comment on this item. if there are no other questions, this item is before the committee. supervisor kim: i just want to say, i do appreciate the work that has gone into this contract. i just want to state that a very much support the outcome of what has occurred. as someone that worked with young people, i think that we have an inadequate number of services and also land parcels that are dedicated to serving youth. i know that this will greatly benefit both the city and also the district representative i am a huge fan of the boys and girls clubs in both the tenderloin and treasure island. their clubhouses are amazing centers for the community. i think this is a value added. to me, the processes where i got hung up, and i am kind of being a stickler peter i really do not want to see a person go out again that is not competitively bid. later, at a member of the public or another nonprofit is to ask

why i supported something, a measure, i do not really have that to go back upon. some of the amendments put in, the percentages do not seem to have an actual measurement or calculation. i understand it was through negotiation, but there was a competitively bid process, i think there would be stronger support with this moving forward. i currently plan on supporting this, but because of the process that this went through prior, i am going to make a motion to move this without recommendation to the full board. supervisor chu: thank you, supervisor kim. >> apologies to the city attorney advised there's one additional amendment to the resolution. if i may read that in, and this is whereas clause number four. as i previously read, i described the resident to component of up to 30 units. the change would change that to a residential component of 30

units and not including up to. supervisor chu: thank you for the clarification bit likable commons. i want to thank supervisor kim and want to echo some of the same concerns that i have had with this project from the beginning when it was introduced here. i do think that the comments we made were well received and actually did get implemented in terms of changes to your contract, which i think makes this transaction a lot more palatable compared to where it was before. i like the fact that we have extended the lease used to 40 years, instead of 30 but that provides more security of the public benefit going to the community. in terms of potentially as sale, the fact that we're selling this property at a below market rate and the potential for us to benefit back if this property is ever sold with an upside of 40% or the sharing of 40% of the sale price or 50% based on

commercial participation makes me feel much more comfortable about that lower price or the non-market reprise that we're selling at. it helps, but did not the best. in terms of having development, i think that is a useful change. the buyback option is a no- brainer and a good one to have included in there. there was a public process for the market octavia plan. we have made some of these some of the changes to the contract. i could get comfortable with this item. i will be supporting supervisor kim's motion to send the item forward without recommendation. i do think this is a much better proposal than it was before. some want to appreciate that. i do think that this will be a project that i will support ultimately at the board, so i do want to indicate that as well. we do have a number of amendments to make to the resolution. just a clarification from the

city attorney. most of the changes are reflective, i guess in the underlying contracts, which we do not have to amend, but we're adding in the resolution changes, which will not be a substantive change. correct? ok. i believe that it has been read into the record with those amendments would be to the resolution. and you will provide a copy of those amendments to our clerk. so we have an accurate reading. and we can do the resolution amendments without objection. and then it to the motion to send the item forward without recommendation as amendmeed, we will do that also without objection. thank you. item 11. >> item number 11, ordinance amending the san francisco administrative code sections 21c.2 threw 21c.6 and adding section 21c.7 to specify the city contracts for services that are subject to the city's

prevailing rate of wage requirement, consolidate consistent standards for determining and enforcing prevailing rate of wage requirements in all covered contracts, providing all employment transaction times for workers under successor contracts to all covered contracts, and provide that all work on cover contracts be performed by employees and not independent contractors. supervisor chu: thank you. we have been joined by supervisor wiener, the sponsor of this legislation, a key sponsor. so i would like to offer the supervisor in the opening comments. supervisor wiener: thank you, and happy new year, everyone. so this item was in before the committee in in december. briefly, as a reminder, these are amendments to the prevailing wage ordinance. the few things brought in the types of contracts that are covered. it does a fair amount of cleanup

and consolidation for consistency with in the ordinance. it creates a six-month transition period when the city changes contractors, and it requires that certain contracts that the vendors have employees and not in the pettitte contractors, because defining an employee as an end and the contractor can be a way to get around prevailing wage requirements. at the last hearing, i made a number of amendments to the legislation which it then requires a continuance. that is why we're here today. over the last few weeks, we have been in discussion in around the janitorial aspects of the prevailing wage ordinance with hsa, dph, as well as several nonprofits, centering primarily around the legislation elimination of the

