around, and they are all there. president o'brien: mr. regan's report was not approved yet, so it is not ready for presentation this evening. supervisor kim: thank you for your time. i hope this is not the last time i will be coming to you. we are more than happy to take feedback and comments in terms of what we can do to support the small business community here. thank you. president o'brien: time for public comment. does anybody have any public comment on this matter? seeing none, this is an action item. >> that is correct. commissioner dooley: i would like to recommend approval to the board. commissioner o'conner: i second. president o'brien: do we need to

take a vote on that? >> we have a motion by commissioner clyde to recommend approval, seconded by commissioner adams. would you like to do a roll call on that? vice president adams: yes. commissioner clyde: aye. commissioner dooley: aye. commissioner kasselman: aye. president o'brien: yes. commissioner o'conner: yes. commissioner yee riley: yes. >> that motion carries. you are now on item 8, presentation and briefing by the comptroller's office on proposition 26 and the impact it will have in the city of san francisco, including how it

affects taxes, licenses, and fees. this is a discussion item only. >> my name is michelle allersma. i am the city's revenue manager. i want to give you some summary highlights of proposition 26, which passed on the november 3, 2010 ballot. i will try to keep it brief and

let you have some material in your packet you can refer to later. it kind of gets into the weeds of legalistic language. let me know at any time if you have questions or clarifications. essentially, what proposition 26 does is it expands the scope of what a tax is and what a tax increase is. anywhere in the presentation i have language in italics, that is what is now in the state constitution. essentially what this means to san francisco and any other local government is that some of the fees we could have charged before the only required a majority approval by the board of supervisors we would now need to get two-thirds voter approval to impose.

i would say in the short term there is not a large effect on the city's finances. every fee or charge we had in place before the election we can keep, and there are a lot of exemptions. i included some slides that detail those. the cover the vast majority of the kinds of fees which currently charge, anything like a regulatory permit or licence, fees for use of government property, a rental fee, recreation and park fees, golf fees. many of the things we charge are exempt. in the short term, it does not have a large effect. the main effect is that it constrains our ability to grow what we currently have and it constraints of our ability to increase the rates which currently charge. it could have indirect effects

to the extent that it constrains the state also. if the state is coming back on their services and we want environmental mitigation or public health programs the state used to provide and they do not do it anymore, the local government could have increased costs. the next slide is a quick summary of the approval requirement for different types of revenue before and after. sometimes we assume everybody knew what they were before. i thought i would give an overview of three general types of revenue and what it takes to increase them before and after proposition 26. a general purpose tax takes a majority vote of the electorate to pass, or a tax increase. to create or increase a tax requires a 50% vote of the

electorate. if you want to create a special purpose tax, that is two-thirds -- is 2/3. if we want our property taxes to go to the public library, it takes 2/3. fees used to take a majority vote of the board of supervisors and now certain kinds, since there would be specific in their use, are now called taxes and would take a super majority of the electorate to impose. there are also property charges in the form of special assessments or bid payments. there is no change to these other. they continue to require a majority board to approve them. really, the big change is if something is to be a fee and now it is considered a tax you need a supermajority vote for

approval to do it. a mentioned earlier that there are some exceptions. so many of the fees currently charge will not be affected. you might as "the point is. what is proposition 26 trying to do with some money to a exceptions -- trying to do with so many exceptions? it has to do with a regulatory fee. in local government land, we always talk about the sinclair paint decision. in 1977, the california supreme court ruled on a fee that imposed -- the state was imposing a fee on sinclair paint and other paint producers that

manufactured things that contain lead. they were using it to treat children from lead poisoning and to mitigate environmental harm. the state found this was an acceptable fee. proposition 26 is getting at areas where you're charging a specific individual but there is a broad public benefit. it is being used for something that has nothing to do with the person paying the fee. it is not helping the paint company conduct their business. it is helping children suffering from the effects of the product you are creating. this is a whole class of regulatory fees they want to eliminate. that is really what proposition 26 is trying to stop. just some broad examples of

things to put the kibosh on, if you will. a lot of these types of fees are typically enacted at the state level. a lot of state environmental programs are entirely funded by these types of environmental fees. for certain types of activities, it is really going to be felt at the state level. i am talking about how the city is quick to fill this. it might come down to us indirectly later. some of the examples are any time when -- say, for food packaging, any kind of hardware or waste disposal fees that would pay for anything that does not directly benefit the person paying the fee -- if it is general pollution prevention or cleanup of toxic sites the pair had nothing to do with creating. that is the kind of fee that is clearly illegal. you might have heard about these

