are there other members of the public who wish to speak on this item at this point? seeing none, public comment is closed. there was a question about a single topic or civil subject rule. can you speak to whether we believe there is a problem with the legislation because of that? >> we have approved it, and i do not see a problem with a single subject issue. the ordinance in general relates to the calculation. the board is always free to take up the issue separately, but i do not see a legal reason why these cannot all be part of the same ordinance. supervisor chu: thank you. one thing i did what to clarify in terms of the title, in the title, we should also make sure there's reference to the golden gate park concourse underground parking facility, so we will make sure that is entered into the record as we go forward. colleagues, can we take those amendments to the title and description without objection?

we will do that. do we have a motion to continue the item until next week? we have a motion to continue the item for a week, and we will do that without objection. >> this item is continued to make to -- may 2. supervisor chu: thank you. items six and seven please. >> item 6, ordinance appropriating $58,700,580 consisting of $45 million of certificates of participation 2012 proceeds, $4,539,337 of fund balance every appropriating $9,161,243 from the 2010 revenue bonds funded projects to the port commission for the development of the cruise terminal project at pier 27 and infrastructure in mitigation requirements related to the 34th america's cup event

and cruise terminal project and placing $45 million on controllers reserve pending sale of the surge of it the dissipation. supervisor chu: thank you very much. >> good morning, supervisors. thank you again for hearing this item. you have before you hear a request for issuance of certificates of for dissipation for up to $45 million. this allows us to issue a tax- exempts alternative minimum tax. we have other representatives from the port to speak for the project. what we are proposing is your typical certificate of participation project, which consists of a property leased. the idea is to use access of one of the city-owned buildings as

well as the america's cup. the goal is to use the city asset during construction so that it can reduce our borrowing costs and we can stop paying once it is completed. the cruise ship terminal would be substantive to speak to the least. there is also a trust agreement. we are required to select a trusty through a competitive process. because this is a private activity bond, it is subject to amt tax. in order to be exempt under this type of bond, it would have to have a different type of hearing. we just held that hearing this morning, it has authorized the possibility of using tax-exempt also as part of this. we also are funding, as you know, a portion of the project. we would be funding a reserve

fund. in addition, we are proposing to use commercial paper, which was previously approved by the board, and which would also allow the city to use interim financing later round in the process. you have also before you a list of documents. there is also the memorandum of understanding, which allows the city to enter into a sort of payment agreement with the port, whereby the port would be irresponsible for the base rental payment as well as all of the certificates of association. in addition, we also have the preliminary official statement, which has the city's financing conditions, and that has been updated to reflect the latest report -- a joint report issued

by the mayor's office and controller's office. we would crest you delegate authority to the controller -- we request your delegate authority. we believe we will be issuing a competitive sale. the amt is not the typical strip to the city issues. at this point, we believe there will be a competitive sale. in addition, just to clarify, with the certificates of participation, we expect there is no recourse to repossession of the assets. the investor has the right to sue for payment of debt but not to repossess the asset. i know that has been a concern for policymakers. we have assumed very

conservative rates, and we expect the service to be approximately 2.4%. we expect rates to be lower, hopefully, when we access the market. with that, if you have any specific questions, i'll be happy to answer them. supervisor chu: just wondering if you could speak to the mout that will be drafted -- to the mout that will be drafted the trip -- to the mou that will be drafted between the city and the port. >> they are non-voter-approved debt, and one of them was an exclusion for non-general fund pledged. in this case, because the port is the user and the recipient of the project, we have this agreement, which allows for them to repay the debt service fully without any general funding, so

this is just the process. in my book, we call it self- supporting debt. but that is more a general distinction. from a credit point of view, it is the general fund of the city that is the credit. supervisor chu: great. thank you. is there additional comments from the port that you would like to add? >> good morning. i am here to describe the project if he would like me to. i know you are very familiar with the projects, having heard the america's cup discussion, but i can go through that if you would like. supervisor chu: perhaps quickly we could go through the major points for members of the public. >> certainly. as a point of background, as you are aware, the america's cup agreement changed from a private

investment of about $111 million to public works projects that shifted to the port in the amount $25 million. with this change, we also retain some properties that would have otherwise been used to repay the authority. for that initial investment through long term development rights, that amounts to about 31 $9 million and ongoing events -- $3.9 million in ongoing events. we have been planning to issue debt for some time for the cruise terminal project and for shoreside power in the amount of approximately $23.2 million. as you will sleep -- see from the slides, adjustments in cost doubled the amount that we were planning to $25 million -- the amount increases $25 million for a total project amount of $25.2 million. the port is thankful to the city for allowing us to utilize c.o.p.'s.

