commissioner avalos: good morning and welcome to the city operations and neighborhood services committee. to my left, supervisor elsbernd. we will be joined shortly by supervisor mar. madam clerk, do we have any announcements? >> all persons attending this meeting are requested to turn off cell phones and pagers. if you wish to submit materials to members of the committee, please submit an extra copy for the file. if you fill out speaker cards, please put them in the container in front of you by the rail to your left. items recommended out of committee today will be considered by the full board tuesday of next week unless another date is indicated. commissioner avalos: thank you. if you could please call item 1. >> item 1, a hearing to consider that the transfer of a tight 20 off sale beer and wine license from 612 kearny street to 3132

clement street will serve the convenience of the people of the city and county of san francisco. commissioner avalos: thank-you. if we could hear from the inspector. >> supervisors, good morning. san francisco police department. what is before us today is an application like the purchase date of the transfer license to a location out on clement street. the location was previously licensed as an albertson's. it was a single license premise upon the whole property. had subsequently been bifurcated on the two properties. half of the is becoming a fresh and easy. a little background about the license -- they purchased the old culbertson's license, so it does not need the level of scrutiny that this license is getting because it got it many years ago. that is what we call a person to person transfer.

the license is moving forward. that is going to be for a type 21 license, so it will be able to sell off sale beer, wine, and distilled spirits. so that is half the property. i will also point out, this is a relatively large parcel. it does have a parking lot, so it is unique. it is not our typical urban pedestrian store. the second half of the store we are here to talk about today -- the applicant is cbs pharmacies. they are relatively new to san francisco. they have one location currently on van ness ave. they are looking to have many locations. their long-term goal is to have locations throughout the city and county of san francisco, but that will be a relatively long process. they want to come in, get a type 20 license. if approved, it will allow them to serve of sale beer and wine only. it will not have a distilled spirits component. it is located in an area of high

concentration of liquor licenses. it is not located in an area of high crime. we come to you this morning with a recommendation of approval with the following conditions. i would like to read these into the record and maybe add a couple of commons. first, the sale of all beverages shall be permitted only between the hours of 10:00 a.m. and 10:00 p.m. daily. second, no more than 5% of the square footage of the premise will be used for the display of alcoholic beverages. 3, no noise sell the allowable be on the area of the control of the licensee. four, the petitioner shall be responsible for maintaining free of litter the area adjacent to the premises over which they have control. 5, the exterior of the premises shall be equipped with lighting of sufficient power to eliminate, make easily discernible the appearance and conduct of all persons on or about the premises. additionally, the position of such lighting shall not disturb the normal privacy and use of any neighboring residents. 6, our bordering condition --

bordering, defined as standing idly about, wandering aimlessly without lawful business as prohibited on the property adjacent to licensed premises. condition seven, no person under the age of 21 shells sell or deliver alcoholic beverages. 8, know malt beverage shall be sold with an alcohol content greater than 5.7 by volume. specifically with that condition, that will keep their product line to pretty much mainstream products. it will not be any of the high alcohol content we have historically had problems with in san francisco. next, the sale of all beverage in the context of 16, 22, 32, or 40 pounds and similar containers will be prohibited. these larger capacity cans will not be allowed. no beer or malt beverage shall be sold in quantities of less than manufactured, prepackaged with the exception of wine coolers or beer coolers, which must be sold and manufactured in

multi-unit quantities of four or more. our overall theme is to keep this away from encouraging public consumption of alcohol, so we are looking for packaging that encourages products taken home for home consumption. condition 11, no one shall be sold in alcohol content greater than 15% by volume, except for dinner once would have been aged two years or more and maintained in the cork bottle, again discouraging very low or high alcoholic content. 1 shall not be sold in containers smaller than 750 milliliters. last condition, the licensee shall maintain a digital electronic surveillance system in the area where alcohol beverages are on display. said it shall be maintained for a time of not less than 30 days and made available to law enforcement upon request. a couple comments -- we have been working with cvs now, i would say, for a couple of months. it has been a pretty long road,

