CITY AND COUNTY OF SAN FRANCISCO
SMALL BUSINESS COMMISSION
City Hall, Room 400
1 Dr. Carlton B. Goodlett Place San Francisco, CA 94102
Monday, July 10, 2006 5:30 PM
Small Business Commissioners
Jordanna Thigpen, President
Michael O'Connor, Vice President
Florence Alberts, David Chiu, Gus Murad, Dr. Raye Richardson, Richard Ventura
Executive Director – Agnes Briones
Commission Secretary – Martha Yañez
Members Absent: Commissioner Richardson
Call to order:
Item 1 - Roll Call
The Small Business Commission met on Monday, July 10, 2006 in regular session. Commissioner Richardson was absent and Commissioner Chiu arrived at 5:45PM. The meeting was called to order at 5:37PM
Item 2 – Approval of the June 12, 2006 meeting minutes
This item was tabled.
Item 3- General Public Comment
Scott Hauge of San Francisco Small Business Advocates provided some details of the small business study which he commissioned Kent Sims to do, stating that it was done during the recession years between 2000 and 2004. He reported that the study showed that San Francisco because of small businesses actually added more businesses due to small businesses, conversely to larger businesses. He reported that the numbers are showing that there are a total of 111,674 small businesses, adding that a large number of that is sole proprietors with no employees. He said that 99% of private businesses are small businesses in San Francisco, and that 55% of the private sector workforce is small businesses, with a payroll of 14.4 billion dollars, adding that the study defines small business as 100 or less employees. He said that clearly small business is the backbone and said that they would be reporting on the other findings in due time. I. Lee Murphy-Reed, representing the National Coalition of Black Women Business Owners invited the Commissioners to their annual Gold Tournament at the Presidio on August 14th to benefit a number of schools that they have adopted. She said more information would be forthcoming.
Item 4 - President's Report
Commissioner Thigpen reported on the proposed community meeting in the Bayview, which is scheduled for July 31, 2006 and said that the next one would be focused around the Chinatown and Tenderloin neighborhoods in August sometime. She proposed August 21st as a possible date. She said that they have to combine neighborhoods, adding that while she understands that each neighborhood has it's own issues, they have decided to group neighborhoods by geography because there are simply too many and it would therefore take years to visit all.
Item 5- Vice President's Report
Commissioner O'Connor refrained from reporting at this time and until the discussion on the Health Plan was called.
Item 6 – Director's Report
Director Agnes Briones Ubalde presented the Commission with a work plan for fiscal year 2006/2007, which outlines the goals for the Commission based on their feedback and per the previous commission retreat. She briefly listed some of the goals including to increase the number of policy reviewed by the Commission and to enhance the city's presence and as a global epicenter to grow and locate small businesses. She also reported that staff is working closely with the Mayor's Office of Economic Development to redesign and better market the combined departments both online and through print materials.