exclusion from the prevailing wage requirements to nonprofits. a very broad exemption to the we did remove that. this has to do with janitorial work. i want to read this in context because when a lot of people here prevailing wage, they assume instead of making minimum wage, $10 an hour, they will not be making $30 or $40 an hour, and they make certain assumptions and generalizations about what prevailing wage means. i want to be very specific for janitors. prevailing wage, i believe, is approximately $12.75 or $12.80 an hour. the distinctions we're talking about our minimum wage, which is a little over $10 an hour now. i believe the nonprofit wage is about $11 an hour. and this is $12.75 approximately an hour. we're not talking about a distinction between low wage and middle-class wages.

we're talking about very low and really, really low. unfortunately, we have seen a race to the bottom line in this country generally, and i think it is completely appropriate to require that hard-working and janitors who are frequently raising their families at be paid something approaching a decent wage. i am offering two amendments today, which i am in formed by the city attorney will not require a continuance. the first is, and i have submitted this one in writing -- page 294. it is a partial reinstatement of the nonprofit exemption, to cover nonprofit organizations who are providing work experience for persons with disabilities. it reads -- a, exclusion peri od, the shall not apply to a

contract with janitorial services with a nonprofit organization to provide work experience for persons with disabilities. this is to address some concerns around some nonprofits that are providing janitorial services foreople who have disabilities and are getting that kind of work experience. the second amendment, which did not make it into what i submitted in writing, so i will read it into the record. simply have -- i think it is already in the legislation. but to be crystal clear, this is not intended to extend prevailing wage requirements to, for example, homeless shelters or organizations that have are doing their own janitorial work internally. better not contacting with the city to provide those services. the legislative digest, the following sentences have been at

it in under the janitorial section. there's no intent to broaden the contract beyond context entered into the city for janitorial services on property owned or leased by the city. for example, no intend to include contracts entered into by the city would not brought it to provide shelter for the homeless, even at the shelter provider is required to keep the promises clean by using janitors or others. so the language that i am asking to be amended in to the ordinance would be at page two, line three. it would to the following -- this section does not extend to a contract beyond those entered into by the city, specifically for janitorial services on property owned or leased by the city. again, i think that is already in there, but just to make it crystal clear, we're putting that sentence in. those are the two amendments that i am proposing. colleagues, i would ask that the amendments be incorporated into the legislation, and i

would ask the colleagues, that you, i hope, support the legislation. supervisor chu: thank you, supervisor wiener. are there any department heads are any other presentations you would be introducing today on this item? supervisor wiener: no. supervisor chu: thank you. for me, i have a couple of questions i would like to ask. the religious clarification question. in terms of the issues with dph and hsa, this is actually, i think it goes to the amendments that you're suggesting, and i think we're on the same page about where we want to go with this and to make sure that it is explicit and clear. the idea was that there certain departments, like dph or hsa that might have contracts with master lease or sro's. there are youth facilities were the primary purpose is not janitorial, but it might be a

different residential use or there is a janitorial component to it. if this were to apply in would require prevailing wage for that, that i think the impact is going to be much larger than we even know at this moment, which would be a big concern for me in terms of the budget and how we would actually do this. i know that from conversations with the sponsor then it is not the intent. if i could ask either dph or hsa to explain where your concerns are and make sure that, from the city attorney's point of view, that that concern is explicitly allayed in the amendments, that would be helpful. >> yes, director contracts of the human services agency. thank you, supervisor chu and supervisor wiener for the admissions and amendments to have made. i think once we incorporate this language into the amended ordinance, and we will certainly work with the city attorney to make sure that the language does meet our needs, then i think

we're fine with our nonprofits and the unintended consequences that the writing of this could have caused. so i think we're in pretty good shape with this amended language, and i would like to thank you for that. supervisor chu: ok, in terms that the contracts you generally see, they would generally be residential facilities that we contract with someone come into the master lease for single individuals or may be individuals where medical services are provided on site a janitorial is included as part of it. it might include a service for the my own the facility themselves and are providing a residential use on that site for youth, for example, were the city my contract for that service where there is a janitorial component to it. but according to this legislative change, this amendment, you think that it is adequate to make sure that, as intended by the author, that is not included, correct? >> yes, we believe we do.