proposed nationally and locally on alcohol, tobacco, soda, and healthy food. there interested in putting fees on those to fund obesity prevention or things like that. that is another thing you cannot do, and any kind of environmental mitigation fee. the next few slides talk about the different types of suggestions and would give these samples and actual language. i will leave that for you to refer to on your own if you wish. i can just talk about what the city is doing to implement that. if you look on a slide -- if you just go directly to the last slide, and this is kind of what

we are doing locally to deal with proposition 26 now that it has passed. the first thing was to find out what it might mean for san francisco and was this going to be a big fiscal issue. not so much in the short term. it is going to constrain us in the longer term. we will have to be careful about reviewing, especially now that departments have submitted their budget, that if anybody is proposing a new fee that it meets one of those of some types. need to be aware that that otherwise it would require voter approval. there is probably not a lot of interest in bringing peace to voters for approval. just my guess. will be looking for those things and working with departments to make sure they are aware of what the constraints are.

one thing that did not really change is making sure that any fees we charge do not recover more than the cost of providing the service. it is possible we might be eligible to get state reimbursement for some things. i am not going to hold my breath. but it is a possibility that is out there eventually. we will keep an eye open for those opportunities. there is going to be a lot of state legislation that clarifies proposition 26, and a whole lot of litigation. president o'brien: it sounds like a recipe for disaster, litigation coming down the pipe.

it is not at all clear. so a paint manufacturer was asked to pay a fee to mitigate against the cost to clean up after that. does that qualify as an exemption or not an exemption? since it was created before, it is grandfathered in. in today's terms, if you wanted to apply that example, would it be allowed or would it have to go to voter approval. >> if you wanted to do impact today, you would likely have to do it with voter approval. president o'brien: it is going to a different group of people

then paid the fee. the only way it would not have to go to voter approval is if it went back to the paint manufacturers. >> if the benefits were conferred on them exclusively. president o'brien: thank you. that helps. any questions from any commissioners? seeing none. very helpful. thank you for the presentation. i am sure we will be hearing more about it down the pipe. any public comments on this item? >> just a couple questions, if i could. how would this work with parking meters, if you wanted to increase parking meters? how about muni fares and the cost of congest and pricing --

of congestion pricing? >> i will make sure i leave a set aside with you. transit fares are generally understood to be exempt because they are a use of government property. you have a choice of whether you get on the bus or not. it is understood that those are exempt. your second question -- you had a question about congestion charges. of street parking is also a use of public property. congestion is an interesting question. i am not sure about that. president o'brien: any further public comment? seeing none, public comment is closed. thank you.

any comments from any of the commissioners text next item. >> you are now on item 9, discussion and possible action to make recommendations to the board of supervisors on the planning code and zoning self- service restaurants, retail coffee stores, and video stores. this is an ordinance amending san francisco planning code to increase the maximum use size for small self-service restaurants in neighborhood commercial districts to that of the non-residential use size limit for the district and eliminate the limit on number of seats, increase the minimum size for large self-service

restaurant in neighborhood commercial districts to that of the non-residential use size limit for the district, principally permit small self- service restaurants and video stores in nc-1 and nct-1 district, conditionally permit large self-service restaurants in the inner sunset commercial district, require the mechanical noise and vibration to confined to the premises, and remove the prohibition of on-site food preparation and reheating equipment in retail coffee stores. we have a presentation by tom radulovich from livable city. >> we are a nonprofit organization founded in 2002. we are in mid-market.

we do a lot of work to try to create a more livable city by making us less automobile dependent. one of the things that i think is very important to us is neighborhood commercial district. these are the heart of what makes a livable and walkable community. we have been fortunate to be able to work with supervisor mirkarimi on legislation. we not gone into restaurant regulation to date. but based on conversations with supervisor mirkarimi, it is something he embraced and wanted to bring forward. we think it will have great effect in unleashing the incredible creativity in small business. you think of technology as one of the things san francisco is renowned for. we are also a great food city. a lot of the businesses regulated by these sections of the businesses that are in the

incredible innovators of food. that is one thing, to stimulate the local business. we feel like a lot of the uses we are talking about are amenities to neighbors. if we can loosen the regulatory controls and make it easier for small locally-owned businesses to grow and expand and move, we want to do so. this affects only the neighborhood commercial district in the city. there is a huge variety of neighborhood commercial district. there is the generic nc districts, and those can be found all over the city. there are also close to 30, if not more, neighborhood commercial districts that are named ncs. there is an encirclement -- an inner clemtent commercial

district, a pastor commercial district. they all have their own rules governing a whole variety of uses. this ordinance did not get into changing which uses are permitted in all of those. a lot of ncs have a very specific restaurant regulation and individual supervisors are working on those. our goal here was to look at the question of size and the nc-1 and nct-1, and by extension commercial uses that exist, these old storefronts with limited commercial use. that is a residential lead-zoned area, but because those buildings have been storefront's since before the planning commission existed in 1960, those retail uses are allowed to persist.

