is really responsible for holding the executive office in check. if we've seen what's been happening out at the mayor's office, it has really not been where it should have been, starting with land use and change in doubling what the deal was. we've been trying to hold them accountable for that ever since. in term of the deal itself and the fund-raising, i think it's appropriate and i thank supervisor avalos for calling this forward. this is the tip of the iceberg. if we believe what we read in the newspapers, mayor lee is now creating a nonprofit organization that will seek to court other major events here. i think we need to look at this event in its entirety. and see exactly what went wrong and a lot did go wrong. i want to thank supervisor mark. he was the first to call hearing that were left out of the [speaker not understood]. they were an integral part as to why it would not fail in

fund-raising goals and efforts. if you look at the structure of the deal, it was really unfair [speaker not understood] in that they should never have been left in the position to have to raise that money by themselves. they were pretty much left out saying, okay, we're going to raise $30 million to clean up larry ellison. who in their right mind is going to give money to do that? if the projections are lower, it was supposed to be $32 million cash. it wasn't going to be money taken from the hotel tax or from other business taxes. that money goes to the general fund for city services. and if they're coming back saying that money is going into their -- to making up their bottom line, you should hold firm on that as well. thank you, supervisors. >> thank you very much. next speaker, please. [speaker not understood]. >> you can submit into the record. you've already spoken. thank you. any other person member of the public who would like to comment on the fund-raising effort? if you don't come forward we will close public comment on both of these hearings. public comment is now closed.

now i would like to move on to the fund-raising effort side of things. i believe mike martin will provide an overview and then followed by perhaps the controller ben rosenfield accounting for the effort so far. i believe there may be a presentation about the economic impact report that as well, i'm open to hearing that. [speaker not understood] i'd like to get into as well. why don't we go ahead with mr. martin. and just before you start, i think -- and i mentioned this earlier, when we began the hearingv, i think it's important that we talk about the original fib tent around raising $32 million. it was to make sure we weren't going to be using general fund dollars. that was the intent of it. so we talk about now we don't have to raise as much money because we're going to be recycling back revenue we get from the hotel tax and from revenue from the event and

sales tax, retail tax into pay for putting the event on, reimbursing the city. that to me was not the intent we originally had in raising money through the organizing committee. >> right. >> thank you, supervisors. mike martin, america's cup [speaker not understood] from the economic workforce development. i'd like to get a brief overview, just a little bit of what supervisor avalos just alluded to in terms of the road we took to get here. i would suggest, supervisor, we have john [speaker not understood] from the bay area council economic institute here. i suggest you be the one to present the economic finding. we can have that back and forth with the expert. and i come back up to sort of continue the discussion with our budget. does that make sense to you as a way moving forward? >> then i would like to get first a report on just where the progress is, the [speaker not understood] on the fund-raising effort. whoever the best person is to do that. i have a letter from the

controller that summarizes that. maybe we can go to the controller first and then go on to the economic impact report. >> okay, that sounds fine. >> mr. controller? >> supervisors, ben rose not field, controller. would it be helpful to provide an overview on our update of the fund-raising efforts of the calc? we at your request, supervisor avalos, updated our analysis from about a year ago where staff from my office and the port with the help of the acoc reviewed written contracts, budgets and grant agreements to provide you and the mayor with an update on the status of their fund-raising effort. so, we issued that memo yesterday. i have copies here. i believe each of you has a copy in front much you as well, that short memo. probably easiest to talk off the last page of that memo if it's helpful.

