are in oakland or on an oakland project, you can count them. what several organizations of small business have proposed and the h.r.c. endorses fully is if you provide incentives to if you exceed the goal by 50%, you can use that to offset some shortfalls. just providing ways or one more alternative so it's not just resulting in a penalty or financial damages to the contractor. so i think everyone is somewhat in agreement that if the more we can promote local businesses and the better for the city generally because what we found is there's about a seven-time multiplier effect of those dollars being recycled because if a business hires locally, that person, their payroll

person or receptionist is going to go out to lunch. when that person goes out to lunch they're going to probably go to a local restaurant. so that's creating jocks at the restaurant, that's creating jobs for the supplier that provides the pro duce. so those dollars get recycled in some -- so many different ways. that's the kind of thing that wasn't into the legislation that we're optimistic in the future we'll have those kind of opportunities baked in, if you will. and just to give you a time line of where the legislation is at right now, about a month ago there was an information hearing before the land use committee where this legislation was introduced and the public had its first chance to comment on it, at least in a public setting and before the board of supervisors.

it was, later there was a formal hearing before the budget and finance committee on the first of december that went through the first reading with the boofs -- board of supervisors last tuesday and is scheduled for second reading before the board of supervisors tomorrow afternoon. so there's not too much we can do at this point. and there were some amendments that were as adopted by the board last tuesday before the, after the first reading, the proposed amendments that the h.r.c. has put forward i think were supported by the -- the and the policy -- or the policy -- or were supported in part by the small business commission, they weren't as adopted but we're optimistic that going forward with them we will be able to work with supervisor avalos and the rest of the

board of supervisors that if we do see negative impacts on l.b.e.'s or more broadly on small business in san francisco that the board of supervisors and supervisor avalos will be open to those amendments. that concludes my presentation. so if you have any questions i'd be happy to answer them. president yee riley: thank you. solt board of supervisors already approved this last tuesday? before we had a chance to -- >> well, the board, in the first reading last tuesday, the second reading is scheduled for tomorrow. president yee riley: oh, ok. so you continue to work with the supervisors to express some of your concerns? >> yes. i just got off the phone with supervisor avalos' office in the last 30 minutes and emphasized that we do support the legislation, "we" meaning h.r.c., but we do have concerns and we're optimistic we will be

able to work with them. if we do see negative impacts going forward, that we can reach some conclusion or some answers to those problems. and the response i got back was the supervisor's office is certainly open to proposed amendments. i mean not for tomorrow but more after it passes. president yee riley: ok. well, our committee, the legislation and policy committee, heard it on the 22nd. but the full commission didn't get a chance to hear it until today. so we did instruct staff and the directors to send a memo to supervisor avalos stating our concerns. so did we get any answer for that? >> we did not get a response to the memo. and i think as alaric has mentioned, that both staff from both departments worked to try

to, before it got to the full board of supervisors, to see if we could do an amendment that would wait for, you know -- we were recommending a three-year period to not include the l.b.e.'s but to phase them in at a later date. i think for the legislation and policy committee, what you heard from your presentation was that was said, well, if there's a problem, we can correct it later. i think our concern and alaric has just mentioned that the supervisor's office has said that they're amenable to amend legislation later, but what does that mean to the cost of a small business and how long will it take for us to calculate the problems to amend something later? as opposed to phasing it in and

waiting to see that -- how the ordinance is implemented, the results of it, and then working the l.b.e.'s in to become part of the local hiring initiative. president yee riley: thank you. >> which is a good point. i mean that's -- that's something that we've talked about that, i think everyone is in agreement that, everyone is open to changing the legislation if need be, but unfortunately, if one round of lick quidated -- liquidated damages to a restaurant, a small business, say $100,000, i'm just making that up, but that's enough to break a small business because they don't have these large cash reserves and things like that. that could be their payroll for months at a time. a degree completely that everyone is open to change, but unfortunately because there is

-- it takes time to get amendments through any piece of, or through any agency or through this, through san francisco or san jose or oakland, and again i think everyone is open to change. i'm just concerned that because it's not there, we're not -- it could be too late for some businesses. vice-president clyde: and i just want to point out the other matter that in relationship to the l.b.e. portion, both human rights commission, which is, that's the body that really governs the l.b.e.'s and this commission which represents small businesses, both commissions were not able to, full commission were not able to hear this piece of legislation until after the first reading at the board of supervisors. president yee riley: commissioner clyde?

