san francisco. and, you know, the safe way is the larger retailers. so it will undermine what we are repeating and repeating as a city, that we're supporting our small, locally owned businesses. and the shop local, spend local , you know, trying to really make sure we keep a level playing field, you know, this unintended consequence of actually advantaging the larger retailers and the formula retail is still a significant concern. president riley: thank you. >> i think at this point i would like to suggest that we take a position on this and make a motion that we are not supporting this legislation.

president riley: any discussion on that? we can't support it as is. so, should we share our concerns and recommendations? >> i think we've addressed them and they have not really been incorporated much into this. so i guess -- do you feel that -- >> a discussion, you can take a motion in terms of support, not support, and then address the reasons for the action that you're taking. it may be good to kind of go through sort of section by section in terms of the areas where businesses are going to be impacted and maybe just make sure that if we're making a

final statement we've re-ity rated all the points that we need -- reiterated all the points that the commission needs to make. president riley: commissioner, did you have a comment or question? commissioner o'brien: not just now, no. i'll continue listening before i speak. president riley: ok. go ahead. >> i would like to recognize that supervisor avalos has indicated that his door is open for the next month during the recession. -- recess. that the businesses, that the supervisor, you know, will be taking comment, they will be looking into the issues that are raised, so i believe that it is extremely important for people to really let their concerns be heard and i'd like to thank him and thank them for keeping that line of communication open. it's extremely important that we keep those lines of

communication open and take advantage of them. and -- so, i just want to let the public know. we don't -- we won't have another meeting, so we won't be able to take a position after this meeting. so, you know, i would like to discuss it. president riley: any more discussions? no. so do we have a motion? >> do i suggest that we recognize that there are no members of the public to speak. president riley: ok. public comment, please. seeing none, public comment is closed. now we have the motion. >> i would like to move that we are not supporting the alcohol mitigation fee as presented at this time. president riley: do we have a second? >> i second. president riley: all right. those in favor. motion carries.

next item, please. >> did you have any additional notes for staff as we've included our previous correspondentence so it's in your pocket as well as notes that we've compiled from the business community and other stakeholders. >> i think the letter we sent on august 3 still is relevant. the points that we make there, we'd kind of like to send those back out again. and then, commissioners, there's some additional notes in terms of discussions that have been had. that, again, to reiterate what commissioner clyde had noted is that the controller's economic impact report does not include the cost, which the wholesalers have said publicly that they will be passing on the costs, between 10% and 20%.

then for the business, that means then that will then increase as commissioner clyde had said, this amount of sales tax, and then there's additional impact fees that businesses will be incurring such as increased credit card charges. so, those kinds of costs calculated into the total cost of what the drink is actually not calculated in the economic impact report. >> neither is the standard allowance that's given at the state board of equalization for spillage and service. there's actually, you know, we don't sell or possess 100% of what is in a keg of beer. so there are standard allowances for that. i believe it's called spillage. but, you know, it is, you know,

significant at approximately 10%. >> i think we need to address a number of issues which we had recommended that my crow brewers, local san francisco microbrewersies, should be exempted from this tax. as they would be considered distributors and retailers. i also would like to talk, to add the point about how formula retailers will begin to have a -- an advantage over the small business in terms of passing that through to their consumers , you know, at a time when we are trying to encourage small, locally owned businesses, it seems to be giving an unfair advantage once again to offsale retail stores.

commissioner o'brien: i was just going to remind the director of commissioner duty's point also, the concern that we don't see a plan in this for eliminating a problem. we just see a revenue generating source and really what amounts to another tax. i'm really concerned at the strategy behind it because frankly i think people will just keep drinking and spend more. and that's what's going to happen. and it's not going to really do anything other than just make the place more expensive as it already is. i think it would be nice if there was a strategy such as a p.r. exercise or an education campaign that could be used to try and direct it to the people who are having the problems of alcohol abuse and try to help

educate them. i think that would be a much better use of resources than this. i'm not crazy about the program the way it's been presented. i'm not sure it's the right approach. vice president clyde: like commissionero brien is saying, i think we need to have an outreach component to the people that are creating these fees for the city, with their use of medical services. it just seems like otherwise we're just going to have this going up every year, the cost of medical bills is going to go up and i don't see anything here to mitigate the number of people that are using facilities. >> just a point of clarification. with the nexus study, it's set

the dollar amount to which then the fee is adjusted to collect that dollar amount for five years, at the end of five years the board of supervisers can direct the controller to do another nexus study, which -- that nexus study then can possibly include the nonalcohol-related cost impacts , to increase the fee. and/or make the adjustment, you know, yonled the consumer price index. or as what was referred to in the nexus study, i think there was a medical consumer price index at 3%. so, i think those varebles, if i've heard the commission correctly, shows varebles are also a concern in termless of down the road and to your point, commissioner, that though this legislation would not -- a fee legislation would not necessarily have the program, but what's not being

presented, with the understanding to the business sectors that are going to be impacted by this is a plan in place to mitigate the costs. commissioner o'brien: i have a concern about -- i would like to know more about the breakdown of the costs that's the basis of this report. you know, we have this information that we've been given, this is what we're paying every year for a problem that's been brought on by alcohol abuse. i would like some more information with a breakdown of an explanation of that figure, that dollar figure.