Item 7 – San Francisco Economic Strategy
Jennifer Entine Matz of the Mayor's Office of Economic & Workforce Development stated that she is charged with coordinating the Economic Development Plan and working with Ted Eagan of ICF Consulting and Leslie Parks and others. She said she would like to talk through the first report which is an economic performance report that lays some of the fundamentals and ground work for the work that they will be doing over the next six months in identifying key industries that the city should be focused on developing in order to grow the economy. Having said that she said that in November 2004 voters passed Prop I, which authorized the creation of an Economic Development Plan. She said that per the legislation there is a very specific mandate, which is to address employment tax revenue and priority industries, the education and skills required to increase job opportunities in these industries, specifically strategies to protect and enhance small business and an assessment of the impediments to growth and employment in these strategies and a look at best practices. She said that the report today will summarize trends in population, employment and wage trends, small businesses, income inequality and poverty in San Francisco, and a profile of the workforce education and earnings. She said that what they have been doing is asking various stakeholders what they believe ought to be the goals of the strategy. She said there is a website, www.sfeconomicstrategy.org and on it there is a web based community survey, adding that all the documents and reports are there including Spanish and Chinese translations of the executive summaries of the reports. She reported that the next stage is what to do next, for example, what industries they should be focusing on and what do these industries need to be successful in San Francisco and more importantly, what could city government do to help create a supportive operating environment. She continued by looking at population trends, stating that it has increased pretty consistently since the 1980's until recently when there has been a considerable shift and the city has lost about 30 thousand people in only the past 4 years. She said that population by race is interesting; stating that everyone knows that San Francisco is a very diverse city, but added that in fact there is no majority. She said that if you lived in San Francisco in 1992 there is a 55% chance that you have left the city. With respect to Employment and Economics, she reported that there is a 5% unemployment rate, which mirrors pre and post dot com boom. She reported that salaries have risen quite rapidly, and said that wages only increased in some sectors not all. She said that the rising importance of small businesses is similar to what Mr. Hauge has already shared, stating that most of the jobs being created are from the small business sector. She continued reporting on some of the other data including transportation trends, workforce, and education. She said that they have been asking people what San Francisco should focus on given the data being collected. She said that in the next 3-4 weeks they would have broad categories of industries identified and said that she would be happy to come back to present those at that time. Commissioner Thigpen asked what coordination is occurring with other cities such as San Jose, stating that it seems that there should be more coordination especially in terms of transportation. Ms. Entine Matz responded stating that while they have looked at this to a certain extent, they do plan to develop it more. Commissioner Thigpen asked what the plans to coordinate with other departments are. Ms. Entine Matz stated that there is currently an interdepartmental working group with representatives from city departments that will be impacted by the plan, and that the consultants would be doing interviews with these representatives to get their input/feedback on the plan and data collected thus far.
Item 8 – Streamlining the Permit/Authorizing Process for Small Business
This item was tabled.
Item 9- Parking Tax Collection and Consumer Protection
Betty Chan, Legislative Aid to Supervisor Jake McGoldrick stated that the proposed legislation stipulates that parking lot regulators must use revenue control equipment, stating that there is currently no parking lot enforcement. She said that the legislation calls for citywide survey of locations, adding that there is a small parking lot exemption. She said the benefits are that the city would get more revenue and there would be more consumer protections. She said that the parking tax will go toward the general fund. Commissioner Ventura asked how the enforcement of this would be paid for and he questioned if this would create extra burdens on the department. Betty Chan said that they hope that the extra revenue would make up for it, adding that the MTA has offered to offset some of the costs. David Augustine of the Treasure's Office added that this is one of a series of upgrades that they plan to undertake.
Commissioner Ventura made a motion to support the proposed legislation. Commissioner Chiu seconded. Unanimous approval from the Commission.
Item 10- Gross Receipts Tax
