million a year while creating 350 jobs. most city expenses associated with inflicted contractor bids -- and i should say that we did knopf -- with inflated contractor bids -- and i should say we did not go into the analysis of the controller report. in some cases, local supply is insufficient to meet the requirements of the legislation. contractors will pass that on to the city. chairperson avalos: the net benefit you said was how much? $17 million? >> yes, in spending. supervisor elsbernd: the $9.30 million, the 1% number based on the $934 million, that is at the 50% local higher number. -- local hire number.

$934 million is what we hope to do. realistically speaking, the capital plan -- maybe the first couple of years, we hit our goal, but we are not going to prospectively for a while. kim still assume the same 1% cost? -- can we still assume the same 1% cost? >> we believe it was killed and nearly. the city's costs will be proportionate. -- we believe it will scale linear lee. -- linearly. the less demand from city projects, the less you run up against supply constraints from any trade. the lower the number, the city cost will go down more than that. we believe there are four items that could dramatically or significantly reduced -- i use that word on my own -- the negative impact associated with

this legislation. that would be replacing the across the board 50% mandatory requirement with a trade deficit requirement that reflects supply and demand of the city the availability of the trade. second, continually assess the progress and amount of time it would take to get to a 50% mandatory requirement. third, allow contractors that exceed local hire requirements to transfer their additional credit hours within a given trade to other contractors. this will allow the same local hiring targets to be met on an industry-wide basis and not a project by project basis, and gets away from a situation in which we are either receiving accounting for penalties or paying bonuses on every project. if we do that, we can eliminate incentive payments. the ability to transfer credit hours would create a private- sector incentives to advance local hiring, and also reduce

the city's costs. i have a little bit more detail on each of these points, if you'll bear with me. as i have said, there are several trades where we believe the supply cannot support a 50% local requirements. these include traits like operators, brick masons, and plasterers, among others. there are others including carpenters and printers which are less impacted and can stay within the scheduled mandate, provided the schedules are industry-wide and not project- by-project. we would recommend iowa -- recommend an amendment to the review that would exempt the trades currently impacted from the automatic escalation to 50%. let the reviews set those -- recommend those targets and not have the legislation set in stone 50% higher requirements for those pieces of legislation. the review by oed and the controller would look at every

trade and how long it would take to progress to 50%. the goal of 50% would be in the legislation, but there would not be a set in stone requirement that 50% be required for every trade within six years unless the board asks affirmatively. supervisor mirkarimi: what happens then if the standard policy by some of those trades in trying to seek those qualified comes from the pool with in san francisco, but do not then find that pool of necessary work in san francisco? tennessee did elsewhere in the bay area, or wherever they may pull it? -- they will seek it elsewhere in the bay area, or wherever they may pull it? >> over the long term, if wages are inflicted, more people will want to work in construction in san francisco, and more qualified jury-level workers

will move to the city just to qualify as resident workers and me that. that is not something that we have tried to model because it is a complicated question of how people will move. clearly -- chairperson avalos: in some cases, it will be people moving back to san francisco. >> it will be people moving back because the city is paying them to move back. that may not be ideal policy. chairperson avalos: they could also have roots here and communities here the rejoin as well. >> that is true as well. even without that, people will be attracted by the higher wages that will occur. we believe that this wording of the review process will ensure that the city stays on the track that i believe the legislation intended to stay on, which is making sure that we are increasing the local supply of local resident san francisco trade workers to advance to%, but to do it in a way that does not -- to advance to the% --

50%, but do it in a way that does not burden the city with additional contract and costs. this creates an incentive for contractors to meet the local hiring requirement, whatever your it is. if they exceed the requirement by 1000 hours for a given trait, they could sell those hours to a contractor that cannot. but that really means is that the private sector will be funding -- will be paying bonuses itself to the contractors that are good at local hiring, and penalizing contractors who are bad and local hiring. i believe this can be contained, if you do it on a trade-specific basis, as the amended language we have suggested here would do. my final slide is that if we allow that private transfer of additional credit hours to essentially let the private sector fund the incentive and much of the penalty structure of the legislation, the city can eliminate its own incentive

payments and further cut the city's costs. i will not go into my model assumptions for that. that concludes my report, supervisors. if you have any questions, i will be happy to take them. chairperson avalos: any other questions for mr. egan? i appreciate your work on this and the recommendations to provided us. this is a work in progress, something for consideration. i cannot say i am totally comfortable with everything you have presented in terms of the analysis. i think the recommendations are sound based on that analysis and worked our consideration. thank you. before going to public comment, why don't we hear from the budget analyst? mr. rose? >> mr. chairman and members of the committee, as shown on page 6 of our report -- actually, it

is on page 7. there is a table two, which estimated the proposed ordinance would result in a cost of 607,000. that is one time costs for needed equipment and surplus. ongoing administrative costs of $1,650,597. those costs would be incurred by both the office of economic and work-force development and the county clerk's office. on the top of page 8 of our report, we point out that the office of economic and workforce development estimates they would need at least five full-time positions to implement and administer the ordinance. we state on page 10 of our report that the financial requirements regarding the