it would cover the shelters, the master lease hotels, and all these supportive housing that the city provides support for which has those services. once we hammer out that language that is sufficient mighting this goes a long way to getting there, then i think it will definitely minimize the impact of this. supervisor chu: great. >> thank you. supervisor chu: this is a question perhaps to olsc. so the legislation does a number of different things. it does make sure that we eliminate any exclusions that deal with conflicts when there is prevailing wage versus underlining negotiated contracts. there is, again, the elimination of the nonprofit exemption, except that we have clarified language for dph and hsa were leading the attack will be much more far-reaching. the component about the small business exception. a retention policy that goes for

90 days to 180 days. and there is also changes in consolidation of general standards and enforcement, which makes sense to me. and setting of the prevailing wage. in terms of the employee requirement, this is a question that i had, because i think the intention of this legislation is to make sure that we are closing in the loopholes with regards to what the worker, whether you are a janitor or whether you are a hauler, ultimately gets paid. we want them to get paid the prevailing wage, because that was the intent of the prevailing wage legislation. my question is, the legislation, the way that we do if it is to say that we cannot have independent contractors, per se, but they have to be employees of the contractor. i am wondering, why is that distinction necessary? why do we say that they have to be an employee? what is the value of that it the intent is to make sure that everyone is being paid the prevailing wage?

i am think you have had experience and can speak to that issue. >> at good morning. manager of the city's office of labor standards enforcement. the prevailing wage ordinance that covers the hauling up by a solid was passed in 2006, and the intent was that the city would set a prevailing wage rate that had to be paid for all truckers to perform that work. for the city. the office of labor standards enforcement has twice audited that contract, and there is a loophole in that contract that, excuse the pun, but contractor driving a mack truck through. that is the definition of employee in that ordinance exempts managerial or

supervisory role persons, a person who exercises those duties. so, whereas the prevailing wage is paid to workers who are in an employer/employee relationship, truckers who are owner- operators, and at this point the current contractor only offers employment opportunities to owner-operators, are paid by the load instead of by the hour at a rate that, when you convert it to hourly, is more than the prevailing wage rate, but that owner-operator it is responsible for their own expenses, the cost of their vehicle, the insurance on their vehicle, the cost of gas, tolls, licensing, and more. and when you take out the owner-

operator's expenses, what is left for wages and benefits or the prevailing wage rate, it is significantly less than the prevailing wage. we have let of examples where it is no more than minimum wage. so the whole intent of the prevailing wage ordinance is undermined, and it is only by refighting employee -- refighting employee that we're able to ensure that the prevailing wage and benefit is actually paid to the person that performs that work. so in the amendment, you will see that the prevailing wage must be paid to any individual who performs work under the contract, and they must be in an employer/employee relationship to try to address that loophole.

supervisor chu: i guess the definitions are little bit fuzzy in my head. the way that i am is seeing it, if you are currently an employer and individuals who work for you, you can have an individual who is an employee of you. you provide benefits, salary, file tax returns, summit taxes, all these other things that are part of that relationship. there are other instances, it sounds like, where you have an employer who does not necessarily have employees in that technical world or that technical way, but instead has perhaps an independent contractor, say, with individuals. and they provide services to that relationship. i guess the question is, is it important for us to distinguish that they're actually employees to that employer? or is it that we really want to try to make sure that whatever, even an independent contractor, is being paid should just be the

prevailing wage, net of all the expenses, like the fuel and all these other things that you explain? i guess i am trying to understand why it is tempore to call it an employee/supplier relationship versus we do not really care that it is an independent contractor so long that you get paid the prevailing wage, net of all these other expenses. >> both the state of california division of labor standards enforcement, department of investor relations, and the city have looked at the possibility of setting a prevailing wage rate for owner-operators, which i think addresses your question. and both have declined to do so. i think primarily because there is no -- every owner operator's costs are different and insurance rates are different. , and it is just an impossible enforcement conundrum of how to

enforce a prevailing wage with the owner operator, so there is no rate, and that is why the city now proposes to require the employer/employee relationship. supervisor chu: it sounds like primarily an enforcement issue. >> i believe that is true. supervisor chu: ok. thank you. >> you are welcome. supervisor chu: why don't we go to the budget analyst report. >> we do need to use the

