language, because i find it a little bit dense. a charitable event is when the property owner is exempt from taxation under the california constitution, as implemented by the california revenue and taxation code. then, the sponsor is not required to pay. commissioner borden: it is based on exemption from california property-tax is? then i guess they are also exempt from san francisco property taxes. is that the case? so any organization falls into that category would be considered a charitable cause? >> right. commissioner borden: great. in terms of the policy credits, i think a lot of them make a lot of sense. i understand the concern of mta,

but i share the issue about the burden on the smaller businesses, particularly because a lot of smaller businesses are neighborhood-related, which people walk to as opposed to take a lot of trips to. if there is not an easy way to separate out various different classes of small businesses in a downtown neighborhood or never would corridor -- i think there is a balance will need to figure out. considering that a lot of these are neighborhood businesses, to the extent that we should all support these, it is something we might look at. looking at the 100% for those businesses makes a lot of sense. talking about larger developments, there absorption capabilities are important. with grandfathering, the

gentleman mentioned the project on sf-made. would they be considered part of the grandfather? or is it because their application is not filed by a september date? >> the with the ordinance is drafted, a project which filed a site permit prior to october 2012 are exempt from the square footage threshold change. the application of the key to new land uses, in this case, wholesale storage, would become effective with the adoption or enactment of the update. commissioner borden: whenever the board adopts it? >> whenever the board adopts it. in the case of the situation the gentleman was describing, in all likelihood, his project would be subject to the fee, unless an effort were made to provide a

grandfather provision. commissioner borden: i recognize that when people follow applications, they are told that fees can change at any time. i recognize that. but particularly with the new categories of uses, it is one thing when a category of use was subject to the fee that is increased. it is another thing when they were never subject to the feet, and now it is a big thing. to the extent that we can look at how there might be appropriate -- i do not know what the date is. it seems to me that projects that have been in process to this point that were always subject to the free -- we should figure out how we can treat them so these projects are not ruined. maybe the answer is the policy credit, in some cases, related to vacant spaces.

i am not sure from that space, if that is the case. >> i think if the commission's desire is to grandfather these types of uses that it would be cleaner and more explicit to simply grandfather them, and not try to cover that to the policy credits program. commissioner borden: i would be eager to hear what other commissioners think. commissioner sugaya: i would like a little -- the transportation sustainability program has never been presented to us, as far as my memory. was it? but these changes that we are not talking about will be adopted by the board on this time line later this year. is that correct? >> one ordinance updates the

impacting transit development fees. that is what we are reviewing today. the other, which establishes the transportation sustainability program, is subject to eir and will be another year. commissioner sugaya: so, we are going through this exercise for about 18 months of changes? >> if everything goes according to plan, yes. commissioner sugaya: i have a question for the small business commission staff. as it was presented, you have two alternatives. they are mutually exclusive. >> the commission provided the alternatives to allow some flexibility, recognizing that the policy program would achieve a similar or increased benefit.

i think, looking at the planning staff recommendation, there are a combination of the two which accomplish the goals of our commission laid out, with the caveat that the policy credit 90% limit is not fully consistent with our recommendation. commissioner sugaya: i do not know how commissioners would feel, but if we were to recommend this on incorporating your suggestion, would it be one or the other? that is what i am trying to understand. >> considering the direction they are moving towards with policy credits, i think if you move in the direction of 100% that it would be fully in line with our recommendation. vice president wu: i am going to make a couple of comments and then go to commissioner antonini.

on the nonprofit question, its staff could give examples -- what kind of nonprofits would these be? would it be office space? program space? i am trying to get a sense of what kind of entity or reason you would be paying the fee for. >> it would be any net new development associated with the non-profit or institutional use, ranging from very small scale to very large scale. an example might be an independent private secondary school, a high-school that wanted to build a gym. another example could be establishing a new site -- you would think i would have some examples in mind. vice president wu: i have a similar concern to small

businesses. if you have a smaller nonprofit trying to maybe build an office, this is some sort of burden. is there a hardship waiver overall that the department offers, which may not apply for nonprofits that can show financial hardship? >> there is no hardship provision with impact fees. the department come on its own, does have an impact provision. typically, the way those are addressed this through establishing a waiver or credit program. in the case you are describing, where a nonprofit was trying to build office space, it could actually be eligible for the policy credit program, in that case. so long as it was under 5000 gross square feet, it would not be subject to the fee. in particular, if the desire is to recommend a 100% fee waiver. vice president wu: i would

