employment that result in 8800 to 6,4 81. about a quarter decline in employment. that's because a large part of the spending is sort of labor intensive remains intact. >> so, i do recall with the report that came out in 2010 there was a measurable bump in employment, but it was actually a lot of it was older time hours, a lot of it was extra hours. not every new hire. that was one of the key [speaker not understood] that came out. i confirmed it with the budget analyst as well. >> that may be true. that wasn't part of our report. although it may be in fact what happened. the jobs that we reported here are full-time equivalents. it's really a number of hours of increased employment that we're all submitting, not an increase in the number of people per se that were going to be employed. >> thank you. >> and just to understand, so, right now what we're seeing is there is going to be -- this word economic activity gets

thrown around quite a bit. you're projecting 90 2 million of economic [speaker not understood] to the city. >> correct. and we can take those results and run them through some basic formulas and provide our estimate for increased city tax revenue. so i submit, mr. martin has declined them to about 13 million. that's significant reductions in the transient occupancy tax, significant reduction in payroll tax. and those reductions are larger than the one-third reduction to overall expenditures partly derivative in large part by the number of sipped katz. greater numbers of syndicates leads to disproportionate increases in the transient occupancy tax as well as payroll taxes paid. ~ the retail taxes have also declined, but back out a third, same as decline in overall

expenditures. we have a net decline of about $10 million projected in city revenues. >> so, just -- mr. eagan talked about a 6.1 increase, million dollar increase in hotel tax revenue. it would require a 7% increase in hotel tax over a three-month period. what is your response to that, which is a significant increase over a three-month period. do we expect during this time that's what we'll have for the america's cup event? >> my expectation for rev par is that it would see a significant bump. having in addition between 5 and 25,000 people in the city on a given day could lead to a vastly significant bump than we saw during the world series. i believe that ted reported an increase of about 3.6% during the world series events. it would be my expectation that

the america's cup will leave the town and the defense would incur substantially larger increase he in rev par over the course of the event. >> [speaker not understood] five days of the event last year drew 150,000 people total. >> okay. >> that does president seem like the same as what you just said. >> no, the numbers that i was quoting are expectations for the america's cup. the number that you i believe just mentioned was for the world series. again, 2 million may be a highest matt and i don't -- given the work that i've done, i don't believe that to be the case. i don't believe that the world series -- there are probably others in the room better able to speak to this than i am. i don't believe the world series and louie vuitton cup and [speaker not understood]. the world series may at some point become a major event but

it's a relatively new innovation. as such it's probably not attracting the kinds of crowds from across the states, the nation or the world that the america's cup is likely to. >> thank you. according to mr. eagan, we're getting e-mail from him or through him, that there wasn't any real impact to the hotel tax last year for the world series cup, which might [speaker not understood] what you're saying right now. >> half of the world series events occurred during fleet week. so, measuring the impact of that literally impossible. unlikely to be meare an accurate predictor for what we'll experience for the america's cup, these numbers are high. i don't have an estimate how high, but significantly higher than reality -- >> thank you. >> through the chair, i just wanted to say there is the

harvey blue grass going on that october time as well and a number of other events. it wasn't just fleet week. but i just had a question. i know from the 2010 report that you did, i think it was an extremely rosy picture with the number of syndicates 15 and the 40 super yachts proposed. and i'm just wondering how you came to those numbers. and i know you said you've adjusted now down significantly to like a quarter of those numbers and the financial numbers, too. but did you look at san diego's america's cup and base it on some projections on how san francisco would be a little bit different? i'm just wondering how you came to that seemingly rosy picture that you gave us in 2010. >> well, i would submit that in 2010 it wasn't seemingly rosy. much of the community that looked at this report, that report agreed with us that they thought we were being relatively conservative. the numbers in terms of

syndicates and the other assumptions, the only thing that we had to if by was previous history. san diego played a role in that, valencia played a role in that. new zealand and other america's cup events played a role helping us accommodate to the number of syndicates we might expect. at the time we really had no idea what the global economic situation was going to be. we had no idea some maybe, but less of an idea what type of boat was going to be used and [speaker not understood] syndicates. there was a lot we didn't know in 2010 that we do know now. and now in this report we've incorporated the best information that's available to us in terms of updating that economic impact. >> i think it's important to note, though, again, having been somewhat close to the developments here, there have been additional events added. >> correct. >> for instance, the red bowl heath races, things like that. you can look at go from 15 boats to 4, that's a dramatic