estimated potential cost to the city for contractors and sub- contractor incentives cannot be fairly estimated at this time. that is, what the costs would be to the city for that. finally, on page 13 of our report, our recommendation is, given the proposal would result in an estimated additional $607,991 in additional one time costs and an ongoing annual cost of $1,655,907, much of which would require general fund monies in the first year, and given the impact to the city that mr. egan has mentioned and the potential impacts, we consider approval of this ordinance to be a policy matter for the board of supervisors. chairperson avalos: thank you, mr. rose. colleagues, if we can go on to public comment, unless there are questions for any city staff? and then we can talk about what

we want to do in terms of moving this along and things to consider as we move it forward. i have a number of cards that we can go on to for public comment. i will read them and people can come up when they hear their name called. it would be great if you would line up in the center aisle. bob alvarado, mindy keener, ramon hernandez, glenn mccellan, eric brooks, jason lemew. two minutes per person. >> i am the executive officer of the northern california carpenters. i want to go through this. should i use the -- i got this note that says a legislative digest -- and to speak in general terms and have you and your staff go to the specific

ordinance? just a couple of comments. on page 2, bullets no. 5 and 6, it is a local hiring requirement with a mandatory produce a patient of 25%. there is additional language which says no less than 12.5% of project work hours in each trade performed by disadvantaged workers. then you have total hours where it says no less than 25% of all project work hours within each trade performed by disadvantaged workers. it is very difficult even for the union, let alone a contractor, to determine who is a disadvantaged worker and who is not. that is a city function in the recruitment and assessment coming through, for example, in this case, city built. city build does that assessment. right now, to put it frankly,

100% of the folks that come through city build our disadvantage. but i put in this language in the -- by putting this language in the ordinance, at the end of the job, when you have an 8% to 10% retention and staff goes to the work hours and an employer misses a disadvantaged worker which he does not know if he has or not, he is subject to penalties, which is withholding of his retention or just writing a check. i think that is a function of the city side on recruitment and assessment, but not on the construction side on the job site. chairperson avalos: mr. alavar, tweo minutes per person is what we allotted. i know you had more than that to share.

i want to be mindful of all these other people who are going to have two minutes. but i want to extend your time a little bit. we had a conversation this morning that did not get completed. if you could briefly summarize your last points, and then i will have to endure time. >> ok. we may end up continuing that conversation. i will just say that if you take those recommendations that we have brought forward with your staff, and again just add a couple of things. the economy is bad. we would like to see that 20% come down to 20%. we think that is an achievable goal. understand completely as we go through this ordinance process that a san francisco resident belongs to the city, and not just particular neighborhoods. a san francisco resident is a

san francisco resident. i think if you are inclined to implement a lot of the changes that we brought forward, i think it is really something -- i can only speak for the carpenters. i think it is something that we can make it work, both for the employers, unions, and san francisco residents. thank you. chairperson avalos: think you for coming in today. i appreciate your time. [laughter] [applause] >> mining is mindy kenner. i am a senior job developer in bayview and visitation valley. i have a journeymen and women and apprentice people in my area who are out of work. they are union members. they have been out of work sometimes for years. they are across the trades. they need to work now. we need to push this legislation through. i ask you -- how many people in

your neighborhood are out of work? in my neighborhood that i work in, 50% to 60% of the young men and women who come into my office are out of work, have no skills, need the training. and we need to put these areas to work. this legislation will give us the capacity to put my neighborhood and the people that come in every day, begging for training and jobs, to work. we need to very good faith with mandated local hire. i have too many people who are socially impacted by not going to work, not having any idea of how to access union jobs. this would give them the access that is needed. they deserve it. every san francisco resident has rights to work in their city. thank you. [applause] chairperson avalos: thank you

very much. next speaker, please. >> my name is gwynn mcallen. i support local higher because it will reduce workers traveling long distance. 35% of san franciscans commute by public transit, prepared to 9% in some bay area counties. vehicle miles traveled decrease with the resulting benefit for air quality, congestion, and public health. we need to eat local, shop local, and higher local. [applause] >> good afternoon, supervisors. my name is jason. i have been part of the stakeholder process that informed this ordinance you are considering. in listening to my colleagues, labor, contractors, the city, and the community, i offer my perspective as a homeowner, a member in the community, my training as an economist, my experience in community

development over the past decade. i am currently employed with a venture philanthropy organization creating low-income jobs for individuals with barriers to work. i want to urge your support for the san francisco local hiring policy for construction. my first point is that the economic analysis of this ordinance failed to account for the real hard and soft costs of maintaining the status quo. it is well documented that there are costs associated with pervasive and retracted unemployment. the obvious are related to increased fiscal expenditures for services to support unemployed individuals as well as the loss of tax receipts. less obvious costs are social costs. the relationship between rising unemployment and rising crime and worsening social dislocation, as well as a decline in real income and spending accompanied by a rise in property and income inequality. i see this every day as new housing stock rises on third street without workers targeted by this ordinance working and