and this provides kind of a side by side comparison of where we find the acoc's fund-raising efforts now in march of 2013 versus where we found in february 2012, just over a year ago. so, a year ago in our prior review, we found at that time evident either cash in hand or written evidence of pledges or commitments totaling $12 million or just over $12 million of which $800,000 cash had been received by the acoc at that point. we update -- we fast forward in time 13 months, we find the $12 million has increased to approximately 13.9 million. so, there has been an increase of 1.9 million. and now 12 million of that 13.9 million has been received in cash. i should point out in both the prior report and in the current report the majority of funds

received by the acoc thus far has come from the event authority itself in the form of first a concession agreement and now a loan that's now been modified now into a loan. so, the majority of funds received are, in essence, accelerations of future sponsorships or loans against future sponsorships. so, to point that out. to reference back to the host and venue agreement and the fund-raising commitments and language there, and others will correct me if their understanding is different from mine, but in that agreement the acoc committed i think endeavored to raise $32 million to help defray a portion of city expenses associated with the event. i think that's the way the language there works. it established fund-raising targets for the acoc over the three-year period with a

campaign of $12 million in the first year which our report in february 2012 kind of quote-unquote certified that they had met. and each of the secondv two years established an incremental fund-raising goal of an additional $10 million. so, versus those targets, we find a bit falling short of that effort in our most recent update. so, raising just over approximately $2 million versus 10. that was the goal, at least as outlined at the time of the host and venue agreement. our focus here has really been, i should say, a couple things has been really on the fund-raising so we haven't really -- we had this -- haven't reviewed expenses that the city incurred. and i know that we'll hear presentations here those are declined. and we have also not performed a review of the economic -- how the economic benefits to the city and region have changed as a result of the changing

expectations for the race. so, we've limited our review to the fund-raising effort itself. i should also say the number we're reporting here today reflects only pledges or cash that are documented at this point. so, of course, it doesn't yet -- it doesn't reflect cases or additional fund-raising i know the acoc and others are endeavoring to raise for the event where something hasn't yet entered into the form of a written pledge agreement or written contract, but it's maybe in a verbal state at this point. so, it doesn't mean we won't see more money. it's just this is what we can find evidence of as of today. >> thank you very much. if there's a member of the organizing committee who would like to talk about progress made so far and what we see. i know we've been at the podium discussing this several times with a lot of assurances that we would be doing better than we are right now. and what do we see now, the prognosis of being able to move

forward? >> thank you, supervisor, and thank you for having this hearing. i think it's timely and important as part of the process. as i sat here listening, my name is mark afoul. i chair the board of the america's cup organizing committee. ~ buell i reflect back where we started. where we were then when we were negotiating this deal to begin with was there were going to be 8 to 12 boats in the race and the event authority expected some 270 to $300 million in revenue for sponsorship. and at the time we had negotiated that the organizing committee would have local corporations and that the event authority would have national and international corporations. it became very clear after we got in the field and started trying to make this whole package work that that would be confusing to the marketplace to have two entities going after and what constituted a local

corporation, lead by local international, visa local international, et cetera. so, we struck a deal with the event authority that basically said that we would give them all a local corporations and we'd get 10% of the revenue. now, if they -- and we believed the 27 -- 270 to 300 million. frankly, i slept pretty well that night when we signed that deal because i thought we were looking pretty good. the reality is, and i'm not putting the blame on them. i think they honestly expected that was going to be the case. you have to remember that this race has never been sure before and it's a new kind of boat and there were a lot of unknowns and a lot of anticipation. so, having said all that, we've recalibrated everything. and you'll hear today from mike martin, i think, and others, that the anticipated costs have gone down and the revenues expected are not what we had hoped. but i can tell you that the organizing committee, i've made over a hundred personal calls

to generate philanthropic dollars. we've raised on average about a quarter of a million dollars a month over the last two years. that's a lot of money when you think of people giving from a philanthropic fund. and, so, without having those businesses, what we've reconstructed now and i have to express public gratitude to the mayor, is that now he stepped up to go after local corporations in cooperation with the event authority on which ones would be available for opportunities to raise money for the city. philanthropic -- >> [speaker not understood] a report on the mayor's efforts? >> i think mike or kerry can give a report on that. it's above my pay grade, supervisor. but having said that, i also was reflecting on the fact -- and correct me if i'm wrong. i mean, we have done public philanthropic events to build the dabey center and other