i think that if that's the case then this would need to be much more targeted. i'm also prepared to go on the record and express a concern deeper behind the whole initiative, is it some sort of, you know, i'd like to know more about the origin of what brought this idea on. is it, like, you know a sin tax on some sort of evangelical level or something like that, you know, or is it strictly just down to, this is good city policy? i'ding are really like to have a little bit more understanding of that -- i'd really like to have a little bit more understanding of that and the study of the thinking behind it. because if it's -- we've got money being spent here with people who are abusing alcohol and then i'd like to know more about that issue if that's the

impetus behind it. does that make sense? president riley: i'd also like to take a look at what we've obtained the cost, compared to other cities and other counties, to see whether or not we are paying extremely high costs for the treatments and medical expenses. >> commissioners, just for the staff as we compile your comments and for the director, should we go ahead and incorporate the concerns with the controller's report that was also -- that staff compiled and provided to you? should those also be incorporated or can i get some direction on that, please? >> definitely, yes. commissioner o'brien: i did read somewhere where they made a correct -- they -- i have to

take a minute to look but there was something that said in there, we made a miscalculation and adjusted a figure, it sounded like they decided to use a different formula or something. so, if that ties in with the question that you're asking, i'm concerned about that. >> the overall ilpact did make an adjustment for 25%. they overcalculated it by 25%, as i understand it, in the first impact report. so that adjustment is reflected heder in this economic impact report. the one that came out today, august 9. president riley: commissioner, this is your first meeting and the first time you heard this, do you have any questions or things you want to know? commissioner kasselman: no. it's an interesting case. i'm listening to your feedback on it and my sense is that the fears are all grounded in some sense of truth and that there's

a problem that's not being addressed and that's sort of where people should be focused and not necessarily on adding another tax to small businesses that are already struggling to pay their rents and so forth. and adding, like, additional fees and things. it's an interesting, you know, i'm not sure people are thinking about that. president riley: thank you. >> commissioner, if i can go back to your question regarding the corrections that the controller's office made, one of the corrections that they made today, with their report, the revised report, was that the actual loss of spending with different businesses that sell alcohol both onsale and offsale, they revised those numbers to reflect a higher loss of spending at both onsale and offsale establishments. commissioner o'brien: right. thank you. commissioner dooley: are there any comments we want to add?

executive director dick-endrizzi: i have one other question. staff has provided some possible suggestions, should this be implemented that the fee only takes affect upon adoption of the fee by neighboring municipalities? and that the fee be voided upon implementation of such a state level fee? >> certainly at least when the adjoining counties, if not on a state level, but at least the adjoining counties. bryan you're talking about two issues there, right? one is if the neighboring counties adopted and then you're saying if it becomes a state adoptive fee then we would use that and mitigate it against the local fee, right? so definitely if the state brings it on, then we don't need it on locally, that's for sure. >> commissioners, commissioner

dooley, for staff direction and the record, can we go ahead and would you be open to admitting your motion to include the comments that the commission received and also the possible amendments? one would be that it will only take affect upon adoption by may bing -- neighboring mue nil pallets and -- municipalities? executive director dick-endrizzi: commissioners, you've made an initial motion that you don't support this but upon condition of it moving forward through the board of supervisors, you can now make a motion saying, we'd like these matters to be considered. or amended. and then -- but what staff will also include is the substantive documentation in terms of why the commission is not

supporting this legislation. which is what this discussion has been about. the primary discussion. am i making any sense? president riley: yes. who wants to make a motion? commissioner dooley: i move that we submit our comments and recommendations to the board of supervisors as this is moving through, their process -- moving through their process. >> would we go ahead and very rift the initial motion and make a motion to oppose this cost recovery fee? but that the commission -- and then the commission would like staff to include the comments and other things that were brought up to you? executive director dick-endrizzi: we don't need to revisit that motion. that motion's very clear. the second motion would be that the commission would in its

comments, should the legislation be passed by the board of supervisors, or that the commission does not support it, but -- how do i want to phrase this? that's the first motion. the second motion would be considerations that the commission would like to have the board of supervisors to consider which is the -- and that not be enacted until other counties and if the state enacts a fee, that this fee is no longer applicable. >> thank you. commissioner dooly, does that accurately reflect your motion? is there a sect? commissioner dooley: yes. vice president clyde: i'll second it. president riley: those in favor. executive director dick-endrizzi: and then just lastly, the overall discussion was making sure that staff was very clear on the points that the commission once emphasized

to the board of supervisors on why the commission is not supporting the legislation. and i want to just make sure, have we covered all the points in terms of any overarching comments to the -- overarching comments to the legislation, concerns over the timetable, and we've already talked about the nexus study, the commissioner has pretty eloquently identified the concerns that the nexus study is not providing. and then we have the competitive disadvantage that this legislation will affect, the competitive disadvantages for small businesses should this legislation be enacted. commissioner o'brien: and the lack of an end game to mitigate, you know, get rid of the problem.