Supervisor Peskin provided a brief background on the gross receipts tax and how and why it was sunset years back. He said that since then there has been interest in sun setting the payroll tax and returning to the gross receipts tax. He said that the delta between what the gross receipts and payroll tax raised and what the city raised is some 21 million dollars and that was exacerbated by some aspects of the settlement that bring that to 32 million dollars. He reminded folks of Mayor Newsom's failed attempt to recoup some of that money with Prop. K, which was defeated at the polls in 2004. He added that the Controller predicts a 172 million dollar shortfall for the next fiscal year beginning July 1 of 2007 and said that he believes that the largest businesses in the city have had a tax reduced holiday now for the last 4 years since the sun setting of the gross receipts tax. He said that while it is his desire to recoup those dollars as well, it is not his intention to collect it from small businesses. He said that his proposal is different than Prop. K in that it has a 2 million dollar threshold as opposed to a 4 million dollar threshold and said he was open for comments and suggestions. Commissioner Thigpen thanked Supervisor Peskin for bringing this to the Commission and for coming in person. She said that the problem is that the proposal would be in addition to the existing payroll tax and said that there is nor mention of reforming the payroll tax and asked why the initiative did not take this into account. She asked why the proposed initiative does not take this into account. Supervisor Peskin said that the reason is that the city currently does not have the level of information to do this, adding that the city lacks the data. Commissioner Thigpen asked if the next time that a tax reform issue could be brought forth to the electorate would be in 2 years. Supervisor Peskin said that was correct. David Augustine of the Treasure's Office confirmed that the city did not have good data on gross receipts, stating that the data that they do have is seven years old, adding that about 20% of businesses go in and out of business every year, adding that it is not a good subset. Commissioner Murad asked if the 2 million dollar exemption would require businesses to pay on anything over the 2 million, or including the 2 million if they are over that amount, adding that it would be more equitable to only tax on the amount over 2 million. Supervisor Peskin said that he believed that it would be only on anything over 2 million. Commissioner Alberts asked if the 2 million dollar exemption applied to only businesses gross receipts in San Francisco, so that if a business had other businesses outside of San Francisco, those revenues would not be counted in the 2 million dollars. Supervisor Peskin said that this was correct, only San Francisco businesses would count. Commissioner Ventura stated that the Federal definition of small business is 2.5 million dollars or higher and asked if the Supervisor might consider amending the legislation so that businesses with revenues of 2.5 or lower would be exempt. Commissioner Chiu agreed with Commissioner Ventura's suggestion. He also asked about the data collection, wondering when and how the data might be collected. He also asked if an ordinance might help push this data collection forward. Supervisor Peskin said that this discussion is on going and said that perhaps the suggestion of an ordinance to require the reporting of gross receipts would help in this process. Commissioner O'Connor asked for clarification of the pass through. Scott Hauge, a member of the public thanked Supervisor Peskin for personally coming to the Small Business Commission and for taking this item off the ballot. He asked if a business in San Francisco does business with businesses outside of San Francisco but it all comes through San Francisco how would that be taxed. Supervisor Peskin said that it would be taxed. Scott Hauge said that the pass through is a terrific idea and it makes sense. He suggested expanding the pass through for certain industries, specifically those that have a high cost of products, such as gasoline stations for example. Stephen Cornell, a member of the public also thanked the Supervisor for his presence and presentation. With respect to the data collection he asked if the Treasure's Office could not simply add a line to the payroll tax return where folks could report their gross receipts and said at least it will give the city some data. Furthermore he said that his business with 12 employees pays payroll tax and under this proposal would also pay the gross receipts tax and said that there are many businesses like his that would be subject to both. David Augustine responded stating that it is something that the Treasure's Office could explore, but said that there may be some concerns because while they function well as a tax collector, they function less well as a census bureau, adding that there would be some question as to what to do with those that do not report. Commissioner Thigpen suggested the need for a consultant to collect the data.
Commissioner Chiu made a motion to support the concept of collecting data. Commissioner Murad seconded. The motion was unanimously approved by the Commission as stated.
Item 11 – Food Service Waste Reduction Ordinance
Supervisor Peskin stated that the proposed ordinance would add a chapter to the environmental code that would require businesses (restaurants) whenever possible to use alternatives to polystyrene foam. He said that there would also be language in there that would allow for a waiver if there are no alternatives that are affordable. He said that currently if it moves forward as planned it will take effect January of 2007. He reported that the Golden Gate Restaurant
Association is in support of this, adding that the ordinance does not ban plastics. Commissioner Thigpen asked what kind of research had and will be done on this, specifically in Chinatown. Supervisor Peskin said that the legislation has been relatively well received in Chinatown and said that there will be additional education campaigns by both DPH and DOE after it passes.
Commissioner Ventura made a motion to support the ordinance. Commissioner Murad seconded. The motion was unanimously approved by the Commission.