structures that relate to the cultural part of the city. but this has been kind of a unique opportunity. examine there wasn't any road nab. -- map. so we've learned a lot as we've gone along. ~ i'll be happy to relay it to the next person who has this job when mr. ellison wins this race and do it again. but having said that, i think that if you combine -- and you'll hear this more from the city side. when you combine the reduced costs, the continued economic opportunity that the economists are telling us, the money that we're currently raising, the pledges that we have and the mayor's efforts on the business side, that all total, i believe that the city will come out whole. now, if you want to get into the language of where we're going to raise 32 million, the costs when we saw the big picture the first time could have been 50. and with the economic impact and our 32 could have made that happen. that doesn't appear to be the

case any more and i don't think it's ever been memorialized. >> i would say, though, the intent around the 32 million was reimbursing city costs which was 32 million now. it's lower. i expect it is still the intent -- >> supervisor, i would not disagree with you that was clearly the intent going forward. but i still believe that the effort will be a positive effect for the city economically and that i believe that the city costs will be covered by that, by all those [speaker not understood] that i identified. with that, i can announce also that to the controller that i have 150,000 more this last week to add to the numbers. so, that's 100 in the door and a signed pledge for another 50. that's big stuff for us. we're working every day and i do want to remind this committee that my salary is a goose egg and i put in about 40 grand a year of my own expenses to make this work. so, i'm passionate about it. i share your concerns, but as i say in the end, i think we're going to come out on top on

this thing. and i think the races are going to be spectacular even with just three challengers and the ultimate event. we hear it everywhere. i just literally got off a plane that's why i was late getting here from new york city. i talked to people. there are a lot coming for this event. we'll keep at t. it takes lots of meetings and convincing people of the merits of it. ~ and i think that they see a positive result for the city. this isn't for the boating community for them, this isn't for larry ellison, this is for the economics of the city what we're driving this home with our donations. with that i'm going to ask kerry mcclellan if she wants to add. she's our ceo and frankly knows a lot more of the details on it if you have questions. >> thank you. i appreciate your taking on this unenviable pledge -- >> thank you, supervisor. [multiple voices] >> thank you. >> thank you very much.

>> mr. buell, before you go, you're on a plane, you were on the east coast early this morning, thanks for being here. >> yes. >> colleague, i was there at the beginning of the stages when the event happened with the authority, and the discrepancy between local authorities and national advertisers was going on. i know the targets are short of where they were originally. we'll get into the holistic picture of. this i do agree with mr. buell, commissioner buell, you have many titles at city hall. i just want to say thank you for your time and effort. colleagues, i think it's hard to see how much time mr. buell has put into this personally. >> i appreciate that very much. >> you have a lot going on. >> that's been expressed by the other members of the board as well. believe me, it's been a great journey and it's going to be a great event. >> thank you for your time. >> chair farrell, can i also

thank mr. buell, but also reiterate there was a commitment made way back in 2010 for this meeting of goxv of 12 million for the first year, 10.10 million for year 2 and 3 and i know you're doing everything you can. i want to make sure our general fund doesn't get hit and we are going to assure the public that the private funding will come in. so, that's my concern. and i'm hoping that you can explain that we're going to meet those commitments. >> supervisor, i share your concern and the anticipation. i would have to defer to the controller and the mayor's office about how tax dollars come in and what funds and how they're spent by the city. but i would remind you in even my greatest enthusiasm, i always have the caveat, it would be our best efforts to do it. there was no way we could possibly guarantee it. >> and maybe ms. mcclellan can explain that $8 million

concession agreement which is now a loan and how that operates as well. >> right, she can. thank you. >> thank you, good afternoon, i'm kerry mcclellan, ceo of the america's cup organizing committee. i'm going to sort of take these in order in response to your question about the opportunity for local corporate donors. we launched late last year a program called 1sf celebrating the cup, hiring two additional fund-raising counsel that had expertise with working with the local corporate community. and we're now in the market on that and have a number of verbal pledges. and i have to say that both mayor lee, but also lou ten an governor newsome and senator finestein and leader pelosi and others are leaning into that effort. i'm optimistic that just as we have worked hard to bring philanthropy i in to find a

