, 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 gacap.

>> yes, it is a functional cab. >> could you talk about what that means? >> what it means is that it serves the same purpose as a hard cap, because it provides a bucket by which the authority will be reimbursed, and once that is emptied the authority has no other sources under this agreement. >> just so i have some comfort, as the authorities and above and beyond their actual cost -- if the authorities to bend above and beyond their actual cost, is the city at all liable for those at additional cost set? >> -- those additional costs?

>> not under this. i should say this is all the city is obligated to reimburse the authority for, but should the authority to construct a vertical development, presumably it will have an opportunity to recover some of the costs through the regular development process and the kinds of profits it might receive from that development. >> could you repeat that? >> the city has a finite bucket, so that is as far as the city will go, but the authority itself has the ability to recover additional funds. >> they can increase the value of those assets, and if the

value could increase, they could be reimbursed for additional costs. >> there is the sale of condos, but it will not be at the expense of the general fund. cracks in no way with they have an actual claim -- >> in no way would they have the authority to draw from the other sources to? >> not under this agreement. supervisor kim: is there a cap about how much of the bond proceeds, or is it about any of those we are putting forward today their mo? >> i got this one. it is all of the net proceeds

issued. >> is any and all proceeds? >> the concept is the infrastructure financing district revenues would accrue annually for a time. they would be captured under a bond issuance of the front end, and the net proceeds would be in this bucket. there would be a collection the exceeds that because you also have to provide for coverage. it is not all, but it is the majority. >> my understanding is the funds, the dollars that come out is also depend on -- intended for other uses. is that correct, or is it for the expenses by the havana authorities raided by the event

authority -- is it for the expense of the event authority. >> it is dedicated to infrastructure work. we have not planned development of these sites. there is 8664, which provides the state's share of tax implements. those will be available to fund other facilities along the waterfront. >> i want to clarify that again. and i do actually want to talk about taking of a lot, but i will talk about five out a later point. -- talk about that at a later

point your go. >> i have had numerous conversations, and it is not easy, because we have a different understanding of what an account is. we are talking about a hard asset accoucap, on where you can draw from in an asset perspective. there were a number of us who had a concern that if there was not a cap you would be able to dip into the general fund. would it be possible to put in languages that clearly states it would never accrue to the general fund or other capital streams, i understand this

language said it is exclusive, but just to make it abundantly clear, has that been considered? >> it has been considered, in part pekoebecause it could invoe city funds or pork funds. goowe have a clear statement of what it can be. we feel that is appropriate to provide the comforts. >> and we have a place holder of $12.3 million. and your perspective is that could be general funds. goo>> in the agreement that was

executed in december, 2010, there was a buyout option that could have been advantageous. the city's cost of borrowing is a lot less than the rate of a cruel -- rate of a cruel, so there may be a way to move forward. we did not want to constrain or tie the hands of anybody from being able to take that option, because we felt it was the right thing to do to get 29 off the table but maintain the reimbursement opportunities. >> i appreciate that, but i think you are playing to concerns that while it may be advantageous, and we may be dependent on the general fund. if we work through this, we could pass legislation to undo that.

if we were to say this obligation would not ever dip into the general fund, and if we wanted to do that, we could actually do the. good >> absolutely. i am talking about negotiating an agreement. certainly the board can make it part of its policy. this is how we will treat it going forward. >> i am wondering can we put that into the resolution. >> i see the point you are making, and i understand the concerns, but i feel like what we would be doing if we took that action, we are playing to the perception we might take into the general fund, when it may be advantageous to issue debt because our credit is better than the port on its own, so it is not necessarily that we are dipping into the

general fund to cut sources. it is clear we only have a limited number of assets. if we made an amendment, it is really to solve and optics at issue rather than it is in the best interest of the city. we may want to do oaa cop. i am not sure it is the best thing to solve an optical issue. >> i understand, and i could see maybe there is a circumstance in which this would be possible, but i think there are members of the public who worry that without stronger language that reflects more strongly, who you're talking about general fund to dollars, and i also understand from an event perspective there issue as well.

i want to understand why we cannot clarify with a bit more certainty numbers we already know have been costed out. >> one way we could get to this, if it is to put in which we do not want to give to the general fund, that can put in, but unless we can say it is to our advantage to do so. something like that that it is financially better for us to do that. >> supervisors, council brought to my attention the existing ndda, in no event can they comply the city to use the port fund to repay other indebtedness.

limitations will not apply to the port of the city to use other sources of funds for any reimbursable work, so i think you have the authority to determine how this gets done going forward. i think this gives you the flexibility. >> i know mr. barclay's an audience -- in the audience, and i know there would be issues about why it would be challenging to place a numerical cap, given that we have provided numbers that lay out the value. could you explain again why would be problematic to do this? >> i am a director of the america's cup authority, anteand

what i will do is refer back to the board supervisors meeting held on the 14th of december, 2010, which i understand the account was a 11-0 in favor of the documents before the board. i understand there are six of those members on the current board. the foundation stone on which 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, and there are things like dredging that was not part of that original estimate. there are other peers that continued to be held by the port,