demo what a wonderful group of award winners of the 2011 good government award. we heart city government. thank you all for being here. stay as long as you want, and be sure to come up and congratulate the winners. thank you.

president chiu: welcome to the full board of supervisors meeting. can you please call the roll? supervisor avalos: present. supervisor campos: present.

president chiu: present. supervisor chu: present. supervisor cohen: presend. supervisor elsbernd: present. supervisor farrell: present. supervisor kim: present. supervisor mar: present. supervisor mirkarimi: present. supervisor wiener: present. >> all members are present. president chiu: can you please join me in the pledge of allegiance? [pledge of allegiance] colleagues, you should have copies of the march 1, 2011 board meeting minutes. can i have a motion to approve? motion by supervisor mar.

seconded by supervisor avalos. any communications? can we go to the consent agenda? >> these items will be acted upon by a single roll call vote unless the members request discussion. president chiu: would anyone like to sever any of these items? roll call vote on items 1-3. supervisor mar: aye. supervisor mirkarimi: aye. supervisor wiener: aye. supervisor avalos: aye. supervisor campos: aye. president chiu: aye. supervisor chu: aye. supervisor cohen: aye. supervisor elsbernd: aye. supervisor farrell: aye. supervisor kim: aye. >> there rare 11 aye's. president chiu: item 4.

>> ordnance appropriated $1.3 million for the ethics commission public election campaign finance fund. president chiu: roll call vote , please. supervisor mar: aye. supervisor mirkarimi: aye. supervisor wiener: no. supervisor avalos: aye. supervisor campos: aye. president chiu: aye. supervisor chu: no. supervisor cohen: no. supervisor elsbernd: no. supervisor farrell: no. supervisor kim: aye. >> six aye's, five no's. president chiu: the ordinance is passed. >> the community block grant program. supervisor mar: aye.

supervisor mirkarimi: aye. supervisor wiener: aye. supervisor avalos: aye. supervisor campos: aye. president chiu: aye. supervisor chu: aye. supervisor cohen: aye. supervisor elsbernd: aye. supervisor farrell: aye. supervisor kim: aye. >> there are 11 aye's. president chiu: resolution is adopted. item six. >> the terms of a new airline airports and lease agreements between the city in the various airlines effective july 1, 2011. president chiu: same house, same call? this resolution is adopted. >> authorizing the department of the environment to expend a grant to approximately $114,000 for the use of motor oil recycling. president chiu: same house,

call? this resolution is adopted. >> the finance subcommittee without recommendation amending the tax regulations code to establish a payroll tax exemption for businesses in the central market street area. and an annual expense of over $1 million to enter into a community benefit agreement with the office of economic and welfare development. supervisor kim: after many months of planning and negotiating and reworking of this legislation, we have a chance to put into place a policy that will bring economic development and jobs to the mid market corridor and downtown areas -- uptown areas. it will help us revitalize a long neglected part of our city. market street is one of the main

arteries of san francisco and it deserves a thoughtful approach. this is what the legislation attempt to represent. it is a carefully tailored tax incentives designed to bring a host of improvements to this area. more jobs, increase small business opportunities, in supporting small businesses in the area. it will help our district. as a supervisor of district 6, i get to see the challenge is that amid market faces every day. they have the highest commercial vacancy rate in the city of san francisco at 31%. on market, the vacancy stands at 51% with over -- with millions of square feet.

this is a unique legislation. as we tried to make it as targeted at specific as possible. we are encouraging certain outcomes in the area. revitalizing a commercial corridor in the city. as i talked about before, we have seen the research. enterprise taxes don't always work. we really believe that with a potential anchor tenants we are bringing in and the 18 bus lines running through it, the infrastructure that is already in place and the high level of commercial vacancy, this legislation is specific enough to address economic revitalization. our office has talked with and heard from many individuals about this proposal. both of those that are in strong

support and those that have many concerns. i want to thank the members of the community for those -- community, those that commented. and i wanted to thank mayor ed lee and the community-based organizations around this legislation. the decision we make today is difficult. we are working hard to improve our approach and make sure that this legislation works to benefit the neighborhoods of san francisco. we want to be clear that this legislation does not impact the general fund because companies will continue to pay existing payroll tax. we are trying to encourage companies to grow in the bid market area and continue to pay what they are paying today. lastly, i want to emphasize that

this is not a one-sided deal. but a partnership requiring businesses to benefit and following through with the benefits agreement. for the first time ever, private businesses will partner with us in exchange for a tax incentive on net new jobs. we are introducing legislation that will forge community advisory councils to ensure that businesses will dialogue with the community and address their concerns. i will talk a little bit more about that at roll call. we want to develop solutions for responsible growth that will benefit our neighborhood. in addition, we will be following up with legislation to ensure that we are protecting residents in the existing areas and addressing those concerns as well. supervisor avalos: thank you, president chiu.

