-- i went to the director of planning about six months ago. i suggested that other notification be sent out to those people. if it wasn't something to me that was really clear. i heard from a lot of people that a lot of them were sent back to wrong addresses. he used the same mailing list. that was the process. the address is not correct, there were multiple property owners, there was no effort to do that. the property owners, some of

them don't pay as much attention as the tenants that are more affected if they are out of town property owners. it is basically the notification. >> i was curious how the rollout will be for you, i assume you have been working on this much longer than just a month ago. can you tell me more about that? >> i have several clients, and one is the property at sixteenth street. starting a few years ago, i combed through permistts and plans. i found some show a clear intent to clear office out of industrial. the proposed use warehouse slash

office. a look at the plans and there was a whole floor of the warehouse that was empty, without partition and suddenly creates partitions in for spaces along walls and a passenger elevator. i look at this and brought it to planning, and the word office appears somewhere in the plans. a wrote a letter to planning a year ago showing this permit and saying that this one, the space doesn't need to pay the fees. the building department approve its and the planning department stamped n/a at the back. not applicable. they said that they disagreed. why?

they said that a proposed use a box should not have said office slash warehouse. the person that submitted that were being straightforward. there is continuing to be warehouse elsewhere in the building. they said that the box has to say office. when i pointed out the plans that created a number of small spaces have a full floor of columns, the answer was, well, this very well could have been an intense to create five separate industrial tenants instead of one big one. this could have easily been the creation of four or five separate businesses of industrial use. we can't take your word that it was otherwise. the input and -- they did input

a passenger elevator and others of the pedestrian -- it did not go anywhere. the whole floor which is 40,000 square feet, about $700,000? the fee will have to be paid for that -- $600,000? has that right? that is kind of typical of the way that planning has been handling this. every benefit of the doubt is withdrawn to a property owner or small business. some cynics believe, why with the city, and needing money, ever be agreeable to and declare the you got me to legalize?

i am not that cynical, but that is one story going around. there are other reasons. the planning department i think wants to set a boundary line for the future, that is that they want people to apply for permits, checking the right boxes and filling them out perfectly. maybe they want a standard, that is fine. we're not talking about opening rezoning. we're not talking about new office tenants. we're talking about allowing the ones that have been there for 30 or 40 years to continue to be there. not to be relocated. commissioner dooley: i want to ask a clarifying question. in the case of an industrial building being the one for being

converted to office and the lower floor maintaining its industrial use, right? only the floor that is converting to office is subject to the feet, is that correct? >> correct. completely converting. they are already there, but legally -- commissioner dooley: is there an additional fee if your subdividing that from one great big space to five spaces? >> i can't talk about the future because you're not allowed to subdivide. commissioner dooley: not office, industrial tenants that might not need as large as space. you're still using it for production, distribution and repair at a lower level. you can subdivide it at will.

and again, i will get back to every use like that will require some office attached to it, generally. >> yes, even manufacturing has had part of it, usually 20% or 25% for people, executives of the industrial use, office employees. the planning code assumes that 25% of industrial users, it will be office. that is exempt from the fee. 25% of industrial use and does not turn it into non industrial use. commissioner dooley: and there is production that takes place in offices in such as film,

editing, animation, digital transfers. there is a whole industry now of computer work done in offices. is there allowance for that? >> and there is a heart activity, a use allowed in the district. arts activities also have a fee if you want to legalize the arts activity. the planning department has an interpretation of arts activities that is unfortunately a little restrictive. they have rules that if you're doing video production, cutting a video, processing and video, editing, computer animation, it is not considered industrial. it is considered office. the only aspect of video production that they recognize as industrial is where you

actually have cameras and doing shoots that require a good deal of space that has significant pieces of equipment, and that have lighting and all that. once the photographs are taken, the rest of the process is considered an office use. >> where you are around when the discussions were happening? >> yes. >> they equated the same for -- we have been looking at the impact fees for new businesses, so at the time the decision was made, the decision was that an existing business is the same as a new business moving in with relationship to the impact fees.

