actual development and construction of the physical assets that the city owns of moscone convention center. >> so, in terms of the assessment funds, those are being proposed to be raised and used to fund many activities and improvements and services. one is, predominantly the majority of the funds that would be raised would be for the expansion of the center itself to pay for cost, engineering, design and construction and significantly for debt service payments to repay the certificates of participation. it also would be a portion of the budget and these ranges reflect that in certain years. you know, they are within these ranges, but they fluctuate and actual amounts percent wise are listed on page 23 and 24 of the

management plan as to how much of these the budgets would cover from year to year. the funds that ensentivizes what the city and the med is trying to attract is between 8 and 9 percent over the course of the district term. the convention, sales and marketing fund is a small portion of the budget, 0-1 percent and there is also a capital improvements and maintenance reserves between one and six percent depending on the year, to fund, once the capital improvements are in place to fund the capitol improvements and then there is an administration and a reserve to pay the treasure and tax collector and the costs of over seing the district. the proposed construction time line for the expansion is between 2015 and 2018. and the assessment district would term out in 2045, after 32 years. and the city will be issuing

the bonds and i will let nadia come up and talk about the actual financing and sort of the city's role in the public financing and the private financing and how that is used to pay back the bonds. >> what we have is a proposed plan and we have every intention to come back to the board for the certificates of participation as well as going back to the capital planning committee to bless the project before it comes back. so this just outlines the proposed structure as it stands today. with the budget of $50 million, we are proposing to issue certificates of participation, but the cash flows that are

attached in the management plans, assumes an interest rate of 6 percent. the idea that we will use the commercial paper in the interum and sell in january of 2017. we propose that the bonds would have a 30-year term with a final maturity of 2047. as lisa just outlined the med assessment is 1.25 starting in 2014 with 0.5 in the first half of the fiscal year and 1.25 in the half of the year with the final term district of 2045. we are proposing 2047 and i will get to that as we move along. of that 1.25 percent, what is available to the project is 87 percent and 7.5 percent in the first year and then it declines to 82.5 percent by 2023 and through the term of the district. the city is proposing and we

have been working with the city administrator's office, the mayor's office and the budget office and of course the travel as well as the convention bureau. and it is that the city will continue its annual contribution of $8.2 million starting in 2009. prior to 2009, the general fund particularly appropriated as high as ten million a year. and in agreement to the tid one that was put in place the city agreed to come in to pay the 8.2 million but instead to pay the improvements to moscone. what we are proposing is as soon as it is paid down by 2018. in 2019 would stack the 8.2 for the expansion, and so what you would see here is a cpi

adjustment every year for the first ten years. for 2028, and then stay flat through the term of the debt of the cop. >> in addition to that, as we will negotiate as you know the interest rate environment is pretty low when it is low, and we know when we go to the markets today we will not have any cash flow issues, the interest will range from three to four percent. but because we don't have... we don't intend to issue until 2017, we have used an assume rate of 6 percent. and in doing that, we will realize in circumstances where we will have the deficits where the general fund will have additional dollars. so we are proposing that in the event that occurs, that if we continue to collect the revenue more than we need for that service, we would fund that med assessments will repay the city

for those deficits. the next one is the stabilization fund, we know which hotel and revenues that are volatile, so the city negotiater will travel that will fund a stablization fund for future losses in all losses in revenues. and the amounts of $15 million and the goal is that as we move that portion of that $15 million it gets replenished and so it will be maintained through the term of the cod. in addition, as you know, the term of the district expires in 2045, we are proposing that we sell cops through 2047. typically when you sell bonds

>> once they are satisfied this could go back to fund the future development and capital improvement to the center. so if you look at the cash flows, you will see that the number include the med pairs, we are going to use a combination of commercial paper with certificates of participation being used to take that out and we also are using general fund operation in this current fiscal year, aappropriated $1.7 million and there is a proposal to request an additional in this calendar year. if you look at this and you take into account, current interest, the city would go to

market today. the once needed the deficit because the cash flow will be positive. and we could potentially not sell the debt out to 20467 2047 and could just have it mature to 2045. and that would require the sf travel to continue to fund the stablization fund throughout the term of the debt. but because we are far out. we have another four or five more years to go. we thought that it was safe to use an assumed interest rate of 6 percent so we can see what the scenarios or what scenarios would result. in addition the ssand the e would be funded from the assessments and not the proceeds from the cods. and the way that we have structured this is the city would collect, we would receive and we would fund that service and all of the buckets that we are proposing here and then the tickets sent over to the med. the idea is that it becomes a

lock box that is more secure rather than sending it to them and bringing it back to make those payments. >> just a quick question, how does i guess the two things that i do want to ask in the amendment that we see is the stablization and the sinking fund. how does that work and how do we start putting money into it? >> if you go into the cash flow in the highlights, we show what we did was you see the sources? the construction draws, you will see the commercial paper being used and the next to that is the city contribution with the appropriation and in this current year. and then you see the assessments. and the first column is being applied to the expansion and when you move along you go to the med assessment, we have not used the numbers that are in the management plan.