and supervisor kim. i actually want to -- i appreciate the work you're doing in looking at your district. looking at what you see in your district and trying to do something about that. it is important that we play that role as supervisors. the exemption of the payroll tax -- i believe that businesses around the country should be socially responsible. part of that is paying our taxes. we have an obligation as citizens to pay our taxes. current tax is a payroll tax. that is something that i think we should take seriously. we should not make exception. the discourse about the payroll tax exemption for a central market, can we do something that

is much more precise? like stock options rather than providing an exemption for a payroll tax. looking at a particular part of a neighborhood and looking at things like twitter. i have read the controller's report. in terms of what their commitments are, i go back and forth about whether it is a good thing or a bad thing. i believe people should be responsible for paying their taxes. when a company goes public, we would be getting in billions of dollars. i would see a $20 million payroll tax that would go with the public offering. that is something that would be a small fraction of the overall cost that the company would be.

i feel very torn about whether to prevent the company from getting -- and from actually having to pay their taxes when they go public. most of all, as former chair of the budget committee of the city and county, i see how difficult it is to meet our commitment to provide city services. two weeks ago, there were schoolchildren that took to the streets to protest against cuts against education. about 200 kids took to the streets for concerns about public education. a lot of the cuts are happening at the state level. it is not really our tax dollars locally. they are not being used to their fullest extent for public education. i have concerns about

disparities of wealth in this country. some of the largest corporations are not paying their taxes. the example is general electric that just made $14.2 billion in profit and is not paying any taxes to the petro government -- federal governemtnment. that is alarming. it flies in the face of what social obligations are in this country. we need services that can meet the demands of our population. if we are going to be allowing a company to threaten to leave, we are setting a really bad precedent for other companies to do the same. we heard about zynga wanting to do the same thing as well. it alarms me that we are doing that. if we give these tax breaks, we are aiding and abetting the disparities of wealth.

we know that corporations like ge, exxon were wanting to get rid of their tax responsibility. they are amassing more and more wealth. if we approve the deal like this, i believe we are aiding and abetting that type of ability in the corporate sector. we need to make sure they are paying their fair share compared to middle-class people and working-class people. we are paying taxes and we are losing services. it makes sense that the corporate sector can pay their taxes and make sure that we have the quality of life that we should all be assured of. lastly, there are already a great deal of benefits that businesses get in the central market area. we have the central market partnership, $11.5 million in the section 108 loans for

small businesses. we have the market street landscape work that will be taking place over the next three years. we have a grant of $250,000 for the arts community that will be placing itself in greater numbers on market street at the central market street area. we have major bike improvements, major media improvements -- muni improvements. the sf mart is in the community benefits district. these are all important investments that the city has made with local and businesses -- with local businesses to attract local businesses to the area. we can increase our tax base and revenue base to attract businesses.

i worried that we set the wrong precedent for giving in at this time for a company to come here that perhaps might leave. i will be voting no. i do understand the eagerness to provide incentives fwhere twitter comes from. we have to look at what it means for the overall tax structure and what it means for the overall businesses in san francisco. and we also need to be concerned about displacement of current tenants and current businesses. i lived in san francisco during the dot com boom. i saw firsthand how building where i worked out for a couple years, i saw many non-profits displaced by dot com companies. they never came back. the rent became too much and

they had believed. -- to leave. we see a cluster of high-tech industry are around the market area. we see those rents increase on small businesses and small nonprofits that serve the community. we also saw a lot of tenants that saw their apartment rents are rising as well. i saw many friends that live in oakland, and as a result, they could not keep up with the high rent that was being incurred as business was booming. they will have more money to spend on their housing. i have cautioned about what this legislation would do in terms of displacing businesses and tenants. thank you. [applause]

president chiu: supervisor kim. supervisor kim: i forgot to introduce some amendments to the legislation as well. the first is a minor changes suggested by the treasurer and tax collector. section b-2 of the ordinance. basically, changing it so that it provides for a person doing business for the entirety of the tax year. this clarifying that statement. we also have to other amendments - -two other amendments. one is reducing the geographic area of the tenderloin area. it is the north side of ellis street. the second feedback that we got

