-- our next litigation meeting is july 19. the building inspection commission meeting will be on july 20. and then we have one in june, to, right? >> yes. is there any public comment on the item 11b? the next item is item 12, adjournment. commissioner murphy: i make a motion we adjourn. commissioner walker: second. >> we are now adjourned.

>> good afternoon. welcome to the san francisco board of supervisors meeting for may 17. could you please call the roll. >> [roll call] mr. president, all members are present. supervisor chiu: thank you.

colleagues, can we have a motion to excuse supervisor campos. ladies and gentlemen, please join me in the pledge of allegiance. [unintelligible] into the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. colleagues, you should have copies of the april 12 meetings. motion to accept? motion by supervisor mirkarimi, second by supervisor mar. are there any communications? >> i have no communications. >> if you could read the consent agenda. items one through 14 comprise the consent agenda. supervisor chiu: colleagues, would we like to sever any of these items?

roll call on items one through 14. >> supervisor kim? aye. supervisor mar.? aye. supervisor mirkarimi? aye. supervisor carmen chu? there are 10 ayes. supervisor chiu: next item. >> item relating to a conditional use authorization. supervisor chiu: colleagues, same call? motion is approved. >> administrative hearings on appeals for work contractors or subcontractors and certification

for for for a or noncompliance with waivers to additionally conform to provisions for state law. supervisor chiu: colleagues? this ordinance is finally passed. >> item 17 establishing a three- year pilot program in the distribution of waste in private residences and businesses in san francisco. supervisor chiu: colleagues, i want to thank you for support of this measure. as i did indicate, i had conversations with one of the stakeholders in this matter. at&t had proposed a number of measures to limit the number of yellow pages that they had. unfortunately, the model that they still wished to use was an opt in option. as we all know, under an opt

out system if residents do not have a strong preference, it is natural due to human inner show that they take no action. this will result in the maintenance of the status quo, which is the continued mass distribution of yellow pages. from my perspective, i think any system that requires individuals to opt out would by default undermine the goals of this ordinance. in particular, the environmental impact would not be adequate given the scale of the problem. with that, colleagues, i would like to ask for your final support on the final vote on this measure to move it forward. this ordinance is a balanced effort to solve our issues related to the mass distribution of yellow pages in san francisco. i would ask for your support. supervisor elsbernd ?

supervisor elsbernd: one way or another, it does not change my vote on this. i hope everyone heard president chiu's remarks about opt in/opt out. i hope that we remember this when we have the conversation about community choice aggregation. supervisor chiu: if we could take a roll call vote on this item. >> supervisor elsbernd. no. supervisor kim. aye. supervisor mercury me. aye. supervisor of a los -- avalos? aye. 9 ayes and one no.

>supervisor chiu: this ordinance is finally passed. >> item 18 appropriating 100900 -- $1,925,000 of the general fund reserve and the public library preservation fund balance to various departments for litigation expenses. supervisor chiu: roll call vote. >> [roll call vote] there are twn ayes. supervisor chiu: item 19.

>> item 19, an amendment to a construction management service agreement for laguna honda, changing the amount from approximately $15 million to $16 million. supervisor chiu: this resolution is adopted. item 20? >> approval of modification #one of lease and use agreement at san francisco international airport. supervisor chiu: this resolution is adopted. item 21. >> item 21 -- resolution declaring the intent of the city and county of san francisco to reimburse expenditures from proceeds of future bonded indebtedness, authorizing the director of the mayor's office of housing to submit an application and related documents to permit the issuance of residential mortgage revenue bonds in an aggregate principal

amount not to exceed $8 million. supervisor chiu: this resolution is adopted. item 22. >> resolution approving the fy2011 emergency shelter grant program and authorizing the mayor to apply for and expand the emergency shelter grants program entitlement. supervisor chiu: this resolution is adopted. >> item 23, resolution approving the fy2011-fy201012 community development brought -- block grants in approximately the amount of $19 million. supervisor chiu: this resolution is adopted. >> item 24 resolution approving the fy2011-fy2010 wealth does not partnership program on behalf of the city and county of