it helps us with that coverage, and also, there's efficiencies in combining what we were planning with the america's cup agreement in terms of debt issuance costs. in terms of the projects, of course, there is a large share here for the cruise terminal project phase one. the event authority transferred about $5.6 million to our project scope. the construction is already under way. with this approval, we will be only $5.7 million shy of complete financing for the first phase of the project. the budget analyst report rightly notes that our first costs have increased from $62.4 million to $67.4 million. several factors led to this cost increase. one is the inclusion of the america's cup scope. the second is two things that would have been built into phase two of the project moving to

phase one because they are more efficient and cost-effective to do now. also, bids are trending upward. we lost the window of very favorable bidding climate. i would like to know that the port has assumed any entire growth in financing without looking to another source. also in this financing, recalling america's cup infrastructure improvement. the major project here is improvements to peers 30/32. those would have previously been the site of quite a bit of private investment. this significantly scaled back project, which maxxam a month is about $12.2 million, will allow us to use the site for the team base but also will extend the useful life of a portion of the pier from 10 to 30 years allowing for public access and continued parking and potentially pave the way for a long term development site. there are also other

improvements -- electrical, dredging. this financing takes care of america's cup permit requirements. well we do not have the final permit approved, we have a good idea in public discussion of what those improvements would be, what is required. so there is $6.5 million included here. the cost for the category may come down if our pile crew can of of the work. will be seeing an ordinance which will allow the pile grew to approve it. if we're successful, we will be able to replenish the projects we are taking from to finance this deal. then, there is the shore power project, which i know you are extraordinarily familiar with, so i will not go over that in much detail. as you know, there is a

supplemental appropriation included, which allocates the proceeds, but it also reallocate its 2010 for revenue debt -- port revenue debt. our strategy was to utilize revenue we had available before issuing new tax-exempt debt and also to be fun feedback lands project. we are funding all demolition and dredging with capital sources, operating sources rather than debt financing those improvements because they do not have a long life, and financing the remainder with c.o.p.'s. in terms of our ability to repay, we have strong ability to repay this obligation. our bonding capacity at the moment is $74 million.

it would utilize 34.6 million of that. in 2014, we will be coming back to you with another issuance. the $29.5 million -- they will be working with you to identify revenue-enhancing projects that we feel would build our binding capacity because we only have about $8.5 million left in the near term. success in the selection and implementation of those projects would be key in building our bonding capacity so we can leverage of the development opportunities and continue to improve our waterfront. the benefits of the strategy are we are utilizing what we have. the structure is better for us. it has helped us quite a bit in figuring out how to deliver our projects on time with commercial paper. overall, it is a win for the port to be able to deliver these long-term improvements to the waterfront at a reduced price.

i am here with my staff, and we can answer any of your questions. supervisor chu: great. thank you very much for the overview. if we could go to the budget analyst report. >> in addition to the increase of about $5 million or 8% for the pier 27 cruise terminal project, we report on page 5 of our report there's an increase of 3,527,000 or 60.3% for the infrastructure improvements that are required under the lease disposition agreement. on page 7 of our report, as already indicated, even with the approval of the requested supplemental appropriation, about $5.7 million of phase one of the pier 27 cruise terminal

project would remain unfunded, and additionally, $800,000 of the infrastructure projects required by the lease disposition agreement with the unfunded, so that is a total of $6.5 million, and the port reports to us that the mayor's office intends to include the 2012/2013 budget. in that, $4.9 million of general fund monies, $800,000 america's cup contribution money totaling $5.7 million, so that would take care of the phase one of the pier 27 cruise terminal project. additionally, $800,000 of america's cup organizing committee contribution to fund the infrastructure project requirements where there is a shortfall of that $800,000. we recommend all of these projects are totally consistent with prior board of supervisors policy approvals. we recommend you approve the ordinance on item six.

on items seven, -- on item 7, regarding the debt service of these certificates of participation, the total would be $71.2 million. that includes $38 million for project costs and about $32.7 million for estimated interest payments. the average annual debt service based on a 5.3% interest rate, as reported by -- or estimated, would be a total of $2,410,322 per year. also, we do report on page 8 that we concur with the port that they do have the ability to repay the debt, and we recommend that you approve this resolution, which again is consistent with your prior policy actions. supervisor chu: thank you.