vice-president clyde: yes, i will just want to say with -- for the record that i am concerned with the speed with which this is going forward. i'm not confident it's had a thorough vetting. there are many issues in here, like verification -- how long does a person have to be a resident of san francisco? where are people going to live? how large is the labor snool all these questions that the reason we're asking for a phase-in is because i don't think we know the extent of our labor pool or our local training initiatives. i mean, you know, if -- you can't -- you can't, for instance require city employees to live in san francisco, ok? so we have these local hire mandates. what prevents someone from just getting an address in san francisco and, you know, with their cousin or their friend and being then, being then eligible under this ordinance

but not really living here? i mean i just find that there are many details that haven't been vetted, so i'm really concerned, commissioners, that they are not. i'm also concerned with legislation that advantages the largest businesses because they are equipped to manage these programs where our l.b.e.'s and smaller businesses, it takes them more time. but i think my biggest concern is the local workforce and the time it takes to ramp up the apprenticeship programs to develop our own skilled labor from our own neighborhoods. and also, where will they live? because one of the challenges for skilled labor is housing, you know, and for a working family to have a quality of life and housing, we've had a tremendous loss of skilled people to the east barkse the north barkse the south bay. you know, they make good money, but they don't make enough. so we don't have the workforce

housing for the labor and i would just argue that, again, you know, i think that there should be some concurrent work. and i understand that the supervisor feels that, you know, it is time to mandate, people feel that, i understand that, but the devil is in the details. so i am concerned with the rushing. thank you. president yee riley: yes. any more questions? commissioner o'conner? commissioner o'conner: how can we apply this to the city's workforce to assure that a certain percentage of the workforce of the city and county of san francisco lives in the county of san francisco, spends their salaries in this county? i'm opening up a kettle of fish, but i'm curious about that. is that conversation going to come up? i would love to be a part of

that conversation. >> it's my -- i mean i think what you are asking is how are they -- are you asking about the verification that people who are saying they're local are actually flol commissioner o'conner: i believe that's what commissioner clyde was al lewding to because it's safe to say that people will fake their addresses as we know people often do in the school district system. >> it's my understanding that within the legislation that they are going to possibly be requiring proof of your -- that you have a san francisco resident. some of that could be verified with things, i think, if i'm not mistaken, but i'm not versed on it completely, on the same type of -- on the voter registration type mechanisms and things like that. but i'm not too sure exactly what the enforcement providers are going to be.

i can tell you that the office of workforce and development is going to be the body that is solely responsible for the enforcement of this new ordinance. but again, i at this time haven't had a long or drawn-out conversation with that office to understand the way they envision that process working. president yee riley: well, we have some letters here from some of the business owners. i read the one for asian american contractors association. you know, and they are suggesting that the ordinance be structured so the prime contractors can comply either by fulfilling the local hiring requirements or by meeting double the l.b.e. participation goal set by h.r.c. on projects. so is it a good option?

>> i mean i think it's a great option. again, because what it does is it provides avenues for both the contractors to not result in liquidated damages, which frankly don't result in anything for the local residents. i mean it's great for the city because those are dollars coming back into the city coffers, but those damages, those penalties don't create jobs. but i think by providing an alternative for and -- for doubling the l.b.e. subcontracting goal, what that does provides incentives to use more local businesses and that creates nor -- more jobs based on the evidence, anecdotally that local businesses tend to hire locally the you are achieving the same objective but doing it by increasing or

encouraging larger contractors to use a local business more often than they would. president yee riley: so it accomplishes the same thing? >> it accomplishes the same thing. and if you are an l., -- l.b.e. it encourages you to even use other l.b.e.'s for your sub contractors. it achieves the same goal but just does it a bit differently. so to get that implemented it would just require the h.r.c. and the office of economic and workforce development to have a series of conversations as we proceed through a contract. but that's something we could manage without too many problems. president yee riley: thank you. commissioner clyde? vice-president clyde: yeah, first i'd like to thank you for your work on this project and also the advocacy for the l.b.e.'s, and just thank you. so i would be, you know, very much supportive of the position

