supervisor avalos: we are back from recess. thank you for your patience. if you could please call item no. 12? >> item number 12, ordinance amending the san francisco administrative code, chapter 106, by adding sections 106 through 106.28, to impose a wholesalers and certain other persons who distribute or sell alcoholic beverages in san francisco to: 1) recover a portion of san francisco's alcohol-attributable unreimbursed health costs, and; 2) fund administration costs. supervisor avalos: thank you, madam clerk. colleagues, i present to you the alcohol cost for traveling feet. this is a legislation that has been in one year in the making.

the city attorney was asked to draft this legislation in june of 2009. the idea came from the work of the brand institute, who was working across the state of california, looking at how we could give recovery for the impact of all call consumption in the state. there was also discussion about applying it here at the local level. there is a big, long process that we have to go through. we have to measure what the cost of excessive alcohol consumption have been to the city. the comptroller's office commissioned a study to determine what that cost is. that helped to inform us how we would be able to set what the fee would be forgetting that cost recovery.

there has been a lot of discussion about how the fee would be applied, discussion in my office and in stakeholders across san francisco. originally, applied directly at the retail level. i have concerns about that based on the experience of recent -- recent fees like the tobacco fee that was enacted last year. the paper works through the remission of building in the treasurer's office. to me it made sense all so it to be able to apply and directly as

part of the responsibility that we were able to apply. i believe that we should be subject to the feed, not so much the ones that are subject directly to the city and county of san francisco. the intention behind this is that every year the department of public health is forced to, with our budget crisis, is forced to make cuts to services, cuts that the board tries to restore but never entirely. they go through the cut and reverse of cuts every year. losing services. important services for treatment on demand. services that san franciscans need to maintain sobriety and

make changes in their lives. because we have continuously been fighting this fight to restore services, there was an effort to hear from the voters in their treatment on demand services as approved by the majority of san franciscans for those that are seeking support around substance abuse and alcohol related issues. when it was passed, the city had not really traded out the mandate. in a way it was difficult as the mandate did not have funding that was attached. this legislation here, the alcohol cost recovery fee is an effort to have at least partial funding for that mandate. so that we can call it partially

funded as a mandate that we were able to achieve in the legislation. originally this legislation was looking at 0.07 6 cents. we have actually changed the amendment today, it is to apply the feed in a different fashion , breaking out for a beer, wine, and spirits, they would each have different types of four levels of fees based on the alcohol content. for those that could be opposed to this legislation and may still, i still have an amendment that i think would be worthwhile to hear.

the nexus study in measuring the cost of the city is based on looking at the state of california and the drinking that occurs in the state of california. people across the state drink a certain amount, but because of san francisco, the nightlife and tourist industry, as well as density, we have a much higher rate of drinking per capita, for residents, and we are actually lowering of the with the new amendment by 25%. there will be an impact that we can discuss later today in the meeting. ted eck in from the comptroller's office of economic impact has done a study about what the impact of this legislation would be on our

economy and jobs created. i think that people will see an impact where there has been a great deal of concern about loss of jobs and that this could be a burden to our tourist industry. which is, as a matter of fact, having a negligible impact according to mr. egan. from the department of public health we of dr. mitch cats. yesterday the health commission unanimously supported this legislation. i would say that there is no other commission that has seen the deterioration of funding for their department as the health commission has. every year we go through the painful process of trying to

determine which services will be let go in which will remain. i would like to state my appreciation for the health commission and they're difficult decisions sphere -- and those difficult decisions that they have to make. a marin institute was a big promoter of this legislation but there are other groups across san francisco that would like to see this past. dan number of people are in the audience today and they work or receive services through the community behavioral health subsidy, michael walden house, the baker places. your presence here is greatly appreciated. we know have difficulty is to provide these services and make changes in your lives. especially with the funding that is not always guaranteed. thank you for being here today.