while we open these items up for public comment? are there members of the public who wish to speak on items 6 and 7? >> it is kind of surprising that they decided to take charge of this catamaran in choppy waters. having said that, since i know we have a number of companies that are lbe's, went through the process only to find out now that the port is stepping into its general fund, and a budget analyst and controller's office and the board of supervisors

they that that type of model where dpw somehow is left out, but our engineering is given more than any other company would ask for and will be able to complete this project. some of you may not understand what i'm saying, but i hope you understand it in three or four months' time. i find it very surprising that nothing came before the land use. we have spent millions of dollars on pier 7. i would like the budget analyst or whoever is in charge to give me some analysis on that contract. having said that again, whatever the port does, this public trust

land that belongs to northern california, they should make every opportunity to give us jobs. thank you very much for your time. supervisor chu: thank you. are there other members of the public who wish to speak? seeing none, public comment is closed. >> i believe there was an indication from the department that there was a word in the title that needs to be eliminated. >> it was a point of clarification. it is not necessary, but it is addressed throughout the resolution. supervisor chu: so no amendment is requested? the item is before us. do we have a motion to send the item forward with recommendation? we do have a second, and we will do that without objection. thank you.

>> item 8, resolution approving fiscal year 2012-2013 community development block grant program authorizing the mayor on behalf of the city and county of san francisco to apply for, accept, and expend the city's community development block grant program in thailand from the u.s. department of housing and urban development. supervisor chu: 90. this is a pretty standard item we see every of that allows the department to be able to go forward to apply for a community development block grant funding from the federal government. there are a number of other programs or funding of grants we would also like to bring together as a package, so i would like to see if we might be able to continue this item for a week to allow those items to catch up with it. before we take that action, while we open up for public comment? are there members of the public who wish to speak on item 8 at this time? seeing none, public comment is closed. do we have a motion to continue the item for a week?

we have a motion to continue the item for a week, and we can do that without objection. we have any other items before us? >> that completes the agenda. supervisor chu: thank you. we are adjourned.

>> good morning. we are here to celebrate the reagan really we are here because of the timing. tomorrow is the anniversary of the san francisco earthquake. it was the earthquake that made us look for other sources of water that were reliable and robust for the entire area. it was the earthquake and the pressure after that that said you need to upgrade to make sure we will continue to get water for two and a half million people the has led us to this program. there are a few projects left, but we are in the middle of the really large regional projects. about $2.5 million is being spent right now.

the first person to speak about that is merely -- mayor lee. >> thank you to the commissioners who are here, the whole staff. you have done wonders. you are on schedule. i really look of these projects in quite a different way. i am really looking at what they accomplish. i am looking at job creation, and it is a wonderful understanding when you have 3 billion hours said have obtained so far for all the different crafts. this particular project i have been quite interested in, because it is one the shares with san mateo county. is one they know is important. it is with six reservoirs' that we manage, and it increases with

the improvements. it has been improved. the spillway allows for water runoff to come in and capture that as well, and it continues to reign in the cleanest water we have throughout the state. just talking about their systems, i was asking and exchanging information with there'irs. they seem to have similar challenges. they all point to an interesting situation, and it just read establishes my confirmation that it is so important that we keep our water system in place, not only about preparing for the earthquake, and you know we can

ensure the public if there is any major seismic event, and water service can be restored within 24 hours. that is important not just to san francisco residence. it is important to our neighbors. earthquake preparedness is one of the most important things i have been working on for a number your's -- a number of years in my previous capacity. we can ensure the public we are in a better position because of our water system and the investment we are making, not just in san francisco. the investments were done in partnership with all the other counties common and not only have we manage it well. we have also used every

opportunity to do local hiring along the way. local folks have had a good shot at these jobs. we shared this system with the rest of the counties and made sure the standards are continuing one of the most celebrated and innovative engineering feats in the history of our country, so i want to celebrate this milestone. there are three improvements that have converged to this point, and that is worth celebrating. it is worth reminding everybody, when people continue to suggest perhaps it is time we take down head ceci -- to take down hetch

hetchy, i believe they do not know what they are talking about. the first 35 miles is on hydroelectric power produced by our water system. thank you very much. >> as the mayor said, this is a partnership. people think of this as the san francisco water supply, but it is the regional water. we are in partnership with a lot of folks. with us today is the executive director of the conservation agencies, his vice share, who is also on the city council, and with us is the president of the san mateo county board of supervisors and the long-term leader in the city.

>> thank you. i really appreciate being here, and i want to say congratulations to the vice chair. i also served many moons ago, and at that time we wanted to work closely with san francisco, because this was a regional project, and everybody wanted to be sure this was done correctly and on budget, and we can rest assured that is the case. what is important -- they call me the queen of disaster, because after krajina -- katrina we started disaster preparedness, but most people think about an earthquake common and the concern is are we going to have the necessary water to take care of individuals thomas -- individuals to? the answer is yes. i think we have to remember an emergency is not just an earthquake.