support the policy credits, and it sounds like the commission is moving in that direction, including the 5000 square foot threshold for small businesses. for small businesses in particular, i think the 100% credit does make sense, although i recognize that every new development has some imposition on the transit system. i think the argument that it is so hard, the figure of around $6,000 in fees for a new small- business -- i also would support grandfathering -- extending the grandfathering for -- i think the category was nonprofit institution, but then possibly for the new categories that would be brought in under the feet. i was not on the commission with the t s p hearing. i share some concern around the

policy credit for developers who are not building parking. i understand the desire to want to incentivize less parking. it follows the transit first policy. i also think that developers are already saving money by not building parking. there is somewhat of an incentive there, maybe. i may not understand every developer's business decisions. but i think that does put more of an imposition on the transit system itself. i just want to flag that. i am not intending to ask for a motion. commissioner? commissioner antonini: i have a question on this. if we deal with the situation where a business was in operation with 2000 square feet, and then we dropped the floor down to 800 square feet, it would have to be a business that is starting new, not one that is

in existence. just looking at this hypothetically, and i guess the question of whether it would be a landlord or tenant -- one would assume the builder of the space would have to pay the fee. quite probably, it would be passed on to the tenant, in terms of rent, to be able to justify the cost. i am just thinking, in terms of a small operation of 2000 square feet, which is typical for a professional office -- that is like $26,000. it is a big piece of change, if i am doing the math right. it is almost $13 a square foot. that is a pretty good piece of change. you are building something new, and it is part of the cost of whatever you are building, and you have to factor that into your rent and everything else. but i think a small-business

group makes a good case. i would support the recommendations, if we have a motion to keep the current 3000 square foot exemption in place. also, i have the same concerns that commissioner wu brought up about giving extra credits to those who do not provide parking, because the impact is still there, as mentioned. it is just in a different form. i would have to see how much credit there was. but i probably agree with her position. commissioner sugaya: i apologize. i do not remember anything about the tsp program. that said, if this is an interim provision until such time as the t s p is implemented, then how much of what we're talking about today carries over in

another program? if we are recommending moving toward 800 square feet, to be retained as a recommendation, with that carry over? or does that have a different set of square footage is? >> the ordinance -- they were sort of parallel ordinances, introduced at the same time. there is an assumption of a threshold. there is a policy credits program, which covers the two residential uses, the small business, and parking. at this point, the tsp does not establish a 100% fee waiver. it is left open for the policy makers. it does apply to non-profit and institutional uses, automotive services, etc.

in some ways, bringing these provisions in today lays the groundwork for what is proposed to happen in a year and a half. from that perspective, that is part of what has generated staff recommendations to provide some grandfathering, so there is consistency between the programs, but time to accommodate those changes. commissioner sugaya: substantially, the two are similar? >> with a major exemption being that this does not apply to residential use, and there is a change to how we conduct ceqa analysis. commissioner borden: so you are saying -- the policy credits -- they are part of the tsp? it is the 100% level or the 90% level? >> that is left as an open question, to be determined as we go through the environmental and policy process.

commissioner borden: defined the to be a conflict? it sounds like, if we were to make a motion to adopt at the 100% level -- would it be inconsistent to grandfather the new uses to the point at which the tsp is passed? it would give people who are currently in the pipeline enough time to hopefully get their projects to the site permit. at the same time, there would be on notice for the net new projects. i wanted to make sure that would be consistent. >> that is what generated our recommendation to grandfather to january 2013, when we expected the tsp to be through its process. i think this would give sufficient notice. it is very consistent. commissioner borden: i motion

that we approved, with the introductions of the policy credits program, as recommended by staff, and in the net new impacted uses. grandfather it full 2014. commissioner sugaya: at 90%, or 100? vice president wu: for all areas? >> at 100%, for the policy credit list. i think it is hard to say. if policy makers at the board want to change that, that is my motion -- commissioner borden: commissioner sugaya: second. commissioner antonini: does that include the recommendations of the office of small business? >> the policy credit is in there for 1000 square feet and takes care of the problem. commissioner antonini: also,

