economy. this has been agreed to d. supervisor campos: i appreciate the movement that has been made, but i have to say i am not satisfied in terms of whether or not we have a hard cap, and i will be on those. it is because of past experience where we have zero

list of items that were supposed to be reimbursed, but there is no cap on this item. i were you have a list of items that supposedly limits to the city's liability -- i worry you have a list of items the supposedly limits the city's liability but you have not abrogated the entire amount, so why not have a specific amount of says you cannot be reimbursed and beyond this amount demarcus items with good -- this amount? if items are really hard caps, why not have it say, this is the maximum?

my fear is you are opening the door for some future disputes about the amount that could be reimbursed, but what is interesting is there is actually a specific amount you are including. the authorities has no problem talking about hard numbers when something is removed a walk in there, so why aren't we talking about a hard, -- that they want in there, so why aren't we talking about the hard, definitive number? plexuses -- >> this is a defined number. i have a history as an attorney curios -- an attorney. by putting those specific new words in, but i would turn to

the city attorney about whether this limitation would be effective in protecting the balance sheet. >> i think the question i would have is, can you guarantee there is not going to be a dispute about whether or not something is reimbursable, and do we have an abrogation about the total cost? >> i do not think there is never a guarantee against being sued, but i do believe the structure in section 1.5, which provides the framework for reimbursement of provide what we call of functional cap, because of limits to exclusive source as the means by which the authority

can be repaid. the difficulty in putting a number cap is an issue of time and future value. the authority has a way to change its infrastructure. it has up to 10 years to complete infrastructures. as we sit here today we do not know what that number will be. >> you are saying we have a hard cap, but we do not know what live is. -- what that is. >> i want to say it is different from a hard cap.

the other issue, as you noted there was a hard number. on the other hand, one of the primary sources is infrastructure district bond proceeds. the value they will be able to derive after it has gone through an entitlement process, including further reviews and all the planning and spermicide-- and permit some re. that is the volumand value to ry the authority, and that actual

amount we cannot give you a number fourr, so we are limiting back to what they build. and we can only derived that from further development as well as these other sources, and i think by limiting sources, we have provided an exclusive means, which is an effective way of limiting the exposure. >> i have to say i appreciate the work, and from a legal standpoint, it approximates the number of a functional croap, bt

if we were talking about my own personal money and i am asking what is the amount of the check i am going to write in two or three years, i do not think you said you would be able to tell me what that amount would be, and i do have a problem with that, which is one of the reasons i agree with the recommendation that we should have a hard cap, and a hard cap is or is not, and you can get into semantics of how you calculate it, but as of today we do not know what that number is, and i think that is problematic, and even though we have a definitive list of items that is supposedly included, we are not sure what that will add up to, and i think that is a

problem, and my own personal view is we owe it to the public to make sure recondition our approval with a hard cap. i think we owe that to ourselves, and the last thing you want is five or 10 years from now to have a situation where the amount is a lot larger than anyone anticipated, and how the year explain that -- how do you explain that to the taxpayer who is going to ask you? that is why it is important to condition the approval on an actual hard cap. >> i would like to respond by saying that by limiting assets, at no time with the general fund required to cut programs. we are talking about piers 30 and 32, the amount relating to

29, and the financial tail, which is another way we can get that out of the document, so we have effectively limited the places they can go, and we have eliminated places they would not have expected it would pay into this particular transaction. >> it ends up with resources we can tap into. you say these are the assets we can recover. that is it, so the risk is on the authority if they spend what is recoverable. supervisor kim: i am glad those questions are asked. i want to ask again, you are calling this a functional ga