on one avenue with a warehouse. then she has to put to her very large -- almost the size of fire trucks. that is how large they are. whether she is bidding on the central subway, mta, her competitors are in different parts of the state or in the bay area, and they can come in with lower rates, so we're trying to push as much as we can korean -- that we can. i am not trying to defend it. we do push as much as we can. we are only able to make

recommendations. more than half of what the engineering estimates are. with say something was going to cost $98 million. a low bid, one came in at $48 million. well, that is great for the taxpayer, really, really great, but in reality, it is tough for the small-business owner. every dollar and every penny makes a difference, so the environment is very tough for small businesses, and i think that we are doing a good job. i think we could use more. i would really recommend it if the commission could even perhaps write a letter to jose, urging continued emphasis on this issue, i think that would be very helpful.

i know that theresa sparks, that would be great. i know she has been doing some great stuff. i would not underestimate the power of your voice, so if you would like to see more, we would be happy to carry that banner for you. president yee riley: commissioner clyde has a question. vice president clyde: are tracking this could >> -- are you trucking this? >> they do not have hiring goals on this, but for the first time ever, caltrans and the mayor's office, they have budgeted and approved a work force devoted program. so rhonda simmons and her folks over there will be working in tandem to get more local hires on the same.

we know there is a natural synergy between work force development and small business, so it is kind of three legs of a store, stool, -- haute three legs of a small -- three legs of a stool. the mechanism is there. they are working with the union and so forth. there is a good flow. >> that information would be very helpful, i believe, to us and also to the general public, as well -- vice president clyde: >> .we look forward to working

with you to create more jobs. >> thank you. thank you, regina. really awesome. thank you. president yee riley: and just a note, in terms of our monthly e- bulletin, we have a highlight of the workshops. in monitoring our click-thropugh ugh rates, that is one of our highest. president yee riley: all right, thank you very much korea next item, please. should we go back to item number five? clerk: commissioners, you are now on item number five, the discussion and possible action

to make recommendations to the board of supervisors on board of supers ivers file number which the board of supervisors by a number100865, an ordinance amending the san francisco administrative code by adding sections 106 through 106.28, to impose a fee and out of a beverage wholesalers and certain other persons to distribute or sell a college beverages in san francisco to recover a portion of san francisco's alcohol attributable and reimbursed health costs and to fund administration costs. the director will be making a presentation. org leading the discussion. we do or leading the discussion. >> the full commission heard this at the july commission meeting. the legislation and policy

committee heard it on july 26 calm and at the full commission meeting in july, supervisor avalos had indicated that he was not going to schedule this as a budget and finance committee meeting until after the legislative recess, which would have been early september. then the commission was informed that he was going to need to schedule at least one hearing before recess, do timing issues regarding a measure on the state ballot but has now basically made a public announcement last wednesday that he was going to have, again, a special hearing, which took place today, to move a piece of legislation out of the budget and finance committee to have its first reading at

the september board of supervisors meeting, and this is with his hope that the legislation gets passed and that it is enacted in the 30 days prior to the november election, of which it needs to be a fee, because what is on the ballot will also require a two-thirds vote. at the state level. so this escalated time frame was not something that i think the commission initially -- we were initially informed that there is going to be a little bit more of a time frame for us to be a to analyze and have some discussions with the supervisor's office. . be able to analyze. so there are some changes that i would want to review with you, and supervisor of the los introduced -- supervisor avalos

introduced three key amendments that were heard at the special committee, so he is change the piece from out of mitigation to a " cost recovery -- alcohol cost recovery, note and then on page 6, the changes are that instead of copulating note it per alcoholic ounce, the treasurer's office in terms of doing collections dot on the matter have asked to have a change but 2 per gallon, and the fee will be established at the pump 0.3 5 cents per gallon for your, $1 per gallon for wine,

and this was per gallon of spirits, and then the other item of note, the first payment will start on april 30 as opposed to january 1. and then, on page 8, 922, the biannual review, beginning with the fiscal year will begin note 2011. " instead of 2012. -- instead of 2012, so that means should a piece of legislation be enacted, there could be a change in the calculation. this was outlined in the nexus

study. so next in your binders, you do have the commission's statement and we supplied to the board of supervisors after the legislation and policy hearing on the 26. a correction on that. the legislation policy committee hearing heard this on august 2. so what we have before us, commissioners, today, the board of supervisors budget and finance committee heard the matter, and i am quite pleased. we had probably close to 50 businesses to come out and speak. we're pleased to have that many businesses.

the key message from these businesses was bottom-line costs and what this would mean in relationship. the budget analyst -- the comptroller has provided an updated report. this report was finalized this morning to reflect the changes in the different calculations. >> commissioners, that report is located in the back of your binder.

so, perhaps maybe then taking the time to go through this in great detail, i know that many of you have had time to review this. do you have any particular questions on this? >> i do not have a question, but an however, it -- i have a comment. vice president clyde: what decreases we are going to experience. the losers on this. i'm very disappointed.