decline in challenges. that doesn't at all complete the whole picture of [speaker not understood]. >> that's right. red bowl, jr. events we completely ignored that, the concert series we completely ignored that. that's not included in our estimates. that would be an add-on to the estimates here. >> is that right? >> yes. >> okay. >> all we've done is take what we knew in 2010 or what we thought we knew in 2010, correct it which in large measure meant reducing numbers. we did not add in the benefits of the world series events because figuring that out would be very difficult. and we did not add in the red bull, jr. challenge because again we have no history on which to base an estimate. the concert series is still relatively undefined. and figuring out the numbers of people that are going to attend the concerts from san francisco from the east bay, from outside

of the region, very complicated sketchy at best. so, we decided best not to include those things in our revised estimates. >> could you explain a little bit more about the concert series you're talking about and the red bull event, the youth event sponsored by red bull? >> sure, i'm probably not the best one to speak about those events. if somebody else would like to speak to those, that would be terrific. >> either mr. martin or mr. barkley can talk conceptually about what is going on. >> an important consideration for us was that we talked about having 55 days of racing through the summer of -- here in san francisco and that's what we wanted to deliver. so, i'm pleased to say that we still have roughly 55 days of racing through the summer. but to achieve it, we've filled a void with some specialist events. one of them is the red bull

youth america's cup, an event called the imagination of the world. there will be 10 plus countries represented with youth teams. we just had some trials here the last four or five spots in february. and the uptake from the media around the world is in actual fact a surprise in terms of how much visibility this is getting for [speaker not understood]. another event that we've added to the schedule is what we call the [speaker not understood] which is where very, very large sailing yachts will be sailing on the harbor. in the bay here, i should say, on the days between the america's cup races when they would take place in the seventh of september. so, in summary, fill a void with a bunch of other events that will in their own right attract people here to san francisco and the media of the world to san francisco. >> thanks, mr. barkley.

>> yeah. perhaps [speaker not understood] included and not included. so, aspects of the analysis that could affect it negatively or positively, thing that could increase the estimates of tax for the city, we revise the potential increases is again sketchy. that could lead to an increase of a million dollars in city revenues, the concert series. the 2012 world series revenues, we have been unable to calculate sufficient data on those events to really make any estimates. as well as some accelerated infrastructure investments. these shouldn't be included in economic analysis, but if they happened sooner rather than later, that's a benefit. things that could decrease the estimates, mr. barkley spoke about the hundreds of millions of dollars that is being spent by management. it's unclear to me exactly how much might be spent by management spending.

~ teen spending. america's cup is substantially different from prior americas cups. -- america's cupses. [speaker not understood] is a significant wild card. so, this is the update to the economic analysis i have. >> thank you. thank you very much. really appreciate your report. so, colleagues, i just wanted to make sure we had these two discussions. i know they were very long, so, i appreciate your patience. i want to appreciate the organizing committee folks for being here as well as mr. barkley, presentations from our departments, mike martin from economic workforce development. donna levitt from [speaker not understood]. [speaker not understood] from office of contract compliance and the controller. the status report is really to make sure we are living up to our commitments as a city

around applying the standards for workforce development small business inclusion. it seems like as a city we need to actually strengthen our effort to do communication about the agreements that we're making. i want to thank mr. barkley for his presentation and the numbers are correct in terms of workforce and small business inclusion. it seems like the event is having that impact. there are a number of people who spoke at the podium today from the public were able to express how their businesses have been impacted, improved, and a lot of employment occurring because of the america's cup event and that's really great to hear. it seems like on the workforce side that there's still a lot of bank work to do to make sure we are getting the maximum benefit. people feel they're actually getting access to jobs and moving forward. i know this is a place where we can actually apply this information to make sure where it's succeeding moving forward in the future. i want to make sure we take

advantage of that with the city to make sure l [speaker not understood] the office of economic workforce development is working hard to apply these ideas and principles. examine overall i want to make sure we have a successful event and all of us do. we want to make sure we're putting our best foot forward to the city. so, i want to thank everyone for applying their efforts to this end and thank you for this time to check in on the hearing. i would like to continue both of these items to the call of the chair. >> sure. if i could first just a few concluding thoughts. thanks to supervisor avalos for calling these hearings. i think for me in particular around the prevailing wage and the local hire, i think it was informative. i think there is good news within there and i think there is stuff to be worked on. but i think we want to focus on the future as a city. but i also want to take a step back. and i think a lot of the media recently has been focused on some negative aspects here, some really good aspects of the cup.