we have worked internally with the division in the controller's office to better project where we think that revenues would go. so some of the assumptions in some of them coming on-line and not included here. this is a more conservative assessment with the growth of 3 percent. and then the next piece is the city. so when you look at the total sources, and you look at the total uses, you can see in here is 2019, you start with 6.2 and it declines to 8 million. so the idea is that the prior year's deficit will be funded when the surplus of all of the other buckets have appeared. and then when you go to sinking funds because that is later in the year, because the certain here is the 2046. the idea is that income and if you add the 10.7 million the city is committing to pay and you take into account the sinking fund it should be paid at that service, so we are

having them prefund the year. and then the stablization fund and with the office and the revenue division, they did an analysis showing what in the last decade what the loss has been in terms of the revenue of the loss of the recession and it seemed like the 15 million was an appropriate number to have as a reserve to support the transaction in a term through the event of the revenues that they don't come in as we would expect. so we also negotiated that the city has a discretion to adjust the funds. so you could choose to fund the sunking fund and in the prior year's revenuing to any other. but because it is today and we will not be starting until 2017. we wanted that flexibility and so it is laid out that way and it is not set in stone, we still have the option of changing the other.

what is important, until all of these buckets are filled nothing goes back to the med it stays in city and helps to support the project. i think that what is difficult when you have a cash flow issue in the first ten years, and when you after you go passed the ten years, you are going to have surpluses so we are going to try to find a medium on how to handle that. if we were to go to market with the interest rates as low as they are. and then the negative impact goes away. and the cash flows become positive. >> there is a stablization fund and the sinking fund and prior deficits. >> the stability fund looks like you funded up to $15 million, sinking fund looks like 25 and 28. and so all of those buckets received funding from excess med assessments. >> correct.

>> until they are filled and when they are filled they get put into another bucket which is for a future possibility for expansion and etc.. >> exactly. >> it terms of the areas where we believe that there are potential variances in what we will actually experience, on the cop debt senser is 6 percent, and that could be lower. >> and then on the med expansion, what were you saying about the source theres? >> do you expect the assessments to be higher? or are we using conservative? >> what we have here is more conservative than what is in the management plan. and also we know that the likelihood that the instance in which it is going to drop and come back up, we feel that

funding the stablization fund of $15 million we are going to be in a position to weather that. and then in the cash flows in the years, 2019 and 26 or so. those are the years where the expansion or the assessment in addition to the cost, they generally are resulting in a net impact that is a negative value >> correct. >> meaning that the city is on the hook for putting in the additional funding. >> yes. >> but that could be different based on the fact that we used more conservative cop debt issue ans numbers and lower conservative assessment numbers? >> yeah. >> is there any other reason why that would change? >> off the top, no. i think that the most the interest rate and second it would be to the term, which is why we are proposing taking it

out longer. knowing that if the market improved we could change it that aligned with the district. it is the interest rate that is more volatile, the city felt more comfortable with the 8.2 knowing that is the possibility that we might have to fund any deficits but the fact that we would get a reimbursement back, you know, when we have moved on further, we are comfortable with that scenario. again the interest rates have been low for the last two years they have ranged from three percent from cop or two percent for cop. and 3.9 percent. i suspect that it will get to 6 percent. >> and then for the prior year you have the three buckets and the flexibility to deposit in those buckets.

we could as a city decide that we want to refund. >> we could do that. >> that seems like it would be a good idea to us to fund for the deficit then. stablization, than sinking fund. >> you have a 6 percent assumption at the moment. >> in order for a negative to go away, where does the rate have to come in? >> i haven't done that but when we ran the numbers at 3.79 percent, it was gone. aly there were positives and i don't have it with me. >> okay, thank you. >> so, my last slide before i take additional questions, is just focused on what are the

next steps with this proposal assessment district? and the next steps would be that if this is forwarded to the full board would be november 20th, the full board would consider the resolution of amendment of the whole that is in front of you, and if that is approved on the 20th, then the department of elections will be ininstructed to mail ballots which they will do by november 30th. the ballots would go out and there is a 45-day ballot period. so what we are proposing is to have the public information meeting at budget and finance on january 23rd. as well as that is the hearing on the issues bonds and more on the structure would go before you again at that point. >> and then, february 5th,

would be the proposed ballot hearing, where the ballots would be tabulated as well as a vote on the resolution to issue bonds. and squished in between all of that is the capital planning committee before the resolution to issue bonds comes to the budget and finance it will have to go to the capitol committee in early january or late december. we can't predict how long it will take but we estimate that it should be wrapped up by june 2013. and then, our anticipation is that the district would again in july, 2013, but in the management plan it also says, you know, that date could get pushed out depending on the validation action period. with that we take the team of the members that didn't speak as part of the city team, we