was changing the contract in department from oewd to the city administrator. the city administrator has the overall responsibility for the implementation of policies, rules, and regulations promulgated by the mayor and the board of supervisors. this is something that mayor lee is committed to showing in terms of advocating for the cba process. president chiu: supervisor kim has made the amendments. seconded by supervisor mar. without objection, the amendments are adopted. supervisor mirkarimi: first, i would like to let knowledge my appreciation -- acknowledge my

appreciation and support for supervisor kim and mayor lee's attacking multiple problems at the same time. but i respectfully disagree with their approach. it will help shape the debate that has got us here today. i would like to bisect for you a little bit as to how i see this unfolding. one of the last points first, a very strong promotion for this legislation, is the introduction of a community benefits agreement. i see a various iteration, it has been used as a very strong marketing tool in order to really justify, rationalize the advancements and passage of this

legislation. if that particular marketing tool and that document is worth the wait that has been portending us to believe that it is that substitute -- significant, i asked for the courtesy of holding this vote off until there will be a thorough hearing on the community benefits agreement unto itself. the fact that a community benefits agreement is being promised after the fact only proves the point that we said several weeks ago that a cba has no binding authority and there is no statutory authority for twitter to be able to deliver the goods on the cba. the advisory committee that is the well-placed attention -- intentions, other areas of the

town where there is significant distress. where there are creations of citizen advisory committees, in my opinion, they have run quite hollow and they're a bit the -- ability to decisions. the cac's were essentially a toothless. i am not thinking this will be toothless from the get go, because i think intentions are well placed, but might contentions are still pronounced. if in fact twitter and others are being asked to have independence in this area and we are asking them to partner with the community, and that basically helps solidify your support, colleagues, for this deal, then i think we deserve -- and so does the public -- deserve the right to have a complete vetting in a hearing

that does not compromise the process, so there does not look like there is collusion or undue influence as relates to how a cba is developed. the second is on the tenderloin issue. tenderloin is a poster child for being, in my opinion, will neglected, and in the area of san francisco. ed -- what troubles me about this discussion, the question of twitter in fleets -- inflates the issue of the tenderloin, and that to me is playing with fire. when there are promises of redevelopment, that's wave effect that all of a sudden lips all boats because of an infusion into an area -- lifts all boats

because of an infusion into an area that had been neglected. we listened to what others had to say, and i expressed this weeks ago in budget committee -- this is unresolved. first of all, it is quotable that chief economist tim egan says it is unsuitable for the tenderloin for the several reasons. most employees to not have the money to pay the payroll tax in first place. two, it is to air -- is too small for a company that and ploys to hundred 50. the tenderloin is an adjacent neighborhood to mid market, and that is where the building vacancy problem has been identified. and four, providing this tax break to the tenderloin, as we have noticed well, is a

marketing tool, but in my opinion affects our ability to make promises and deliver on those promises. which is why the third point that i have concern with -- and it was mentioned by supervisor avalos -- i think we speak too soon. there is not a single person in these chambers, elected in public and city staff, who once twitter to leave. absolutely not. but i also think what we are left with has created a situation where there is no retreat, because it was too far gone. but i think what would have been better policy is the genre of companies we are talking about, the tech companies, get to go public -- not publicly-traded

debt, but those ipo's, those 6 to 10 of been able to identify, we could have readily addressed their concerns. i have yet to hear whether this deal was proposed to twitter -- on just the stock options. because we know, in a more precise way, when a company is about to go public, ballooning their ability to pay up to 10%, for lack of a better characterization, of what they would owe the city. the fact that we will with the payroll tax and the stock options is what concerns me as being the precedent we should never have set. therefore, we must alter it for companies that must make good on

their fair share, too, otherwise they will leave san francisco. that, to me, is where we have learned from previous tax break discussions. and i have -- and i am not against from a tax break. i have given a tax break -- i have advocated for the film industry. i am underwhelms. frankly, i have not seen the result of the improvement. and i think that in this respect, what makes this potentially problematic policy science is the fact that we are specifically lasering in one tax break for one company for one neighborhood area. i would rather we step back, use the question of the community benefit agreement as an opportunity to have a more thorough vetting, and impant --

implant that legislation with something that deals with a citywide problem, so it is fair and equitable. it is a slippery slope we fail to manage. that is what has helped us get to this particular place. but i understand the psychology that led us to where we are, at which is why i get the push from our colleagues and the mayor, no question about it. along the way, we could have put the brakes on, just a little bit, we directed with a little more refinement. help the tenderloin. what i heard come out of the debate -- if they cannot get a full service grocery store. full service grocery store. i i agree.