Item 12 – Restricting Posting of Signs on City-Owned Lamp Posts or Utility
David Noyola, Legislative Aid to Supervisor Aaron Peskin said that the proposed ordinance would restrict the posting of signs on city owned lamp posts and utility post. He said that the majority of the signs are political campaign bills, and said that it would apply to the larger signs only. Commissioner Thigpen speaking from personal experience she felt that it does create blight for the city. She expressed her concern with the fact that while the legislation lists the height limit of 12 inches, it does not mention width. Furthermore she said that while the legislation mentions the required registration of signs at the Department of Public Works, candidates can actually go down to DPW and get a registration number and not be affected for the upcoming election. Commissioner Chiu said that he believes it is a good measure because he does believe that neighborhoods get crowded by all these large signs, and said that the idea is for neighborhoods to look clean and not overcrowded and will bill boards. Stephen Cornell said that he is aware that there are about five owners of polls in the city, including the city, Caltrans, PG&E and others. He wondered how this ordinance would affect those non city owned poles and suggested that this apply to all poles.
Commissioner Alberts made a motion to approve the ordinance. Commissioner Chiu seconded the motion with the following amendments: that the width issue be addressed and clarified, that the pole issue be addressed and clarified to include all poles, and the issue of the potential retroactivity for this particular election cycle. Commissioner Alberts accepted the amendments. The motion passed with 4 votes. Commissioner's Alberts, Chiu, Murad and Thigpen voted in favor. Commissioner O'Connor voted against. Commissioner Ventura abstained.
Item 13 – Fillmore Jazz District Community Benefit District (CBD)
Lisa Pagan reported that there are roughly 170 businesses in the proposed district, stating that they would all receive notices about the proposed creation of a CBD. She said that there would be a public meeting in August and the ballots from the election would be counted. She said that the Board of Supervisors would then decide based on the results of the vote to create the CBD or not. Commissioner Thigpen asked how this would be affected with the exit of the Redevelopment Agency. Lisa Pagan said that it would not impact the CBD, adding that the Redevelopment Agency serves a much broader area. Commissioner O'Connor asked what services or benefits did the Fillmore choose to implement in their CBD provided it passes. Lisa Pagan responded stating that they opted for the typical, sidewalk improvements and beautification, including streetscape improvements, banners, marketing and promotions, and security.
Commissioner Ventura made a motion to approve the resolution that would allow the creation of a Fillmore Jazz District CBD to move forward. Commissioner Chiu seconded. The motion was unanimously approved by the Commission.
Item 14 – Central Market Community Benefit District
Lisa Pagan of the Mayor's Office of Economic and Workforce Development stated that this was also heard in committee, but said that Supervisor Daly had requested that the steering committee go back to the community and have more dialogue with the community. She said he had continued it until August 15th. She said that the boundaries included Market Street from 5th to 9th Street and some of 5th Street from Jessie to Mission Streets. She said that this district is also interested in streetscape and security. Commissioner Thigpen asked what happens when it comes to city property, stating that there seems to be some within the boundaries of the proposed CBD. Lisa Pagan responded stating that last year the Board of Supervisors passed a resolution to have the Mayor vote in the affirmative on behalf of any city property, and said that this would occur on a CBD basis, adding that federal property is usually exempt.
Commissioner Chiu made a motion to approve the legislation, adding that he personally supported it as a former business of that area that left because of the adverse working environment. Commissioner Ventura seconded. Unanimous approval from the Commission.
Item 15– Proposition J Contract/Certification of Specified Contracted-Out Services Previously Approved
Lane Kasselman of the Mayor's Policy Office reported that Prop J was passed in 1976 and this resolution allows the city to contract with private contractors if it is less expensive than similar work performed by City and County employees. He said the legislation before the Commission are all existing contracts and said that were submitted as part of the Mayors 2007 budget, adding that they are all non controversial contracts and have been in place for many years. He said that they have all been certified by the Controller's Office as producing cost savings.
Commissioner O'Connor made a motion to approve the proposed resolution. Commissioner Alberts seconded. Unanimous approval from the Commission.