provision one. there were situations. commissioner borden: i did not even think about that. it is really actually -- commissioner antonini: could we get rep -- commissioner borden: i just realized. commissioner antonini: there are two things being presented, so i wanted to make sure we could address your concerns. >> there is confusion with emotion. ideally, the primary recommendation was to maintain the 3000 square foot threshold at that level, and maintain the five years. but the commission wanted to give flexibility to policy makers, recognizing the program would achieve similar additional benefits by raising it from 3000 to 5000. even though there is some contradiction in our motion, i think it was done intentionally to allow policy makers to have some flexibility. commissioner borden: 3 reading

it, it's as non-formula retail in a vacant space. >> i would defer to planning, but that is taken from the text of the code. i believe our motion should be consistent. commissioner borden: that is not in conflict? >> no. commissioner moore: to clarify, you are taking from the latter point number 1, the special order use. commissioner borden: there are conflicting things. policy is saying it would make the threshold change. separately, the policy credit program would allow us to basically, even though the threshold change, people would get their credits for it. >> my understanding, listening to the discussion at the small

business commission, their preference was, do not change it. if you are going to, introduce a policy credits program. commissioner borden: the question for us is which way we prefer. the tsp goes to the more restrictive level, to 800 gross square feet. obviously, we are not the final approval, so it could change again. if we recommend, and it goes forward with a lower threshold, which i think we all support, what does that mean? will the tsp the re-evaluated? there is no conflict, is there? >> i think the goal has been for the tidf to be aligned with the tsp, to the extent possible. since it does not include the credits program, the preferred

approach would be to allow the policy credits program to move forward with the 5000 gross square foot cap. the concern is if you lower the 3000 square foot threshold to 800 square feet, projects which would not be subject to the fee would now be subject to the fee. with a 100% fee credit, the projects would not be subject up to 5000 gross square feet. if that is accomplishing the same objective and could be in the alignment, that would be preferred. commissioner borden: that was my original motion. i wanted to make shirt there was not a conflict because of the language around vacant space, in particular space that might be transitioning. i do not know if that was a thought. it sounds like they are fine with the policy credits. it sounds like everybody is fine with that as a policy approach.

commissioner antonini: just to clarify, so i am clear on this, it seems as though if we implement point two from the small business commission, which i believe is part of the motion the commissioner has made, it actually takes care of number one. most of the smaller non-formula retail businesses -- am i correct? two is taking care of one. it is an either-or situation, but it looks like two takes care of almost all instances where businesses would be -- >> the program does specifically say non-formula retail. it would be subject to the fee. anything above 3000 gross square feet. under the second

recommendation, anything above 800 gross square feet. commissioner antonini: presumably, they would be able to pay that. i do not think it would discourage them from going in, because there are a lot of fees going in. i do not see a problem with that. commissioner borden: a final question, related to the charitable and non-profit -- not all nonprofits are exempt from property taxes. i am kind of concerned about that. >> it is a little bit below my area of knowledge. if you are a 501 c three, -- 501c3, you are probably exempt.

commissioner borden: it sounds like most nonprofits would not get the fee because of that charitable exemption. >> but that exemption is proposed to be eliminated with the tsp. therefore, the need for the grandfathering to allow some time. >> the motion is to approve the recommendation with the policy credits program. commissioner borden: it is also on page 13. >> the motion on the floor is for approval that identifies the small business commission. commissioner borden: adding the

grandfathering to 2014. >> as stated by commissioner gordon. >> i have a clarification. there were five recommendations made, in terms of modifications the policy credits program and the grandfathering -- you have added new fees. there were recommendations to include a five-year time frames for inactive uses. commissioner borden: staff recommendation -- adding the policy credit and the grandfathering period -- >> on the motion.

commissioner antonini: aye. commissioner borden: aye. commissioner moore: aye. commissioner sugaya: aye. vice president wu: aye. >> thank you, commissioners. that motion passed unanimously. vice president wu: i am going to ask for a 20 minute recess. >> the commission is taking a 20 minute recess. thank you.