commissioner dooley: do we have everything covered? you can read it? can we just quickly run through it? vice president clyde: i think we should. forgive me if i'm slow but i'm slow. can we still collate comments? the period of between the next board of supervisors hearing and we will have a legend policy meel meeting, we will have another meeting. with -- are we able to incorporate comment from the public into our recommendations through this period, through this open comment period? you know, for a final letter? a final set of recommendations? executive director dick-endrizzi: should the legislation, i mean, what the legislation and policy can do is amend or update, provide

updated information that it would like the board of supervisors to consider. vice president clyde: that is my concern. with the fast timeline and our attempts to get more information, you know, i think there may be additional comments or suggestions that we will be able to make in the future. commissioner dooley: i would like to request that the director would give us a rundown of what we've committed here today, too. executive director dick-endrizzi: commissioner clyde, just to go back to your point, so the commission won't be able to take another formal action on it, as the full commission. the legislation and policy may be able to provide some updated comments in regards to this item between now and september

7 when it's proposed to be heard. because the next commission, full commission hearing will be after. unless the commission chooses to have a special meeting. vice president clyde: got it. executive director dick-endrizzi: ok. so just to maybe go through some of the comments that the commission has made and also some of the small businesses, that the intent of the ordinance and -- is that the original intent of the ordinance had been stated, was that it was to go -- that they're targeting the wholesalers as the means to go after big alcohol to, to quote their termination -- alcohol, to quote their terminology. but i think in terms of this ordinance, what we really understand is that this actually is having the impact

is on small business, because small business is going to have to -- is the one that's fronting the cash to pay for this. proposed fee. and that as we often -- the commission often sees, is that when we divide legislation that is specifically targeted toward small business, when small business is not a stakeholder in developing the legislation there tends to be a disproportion impact on small businesses. the concerns over the timetable , i think what i've heard from the commissioners is that the concerns that the time table is -- timetable is dictating the -- the timetable is dictating the passing of this legislation, not whether we're implementing good policy.

cost containments, so, what i have heard from the commission and the small business community is that there is one, there's not a plan in terms of dealing with our cost containment, that is a parallel plan with the fee, need to know more information in terms of what actually are in these fees that are defined in the nexus study and are there other ways of which the city can be -- excuse me -- are there other ways the city can be looking in terms of cost containment so we do not increase the fees, plus the fact that within five years, when the nexus study is

to be reviewed and take a look at, there's the potential for new costs to be added to the fees, let alone just the consumer price index, increased cost in fees. did i miss any other items that you had addressed? commissioner dooley: and we're including the microbrewries issue? executive director dick-endrizzi: the microbrewries issue is one that -- we're in discussion with the my crow breweries. there has been discussion about the businesses working together as a whole on this. because the micro breweries,

it's a unique -- there's unique exonalts to them in terms of being both the wholesaler and also the retailer. commissioner dooley: they sell other people's products as well as their own. the formula retail. executive director dick-endrizzi: so, going to the formula retail component is that for, one, identifying the onsale retailers as -- that has been identified, the formula retail, the big box, will have the advantage of being able to distribute this increase over many different products, thus not raising their costs, which put them at a competitive advantage of having consumers purchase the products from them over the smaller retailers. the other component -- the

other component -- let me -- i'm sorry, let me just -- the other component that has been identified and, in terms of discussing with some of the industry folks that we haven't actually discussed here, is that some of the larger retailers, they do have distribution points outside of the city and how will the tax and treasure office be able tone sure that those retailers are correctly calculating the cost of those distributions going to that point and going into the city? vice president clyde: when we look at the competitive disadvantages, our catering companies in san francisco will be at a significant competitive

disadvantage and certainly not encouraged to shop local. but we have many caterers and kitchens and caterers who are located outside of the city and will be buying product outside of san francisco. and will be taking their rereceiveble, accounts rereceiveble, -- receiveble, in adjacent jurisdictions. executive director dick-endrizzi: and i think, and in addition i think i would really like to underscore the point, the caterers in san francisco, they may purchase outside, but if the big box formula retail would want to take advantage of making them exetively -- take advantage of them to make them more competitive, they may not raise their prices. so, those caterers could -- again, just more and more of the dollars are going to our big box and formula retail as to possibly some of -- not the

super small retailers but maybe more of the medium sized retailers. so, i, you know, i think in this situation, while i do think that there's going to be some competitive advantages for the businesses outside the city but i think we need to really underscore the fact that even within the san francisco boundaries, we're pushing -- we're pushing sort of the consumer dollars in a direction that seems not what is good for -- you know, it's not supporting small business. vice president clyde: i just want to clarify. maybe i wasn't clear. i'm not suggesting that our caterers would purchase outside of the city. that was not -- it was a competitive disadvantage -- no, not at all. no. what the competitive disadvantage is with caterers providing services in the city who are located outside of the city. because people can purchase their catering anywhere. and they bring it in. so regulating that, you