Item 16 – San Francisco Health Care Access Plan (HAP)
Mitch Katz Director of the Department of Public Health reported on the proposed Health Access Program, stating that the consensus is that health insurance should be available to all San Franciscans, stating that they were asking the wrong question, adding that the question should be could we provide some type of health care. He said that the answer is yes. He said the Health Access Plan, or the HAP as it has come to be known, is a program that provides a medical doctor to everyone. He said it is not a comprehensive benefit's package in that there is no eye and no dental included and said that there is no coverage outside of San Francisco. He said that all these things combined lower the cost. He said it is not an insurance product, adding that it is one way to keep the prices down. He reported that 54% of the 82 thousand uninsured are employed. He said that Supervisor Ammiano's legislation would require folks to pay for the plan, adding that employees with less than 100 employees would be required to pay 1.06 per hour per employee and for those with over 100 employees; employers would pay $1.60 per hour per employee. He said that this legislation would provide 30 million to help fund the HAP. He said that the total amount of the program is $198 million dollars, stating that they have calculated that the city is currently spending 104 million dollars, which it would continue to fund. Commissioner O'Connor commended Dr. Katz for all of his work on the HAP and with the Council. He said he was hopeful that the city could resolve the funding piece of the legislation because he believes it is a great vision. Commissioner Murad asked if Ammiano's legislation states that employers with 20 or more employees will be subject to this. Dr. Katz said that this is correct. He said that the HAP is inclusive for all regardless of employment and said that negotiations are ongoing, and added that the Council did not get into the funding of it. Commissioner Thigpen stated that while the current uninsured population is young, she asked if there were any provisions in the plan to account of an aging population. Dr. Katz said that on average the uninsured are less than 40 years of age, but said it was a valid question adding that the calculation assumes the demographics stay the same. Commissioner Thigpen said that the emphasis is on preventative care and wondered what type of outreach will be done to talk to the population about preventative care. Dr. Katz said that while one can never change people's behavior, they will nonetheless try novel ideas such as providing free preventative care including free pap smears for example. Commissioner O'Connor expressed his concern for his personal situation in which his workforce is made up mostly of young people, stating that he as an employer will contribute a lot under the current proposal, but will not take out much in that his employees because they are young and healthy, will not use it. He said this prospect frustrates him. Commissioner Alberts asked if the philanthropic community would be paying for this to a certain extent in the future. Dr. Katz said that this was not planned. Jim Vernon, a member of the public said that he is educated and one of the 82 thousand uninsured. He said that he would not use this plan. He said that there are insurance plans out there such as Blue Shield that cost less than the plan and are comprehensive. He stated that he would be starting his own program and that anyone would be eligible to join. He said the way that you would keep the costs down in his program is to not cover lab work, which doctor's often want to request you to get often time for not reason. Stephen Cornell stated that the City is the largest employer or one of the largest. He said that he would hope that when the city buys products that these vendors also provide insurance to their employees and that they comply with the cities minimum wage ordinance and all other employment related ordinances.
Commissioner Chiu made a motion to support the proposed HAP ordinance. Commissioner Murad seconded the motion with the amendment to provide proof of residency for a minimum of twelve (12) months, and to cap the number of uninsured so that it does not increase substantially. Commissioner Chiu accepted the amendments. The motion passed with 5 yes votes. Commissioner Alberts opposed.
Item 17 – New Business
Commissioner Thigpen proposed that the next community meeting be held on August 21st in Chinatown and the Tenderloin. She said that she and Director Ubalde had set a tentative schedule that they would like the Commissioners to review and provide feedback. Commissioner Ventura requested that Director Ubalde work with the Department of the Environment to get information on the number of businesses that they have reached out to with respect to their various programs. Commissioner Thigpen suggested calendaring the street fair items and inviting all the stakeholders. Director Ubalde suggested bringing back Christine Carpenter from the Department of Public Health to give her input on the Work Standards Proposal.
Item 18 – General Public Comment
No public comment at this time.
Item 19 - Adjournment
Commissioner Ventura made a motion to adjourn. Commissioner Chiu seconded. Unanimous approval from the Commission. The meeting was adjourned at 8:29 P.M