consolidates and puts into the same section what the prevailing wage requirementsor so it's easier for everyone to see what the requirements are without changes to the language for what prevailing wage requirements are. and one of the more significant changes in chapter 21 actually is in regards to the calculation of sales tax, discounts for commodities. it is the policy of the city to provide local businesses sales tax discounts for commodities but the formula was complicated, based upon the grows receipts tax and payroll tax system so the city, we're applying a 1.25% price adjustment to commodities bids to businesses located within san francisco to streamline it and make it easier, based on consultation with the city treasurer,

controller, et cetera. that's pretty much, in a nutshell, what both pieces of legislation would be achieving and it's not yet calendared for land use committee but it will be. >> thank you. any questions? >> i just want to make a comment that really appreciated your presentation to our policy and legislative committee, and we had a really good chance to look over everything and i think the changes are huge improvements, especially the one about the ownership requirements, to make it more realistic about how complex some businesses are in terms of who owns how many percent of the business. so i think you did a really good job on this. commissioner riley: i was playing catch-up a little bit. commissioner o'brien.

commissioner o'brien: is the aim to open it up to businesses? >> it's bumping it up, because some of our contracts, it was $100,000 before, and -- and the idea is that, especially for smaller businesses, it's a lot harder and more burdensome for them to undergo the whole contracting process so if you raise the threshold, you allow for more informal contracts and it helps the smaller firms to be more competitive. commissioner o'brien: okay. >> it streamlines the process, as well. commissioner riley: can you explain the split order? >> the splitting? actually, what we're doing here is we're actually not doing any changes to the code as it

relates to bid splitting. we're only reinforcing the fact that it's not allowed. so, you know, you might get cases -- so, currently, i believe that under current code, if it's commodities purchases under $10,000 will go to departments directly, it doesn't have to go through the city purchaser office. so you might see cases where you get contracts, several of them, for $9,999, so, in those cases, there might be something fishy, and, again, this legislation doesn't actually change anything related to that code, it just says that, again, it's not allowed. >> commissioner riley: it just reiterates it. commissioner clyde? commissioner clyde: i recommend these changes. commissioner riley: public

comment? is there any public comment? seeing none, public comment session closed. and discussion? do i have a motion? commissioner clyde: i move to recommend this -- these changes move forward. >> commissioners, we do need to take a motion on each item, each piece of legislation. commissioner riley: do i have a motion for item no. 7? >> i move. >> i'll second. commissioner riley: those in favor? >> aye. commissioner riley: item no. 8. commissioner clyde: i move we recommend. >> i second. commissioner riley: those in favor? >> aye.

commissioner riley: item carried. next item, please? >> commissioners, for items no. 9 and 10, we do not have the staff from supervisor mirkarimi's office here at this moment. though, hopefully they'll be here soon, so maybe we should move on to item no. 11. commissioner riley: item no. 11? >> commissioners, item no. 11, discussion and possible action to make recommendations to the board of supervisors on board of supervisors file no. 101056 banning the sale of tobacco products in pharmacies. and we have a presentation by the director and nick shoman, proproprietor of charlies drug store. >> commissioners, staff is not

here from supervisor mora's office this evening. today this item was heard in land use. this is, if you'll recall, for commissioners dooley, riley, collide and o'connor, in 2008, you heard a piece of legislation about the pharmacies and banning the sale of tobacco in pharmacies. and at that point, we had a presentation about the number of small pharmacies there were and that the commission initially did approve this but we were not aware of charlies drug store at that particular time and charlies drug store falls in this unique entity that he's basically really more a small grocery store. so once it did pass, we became aware of this, and worked -- charlies drug store actually had to end up going to the board of

appeals, but wanted the board of appeals, based upon the definition of the exempt categories as a grocery store, that he was able to continue to sell. now this legislation that supervisor mora has introduced is closing those exemptions and removing the exemption for large, big box and grocery stores. so it's removing any -- its intent is to remove any ability for a business to sell both pharmaceuticals and tobacco. so we do have one small business that is definitely going to be impacted by this, and so we've invited nick shoman from charlies drug store to present to you what this impact is going to be. >> thank you for your time. my family has been at this location 1101 fillmore for 23 years now.