especially for a group looking to come into san francisco and wants many licenses down the road. we had to continue it two weeks ago because we could not find a solution between our proposals and theirs. today, we did not really resolve things until friday. that brings us to today. they are in concurrence with these conditions, and i think, with these conditions, it should have minimal impact on the community. we are recommended for approval. commissioner avalos: thank you, inspector. i wonder -- has the city ever had a global policy about pharmacies, stores that are typically pharmacy stores like walgreen's, about the sale of alcohol on these premises? i know that there was a long time, the walgreen's is probably the biggest chain we know of in san francisco currently that has a pharmacy and the kind of convenience with health aides.

i know that it was about 20 years ago, walgreen's did sell alcohol -- beer and perhaps wine. cheap stuff as well, even maybe 40 ounces. that policy ended. i'm not sure if that was a walgreen's decision or a city decision. then, as of about a couple of years ago, there seems to be, because righted that have the ability to sell alcohol, and they have left the city -- well, ended its business -- well prints have picked up some of those spots. now, we have, maybe a change in policy only based on what is happening in changes to the actual business size. does it make sense that as a city, we think about what it means to have sale of alcohol at our pharmacies and pharmaceutical businesses rather

than do one by one spot approvals of liquor licenses? i am worried. cvs has just come to the city and has been growing dramatically in their presence on the west coast -- i know them from the east coast where i used to live -- and we could see them opening many stores in san francisco, and then we will have more liquor licenses that will come up in those stores as well. i'm concerned about the impact on small businesses. in my district, i have two pharmacies that are clinging to life in the excelsior district. walgreen's has moved on to geneva. they want to sell alcohol there as well. that could make them more competitive against smaller businesses that are clinging to life. i think we should be thinking of the city overall, what our policy is around pharmacies selling alcohol. what is the change in the law

that has happened in the city over the past few years that has seen now we are going to see more pharmacies looking to sell alcohol? >> let me go back. you are correct. many years ago, i would say approximately 15 or so, they did have a liquor licenses. my understanding of the history was that they were more of a nuisance at the time than they were worth, and it was actually the chain that elected to surrender them, and they subsequently did and got rid of all their licenses in the city and county of san francisco. the correctly stated, we had rite-aid come to san francisco, and they did acquire some liquor licenses. most of those locations, that altman gave up the san francisco market, although they are still in business. most of those locations were acquired by walgreen's, so it put walgreen's back in the

liquor license business, strictly through that person to person transfer process that we referred to. at the same time, walgreen's was looking at a national effort of getting back into the liquor component, and then, a little bit of that story. when the walgreen's first came up, it was newsworthy. it was front-page news that they were talking about bringing many licenses to san francisco. walgreen's has in excess of 90 locations, and their long-term business plan would ultimately attend to license all of those. that caused concern here with the supervisors. it caused concern with the mayor's office. we did start dialogue with walgreen's early on. we have since move very cautiously, very slowly, and very selectively on very specific locations. i believe we currently have 6 walgreen's with a liquor

license, but i think what is important to look at is they are very restrictive licenses. we have tried to strike a balance where they do not impact the community or police services, so that they are a responsible seller. but i will tell you, the question you brought up with regard to pharmacies selling alcohol -- we obviously know that pharmacies once sold tobacco products and san francisco went in a new direction and other cities have followed. the conversation certainly came up when the walgreen's dialogue was occurring. supervisor avalos: it seems to me that if we are approving a license, that we are paving the way for this happening more and more and putting a precedent where any new chain pharmacies coming in will be pushing to have this sale of alcohol on the premises as well, and that will be the new -- the start of a whole new effort to do that, that we could potentially see. every new pharmacy chain,

including walgreen's, selling alcohol in the city. i think it might be best if the city actually makes a global ruling about how we are going to handle such liquor licenses in pharmacies. if we are going to be willy- nilly here and there, then we are not doing the kind of work we need to do to set the tone for what it should be for the rest of the city. i am considering not supporting this liquor license or delaying this item so i can have a conversation may be with the mayor's office and with the stores about what it is we are doing here. >> i apologize if i was not -- let me give you a little more detail. by no means is this willy-nilly. supervisor avalos: i did not want to use the word about your work. >> in the spirit, i think it is important that articulate that the police department looked at this very closely.