the youth leadership institute is here to be supportive as well. local 798, the fire departments, has stayed here from the last items that we have before us today. there is an impact on jobs within the fire department if this legislation is passed talking about cost recovery, with over-consumption of alcohol, it is important to note that these services continue. the sobering center is $120,000. direct treatment costs and the

judgment -- general hospital services digging up beds in the system, close to $600,000, and we have a fire departments where services are rendered to deal with transports. that is at $2.9 million through the fire department. transporting directly to the sobering center, another $1

million study that was measured was $17.6 million. add to that, if we apply this week, the treasury tax collector, who would be providing administrative support services to make sure that we have room between the overall cost and what the fee will bring in. we will have about $16 million currently that the fee is designed to bring back in terms of cost recovery. there is a role that the comptroller's office plays,

making sure that we accurately said the fee for cost recovery, and i doubt that this would happen, but growing over the process that was measured to make sure that we are below that level and following state law. dart let's go ahead and have misters deegan -- mr. deegan report first on the alcohol impact fee. before he starts, i would like to thank my co-sponsors for the legislation. i appreciate your help. >> good afternoon, supervisors.

given the main proposed legislation of a fee on wholesale of all distributors in san francisco to recover some of the city's alcohol attributable costs, in terms of the economic impact the finding is that the fee will be passed on from a wholesale channel to retailers and final consumers. this will slightly result in decline of consumer spending that bars, restaurants, and liquor retailers. to the overall impact of fothe legislation is neutral as it will be offset by supported fee revenue.

in the original version of the legislation that we analyzed it might foot -- might not completely account for all of the whole consumption, so the supervisor has advocated a 25% reduction in the fee over the costs incurred. the fee as originally proposed was $0.76 per ounce with a higher amount of alcohol. coming directly from the nexus study, indicating the city's alcoholic travel costs and services in the public departments and fire department. with administrative costs and

total attributable costs for expected alcohol abuse in the city is $18.1 million, the maximum fee revenue that the city can recover. in terms of the fee calculation and where it comes from, nexus study based on california alcohol consumption profiles, there are 300 and set -- 57 million drinks annually served in san francisco, turning in the 214 million ounces of alcohol, dividing it into the cost that we have it would lead to the maximum allowable feed of 8.4 5 cents an ounce -- four counts of alcohol sold. -- 8.45 per ounce of alcohol sold. the nexus study derived its estimate based on the average per capita alcohol consumption

in california. a reasonable consumption that reflects available hard data, however sentence cisco has a significantly larger restaurant and bar industry than the average california place, therefore considering that it is likely that the per capita alcohol consumption is significantly higher than it is in california as a whole. what it means is charging a fee based on the resumption of california average consumption likely leading to an overconsumption of fee revenue. our estimates, which i will show you on the next page without going into detail, the san francisco per-capita alcohol consumption being 25% higher than the state average. in terms of how the feed affects the economy, it will directly fall on distributors, who will face a choice of whether or not

to simply reduce their income, payments, and suppliers, or trying to pass the feet forward to local retail outlets. because the san francisco wholesale market is a small piece of the national market, it is unlikely that they will be able to force suppliers to accept a lower price. however, on the other hand, because local retail outlets cannot obtain all call it beverages except from a distributor that pays the fee, these retailers will not be able to evade through higher wholesale prices. we would expect that the wholesaler would do that. shifting the burden of a fee on to the retail outlets. they in turn have a similar choice about accepting that as a reduction of their own income or trying to pass the fee on to final consumers. to the extent that they try to

pass it on to final consumers, it would raise the retail price paid, tending to reduce consumption to a degree and extent to which consumption will go down depending on the role of the feet and the extent to which it raises retail prices and percentage terms. the price sensitivity of consumers, i will share calculations with you in a moment. ultimately the overall economic impact depends on reduced spending at retail outlets that serve alcohol because of the tire price consumption. consumers will be spending additional money to pay for the feed as well as the positive economic impact pherae f -- impact. how the fee would affect a per

serving on different types of magalie beverages, it is charged in the original version per ounce of alcohol, so it is relatively bigger per ounce. of course, a serving of beer has less alcohol. it basically works out to 4 cents per glass of beer. 4.7 cents. however, off how that affects retail prices is different. >> i am curious if it changes in the analysis, or if it does is just a minor changes. >> if the amendments brings it down 25%. >> the change