when we first opened 23 years ago, we told the community we weren't going to just be another corner store. the last thing they needed was another corner store, so we said, we're going to put in a pharmacy so the community went for that. as part of my licensing process, we got a liquor license. as part of the liquor license, we had a couple of conditions, one was the pharmacy and that we would keep the hours of 9:00 to 9:00. so you look at a liquor store 9:00 to 9:00, i mean, in my area, i'm the last to open, the first to close. that's not what our business is about. when it comes to the pharmacy, the way things have gone in the past few years, business has been declining in the pharmacy but my store sales make up for my losses in the pharmacy. we give people the best service they can have when it comes to the pharmacy. i have people who can't afford copays and we waive them or they can pay them when they can, they're on limited incomes. 90% of my customers are

low-income and senior citizens. they don't have to make the decision of do i want to have my medicine at the end of the month or do i want to eat. we headache it easy, pay us when you can get it. my operation in the store has been -- make it easy. my operations in the store have been successful so i can withstand the losses in the pharmacy. i don't want to close the pharmacy. i don't want to make the senior citizen that lives across the street from me have to get on a bus and wait a half an hour for the bus to take them 15 blocks up to the walgreens and walgreens will not provide the service i do. tell them you can't provide your copayment what are they going to tell you? next customer. this is not something this neighborhood needs to lose. i've been there 23 years longer than any business in the area and i hope you guys can see where i'm coming from here and how much this business, this

pharmacy, is being depended on. within a three-block radius, i have about eight senior buildings, none with less than 200 tenants in it so it shows you how many people do need this service. this is not something that i want this neighborhood to lose and i could not face my customers selling my pharmacy to a chain store and seeing them walk by, knowing that the services they needed were right here in front of them and i let that go. i could not do that to them. commissioner riley: how will not being able to sell cigarettes affect your business? >> we're more of a grocery store. if you wanted to go to the store and pick up a pack of cigarettes, a bottle of wine, groceries, you're not going to buy the cigarettes somewhere else and then come to me, you're going to go to the one place you can get everything. right now, cigarettes make up about 8% of my business in the store. that seems high, but the cost of cigarettes are pretty high. you can buy a loaf of bread, half gallon of milk and box of

cereal for the same price as a pack of cigarettes. it does sound high, but if you factor in what people are buying when they do buy the tobacco, it's huge. and ever since we got our exemption, you know, we've taken down almost all the cigarette advertising in the store. i mean, i do have at the front counter a few shelves where you can see. my other register, you can't even see the cigarettes unless you ask for them. i'm even open to keeping cigarettes under the counter where no one sees them. i'm open for anything. my pharmacy pretty much is running as a non-profitable pharmacy. i could apply for non-profit status on this pharmacy because it's not making money. it's there for the community. we told the community 23 years ago we would do this and we want to continue doing it. commissioner riley: thank you, and commissioner o'connor. commissioner o'connor: the store is at fillmore and what? >> golden gate.

commissioner o'connor: is that across the street from mcdonald's? >> across the street from mcdonald's. i just found out about this last wednesday. commissioner has been behind me and trying to help me with this and trying what we can with this short amount of time that we have. commissioner o'connor: point of clarification, with the legislation that was already passed, it would ban his business from selling -- being a pharmacy and selling cigarettes, correct? >> the legislation that already passed because of the business, charlies drug store, the business, it also falls within sort of the definition of a grocery store. so it did not ban it. so with the original

legislation. though, ghik have to take that -- nick did have to take that to the board of appeals, but under the definition of a grocery store, his business meets that definition of the planning code, and so he was able to win in an appeal. >> now supervisor mora is introducing stricter controls? >> right. so now any grocery store, no matter what size you are, any entity cannot sell both pharmaceuticals, have a pharmacy, and sell tobacco in its business no matter what size you are. so today in the land use committee, this was heard. the supervisor chu, david chu, did ask the committee if they would consider extending some time. the committee said that they would be willing to hear this more, but -- or have the board

of supervisors consider this more, but they did forward it out with recommendation. so what that does mean is there really isn't that much more time for us to be talking to the board of supervisors, but still trying to push for it not to be heard at the board of supervisors, the full board of supervisors to try to work on something. commissioner o'connor: roughly, do you have any idea, maybe, charlie, also, how many independent grocery -- independent pharmacies are left in san francisco? is there more than i think there is? seems like there isn't very many. >> you know, i'm not sure how many are left. but when you look at some of these independent pharmacies, they should be pharmacies. i'm also a full-line grocery store and for them to take cigarettes out of their location probably didn't really affect their bottom line. i mean, i'm more of a grocery store. this would really affect me.