of the human rights commission on proposed mendenhalls -- amendments but i would also caution that also the amendments are put in the legislation, there is no guarantee, and we've seen that it's very, very difficult to amend legislation going backwards. so i, you know, i would like to support a resolution or something they can't, you know -- to the board for tomorrow's meeting and supporting the recommendations. because, you know, our -- there's still so much pressure in the economy. this economy is not ramping up overnight. there is so much pressure and i don't, i agree with the punitive, you know, using punitive liquidated damages against small businesses is not a good way to go. president yee riley: so, director, do you -- is there any chance we can reiterate our

concerns to the board of supervisors? >> yes. we can draft a memo first thing in the morning and distribute to to the board of supervisors. up -- you have an option of tonight, you know, making a regular kind of recommendation as if you prefer so that it is on record or you can say we're not making an official recommendation but working -- i mean -- excuse me, not making an official recommendation in terms of normally how you would proceed with a recommendation for legislation that's still yet to come before the board of supervisors but just -- but that you're making a statement in records to supporting h.r.c. so you have an option of trying to do an official weigh-in on the legislation or a statement, since the legislation has, i mean, i don't think we're going to see really much of a change

between now and tomorrow. president yee riley: what would get more attention? >> i'm sorry? again, i didn't understand that last -- president yee riley: we have an option. so which option would get us more results, more attention? >> actually, i'll be honest with you, i don't think it's going to make ever too much the difference either way. yeah, thank you, alaric. vice-president clyde: but it's what you as a commission want to have on record in relation to the small businesses, having it on record in terms of, you know, we can make a statement of disappointment that that legislation went through the process with the board of supervisors without having its full vetting with both commissions, that our -- that are, you know, have governance

and oversight to small businesses. it's more a matting of -- matter of on record and then of course really making a strong statement to -- in regards to the office of economic and workforce development really working closely to monitor the effects of the legislation as it affects be l.b.e.'s and making quick adjustments as needed. >> right. i would tend to agree with that. i think, you know, we're trying to make sure that going forward that once conversations are happening regarding this legislation or even similar legislation that impacts small businesses or l.b.e.'s more specifically, that we're as invited to those conversations ease -- as we caning and we can help shape those legislation or amendments as opposed to having to react to it offer the fact.

>> but commissioners, before you make an official motion we do need to open you it up for public comment. president yee riley: thank you very much. commissioner o'brien? commissioner o'brien: that's fine. thanks. i'm just trying to understand the -- where we're disagreeing between the ordinance, this new ordinance and the existing l.b.e. initiative. i guess what i'm hearing is one of the issues is we don't like sort of where they contradict each other, the punitive damages or liquidated damages. is that one of the areas where we have a concern? >> it's not that we have a concern. i think -- and before we start assessing possible liquidated damages against l.b.e.'s for are noncompliance i would like to have time to assess or

understand what impact the legislation would have on l.b.e.'s because i think it's not -- i think it's -- if the legislation as written, if it doesn't -- if recognized that a small business having to comply with the ordinance is -- adds a lot more burden than a large business because a large business has the infrastructure and possibly has the resources to pull individuals and employees from one project and use those resources and/or to get credit for those employees working on a noncovered project. so basically if you're, as local bays, you have one option. you have to meet the local hiring, period. there aren't any options. i think if you're a large business the ordinance provides for these options which on paper i think they're saying they're as available to the small business, but in reality i don't think they are simply because of the fact that if you're a small business you

probably don't have all this plethora of contracts where it can be drawn from to meet your local hiring goals. commissioner o'brien: well, thanks. i apologize if i was making anybody regurgitate what they might have already understood, but i was just trying to be clear on it. to try and understand the history of this, i know it was a proposal from supervisor avalos and it sounds like it wasn't presented before this commission for consideration. how long has the ordinance or when was the ordinance first proposed? >> i think the ordinance was first inth october time frame was when it was -- the time when it was first introduced. supervisor avalos along with the office of economic and worgfors -- workforce

development with -- had a task force, i'll call it, that began looking at this in earnest over the course of the summer. there was a group made um of the office -- city departments, the office of economic and workforce development and contractors, look at this as well. and in october when the legislation was first introduced at the estimate >> i have here on the list, october 25 or 26 it was introduced which would have meant that was maybe a week and a half before our november commission meeting, which is not enough time for staff -- generally it takes a week for items to be at minimum to get redirected to our office after it's introduced at the board of supervisors. so the november commission meeting would have been too soon for staff to have digested, i mean, because right