in those limited commercial uses, what is called a small self-service restaurant would now be principally permitted. a self-service restaurant -- there is a distinction in the planning code between a full- service restaurant, your classic restaurant where you go in and are seated at a table and somebody takes your order and you pay your server after mail and leave -- any other restaurant is a self-service restaurant. that does include fast-food restaurants. that is the reason we have these restrictive controls from the 1980's, all of the fast-food restaurants. but it is a much broader category, so every taqueria and coffee house, and crepe houses, and great restaurants in my neighborhood, like casa -- some

of these are michelin star restaurants. there is a huge range that has been captured in this. we would make them principally permited in commercial use areas. the other thing we do is increase the use size limit. there was a strict square footage limit on these self- service restaurants, proposed in the 1980's before the americans with disabilities act and other requirements. it is a very small commercial space. and we have heard stories where only a small self-service restaurant was permitted and a large one is not permitted. if you had a 1200 sq. ft. space, you had to petition of 200 square feet. -- you have to partition off 200 square feet. you still pay rent on it, but you cannot use it. this gets much larger with the mission, 5000 or 6000 square

feet. >> the taqueria on mission were given an expanded size footprint because it is on mission street, but if it was in a different location in my tongue and a thousand square feet maximum. >> i was thinking about la cornetta. it probably should not have been permitted on mission street and. i do not know why is there. i hope i have not singled them out. >> it might have been conditionally permited or they got a variants -- a variance. if you went to valencia and valencia has small use size, it would be whatever prevails. the idea is to create parity between these self-service

restaurants and other types of businesses in most nc districts. it does not matter if it is a restaurant, a video store, a liquor store, or a hardware store. anything larger than 3000 square feet would require conditional use. it raises that to parity with all the others. that is how we change that. even where you do not change the restrictions, even where small self-service remains conditionally permited are principally permitted and large self service is prohibited, at least you could open larger restaurants and give folks a little more flexibility. the inner sunset was a commercial district. it is a very small size limit. large self service was not permitted. we may conditionally permited so it has parity with every other business. there is a retail coffee stored

definition. retail coffee stores have only 400 square feet you can devote to seeding. you can sell coffee. you can also sell incidental baked goods, but you cannot do any food preparation. you could not have any equipment dedicated to heating. we call it the toaster role. a retail coffee store could sell you a bebel -- could sell you a bagel, but they could not toaster bagel. in my need a conditional use. we got rid of the restriction on the number of seats. >> that is a great name. >> the toaster role -- rule. there was a great report that i have talked to your staff about called nc-20. in 2009, it was adopted by the planning commission and reviewed

the restaurant sites. it is a great example of this. who cares? why are we regulating this? these are very hard for the planning commission to regulate. it is hard to go out and have the toaster police. is it like reheating water or a beverage? you have got to create something that is enforceable. it can be hard to comply with. it suddenly violated the planning total. that was a goal of all of these. >> i am not an expert on the issue, but i understand that a lot of small businesses can open up with a convection oven. this will simplify its. but anything an open flame requires an incredibly expensive

hood, and fire equipment system. it is cost prohibitive to a lot of square footage cafes. >> i only know this anecdotally. he is very excited, he will opened this restaurant as part of the beer garden. local zoning did not allow the breakup on the eighteenth street. it will do a lot of deregulation. this is not everything as well. the good news about this is that this was introduced by the supervisor a few months ago. a few commissioners have talked

about what other deregulation we have to do. it is really just the beginning, as it were, of trying to rationalize. i hope it makes some positive steps. secondly, if you have thoughts about further legislation amendments and all of that, i promised to take notes. whenever interest you have in further changes, those are things that could be discussed at the commission. they could be the subject of future ordinances'. with that, i will take questions. commissioner adams: i want to

thank you for bringing this up. we cover these zoning areas in the neighborhood parks that you talked about. i talked to many merchant organizations around the city. this is making it uniform. it is long overdue. it will help the vitality of a lot of neighborhoods. i can't tell you how many new restaurants have come into the area. this is going to help. i hear the complaints about the toaster oven role. -- rule. businesses have been there for 50 or 60 years. st