are setting this up. the transportation authority had taken a support position, for example, but mtc arranged to have them appear in support of the bill. that brought to coauthors who were on the committee on board and that, i think, led the way. we were the only entity there to express opposition. the principal make up of that committee was for southern california with the exception of the two members from contra costa, so that was the bellwether for that. that bill was the assembly -- the next stage of the bill was the assembly appropriations committee. we will have to take a close look at that. there was a series of

discussions with assembly member ammiano about what we're going to do -- >> did he not introduce a competing bill? >> he did not get. i do not know if that is his strategy. supervisor mar: we open this up for public comment and close. can we support the recommendation without objection? ok, so move. please call the next item. >> 5, introduction of new items. this is an introduction item. supervisor mar: thank you. is there anyone from the public that would like to speak? seeing none, public comment is closed. >> 6, public comment. supervisor mar: anyone that would like to speak? public comment is closed. is there any other item before us? meeting adjourned. thank you, everyone.

supervisor chu: welcome to the subcommittee of the budget and finance committee. my name is carmen chu. i enjoyed by supervisor kim. supervisor mirkarimi will be joining us shortly. mr. clark, do we have any announcements? >> please turn off all cell

phones and pagers. if you present any documents to the committee, provide a copy to the clerk for inclusion into the file. items acted on today will appear on the board of supervisors agenda on march 29 unless otherwise stated. supervisor chu: i would like to wait for the full complement of the committee before we get on to item one. let us go on to item two. >> resolution authorizing the department of emergency management, for the city and county of san francisco, as fiscal agent for the bay area region, to retroactively accept and expend a fy2008 buffer zone protection program grant in the amount of $579,090 from the u.s. department of homeland security through the california emergency management agency to fund critical planning and infrastructure protection needs. supervisor chu: thank you. we have someone from the department of the emergency management. >> good morning.

and the item before you this morning is a five under thousand dollar grant from the u.s. department of homeland security for a program called the buffer zone protection program. this will provide additional security for sensitive infrastructure in the bay area, through things like improvement to strengthen and fortified the physical plant of the site, by installing barriers or blast walls, installing security systems. the grant will provide additional security at three sites selected by homeland security officials, in consultation with the sfpd. the board has seen the script before. one of them was approved unanimously in 2008. the two main points is that there are no local matching funds required for the grant and no new positions created. i am happy to answer any questions you might have. supervisor chu: thank you.

i do not believe we have a budget analyst report for this item. supervisor kim? supervisor kim: i have two questions. i was just curious as to what examples of infrastructure needs we may be able to fund through this grant. >> one of the challenging things of this grant is the department of homeland security does not like to publicly discuss where these things are, so it makes it difficult, but the board did approve some security steps for parts. you can think of different vulnerabilities around the bart system, which the board approved a $1 million, to strengthen and fortified different aspects of that system and improve security. transit systems, other things that you might consider critical infrastructure that might either fail during a disaster or be targets for a terrorism attack.

those are the kinds of things that are targeted by this grant. supervisor kim: in light of what has happened recently in japan, has there been any other recent analysis, areas of weakness that we may not have thought of, that could have unintended environmental consequences? for example, the nuclear breakout in japan. they were well prepared, in comparison to other countries. i am thinking, in light of what has happened in japan -- >> that is a great question. every two years, we update our hazard mitigation plan, where we do exactly what you're asking, we tried to think ahead. we tried to think about lifelines, utilities, bridges, transit systems, things that might be vulnerable during a disaster that we ought to think

about ahead of time. we update that every two years. certainly, we are monitoring events closely in japan to see what can be done to improve, and what lessons we can take for our own city. supervisor chu: thank you. why don't we open this up for public comment. is there anyone from the public that would like to comment on this item? seeing none, public comment is closed. can we send this item forward with recommendations? without objection. thank you. back to item one. >> ordinance amending article 12-a of the business and tax regulations code by adding section 906.3 to establish a payroll expense tax exclusion for businesses located in the central market street and tenderloin area. supervisor chu: thank you. this item came before the budget and finance subcommittee last week. there was an amendment that was

made and the item was continued to this meeting. before we start, supervisor kim, supervisor chu, would you like to make any opening comments? supervisor chiu? >> i just want to make a brief comment. this is a proposal that i have been strongly supportive of from the beginning. last week, when we spoke about this, i talked about the importance of how we need to move beyond the status quo. part of what i also think today's discussion is about, this piece of legislation is about, is about building san francisco's 21st economy -- 21st century economy. we are exceedingly good at attracting people who want to start things, start companies, but we are not good at helping these people grow their companies and broke into a significant economic forces that will allow us to continue to put

san francisco on the map, as a beacon of innovation. i really think that this legislation, certainly with twitter's announcement last week that if we were able to pass, it would allow them to stay here. as our city economist has pointed out, we will be able to use that to grow our innovation and economy, in part, around this mid market area, in ways that will revitalize this neighborhood for, hopefully, many years to come. colleagues, unfortunately, i will not be able to stay for the entire discussion, but i hope the commission can support this today and move it forward. supervisor chu: thank you. supervisor mirkarimi. supervisor mirkarimi: if super the representativsupervisor kimo first, being part of this legislation -- supervisor chu: i believe she is