are here to answer the questions that you may have. >> is there anything that you want to add on item number eleven? >> did we call both items? >> we did. >> excuse me. >> okay. so then, yes. >> item 11, is an amendment to our article 15. it would provide some additional ways to enhance the state law for business improvement dikts and it would allow us to extend the term to 40 years when assessments are applied to pay for any bonds, or certificates of participation or similar obligations because under the state law, yes, we are allowed to issue bonds, assessment districts can issue the bonds, as well as the city can issue bonds and have them repaid by assessment district. but we wanted to clarify that

if we are going to be issuing that kind of financing. we need a longer term than what is currently allowed in our enabling ordinance, it says right now up to 15 years. so in order to issue bonds, we would need to be able to go up to possibly 40 years in this case it is going to be 32. but the ordinance would be amended to allow the 40 years in the case of such financing. and then, the ordinance also would be amended to our article 15 is proposed to be amended to also authorize the board of supervisors to have a procedure to aestablishing business-based and a stronger flesh hold of voter participation for improvement districts and that would be optional at the discretion of the board but it would be an option for the board in the future if this amendment is approved for article 15. >> thank you. >> could you speak to the amendment of the whole?

>> yes. so the amendment of the whole was necessary because we from the time that the petitions were originally, the first petitions were originally submitted to the board of supervisors that triggered the 30 percent support, which allowed the resolution of intention to be introduced. from that time forward, when we started working with the budget analyst office, it was clear that we needed to provide the full picture of the project financing now, even though this resolution is only moving forward the assessment district portion of the financing. we realize that we needed to get very clear on all of the financing terms including the city's contribution as well as the bond financing in the management plan and in the resolutions. so, we took a pause and instead of coming right to committee, we regrouped with all of the different city agencies and the

tid and the san francisco travel and negotiated the terms that we presented to you today. so that is a lot what is in the amendment in the whole and in addition to clean up items that we needed to fix. >> okay. >> starting from the dates and other type of... >> thank you and from my understanding from the city attorney, these amendment of the whole is not subnative in nature and so we can take action on it today. >> let's go to the analyst report. >> >> from the budget analyst office, and there are two items before you, the first the ordinance, has indicated to mend the business and tax regulation code to extend the future business improvement

districts that are created from the current limitation of 15 years to up to 40 years and would provide an alternative weighted two-thirds vote approval that the board could approve as future business improvement districts come forward. and as this is permissive legislation, there is no impact of the proposed ordinance and we recommend approval. we write in the resolution that is before you, which would declare the board of supervisors intent to the new expansion district and for assessments on the hotels city wide, with the two areas, area one and two having the different assessment values, there is a table in our report, table two that shows on page 7, that shows the two zones and the different assessments on the gross revenues. and it has been presented, i

will just go briefly. that and shown in an attachment three, on pages 15 to 17 of our report and as discussed in what is now the revised management district plan that is before you. there would be an estimated total 19.3 million assessments collected in the first year, 87 and a half percent of that or 16.9 million would be used for the moscone center expansion activities. and an additional one percent of 193,000 of those from the first year will fund the capital reserve funds to pay for the improvement at the center. and the med would also provide funding for an estimated 9 percent or 1.7 million in the first year for the convention incentive fund to attract business meetings to san francisco and 2.5 percent or

483,000 in the first year to the administration and operating reserve fund. these percentage allocations would change, that it would go down to 85.2 and the capital reserve will increase from 1 to 6 percent over that time. and shown in attachment 4 of our report, it is on page 18, this is the presentation by nadia of the correcter of the controller office of public finance there is estimated to be a total almost $1 billion of the moscone convention center certificates of participation, that will cover the principal and interest costs to be paid over the 30-year term at the conservative 6 percent estimated interest rate and that would be repaid with an

estimated total of 930 million dollars of assessment hotel assessments from 2013 through 2045. again, assuming that the 1.25 percent in the zone one and 0.3125 in zone two, in addition there will be about 300 million dollars of city general fund contributions from 2019 to 2047 ranging from 8.2 million in the first year toup 10.7 million in the latter years. >> we did have many amendments they have included all of the

amendments that we identified in our report. we do indicate that approval of the proposed amendment of the whole through the policy decision for the board. because it is our feeling at this point that if you go forward although this is a resolution of intent, this will trigger the ballot and the vote by the hotels. this will trigger approval of the plans, which is the commitment and is now in the proposed resolution that the city will contribute beginning the 8.2 million dollars a year, going up to 10.7 million a year. about $300,000 over the term and also knowing that the hotels currently with their petitions have over a 50 percent return rate. it is likely that this will come back with a favorable approval from the hotels so we

if you want to go forward with the expansion of the center with the city contributions. >> that would be a city-run project correct? >> yes, it would be a city-run project. the other folks will be managing? >> thank you, why don't we open this up for public comment, if there are no questions at this time. i will call the names on the card.