i guess i am assuming that the fee that they are charging, the property owner to be able to stay there as an office space, i guess i have made the assumption that it is equivalent to the impact fee should and office space want to move and to a warehouse space? >> i agree at to the point where you said it is the same as an office tenants now wanting to move. the office tenants, people who have an office cannot move to the district. >> retail, we have had issues were retail want to move into those spaces. >> there is a district that his property is in on sixteenth, i believe it is the only where

retail is allowed as a matter of right. others allowed it in small quantities, maybe 1500. is the sixteenth street district is the only one that says that retail is allowed up to 25,000 on any floor. he had the same as the music store on his second floor at one time in the old days. and so, retail does have a significant impact fee. were he to move in retail, there would be a fee between $6.10 dollars a square foot for new retail. >> new office is not allowed. that answers my question. the uno in the planning department has an out of the properties that they are currently occupying the office

that are designated by pdr so that we could -- >> they do not. it is understandable why. for the planning department to know which buildings do and do not have permits that meet their criteria for being the conversion from non-office to office, they would have to have their staff look at every alteration permit and plan ever issued, over 1000 buildings. the ones that might have office as opposed to residential, they don't have that staff. they are not able to come up with a map. >> he said that there are 12 parties that have come into compliance? >> as of the date of november 4, when the planning director wrote you what you have in front of you, or wrote to the board of supervisors, i think it was

november what you have in front of you. he mentioned three. i understand another eight or nine have come in as of today. the was 3 -- it was 3 at the time that he wrote that. president o'brien: commissioner yee riley? commissioner yee riley: how many homeowners will be affected by this? >> i have not studied it myself, but we know that there are 7000 lots affected. we can assume that the majority of them are residential or retail or industrial and haven't become office. as to how many or converted to

office? i have heard different figures. i would say probably 1000 buildings just because i have spent 20 years in the city doing permit and development law. i am speaking from my experience. how many small businesses in each of those thousand buildings? i don't know what you consume, but the number of them are owned by the tenant, owned by the user, sorry. they are single-user buildings. another large portion, they have multiple businesses under one landlord. that is the best i can answer. commissioner yee riley: it has been three years, why do you think it is only currently in the enterprise that applies for this?

>> like most things in life, it is never one or two things. people haven't understood the notifications. they may not have ended up in the right hands of people that make decisions. third, people are looking at the fees and realizing that they just can't pay them. they're hoping, perhaps, that the planning department enforcement people don't come to their door or take years to come to their door. which may be the case given that the enforcement staff is not enormous. they may be considering going bankrupt rather than pay the fees. they may be ridding their buildings of the tenants of the don't have to pay the fees. they might be waiting for the leases to expire and not renew them that the office tenants are no longer in the building.

that way they are not liable for the fees. i can think of three are for other reasons, everybody has their own separate reason. commissioner yee riley: be you feel that the planning department has done enough outbreak? >> the planning department, in my opinion, could have done a little more. given their budget, i am not sure it was feasible. i think that people in the planning department have changed a lot in the last three years. i think that people that were there in the first couple of years did not pay enough attention and may not have had their real strong opinions that small business was important.

i think that as we are reaching deeper into the recession and as the city becomes more cognizant of the importance of business, i think the planning department is doing a little better job in the last year of bringing forward or thinking about business. but not nearly enough. if you pay attention to where their budget comes from and you pay attention to some of the groups that heavily influenced their decision making, you will find that it is not all that surprising that they're out reach has and then as good as it can be, and that they have not had an open mind and enough about what permits him do and do not create an office used in their eyes. commissioner yee riley: you're

asking for more time than 90 days? how much more time and what is your plan? >> we're asking for one year beginning the nineteenth of january, and during that time, we are asking for supervisors to call for hearings and to create some sort of an economic study. an economic study was done in the two or three years prior to 2008 about what was the connection between the fis and the harm? how high should the feed be? how long should people take to pay? what affect will the fees have on the loss of businesses that we want to keep? those numbers, since they were really developed in 2006 and 2005, when they thought the legislation was about to take effect, it did not. those numbers are now six years

or seven years old. a lot has changed since the recession. we are asking that the same people that study the numbers before or somebody different do another study. we are asking that the planning department to reconsider its standards for what kind of permits actually created office. hair standards are pretty high. they need to have a system for how they are going to look at those permits. it will not be overnight that they develop a new system. we are asking for that study to be done. hopefully, perhaps six months or seven months into the year, there will be a series of hearings. they can come forward and testify, we can develop something that makes a lot more sense. commissioner yee riley: that makes sense to me.