personally, i still firmly believe in the america's cup is going to be a great event for our city here in san francisco. i was not here when the board approved this deal, if you will, so i have a different kind of history and time frame. but as i look and kind of summarize all of this financial data and we have a lot of it today, the bottom line here is that we're going to have an event that is in all likelihood going to cost zero dollars to our general fund. we have an event that is going to create over $900 million of local economic activity and translates into approximately 6500 jobs, new jobs. a lot of cities would pay a lot of money to see that happen. and we're going to in all likelihood have zero costs it coming from our general fund. it is obviously accelerated a lot of projects along the waterfront that would have been done otherwise. and i think also the one thing that's so tough to quantify is a sense of civic pride that an event like the america's cup

does for a city. last summer, i can't tell you how many people friends of mine, family members of mine that saw the cloudless day of sale on the bay in san francisco with these colorful boats. i'm not a sailor, but i thought it was a spectacular event to watch. and seeing our city on national tv i think is nothing but a great thing and it's such a great light. even if we depth -- ~ didn't get another america's cup here, it will be talked about. i think our city will shine this summer. i think we're lucky to have it here. i know there have been ups and downs. there have been projections of teams of spectators of revenue. if we think about where we are going as a city in the summer, no cost to our general fund in all likelihood, $900 million of economic activity, over 6500 new jobs, and the chance to

showcase our city on the national, international spotlight. i think this is a great thing. and i would just suggest that as a city, you know, i have talked quite a bit with the mayor lately about his efforts and in fund-raising and helping him out. and i think i would hope that we would all get behind that. we want to make this a great event for the city, but the mayor is working very hard to make had i fund-raising goals. i think we should all be doing our part as well. and i really want to thank the people we talked about, mr. buell, case, all the people working on behalf of the city, organizing committee to make the city whole. i think we need to also say thank you and let's work together because we want to make this a great event for our city together. i hope we can move forward in that spirit of cooperation and see this through to be a great event this year. so, with that, if there are -- >> thank you. i do concur in your comments

about the america's cup event really showing the great part of san francisco. of course, within that is the collaboration of the city with the private sector to put this on and a lot of the small businesses that have been involved and the sacrifices they're making, commitment they're making is significant. the trajectory we have right now is there will be general fund impact if we don't raise enough money to offset that. and that is something i want to express at the very end of this, it's likely we will have general fund impact to this event even with new money coming in, it's money that won't be going to the general fund services and neighborhoods, but going to pay for the event itself. that is not what the original intent was about why the commitment or why there was a commitment to endeavor to raise $32 million, now 22 perhaps, but i just had to express at the end, this is going to be a remarkable event. if not it will be a remarkable achievement in san francisco that we expect, i hope it will not be that cost to the city

because that's what we agreed to in the beginning. thank you. >> and, so, i appreciate that comment. i'm just again going to respectfully disagree this trajectory we're on, we have three months to raise some million dollars. with the mayor's efforts, i hope we will all participate, all supervisors will on these efforts to raise the money. and also, we were just told we're not including the ac 45 events from last summer, we're not including the red bull youth events from this summer, the marsupiate races. these won't get squat identified, but from my perspective, i agree, we need to be watchdogs, but we need to be mindful and cooperate and put this on and get behind this. let's get behind this as a city and all put in our best efforts to make our city shine this summer. >> through the chair, i just wanted to -- and to my two dueling colleagues here, i'd like to thank supervisor avalos

for bringing this hearing, and supervisor farrell for looking at our mistakes. we have to support mark buell and kerry mcclellan and the mayor. i appreciate mr. barkley staying for the whole hearing as well and all the information that's been shared today. i didn't want to lose the issue of making sure that the back pay is addressed and that in the future as we look at private or private projects or other projects like this that we have a very clear system so that prevailing wages adhere to if that is a commitment that's been made. i think the suggestion from olse and others and from the public that testified, i definitely would like to see an investigation of penalties or some way to enforce, to go beyond good faith efforts to make sure that we have better monitoring systems and really can ensure that workers are paid their prevailing wage and we are monitoring and make sure

this does not happen again. so, i appreciate the hearing and look forward to working to the to make america's cup successful. >> okay. and we have a motion to continue to the call of the chair. and we can do that without opposition. [gavel] >> for those of you watching on 26, we'll take a five minute recess in between committee meetings. mr. clerk, do we have any other items on the agenda? he >> that completes the budget and finance committee subcommittee meeting for today. >> we are adjourned. [adjourned] >> good afternoon, everyone, and welcome to the san francisco board of supervisors budget and finance committee

meeting for wednesday march 13, 2013. my name is mark farrell, i will xw chairing this committee, joined by supervisor eric mar, the vice chair, supervisor avalos, supervisor breed and supervisor scott wiener, i will like to thank sfgtv covering this meeting, as well as the clerk of the committee, mr. victor young. do we have any announcements? >> yes, please silence all phones and electronic devices, items acted upon today will appear on the march 19, 2013 board of supervisors agenda unless otherwise stated. >> thank you very much, and colleagues, we have two items on today's agenda, please call item number 1. >> hear tog receive an update from the controller's office on the city's five-year financial plan. >> and we have ms. howard here,

