>> >>

>> push

>> it worked in the renovation and we believe that it will work for the expansion. we believe that there is tremendous public benefit, but job creation, and city, general fund creation. this process today is just the beginning of a long process. we will be loved with a great amount of community out reach and public communication, because we believe that not only will this be a great benefit for the community, but also for the neighborhood. i leave two blocks from the center and i do care about the neighborhood that i live in and i believe that this enhancement will not only make the center

bigger but a bigger player and a better piece of our neighborhood. >> i just want to point out some of the economic facts. two billion dollars in direct spending in san francisco economy has already been lost. between 2010 and 2019 because the center was not big enough. these were groups that would have come to san francisco but decided not to because there was not enough space. the increase and average daily rate will be immediate and a long term, each time that we expanded and build one of the two buildings in the past, mascony, south, north and west, the revenue has grown and sustained itself and we believe that it will continue to happen with this next expansion, the revenue per room is the way that you value the hotel revenue is expected toin crease, 6.7 to 5.5 percent. that converts into hotel tax into the city's general fund.

the occupantcy will grow to 86 percent when the expansion grows. >> the projected occupantcy of the rooms? >> since the rooms is where it comes from, we have to say that the hotel will benefit from the assessment. >> where is it at? >> 1.5 percent. >> what is the occupantcy? >> it is about 80 percent this year. >> 79, 80 percent, thank you. >> excuse me, office of economic and workforce

development. i wanted to go over the approval process, this is for the district which is proposed to fund, you know, over two-thirds of the projects, regarding the moscone expansion, but in addition, the district wants to fund a few other things which i will go into in a minute. a few junctions where there will be a few processes for the approved project. today, we have submitted petitions, actually, they have gone up to 53.97 percent weighted in support of forming the proposed mascone expansion and today is the resolution of intention that you are considering. and after if this was approved, at the full board, then, the department of elections will mail the ballots to all of the hotels proposed to be assessed

in city and county of san francisco. and after that, there will be a public information meeting in january on the 23rd, which is included in the date of this proposed resolution of intention. and then, after that, the full board, as community as a whole would consider the resolution to establish following a ballot tabulation and public testimony. in addition, there was a validation action process to validate not only the proposed financing portion of the district but also the assessment district. so other approval processes related to the bonds, this is proposed that the city would issue bonds that would be repaid in large part by the assessments by also by the city contributions. and we will get more into this in a minute with the presentation.

but the capitol planning committee would have to you know, approve the resolution to issue bonds, and the board of supervisors again will have to after that, approve the resolution to issue bonds, following that process, there would be a validation action in the court for the issue ans of the bonds. and so this dates on here, unfortunately, i tried to correct this morning but all of the computers were down. it is actually the district information started in september of 2012 in the sense that that is when the petitions were first submitted to the board supervisors. but, that that process we are anticipating ending around june 2013, that is when we are anticipating the validation action would be concluded. the bond financing process, the resolution bonds would have to be introduced at the board and would go in front of the budget

and finance committee in january and then to the full board on the fifth of february at the same time the resolution to establish the district would go to the full board. and then, in addition to the financing, portion of this project, there is a long process for entitlements and design. that is just going to begin. and so there will be a review process, design and development, the zoning or the proposal will stay in the zoning so there will not be any proposed zoning changes. but we will need to get approval and permits from the building department. and it is anticipated that process will take two years starting december up to 2012 to december of 2014. and, anticipating start of construction in december of 2014. so i am just going to go over a little bit about the proposed

assessment district. it has two zones. similar to the current tourism improvement district. the current tourism improvement district has been a very successful portion of those funded mascone renovations. and that portion of the assessment of the current and will be sunseting at the end of december, 2013. so, in zone one, which is on or east of venas on or east of 16th street, the rate proposed in the new district is 0.5 percent from july to december of 2013, because that is a period that it will overlap with the existing moscone renovation district. and when that sunsets at the end of december, the assessment under the moscone will go up to 1.25 percent, for the duration of the district which is a proposed 32 years, ending in

2045. zone two has a different assessment rate, and that is for hotels residing west of vanness, and south, and south of 16th street, and that proposed is 0.3125 percent. and this is room revenues for tourist rentals. so for room and hotels, that generate revenue from tourists. this percent will be charged on the revenue earned from those rooms. >> could you just remind me what the current rates in zone one and two are? >> under the tourism improvement district, zone one is one percent, and zone two is 1.5 percent. but the moscone renovation portion of tho will sunset at the end of 2013. so it will go down to 1 percent in zone one, and 0.75 percent in zone two, and those funds will fund the san francisco

travel related marketing of the city for tourism industry, hotel bookings, and services of that nature. it won't go towards a capital improvement any more for moscone, the portion would sunset. >> just a clarification, you had indicated that the petition vote already came through, i think that is what we see before us. >> today we submitted additional four petitions that brought us. we originally submitted them to the board in september, but they have gone up to more of a trickled in so now it is at 53.97 percent and support. >> is there a period when you stop counting? >> yes, now. >> now, okay. >> right, because if this resolution is approved by the full board, then the ballots will be made out and the hotels will have a second chance to weigh in, a second time through the formal ballot process. >> and then i guess the

question for you in terms of the 54 percent of the total weight of the beginning of the process, there is only two percent roughly that was in opposition. so there is a 40 plus that did not participate. >> correct. >> i wonder if those are hotels, and what kind of out reach to them and i know that we will be mailing ballots to those entities, but at the same time is there an opportunity to educate them, something beyond the ballot and how do you reach out to those who are less involved with the process. >> so i will tell you the formal process and, then i will also let members from it talk about the additional out reach that they are doing to the hotels than they have done. the formal process is a notice, goes out to all of the hotels, that details the plan and the voting process.

and then, a notice actually also will be going out in three languages in addition to the ballot notice. it goes with the ballot. and then, the public sort of notice requirements that we have for our committee hearings, are in effect, but i know that the existing has been meeting with the hotels regularly and so i am going to ask joe to come up and just speak a little bit about the additional out reach to zone one and two, and zone two in particular. >> okay. >> right. thank you. >> we believe that we will have much stronger support. we only had one week to collect the petitions and we will have 45 days to collect ballots. we have done it in parts of staoet in zone one and two to communicate with the hotel community. being that we only had one week to collect the petitions that is why we feel that we did not get as many as we would like. our goal with the ballots is to

have more participation through through the building >> i like this one better. so the billing and collection, basically, how it works, in the existing and how it would work in the future is a contract with the task collector would be drafted and approved. and that would spell out when the tax collector would do in terms of billing and collection and that would be paid actually by the moscone in the district. and that is the intention that the billing would happen through the tax collector office and the collection would happen by the treasure and tax collector and they would transfer the assessments on a regular quarterly basis to the expansion district and that process has been working and being, you know has been refined, but that is the

process that exists now and that will continue end into the moscone district. >> the district would be governed under the same non-profit that manages the existing tourism improvement district and that is the san francisco improvement district management corporation. and there is a governor section in the management plan that talks about, you know, that board of directors and its competition. and then, the contracts, they will be contracts with the city and county, several considers, one for the assessment district itself between the office of economic development and the assessment district. redevelopment regarding the

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