the goal is intelligent licensing. from a policy perspective, which i refer to all of you, obviously, wherever you guys want to take it, we will work with what you give us, but i will tell you this -- we look at these very closely, and this is a unique situation. we do not have a lot of large retail spaces with parking lots like this location has, and that is why this one is working. nonetheless, we are still encouraging you to do a very restricted license. this business plan would not worked in other parts of the city. i think what is unique year -- and that is where we have to always look at all of these business plans, regardless of who they are coming from, on their own merits, exactly where they are going. we all know that what works in one block, two blocks away, just will not work, for whatever reason. we are keenly sensitive to that, and i think this one was unique. it is my understanding, cvs did

do some outreach to the community and the community is not opposed. for these reasons, i think we are on track to proceed very cautiously. supervisor avalos: ok. and my comment about willy-nilly was not about your work. i know we are going to see more and more of the pharmacies coming forward, and walgreen's and cvs as they want to increase business in san francisco, will probably come forward. >> there's no question that every segment of our industry is looking for potential revenue streams. i can tell you that absolutely, we will be seeing cbs -- cvs tried to emulate walgreen's, not only with the number of locations in the city, but hoping to get licenses. we are seeing it every day where people are looking for innovative things, places that

once used to shut down at the end of normal business hours are now operating later, trying to get one-day licenses to bring in a possible revenue streams. there is a lot of creativity out there, and that does come back to as being responsible and the row with our investigation. supervisor mar: thank you, inspector. i know when we continue this two weeks ago, and mentioned cvs had been working with a number of neighborhood organizations, and you acknowledge that they are not opposed to the liquor license. i share the concerns on a citywide level and the mayor's concerns of too many of the liquor licenses for the walgreen's, and then i guess this would be the second cvs opening, and i know that there are broader expansion plans, but you've laid out -- was it 12 conditions? how many of the conditions did

you -- >> yes, there were a total of 13. supervisor mar: two weeks ago, it seemed you were going to be recommended rejecting the license, but now, you have sat down with them. you said on friday, he came to an agreement with representatives that those heavy restrictions and this being not a precedent, but really restrictive approval, so you are recommending approval, and cbs has set down -- cvs has sat down with you and are in line with that as well? >> yes, they have realized that although these conditions may be restricted, i like to look at them as these restrictions giving us the tools to approve the license, and then not being familiar with the san francisco market, the uniqueness of our city and our many communities and our huge density, i think they felt that they could come into san francisco and get an unrestricted license, and that is just -- when we are dealing

with our huge volumes of licensing, that just is not realistic. took, unfortunately, the continuance of two weeks ago. i will be honest with you. this thing did not get resolved until late afternoon on friday, and that held up the clerk's office, which was waiting to get your reports out. that is not a great way to start a relationship. i'm only sharing this with you because i am concerned about their continued interest in coming to san francisco if this is going to be the way we are engaging each other. supervisor avalos: i'm concerned about pharmacies that have to compete, that are struggling just to get by, and the advantages we are giving to other businesses that will impact small business owners in the city. supervisor mar: i also share the concern about the impact on small businesses that sell liquor and the various chain pharmacies. you mentioned that fresh and easy has a person to person alcohol license, and this would