program that is appealing to local advisetionv to support and help the city be successful, we have crafted those messages around what the city is creating around community and legacy benefits. ~ and as we have traveled from all of this being hypothetical in projections in 2010, we're now at the mid point where we can see what ha the city accomplished and capitalized on this effort around. the passenger cruise ship terminal and making the most of that, making the case the city is making the most of this. i remain optimistic that we will be able to cover whatever the ultimate is, and mike martin will speak to that, excuse me, in terms of the city's costs evolving. the controller has reported on funds not only received to date, but forecasted to date. and i think in the report it represents that we are about another million one that is coming in pledges between now and january 14th that are going

to go towards outstanding city expenses. that's this moment in time. not another day passing. we will had make progress on that front and we'll city planning to expand the program. we do shallv [speaker not understood], we have the 1sf donor program, and opportunities for donor recognition. all give a little [speaker not understood] bounce in our record which previously had been staying with us, [speaker not understood] have faith that the city is going to be able to pull this off. time and time again we actually demonstrated that. and the event authority has put life to this program as well and giving them -- we hosted two events quite collectively, [speaker not understood], we hope these events successfully -- people have a better understanding now when we talk about why we have catamarans on the bay. -- >> [speaker not understood] the fund-raising effort. >> right.

the creation of the fund-raising cup program has come from his vision of what that should mean. and we have been holding breakfasts with ceos that he is in direct participating in. he is taking meetings, and i refer to him personally but he is putting an incredible amount of energy behind this so people are responding. we're working with local corporate counsel to put together a fund-raising program. the person helping us put on the 75th anniversary working with the national parks conservancy which had a nice balance of companies that participated and individuals. so, i think we have the right model for this and i'm incredibly grateful for his support. >> has he won any pledges? >> he has a number of verbal commitments, yes, he does. >> and an amount? >> i would say they total right now just over $2 million in verbal commitments. and it's our job to take those verbal commitments and translate them into tangible assets for the companies to see

the value. i'll walk you down the example. >> do you know who it's from, are you able to say? >> we have not signed the projects so it wouldn't be prudent. we can go through the process. they're local companies, people deeply committed to the success. >> thank you. >> supervisor mar had a question relative to the transition of the payment in commission into a loan. you know, as chairman referred to, this has been an evolving process. and the event authority are our partners in this. ultimately this summer we had to sit down and recraft the arrangement. [speaker not understood] that was our priority. we sought to take the local market back. two event authorities, three event authorities, sponsors are major sponsors here from the bay. there are a lot of other companies that we heard from directly that we're looking for a lower price point and another opportunity.

under the prior deal, we were receiving 10% of whatever they did. under this arrangement as a specified in the controller's agreement, if the local corporate partner program is in part a revenue stream to pay back $5 million of that payment p on which funds come in, we cover the expenses of that program. and then 25% stays with us and enables us to pay city expenses and 75% goes back on that loan. it is a nonrecourse loan that expires on october 1st. so, we are doing everything that we can to support that program and ultimately succeed in full repayment. but we are nonprofit with no assets and god willing the america's cup will continue to be here in san francisco. i don't know necessarily the state of our organization, what will happen in future america's cups. we're here to support the city in this one and our business plan is existing to receive funds through february, january, 2014. not only to make sure the city

makes whole, but make good on our commitments. so, we are endeavoring every day to not only succeed on the [speaker not understood] front, but also on the corporate partner front. i can answer future other questions. >> thank you. >> thank you. >> mr. martin, do you have any other parts that you would like to present as part of the fund-raising effort? do you want to go into economic impact or not? >> the two pieces of presentation are economic impact and review of our current budget situation. i can take those in either order. i can start with the economic budget and go to the other after that. >> okay.