san francisco to apply for, except, and expand the city's program entitlement. supervisor chiu: this resolution is adopted. next item. >> item 25 is on the budget and finance committee without recommendation. an ordinance in many of the tax regulation code by adding a new section to establish a payroll tax expense exclusion for the eligible persons payroll expense that is attributable to stop- based compensation. supervisor chiu: supervisor mirkarimi? supervisor mirkarimi: thank you. colleagues, i want to thank so many of you on the board, particularly supervisor farrell and supervisor david chiu for helping has moved beyond the deliberations that occurred with the twitter deal and begins to address the panoply of the

companies that were seeking relief because of the great concern, to concoct any kind of law that would help them stay in san francisco to help nurture their growth, and in return, benefit from that growth so that they would then help enhance our general fund through the payroll tax, while providing any kind of incentive that diminishes any impact whatsoever towards the general fund. it is exactly the kind of legislation we are trying to advance your. that legislation is a stock option tax exemption. through the controller's report, we have seen that this would create very little impact. ain our ability to provide that incentive for a number of companies -- it would provide that for a discreet population

that allows -- discrete population allows san francisco to track what would be capable of. we would be able to understand what the true impacts are, whether that has to implicate stock options for companies, that are free -- pre-ipo and already public. it is important that we understand what that is, because the treasurer's office, the tax collector and the comptroller, have yet to be faced with this exchange. i think the deliberations that came out of the last few months on the questions of tax breaks and tax reform helped us arrive at this particular place that gives us this antre to determine what it would look like to

overall our business tax structure. working with mayor lee and others, we are investigating what those options would look like. this is unmeasured step, one that is unanimously supported by the small business commission. and to the mayor's office, you can ask them, they have been supportive of this legislation. we believe it helps answer the interim call right now for companies who are watching very carefully -- vigilantly -- in seen how we will negotiate with one company in particular that wants to stay in san francisco but needs relief. instead of just providing for payroll tax, it is exactly the right formula for us to proceed. that is what is before you today. i would really ask for your support. thank you. supervisor chiu: supervisor kim?

supervisor kim: is my microphone on? first, i want to thank my colleagues for continuing an important discussion that already been started, but we really engaged in over the last four months with the midmarket, taxes and legislation. we talked about efficient and effective ways of taxing our businesses and investing in our city, but in ways that encourage job growth, and retains companies that we need here in san francisco. it touched on many areas previous legislation talked about. we are the only county in the state of california to levy a payroll tax. it is done out of concern for companies that may not be in san francisco, and to prioritize the attention of companies that

might be here and how that contributes to our tax base as written into the ordinance. also, and in the spirit of the ordinance, it is not hurting our general fund. so, ensuring that we are maintaining levels we have had in the past. i did have some concerns about this legislation because there were some differences. one, a lot of community advocates had asked when we passed the midmarket legislation that does not be the beginning of a slippery slope, that as we tax the midmarket -- as we passed the midmarket legislation, if companies come to the board of supervisors threaten to leave the city, we do not pass piecemeal legislation to keep and retain companies. i took that commitment seriously as i thought seriously about this legislation, because to me, this is a definite step in

applying tax exclusions for other companies in san francisco. there are other things missing from this legislation. one is a focus on neighborhoods. a focus on neighborhoods where there are high levels of vacancy. the second is the community benefits agreement for companies that contributed a high amount of payroll to san francisco. after some thought, a kind of came to the conclusion to support this legislation for the following reason. one, in terms of the community benefit agreement, very few companies would be eligible for this tax exclusion on stock options. as was indicated by ted egan's report, a very few companies are ipo and stay under $150,000.

there are very few companies that will hit that level of payroll tax option. by the way, i appreciate my colleagues'support for my neighborhood and my district. it has been refreshing to me to talk to zynga and hear their commitment to the city of san francisco into our neighborhood. and i know they are in talks right now with several community advocates and nonprofits are around how to support local hire and individual jobs for individuals who have less than a four-year college degree. it was also nice to hear about the community work they have already been doing thus far, and the further commitment to deepening that level of support in our neighborhoods by partnering with nonprofits and potentially working on open space and other park issues.