be the second one. and there is a parking lot, so those were special reasons for concern, but you also said that there is relatively low crime rate in the richmond district for the area that is in and around lincoln park, and those were all considerations you considered. >> correct. and also, where i was able to find balance was finally getting pbs to understand that these conditions were going to protect the community, and that is what we are trying to accomplish. i would also suggest, although this is not necessarily my area of focus -- i think it also protect the small business owner. with these conditions, obviously, we know that alcohol sales are statewide allied 6:00 a.m. to 2:00 a.m., and we are narrowing their time frame and restricting products. i will also caution that i noticed with conversation, their preference would have been to have a distilled license, which is another thing we were opposed

to. i think there has been a lot of learning. supervisor mar: i noticed that besides the restrictions on lighting and loitering, or the improved lighting and restrictions on loitering, there are also percentages of the alcohol and wine, and only 6 fax, so you cannot buy, like, a single beer. you have to buy them in packs so people would take them home as opposed to treat them in the parking lot. because of those restrictions and strong sentiments because of the lincoln park neighborhood area that has been without anything filling that old safeway/albertson's spot, i am supportive of your conditions and is restricted approval, and i also see this not as a precedent, but more on a case by case basis and encourage various stores to work closely with your office to make sure it we are protecting the public's health, but i also support supervisor

avalos' suggestion that we need a broader city-wide policy that works with chains and other stores to limit the number of licenses in the future, but i am supportive of this conditional approval. supervisor avalos: another concern i have is in the same building the same lot. fresh and easy will be there, and they will be able to sell every item of alcohol -- with alcoholic content cvs will be selling. i'm not even sure there is a necessity that they need to have a license to be able to operate on this spot. that is just another concern i have, and whether it is important to have two sites selling alcohol in the same building. >> i think that is a fair comment. the only thing i'd say making this a little bit unique is the size of the structure in the back that it probably is not suitable for the average mom- and-pop operators.

that is what i keep going back to. it is about intelligent, responsible licensing. as long as we continue to look at these on an individual basis and work collaborative week, i think that this is a workable plan, and i will say with these conditions, i do not see it negatively impacting the community. supervisor avalos: ok, thank you. let's open this up for public comment. any member of the public would like to comment on this item, please come forward. >> good morning. i have lived in san francisco for 59 years. i would like to speak in opposition to this matter. i think that supervisor avalos has brought up some good points, and i think a lot of his opinions have been misrepresented in the press. the reason why i would like to speak out in regards to cvs is that very quietly last week, i would like to bring this matter

to the attention of everyone here. very quietly, they made financial settlements with the u.s. federal government in regards to the medicare program. i remember correctly, they were agreeing to a settlement of $18.5 million fine in regards to miss using reimbursements that were part of a large whistleblower suit out of the state of minnesota. the pharmacist worked for cbs, i assume went through proper channels, and was rebuffed by the corporate structure of the company that had to file a federal lawsuit. that whistleblowing pharmacist for cbs -- cvs collected $2.5 million, and cvs agreed to an

$18.5 million fine. i'm not one to judge just on one issue, but i think that should be made on the record, and since there are concerns brought about the company being new in san francisco, maybe we ought to check this one out. in regards to my own experience, on my trips to washington, d.c., my experience with cvs is that their operations, compared to walgreen's, seemed a bit sloppy. it seems like the stores do not have as many employees as they need because they are out there 8 pete -- they're at their great. their service is not very good. thank you. supervisor avalos: thank you very much. any other member of the public like to comment? seeing none, we will close public comment. supervisor mar: i would like to move up with the 12 recommendations. i would like to move a positive

recommendation. >> it is actually 13 conditions. supervisor mar: could we get those in writing? i know you develop them late on friday. could you get them to us? >> absolutely. i will e-mail them to your office today. supervisor avalos: ok, great. and specter, thank you for your work on this. i appreciate your working through the delay in working closely with cvs in this matter. i probably will be voting against this item. i understand the conditions we are placing on the business, and there is support from the neighborhood, but that is probably also may be for cvs or a pharmacy being at the site, not necessarily that it has to have a liquor license or not. but i think the state needs to have a more global approach about how we will be citing liquor licenses in pharmacy chains around the city, so i, you