reserving her comments. i believe we had some comments from staff last time. harvey, did you do the report? >> i have two additional comments if you would like me to make them now. supervisor mirkarimi had asked if there would be any additional costs regarding the mta. we did contact the mta and did a report on page 8. it would be a cost of $234,000 annually. finally, at the request of the tax collector, we have a recommendation on the bottom of page 8, to allow the tax collector to disallow the payroll tax exclusion, and if businesses do not maintain the records and documents in a manner acceptable to the office to objectively substantiate any payroll tax exclusion, claim,

and provide such records when requested. so we have added that recommendation. we think that is a reasonable request from the tax collector. supervisor chu: thank you. i believe supervisor kim had a follow-up question regarding the tax collector. supervisor kim: i believe the treasury tax collector might have a few things to say to us. >> my name is david augustine with the treasury tax collector's office. we appreciate the recommendation. we think the recommendation was made perhaps prior to when 0906 .3 was added in, which would determine who would get a tax exclusion. we think that would be sufficient, for our purposes. for instance, if we did not receive books of tax and record,

we could deny the exclusion. in addition, we have a technical amendment on page six, line 2, no later than the effective date of this ordinance. we propose removing the lid and the effective date of this ordinance and inserting the word "shall" adopting rules and forms. the process takes time pursuant to the business and tax codes. we want to be able to issue those regulations. in addition, we would have a final technical amendment to page 4, the definition of base here. we would propose adding the word "full" online the a 11nd 15, so that it reads, the full tax year. in that way, we could avoid any

particular business coming in for a short period of time, incurring peril expense, but then deciding that that would be the entirety of their baseline calculation for working in san francisco. inserting the word "full" would obviate that concern. supervisor chu: and what was the change? >> page 4, lines 11 and 15, the word "full" would be added. supervisor kim: first full tax year for line 15? >> that is correct. we think that is in keeping with the sponsors and budget analyst's recommendations. we want to make sure it is clear. supervisor chu: thank you. to the city attorney, when these changes be substantive? they would not. it would not require a

continuance. any other questions? supervisor mirkarimi. supervisor mirkarimi: 2, maybe the comptroller, but analyst -- to maybe the comptroller, budget analyst, this would allow for a mid market deal in hoping to recruit, incentivize, anchor companies like twitter. what was reported today in "the chronicle, " zynga, a company like twitter could also come. that would build the rationale that if we build it, they will come. but when i met with the company on monday, that was not the case. i was informed by the cfo, they would not come to mid market.

i am trying to understand how this lines up. are we talking specifically about twitter or other companies? just so that we can take some of the hearsay out of this discussion. number two, i want to ask the question, was there any consideration by us, looking at a moratorium on the stock options? if, in fact, the goal is to localize the incentive in the area of mid market or tenderloin, why not do it for other companies who would like to benefit from a similar break, like twitter, but who are not going to move to mid market, but maybe to do, but in a more sweeping way citywide, so we are not favoring one district over another, so that we are doing something over all foreign industry that can benefit from a deal like this.

this is part of the discussion that has not come up yet. supervisor chu: why don't i ask the office of and work force economic development to take a shot at this. >> thank you. with regards to clarify whether or not this is a tax breaks targeted at twitter or extended beyond, the answer is emphatically the latter. while we have known for several months that twitter is interested and considering moving to the sfmart building, and the exemption here is to have twitter anchor what would hopefully the a zone of the market that has been challenging and with a high level of vacancies. over the next eight years, the idea would be to attract other large tenants, hopefully, digital media and tech-type tenants who would want to relocate. really, any type of business

that can benefit from that locale. the idea is to revitalize this area and create jobs and create the ancillary economic benefit of having storefront retail once again flourish on that neighborhood. we think twitter is an incredibly important anchor, but we would be here before you today even if they were not in the mix. we would be hoping to attract another anger tenant -- anchor tenant. supervisor mirkarimi: i get that, i like the intent, but i am confused on the policy side. what i am wondering about is, what has now come out of the woodwork are other companies who are looking for -- and understandably so -- a similar kind of benefit.

structurally speaking, what i am concerned about is, for a lack of better phrase, do we spot zoning a certain benefit to one particular company? for in a corridor of companies, without knowing whether they will return and be in mid market -- in this case zynga -- i understand that is inaccurate. >> certainly, i do not know the accuracy of what is reported in the paper. since this policy was first proposed, talked about by the members of the board of supervisors and mayor, our hope has been -- because this is a net new tax exemption, existing companies in their existing space, a even if they were in mid market, would not be eligible for a tax break. we are trying to say, here is a

you have an equal opportunity to grow come as twitter does. companies that want to take advantage of this potential tax break can join us in the revitalization effort of mid market. for some companies, it will not make business sense to them. we hope that we can learn companies in from out of town and out of state, if they want to grow. we feel like it is a pretty level growing -- playing field. we are looking for companies that want to make this move, should it be advantageous to them. we do not want something that would just sit twitter's business model, but a wide swath of other businesses models. if they want to come to mid market and grow. an existing company could keep their work force wherever they are in the city, and choose, if it makes sense to them, to have

another office that encapsulates their growth on the market. that would accomplish our goal of having jobs in the area as well as having a tax break for them to grow. supervisor mirkarimi: i am still not convinced that a company like twitter, with their hip, urban image, wants to move to the suburbs. i am not sure that we are capitalizing that negotiation as well as we may want to appear well that is up for interpretation, why not move the discussion to a larger reform? why not get into the question of a moratorium on stock options? if san francisco wants to attract companies and retain the companies, then why not use that more as a templated strategy that will help these companies relocate to mid market,