so, after careful thought, realizing that this legislation is terribly narrow and would impact a small number of companies, i am thinking we're moving in the right legislation. i will be supporting the legislation today. i do hope this does not continue a piecemeal legislative approach around tax reform, and as we're able to make companies whole, they will continue the negotiation process next year, and they will still stand with us. thank you. supervisor chiu: supervisor of los -- avalos. supervisor avalos: colleagues, i oppose the payroll tax exemption because i thought it was overly broad and put in place many measures attempting to revitalize the central market

area. i also heard as we were discussing this legislation in our offices and in here in this chamber, that the real value of the exemption was four twitter, which was going to go public and would not be able to save a lot of money and stay here in san francisco. so the real issue was about the initial public offering that twitter was going through in the next few years. when i voted against the central market payroll tax exemption, i said i am willing to look at the issue of companies going public and seeing how the impact of our payroll tax covering stock options are around ipo time. that is what is before us today. it is legislation that is specific to that issue for a lot of companies.

also, my concern about the central market payroll tax exemption was it was going to be eliminating the payroll tax for new hires, prospective new hires in the central market area and i did not like the idea of adding our payroll tax, which is the payroll tax. it is a much broader examination of what the value of our payroll tax is. we have people talking about why do we have to have a payroll tax at all? why do we even have to have a business tax? those are some of the whispers i heard out in the community of san francisco. i got alarmed hearing that kind of talk because we do need to have a business tax. i do know in the next few years

we will be looking at making our business tax structure. i get really concerned when i hear people say "the payroll tax is a job killer." maybe in some industries the payroll tax might be a disincentive on business going forward, but i would not be surprised if we came out of the discussion about remaking our tax for next year that involves a combination of a payroll tax, a commercial occupancy tax, and a gross receipts tax. all of that can be remade in a form of our business tax structure. i look forward to robust discussion, because i think we can tease out a lot and have a new ones approach -- nuanced approach. i look forward to that discussion. this to me seems like a very narrow way that is much more palatable for me to accept in

terms of how we get to keep small startup businesses here in san francisco and i will be supporting it. thank you, colleagues. supervisor chiu: supervisor mirkarimi? supervisor mirkarimi: i concur with supervisor at a los -- av alos' comments. it is probable there will be great movement between now and 2012, some attempts at significant reform. i know that is being well probed by a number of our colleagues here and by the mayor's office and by others. and that is a good thing. but right now san francisco has a problem. the problem is we have of growing industry of pre-ipo companies. what the midmarket debate was able to shed light on was it was

not about one company, company,a -- but a discrete population. the questions were prompted about companies who, in our minds, the also legitimized in wanting to keep their business. ed but this is without the adverse boomerang effect. the best approach, the only approach, is to look at what is unique in san francisco and that is we're the only ones with a payroll/stock option tax. by peeling off the stock option tax on the payroll, being able to help those specific companies right now -- and there are not many. there are maybe 10. but those may be right now will allow us to really be able to corral, i think, an industry

that is burgeoning, but one we may have lost before because we did not tackle the problem. let me tell you. at least from this political side of the bench, it has been a long time that people in this government have confronted business tax reform. people have been talking about it for a long time. the prevailing theory and conventional wisdom is gross receipts over payroll or some hybrid thereof, but there has been no delivery on this. i think that is something that comes to unnatural ahead. before that comes to that head politically, before it is reconciled by the voters of san francisco, being able to justify our case so that it is a more foolproof case is one that i think is furthered by what we passed here today. in light of that, i have a quick technical amendment. i am told this is not

substantive. page three, line 16 -- the amount of the stock exemption is that amount of stock-based compensation pre-payroll expense or the company's 2010 stock- related tax-based compensation. with that amendment it will read as follows of " a person who tax in 2010 paid more than 70 $50,000 in payroll tax attributable to stop-based compensation made their payroll tax in excess of that aid in tax in 2010. number two is a person who did not pay more than $750,000 in stock-based compensation may

exclude compensation in excess of $750,000. those are technical, not substantive, right? good. >> second? supervisor chiu: can we take that amendment without objection? supervisor mirkarimi: just ending, i have mentioned several times important action of supervisor farrell and supervisor to -- supervisor david chew -- chiu. i do not know what his name was not on this, but that was missing in this particular version. supervisor chiu: supervisor farrell? supervisor farrell: thank you, mr. president. thank you, supervisor mirkarimi. obviously, we took the question obviously, we took the question of stock options from something