therefore unable to occupy his residence or shop in our business district. serious considerations of the conclusions of mr. egan's analysis must factor in these real costs which undoubtedly persist and will rise if we do not deal seriously with the failure of good faith. my second point builds on my first. even if there is a marginal net cost for a contract in, that would not factor into the costs i just mentioned. these are small. i would argue that they are insignificant to the taxpayer compared to the resulting decrease in crime and neglect in these areas where people are expected to enjoy these public works. chairperson avalos: thank you. we have a lot of people. i did not want to cut you up, -- cut you off, but we have to. >> my name is emily, executive director of the department on the status of women. among the 44,500 unemployed the

chair referenced, there are many women, single moms. women make up just 3% of the roughly 15,000 construction workers in san francisco. this percentage has remained roughly the same since 1999, when we looked at liverpool statistics as part of our gender analysis of the department of public works. the women can expect to earn a 20% to 30% more in construction jobs compared to office or clerical jobs. this ordinance represents an opportunity to advance our shared goal of gender equity. san francisco was selected for the america's award on gender equity by the un organization of american states. in the years of our work, we have found that the most important means of ensuring workforce diversity in nontraditional fields are recruitment and data collection. we urge to changes to the ordinance.

we have submitted language to you requiring contractors to provide a recruitment plan so that oewd can evaluate how much their outreach is to non- traditional groups in this area, and to require them to report on the demographics of hiring versus the available labor pool to look for signs of gender, race, or other types of discrimination. thank you very much. [applause] chairperson avalos: thank you. >> good afternoon, supervisors. derrick brooks representing the green party in our city. i remember way back when we had minimum wage and living wage legislation. we saw similar economic analysis that said this was not going to be good. it was going to cost the city and the economy money. that turned out to be false. it is clear that living wage is good for our economy. this will similarly be good.

the green party in our city stand a strong supporters of local hiring mandates. the key here is localization. for the past 25 years as an organizer, i have studied capitalist economics, especially the new capitalist economics. any alternative economics student will tell you that it is possible -- if you listen to any pundit on the alternative side of economics -- it is possible and even likely that there will not be another bubble and the economy is going to stay the way it is. that means localities, counties -- every county in california should be passing a local hire ordinance, not just this one. this leads into peak oil. the peak oil taskforce in their analysis clearly showed us that we have some serious problems that we are going to face in the near term because of peak oil prices. it is vital for that reason that we start localizing our work

force. you heard from someone previously about the environmental analysis. it is crucial that we localize our work force for the environment. in cancun, mexico, it is looking a lot like copenhagen. that means local cities like san francisco need to take a lead on the environment. that means every political environmental leader and later on localization of peak oil in the city needs to say rock-solid in support -- stale rock solid in support of this legislation and make sure it goes forward. chairperson avalos: maceo lyons, espinola jackson, guanyoun lin, florenge kong. >> mike two minutes start now, right?

my name is ramon hernandez. a represent local 261, over 3000 workers, city and county. i want to make it clear. we work anywhere in the city and county of san francisco. i want to make sure we have a mechanism for the city ordinance to guide everybody. it does not matter what. they are going to be working on the construction. final, everybody for city build, which is one of the big -- with us, they are working together for the city and county. also, i just want to say thank you for supervisor avalos, the work you have been doing. i know we have been talking with

you. [applause] and i want to say to the mayor office of work force development -- rhonda simmonon ans and chri have been doing a great job. we are going to support you. 20% of local hires. we are going to do it. [applause] chairperson avalos: thank you. next speaker, please. >> i live in san francisco. i live on 10th street. >> mr. fong is here. chairperson avalos: you have to use the same microphone. >> mr. fronong is a resident of

district 10. >> [speaking chinese] >> i am here to support the local legislation to hire workers from our community. >> [speaking chinese] >> this is a very important legislation. both he and his wife are looking for work, and he wants to see that the legislation is move forward quickly. >> [speaking chinese] >> he is hoping that the legislation will help a lot of people, such as people in the

garment industry as well. they also have their needs. >>

i think this legislation should go through. we are tired of projects -- a promise is being made and not kept. good-faith has failed. mandatory is the way to go. >> my name is espinola jackson. the citizens of san francisco are always being asked to support local bond measures with their hard earned tax dollars. if our tax dollars are good enough to fund a san francisco project, we also deserve to reap some benefits as a community. this local hire legislation -- [applause] chairperson avalos: clapping in the middle cuts down people's

time. i will give your time back. >> i have fought for many years, at least 50 years, for training opportunities that can lead to careers, local jobs, as well as business development that serves all of us in san francisco. a local hiring mandate makes a long term economic sense, because it will have an immediate social impact, especially for the jobless and disadvantaged in our community. it is also the right thing to do. the one thing missing in this legislation is to do not have the local cbo's. i would like to see them included. chairperson avalos: maxine, jim felinas, cesar verras, and jose