>> through the chair, mr. martin, do you have copies of the presentation? >> i don't with me, but i can ask someone to make them and bring them down. >> great, thank you. >> i'd be happy to. supervisors, just wanted to step up today and provide you with a current budget update. that is alongside the report you're getting on the fund-raising as well as the economic impacts. to similar comments made at the outset of this issue, it's certainly not my office's place to try to recast the agreement. the words are what they are on the page and we're frankly moving ahead to implement the agreement the board approved last march and again in september. we have been trying to do this in what everyone talked about as the san francisco way in terms of upholding the considerationses around workforce and small business that we already heard about today as well as through the environmental review process and really creating a sustainable event that becomes a leader. all of that obviously requires

resoartiones, but i realize -- we realize very acutely that it requires smart application of resources. we never looked at our $32 million as a blank check to write $32 million of checks. it is an amount to be fund raised and endeavored to be feud raised in best practices and best efforts. but we want to do this in an efficient way. so, on the screen here is a slide sort of looking back at 2010 and sort of prefaced previewing which you'll hear a little bit in the economic impact piece. the original bay area economic institute study shows under 1.4 billion of impacts, 8800 jobs and 23.9 million of tax revenues. the city's budget analyst actually came back and did a report for the board in december of 2010 that took its own look and provided a range of impacts, economic impacts from 950 to 1.6 billion and had a lower tax bill of 9.5 billion

dollars. i retraced our steps a little bit. while i don't want to recast the agreement, there was a level of break even analysis. [speaker not understood]. the $12 million cap there that obviously, unless fund-raising came in, and budget analyst expressed a caveat about that, that gap is what we're looking at. today we'll see information calling for a lower economic impact of $900 million as well as 13 million of tax revenues. again, you know, back last march we did a break even analysis and again i think we'll do again today a review of our costs and a break even analysis from there. but i understand certainly the outlook of the city is to make itself whole through what it believed was a fund-raising program of $32 million and, so, anyway, i just wanted the budget information to be looked at in that context.

so, this is slide shows our invoices to date, a total $8.37 million. we sent an invoice to this effect to the acoc -- actually, the last piece of this was approximately $3 million, i guess. we had already been reimbursed at the end of last year. so, the bottom three lines of the key for this slide we invoiced $8.3 million costs. we see reimbursement of 6.38 million at this point outstanding is 1.5 million. and that obviously will, with the good news being talked about in terms of further pledges coming in, that's the first dollars that that would go to. obviously the next step is to look ahead. this slide shows expenses we expect in this fiscal year that we would invoice a lot of these have to do with some lingering

costs from last year's events as well as things such as the port, some improvements preparing for next year's event. i do want to emphasize the lion's share had been funded from the port's budget as was reported to the board when we sort of brought the reconstituted agreement back last march. in addition, at the bottom -- the the bottom three lines there, i guess, the two lines before the total had been insurance and the cash collateral escrow as you may recall last september, we came back to you with a new approach to the security arrangement under the agreements. i allude today this earlier. i think we saved a great deal of money certainly on the event and insurance side targeting the insurance to those revised security plans. that was obviously a great boone to the project. in addition, the cash collateral escrow, the next line down of $2.4 million, that's meant to secure the city's performance on its obligations in putting on the events. we fully intend to fulfill the

obligations and it's there as security. but if it's not drawn upon it flows back to the city and is payable towards costs. i'll mention that again in the next slide to show how we've calculated that in. the total of these costs, total just under $10 million for the rest of this fiscal year. these are all projected costs looking ahead to next year. again, these are really revolve around operations for the events and preparing for and hosting them. there is also an amount for the national park service line item, $974,000. there had been a helpful partner in coming back to the table after the experience of last year's events seeing what kind of secular impacts there were. we worked with them through the federal review process that the park land were protected and they have been helpful