now generally we have the legislation and policy committee do a first run with it. so the first run was done with the legislation and policy committee add -- at their november meeting. normally what we do have is that the supervisors will go through the legislation -- will go through the steps in terms of having is -- it presented at the commission, getting a full hearing, hearing back from the commission, both at the legislation and policy expect and at the commission meeting, and then moove -- moving it through the board of supervisors. but in this particular case, whether it's there's some urgency to get it passed before the end of the calendar year i don't know, but in this case the legislative sponsor chose not to allow the time for this commission and the human rights commission to be able to officially weigh in on it.

commissioner o'brien: so is it possible that tomorrow this could be voted on and passed in the hearing tomorrow? >> well, it -- yes. because last week it was voted on and passed at the full board of supervisors. so with some minor amendments, but as a whole -- >> right. minor amendments were made or introduced last week but it passed 8-3 last week. >> so they were nonsubstantive amendments, correct? >> yes. >> so it passed on the first reading and generally the second reading is just a matter of formality. does that answer your question? commissioner o'brien: it does. it just makes it even harder to think of what's an appropriate communication to send back, if it's a done deal. sure.

president yee riley: we can think about it. >> yeah. i recommend you think about it. i mean mip recommendation is that even though the board is going to vote on it, i still think it's too -- to this commission's benefit and for the l.b.e.'s that the commission have an official response to the legislation. >> right. president yee riley: so let's open for public comment. thank you. >> at this time the commission is now taking public comment on item number 6, public comment limited to two minutes. please state your name clearly. >> steven cornell. i guess i'm really disappointed. the basic thing of this commission is to be out there for small business in san francisco. yet you have a piece of legislation, the supervisor did not bring it forward to your commifplgts the charter sace it has to be.

i think the commission, the minute they heard that, should have gotten to their city attorney and demanded that this come forward to this commission. this is important legislation for small business. this can screw up a lot of small businesses in san francisco. it should be heard whether it's good or bad. i listened to it at the board of supervisors. supervisor avalos spent 10 minutes talking about all the people who, the groups that were involved in this legislation. i didn't hear small business commission. i didn't hear chamber of commerce. i didn't hear anything about the normal business things. they brought up groups you never heard of in your life. so this has been around a long time. and i think this commission is falling down when you don't sit there and demand that they have to stop and if there's no emergency about this, the city isn't falling down, it's been

around a long time, you're supposed to -- it's supposed to come to this commission and it's not up to the supervisor to say i don't want to send it to there. the charter says you're supposed to hear it. you guys, you know, you should really be sending a letter tomorrow to the supervisors demanding that it be stopped, that they did not follow the law. i think it's pretty basic. it's disgusting. sorry. president yee riley: thank you. any more public comment? seeing none, public comment closed. commissioners? commissioner o'conner: i'm definitely in agreement well. words of mr. cornell and it's just a slap in the face that supervisor avalos' office chose to just not involve us, not

include us, not include small business people on the, whatever ad hoc task force that went into creating this, and it just speaks to several things, which i won't go into, but at this point in time we have to at least stand up and tell them that this was not the right procedure. president yee riley: ok. commissioner clyde? vice-president clyde: i second that. i'm absolutely in favor of the intent of the legislation. i understand the driver of the legislation. you know, the fact that people have the intention to hire locally is one thing, and i understand the driver to make it a mandate. we have a very high unemployment rate in san francisco with labor and trades, so i support the intent. absolutely. but i have to agree that we have to make some statement that this commission is useless

unless we are allowed to vet legislation be as it's coming forward and being proposed. so i agree with commissioner o'conner and i think we should draft a statement. it's just going by too fast. no one mentioned the $10 million limit, which is very small, and the tremendous competition that our l.b.e. amings are under for the contracts that now the larger companies are bidding for, and this is precisely the type of legislation that advantages the largest companies. so i think we should draft a letter. i agree. president yee riley: commissioner o'conner? commissioner o'conner: this is a perfect example of things i've brought up many times to this commission as to how unimportant small business is in this building. we've definitely improved our standing well. creation of thes