>> it doesn't change not much, does it. vice president clyde: i feel the legislation is really not taking into consideration the very real financial impact.with small businesses, and the loss of employment, and it seems that it is putting a huge burden on the businesses. president yee riley: of the legislation and policy meeting earlier this month, we talked about some of the concerns we had on this legislation, the timetable as well as the cost commitment and also the

competitive disadvantage. do you remember any more? vice president clyde: i know we spoke about the concept that this is a pretty broad nut for targeting chronic inebriants, and it could be brought down to focus on certain types of of all that seemed to begin shooting more than their fair share to the problems with chronic inebriants, like beimel liquors -- like the malt liquors. it would not be proceeding

forward until other bay area counties would enact similar legislation, therefore making it a more level playing field for all of us. and then the cost containment. we all know what middle, -- medical costs are like and the fact that every two years, this can be raised, based on the cigarette tax which doubled in one year. that he has been raised. we are very concerned that this could just be a constantly escalating costs for small business. plus, the fact that it does not address in terms of any programming or any money put aside for mitigating chronic inebriants. we would prefer to see at least some kind of part of this money allocated towards alleviating

this problem, whether it is sort of just providing cost recovery it without really addressing the causes and how we might be able to address these in a more positive manner. i think those were all things we were very concerned about, and we still remain concerned. president yee riley: commissioner clyde, you have some concerns, as well. vice president clyde: at this point, my concerns are pretty well documented. it will be reviewed annually. this is a concern because the allocation of these costs according to the nexus study, it

is caused some attributed to alcohol, and if you heard the department presentation, they are saying, and i have heard it echoed in the supervisors' chambers, that they believe that the costs attributable to of all are significantly greater, so that leads me to believe that this fee will be increased, and i would like to know about what the increase in costs will be after the givebacks that labor has agreed to, and i believe that is about 18 months. the comptroller's report does not contain the markup that the retailers would have to put on any recovery or their wholesale

costs. this was per retailer. we are not getting the dollar value that is potentially in the add, i'm paying the state an additional 10% on that markup of the i also have to include my -- markup. i also have to include my costs of financial transactions, i have to include 2% to pay the bank.

so, because most of our trngs actions are now on -- our transactions are on --ity and credit cards and those fees are continuing to increase with no sight of really abating. so there are people who say that this is really nominal and we don't understand it. why people are so concerned, but what they are not seeing is our having to do cost recovery as well and it is actually higher, so i would like the controller to control, you know, to factor those impacts in. i think we heard from the small business community that they are not -- they aren't -- they are not unconcerned with the impacts and they would like to work with the city. what we -- what -- but what we are facing ised inability to get in on the ground floor, developing policies and legislation. so, this has been ongoing over

the past year, year-plus, and the small business community is being given a very short timeline in which to respond. so that is a concern. and, let's see, what else, what else do i have? president riley: you mentioned cost containment. vice president clyde: yes, i did, and i think that that is -- again, with the fees we've seen two years ago, fees were increased 25%. they were increased, you know, a year ago about another 10%. just using this structure is, you know, is a concern as well as the health costs. so, you know, a legislation that does not include some containment is, you know, really, you know, i'm not sure

how responsible it is, and i am concerned about the jobs creation. i mean, we do have -- we do have what is being referred to as a jobless recovery and the jobs, you know, we are seeing that the people will have their incomes impacted. in fact, as i speak to several people who work in the industry, they say, sure, raise the prices, the customer will take it out of my pocket. you see people pull back on their gratuities, you see them pull back on their spending in general and really i think there's such significant economic damage that can be done just to raise a relatively small amount of money. you know, it really -- $17 million is not or $14 million, $15 million is not that much, but the economic impacts will be widespread. it will also drive businesses out, not businesses, but it will drive spending to the big box.

i think that's the point that was not made really well in the, you know, as the small businesses spoke on their own behalfs, they didn't really bring this up. but when you look at it on a bigger picture, really the larger big box retailers are able to spread the cost of these fees across hundreds or even thousands of items and so they can absorb it and get, you know, and actually enjoy a competitive advantage within 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