thank you. >> yes, i'm sorry. i just realized i was writing and now i have -- oh. yes. i'm just asking, not that i expected to have this information, but do we have any sense of what the vacancy rate is in the eastern neighborhoods? especially the pdr? >> i really don't know. >> do you have it? speak to the mic. >> i can tell you in my own building, the building is about 150,000 square feet and i have roughly 35,000 square feet of vacant space.

whatever the math works out to be. we're obviously trying to find new tenants. people come and luck, he'll know, maybe we'd get some people. some of our spaces in my case are quite large. the largest base, the harder it is to find a suitable tenant. i have one space that is 5000 square feet, another is 9000. another space is roughly 12,000 square feet. i have my largest space, 20,000 square feet. it is on the fourth floor, which is not conducive to pdr type activities.

those type of activities are best served being on the ground floor. and there are also certain uses in the realm and that cannot be in multi-tenant buildings such as myself. such as auto repair, furniture refinishing, things like that. he may have to be in a stand alone building because those issues like fires and the requirements under the building: that there be four- hour walls between themselves. realistically, they have to be essentially by themselves in a stand alone building and bottom of the tenant of building where there are other tenants and things like that. lastly, if i may, i don't think when people came up with these

legitimization fees, that they really carefully studied the kinds of revenue that people like myself are realizing from the properties. as i mentioned, we get approximately, on average, 75 cents per square foot per month. he translates to $9 a year. when people were talking about prop m and legitimization fees, people were getting $2.25, to dollars and 50 cents a month. -- 2.50 a month. it is a different set of criteria. it is one thing when you are talking about a brand new building, somebody wanting to put a new building on a vacant piece of land and the city says

that you must pay impact fees of this. it gets put into the budget, they go to their lenders and lay it out. we want to borrow a certain amount of money. it is a situation where people such as myself, you have the existing buildings and you have tenants and somebody comes along and says, in order to keep these tents, you must pay this fee. as i mentioned in my original comments, it is a whole different world out there. it is very difficult to go to a lender and say, how want to borrow this amount of money not to improve my building and make it more attractive horror be able to attract tenants who are

willing to pay higher rent, but just to be allowed to continue to do business the way that i have been doing business. >> the businesses that you have been shelling the space to fit within the -- showing the space to fit within the pdr definition? >> perhaps yes, perhaps no. there is a special type of pdr. >> ok. president o'brien: any other questions? i would like asked mto ask mr. gladstone a couple of questions. this is tied into the eastern neighborhood zoning project that has been going on for years and years. this is a question. it looks to me

the impetus behind what we are discussing is hardly of the neighborhood -- as part of the neighborhood zoning laws, the type of business that was perceived to be diminishing or disappearing, i am thinking that this might be a reaction to what happened during the internet boom, businesses coming in. >> correct. president o'brien: secondly, again, this is a question. we understand it has been extended by three months -- >> could be. president o'brien: if it weren't, depending on the efficiency of government forces, they could be knocking on the door and hitting you with the big fee or hitting you with booting you out of there.

we might see that kind of activity taking place? >> yes. people opposed to office having moved into these districts and want to preserve it for industry have someone to preserve it for only affordable housing, i am told the planning department will start to file complaints after january 19. we got to know if they will start with the small buildings or the large, but we are informed that they will start with the larger ones because you get more bite for the same amount of effort. we believe planning will be hiring more enforcement people to respond to those complaints. those complaints will give people a number of days to file permits -- sorry.

those notifications will say that you don't have a chance to file any more. what you do have a chance is to come and show us your permit one last time. but if they are not up to par, to planning, planning will notify the owner that the users must leave the building or the usual penalties under the planning total get paid. those are per day penalties. president o'brien:ok. ok. thank you. commissioners, first of all, i am also finding it very interesting that the eastern neighborhoods community a advisory committee voted unanimously to extend this by 90 days.

that an of itself is a statement of support to the notion that this thing really needs to be thought out a little bit more. i know how much time they had to think about all of the logistics involved here, but maybe they didn't have just thought that by today's sounds like a figure to get started on. based on what i have heard tonight and based on the complexities of the issue, it doesn't sound right to me that this is something that can be handled in 90 days. if it can result in such draconian actions as people being hit with a severe fine, that is not been job of government. i never like to