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Committee backs authorization to seek up to $170M in COPs for War Memorial seismic upgrades
Summary
Officials requested authorization to issue certificates of participation up to $170 million to finance seismic upgrades and attendant improvements at the War Memorial Veterans Building; staff presented project scope, financing assumptions and alternatives, while the budget office noted COP financing is more costly than GO bonds but delaying repairs is inadvisable.
The Budget and Finance Committee considered an ordinance authorizing certificates of participation (COPs) not to exceed $170 million to finance seismic upgrades and other improvements to the War Memorial Veterans Building.
Nadia Sissay (Office of Public Finance) outlined financing assumptions, explaining COPs require a reserve fund and capitalized interest; the project cost funded by COP proceeds was presented at roughly $132.455 million with COP-related carry costs raising the total to approximately $168.1 million under the conservative assumptions used. Sissay said the city intends to use its commercial paper program to fund preliminary design and early construction draws and plans to sell COPs in December 2012, which could reduce carrying costs.
Beth Murray, the War Memorial’s managing director, described the building’s historic significance, existing seismic deficiencies and proposed program: seismic/ life-safety upgrades, repairs to damaged premises, replacement of tenant improvements, and partnerships with the San Francisco Opera and the Arts Commission that would add rehearsal/performance and gallery space and provide private gift commitments of roughly $15–20 million from the Opera. Project schedule proposed design starting August 1, 2012, construction beginning January 1, 2013 and reopened by Veterans Day 2014.
Budget analyst Mr. Rose reported COP financing under conservative estimates would total roughly $316.28 million including interest (project costs + estimated interest $148M–$165M in transcript discussion), compared with an estimated $228.52 million cost using general obligation (GO) bonds — a difference the analyst calculated at about $87.76 million favoring GO bonds. The analyst and capital-planning staff said delaying needed improvements was not advisable and characterized approval of COP financing as a policy decision for the Board. Public comment supported timely rehabilitation to avoid closure and hazards.
Supervisor Kim raised concerns about higher cost financing and public priorities but moved to forward the item; the committee sent the ordinance to the Board with recommendation.