as far as the number of stores, i'm not sure. i would be guessing if i gave you a number. commissioner o'connor: so you're say figure you were to either go with the pharmaceutical goods or the cigarette, you would probably go with cigarettes? >> i would have no choice. i wouldn't be able to stay open. i mean, there are some months where i'm contributing up to a third of the store's profits to the pharmacy. it varies month to month. commissioner o'connor: you are next to a lot of senior buildings. >> yeah, yeah. and it's not something i want to do. i wouldn't -- me, as a person, that's just not, my family, it's not something we want to do. commissioner o'connor: is this something supervisor mirkarimi has addressed at all? it's supervisor mirkarimi's district, so i was wondering if -- >> i have been in contact with supervisor mora and their stand on this, they would love to

help, but i think they're looking at the city attorney, and the city attorney is putting some pressure on them because i guess the lawsuits from walgreens and what-not and they kind of wanted to cut out those lawsuits, but at the same time, i'm going to be affected by it. a lot of this is new to them. they didn't know about me and what was going on. commissioner o'connor: right. >> so, i mean, some things to consider is the fact that when drafting any sort of legislation, that does take some amount of time, and the department of public health was very well aware of charlies drug store and the situation. and i think that this is really indicative of much of our policies that have -- that are drafted without the

consideration of the impact of small businesses and should the board of supervisors decide that they want to move forward with this, why couldn't there have been a conversation, you know, because, nick doesn't have time to sort of weigh in the options, you know. if this legislation moves forward as it is, he has to, one, deal with abc, and abc right now is so short staffed, it takes a very long time to get through to them, to get an appointment. this is going -- if he closes his pharmacy, how will this impact his abc license. there's a lot of questions. so i did ask the land use committee today to allow the commission to weigh in on this and to allow some more time to have a discussion and opportunity to figure out what we can do, but that did not

happen. >> so they're not going to allow us to make any suggestions? >> well, the committee -- there's the rest of the board of supervisors that could be sensitive to, you know, the recommendations. >> i'm wondering, do you know how many square feet your business is? >> roughly 2200. the business, the store floor, not including storage and what-not, is about 2200. i'd say the pharmacy is probably 10% of that. >> just wondering whether there could be any way to address this in terms of square footage, you know, that would basically grandfather -- commissioner o'connor: any business under 2500 square feet, because most walgreens are going to be above 2500. >> well, walgreens isn't the case. it's now the grocery stores and

the -- >> they're going to be above 2500, too, so. >> if you think that might be one possible way to go, it's worth a shot. commissioner o'connor: yeah. >> i brought that up to commissioner mor's office and they asked the city attorney about that and the city attorney was hesitant. they don't want to leave any loopholes out there. commissioner o'connor: they don't want to weaken their case if they have to go to court. and they will. >> do the city attorneys really care about what i'm doing? commissioner o'connor: they don't. >> even though in 2008 i received assurances from christine debary and kathleen dodd telling me it doesn't affect me, it has nothing to do with me. and i called mr. mirkarimi's office at the time and i quote him, "that's what they told you, take it to the bank, don't worry

about it." >> are you finished? commissioner o'connor: yeah. >> first of all, this is an example, one of many examples, of well intended legislation that actually degrades business plans and moves them in the opposite direction, the direction that we don't want them to go. i mean, here's a pharmacy, it's a small pharmacy, it's not really profitable, it's a family-run business. it is extending credit to people in the district. it is, you know, assisting low-income people. and yes, a part of its business plan is financed by the sale of a legal product. all right, i mean, it's very difficult, this legal product that is available at the corner liquor store. i'm not really buying the argument that if children see cigarettes somewhere in a store

that somehow it's going to be seen as more healthy if it's in one store or another store. i'm not really buying that argument that keeps, you know, let's protect the kids, because i really think what protects children is the ability to make deserving, well informed judgments in the course of their lives and you can teach them from the earliest time to make well informed decisions from the smallest child, you know, you can teach them. and this, you know, we've got to protect them from mixed message, is not going to protect them as much as decoding mixed messages that they will receive all their lives. >> i think some of these kids see worse things waiting for the bus to pick them up for school. >> with that being said, degrading the business plan is a serious issue for me to watch people have to degrade their plan in order to stay in business. i would like to see something about more time and the city

reaching out to assist in economic development, because a big box retailer or a large chain, they have many ways to reorganize their business plan, so they retain control of the sale of the forbidden product and their pharmacy at the same time. they have enough money and capital and whatever to do it. so if the city would provide resources either throughout mayor's office of work force development to help you to organize your independent, locally-owned business in a way that works for that location, that inner city, under-served location, i think that that's something they would hope that members of the board of supervisors who are very much in touch with what's going to in their neighborhoods would reach out to you and assist you with. so, to give you more time is primary. and i don't know how much time