the mayor's budget director to talk to item number 1. >> hi, supervisors, thank you for having me here today to talk about the city's proposed five year plan, i have a presentation that i have distributed to you and will be walking you through that presentation, i'm happy to take questions during the presentation or at the end. what i thought i would cover today, just a quick reminder about some of the good work that the city has done regarding financial policies and planning over the last several years, i think that the deputy controller is also going to be talking with you a little bit about how some of the policies have play out through our reserves in particular subsequently, talk about the goals to have plan, what are the major assumptions in our base case projection, walk you through that projection and some of the fiscal strategies to adopt a balance five-year

outlook. over the last several years, we've began a number of steps to strengthen the city's financial management and reduce volatility in our budget process, one of the biggest and most recent steps is our move to two year budgeting which i think has certainly reduced that volatility and allowed for the city to make -- implement program ic changes over a longer period of time, we've implemented a consistent habit of doing long term financial planning in our overall fiscal city picture. in addition, the board has adopted fiscal policies that contribute to that responsible fiscal management including the increasing the city's reserves, limiting the use of one-time sources, and codifying some of

our debt policy, so, as you know, the five year financial plan is essentially a road map for the city's financial outlook over the city's next five year plan, it is a collaborative effort that are jointly -- it's jointly done by the mayor's office, the board's budget analyst swes the controller's office, so i would like to thank ms. campbell and [inaudible] for all the work we did together on putting this together. the plan itself highlights key financial issues specifically drivers of any gaps between revenues and expenditures and then monitors our overall progress on the city's structural deficit. as you'll also remember, the five-year plan, it requires that we both present what that gap is and then propose financial strategies about how to eliminate the gap between

revenues and expenditures. so, what i thought i would do is kind of walk through some high level assumption and then talk about in more detail about what's going on in the five-year financial outlook, so the plan itself assumes the budget that was adopted last year for 13-14 as the base case in most scenarios, so that means things like our capital funding is assumed at the level that it was adopted in the budget last year, inflation on materials and supplies on grants to non-profits that's assumed at the level it was adopted last year, the one major difference that i would highlight for you now and i'll mention it again later is how we're treating the prop h public education enrichment fund baseline in which we defer to contribution last year in the second year and our

projection today assumes that that's fully funded. >> ms. howard, just to refresh memories, the amount of the capital plan that was funded last year, so the assumptions are that it isn't 100, is that correct? >> it's approximately 40 million dollars that was include in the bujd for 13-14 that was adopted by the board, the capital plan recommends nearly 80 million dollars, such a significant reduction from what the plan recommends. >> so, if we were going to fully fund that going forward, we'd have another 40 million shortfall in essence looking at it right now? >> that's right, supervisor. another assumption that i would highlight for you, the five-year financial plan in the joint report typically don't make any assumptions about increasing service levels or adding additional employees and that plan is consistent with that unless there are known policy plans such as the

opening of san francisco general hospital. regarding reserves, the plan doesn't include at this point an additional allowance for any state or federal losses, it also assumes that because our revenues are growing, we're not eligible for rainy day withdrawal. >> supervisor avalos? >> thank you, chair farrell, could there be withdrawal for allocation to the school district for the rainy day reserve, that's still a possibility? >> that's correct, supervisor. i think there is still work at the controller's office will need to do to determine whether the school district will be eligible for a rainy day withdrawal in fiscal year 13-14, however my expectation is that they will be eligible. on wages and benefits where contracts are closed, we assume no cost increases and no

changes in those closed labor agreements, the plan assumes inflationary increases equivalent to inflation, the consumer price index on open mou agreements beginning in fiscal 15-16. the plan also incorporates savings that have been generated through the passage of proposition fee or pension reform measure and the plan identifies a number of department specified issues that i'm happy to talk to you more about and there's certainly more detail in the report itself. so, at the highest level, the plan identifies a gap between revenues and expenditures over the five year period of 487 million dollars, as you can see in the chart that's on the screen, over the five years, our city revenues are projected to grow by 13%, but our expenditures are expected to grow by 25% over that same

period of time. and that difference creates our projected deficit shortfall that we're going to talk about how to close. on the revenue side, i would highlight, these are strong revenue projections and so over the next five years, 578, nearly 600 million dollars of revenue growth to the city. the growth is supported by, you know, the overall economic condition of the city including our property tax base, so housing prices, the strength of our tourism economy as well as job growth. as you might imagine, revenue projections are sensitive to the overall economic condition of the city so to the degree that the pay for the recovery is slower or federal spending cuts are more