you would need to look into a possible reorganization or -- >> it would be hard to say. my main thing right now is getting a hold of abc to lift some of these restrictions to give me some flexibility. one option, maybe i could move the pharmacy to another location down the street, something like that. >> that's what i was going to suggest. >> i do see a few store fronts that are open. commissioner o'connor: you're on the corner, right? >> right. commissioner o'connor: what if, in the back of your building, you did whatever it took to create a wall back in the space, back in the space, create a wall to code which allows you to create almost like a separate business. >> that could be possible, like a separate entrance? commissioner o'connor: that would be difficult. >> that would be difficult, at the same time. commissioner o'connor: even a window. >> the way the pharmacy is set up, i'm always there, my brother's always there.

it's kind of a safety concern. if i just have a pharmacist in there by himself or him and a tech, it's kind of a safety concern in the area that i'm in. yeah, i thought about that. if it was possible, i mean, i would do it. but a lot of it does come down to personal safety. >> commissioner riley: commissioner ballerina, you also have a question -- o'brien. commissioner o'brien: that idea of a separate at the back of the building, would that be for the pharmacy? i was wondering if you could create a separate, not an entrance, but a separate window, like a book stall, where you can sell the cigarettes separately. would that work at all? >> the pharmacy is enclosed by itself in a different area with

its own windows and walls already separate from the store but if you walk into the store, you can walk directly to the pharmacy window and if you walk in to my store coming to the front door, my pharmaceuticallacy is in the back west corner. commissioner o'brien: right. so would it be possible to create a -- i don't know if it's possible. commissioner o'connor: you could have a store within a store. >> i think i would have to have a separate address for this to really work with the health department. commissioner o'brien: i don't think a separate address would be that difficult. >> i'm open to anything, anything to keep my business running and keep on serving the community. i'm open to any ideas, you know, anything that's possible. commissioner o'brien: if we can do a -- i mean, i don't think the address is a problem. i know where that gets administered. if we could do a address, a separate address and then a separate window possibly when somebody wants cigarettes, they

can get your attention with a bell or whatever it is, and they would do that business -- it's in the same business, not coming in with the same entrance, though, they just walk around to where the window is, would that work for you? >> like a separate counter? commissioner o'brien: like almost a separate counter. commissioner o'connor: take-out window. commissioner o'brien: like a take-out window, thank you. >> anyone who wants to go to the pharmacy they don't have to interact with anyone in the store and anyone who wants to buy cigarettes doesn't have to go anywhere near the pharmacy windows. >> i would suggest to separate the business, don't call them one business. >> yeah, i mean, it's true, but some of the supervisors might think i'm looking for another loophole here. >> well, you are. >> yeah.

i'm looking for anything -- >> you're being forced to look for a loophole. >> i am. and i think all this could have been solved with half-hour meeting with a few supervisors and we could have moved on with this in 2008. commissioner riley: commissioner kasselman? commissioner kasselman: i'm sure the costs of expanding into another location would be a big burden, so a simple short-term solution is if the pharmacy is closed, if most of your pharmacy sales were before 4:00, close your pharmacy at 4:00. i don't know if that would get around -- and do cigarettes after. short of change the business. >> right now, my pharmacy hours are 10:00 to 6:00 and, you know, with people working, trying to come in, pick up prescriptions after doctor's offices, i have to keep the same hours they do. if i close the pharmacy at 4:00,

i don't think the board of supervisors would let me sell cigarettes after 4:00, it would be the same location. if i do find another location nearby, to move my pharmacy to, and i would have to continue to use profits from the store to keep afloat, paying rent in two places where i'm paying $2500 a month now. >> you mentioned we don't have to be at this time and place at all, we talked about earlier. supposing we had to do it all over again, what would be the solution to allow you to do what you're doing and still pass this legislation? because if it's a matter of going retroactive, there's surely a way of doing that for the legislative process. >> i think they could have made an exemption back then. commissioner o'brien: but the exemption, would it be to you or to an exemption class?

>> the exemption is the number of employees. commissioner o'brien: so it would be a class, then, and all businesses that fell into a particular classification. >> if we said under 10 employees, which i have five full-time and one part-time employee right now. city for healthcare where a business has to pay for healthcare, what do they have to have, 10 employees? >> 20. >> there's an exemption for that, i think this could be something similar, something along those lines. commissioner o'brien: i'd be worried that probably supervisor mora would be worried that that would dilute the effect of the legislation and the intent of the legislation probably. i think the way to go is to get a separate address and build a take-out window and people -- you obviously have a very lo