microphone. would you mind using the podium? supervisor chu: the one next to you. >> none of them are working. would you mind using the podium, please? >> good morning. i am from the budget and legislative analyst's office. we updated our report on the proposed revision to the prevailing wage legislation to provide more specific cost estimates. we identified two main areas for costs that result to the revisions to legislation. one was by extending the prevailing wage requirements to nonprofit contractors for a janitorial services and the other was to predefined independent contractors as

employees. for the nonprofit contractors, we did not have the most recent amendment proposed today in terms of excluding services that are provided to disabled individuals but as our estimates will include that. i would have to refer to hsa on what the difference would be. but in terms of looking just at the wage differential between minimum wage for contractors and prevailing wage for janitorial services, per public health services and real estate, we found it to be about $184,000. that does not include a, sort of, other costs. compensation, things that are driven by wages, a percentage of wages. for solid waste contractors, we had a harder time, because we do not actually have data on how many individuals are involved. so we simply compared contract costs, per unit costs, between the contract or their bid for services using employees,

compared to sns trekking, which uses it ended in a contractor's. if you look at the costs and the actual mileage for 2011, we got a cost of $630,000. this would be somewhat inclusive of the differences in costs. there may be other costs associated in terms of the transitional employment requirements, increasing it to six months, if employers were hiring former employees of a prior contractor at a higher rate because there were more senior, but we have no way to quantify or know what those costs would be. supervisor chu: thank you. follow-up question for either the sponsor or to the department. with regard to eliminating the exclusion for the conflicts with the prevailing wage legislation, where there is an underlining negotiated contract of i am wondering, in our current practice, how have we dealt with

that generally? >> could you repeat the question again in the context -- supervisor chu: this is not necessarily just for hsa. it is across the board for the other sectors as well. part of the proposal includes eliminating the exclusion where there is a conflict from what the prevailing wage is stating versus what underlying it negotiated contracts are. i am just wondering, generally, how we have treated that. generally, i imagine we have been paying the negotiated contract amount. >> generally a collective bargaining agreement would take precedence. when negotiating, we honor the collective bargaining agreement. supervisor chu: is this true for some of the other sectors? in addition to the nonprofit world, some of the other areas? >> we have not run into that at all. supervisor chu: ok, so generally

this has not applied except for nonprofits, it sounds like. >> we did actual survey all the departments in terms of whether there agreement paid the collective bargaining wage or prevailing wage. we found in all cases the prevailing wage is what was paid. supervisor chu: ok, thank you. and on the category of off- street parking, i notice that now we have included a number of specific categories. employees at off-street parking on page 6, but it does not specify who or which employee categories were included. now we have included washers, attendants, cashiers, divert folks. have we always included those folks anyway and is this just clarifying by putting them in? >> those classifications are listed in the collective bargaining agreement adopted by the city, so that does not reflect a change. supervisor chu: just a

clarification in the language? >> correct. supervisor chu: ok. colleagues, why don't we open this item up for public comment. are there members of the public who wish to speak on this item, number 11? >> good morning, supervisors because attorney for local 350. i just wanted to emphasize, in response to the question that keeps coming up, and that is the difficulty of having independent contractors and having the prevailing wage ordinance. the problem, as pointed out, it is and possible -- it is not only an impossibility that this city that has dealt with, but the state has dealt with it, to apply a prevailing wage ordinance to persons or not employees. there is no level playing field. there's no place there. the way an independent contractor is compensated has no relationship to wages. an independent contractor is

compensated with a contract price for doing the job plus the additional costs. in regard to one contract that has done a lot of attention, the costs and all were the costs of the truck, cost of insurance, cost of licensing, and all the other things did you at all that up, is on a fairly large amount of money. but when you subtract all the costs of doing business from that, disease and in well below what would be the prevailing wage because of the intent here is to try to establish a solid base from which to establish parity in terms of how much employees are paid. again, when the state of california was confronted with this, specifically in regard to building trades issues, it was the same response. we cannot form a prevailing wage. we cannot enforce a prevailing wage with order to input the contractors, because we're not dealing with a wage. [bell rings] supervisor chu: i have a follow- up question to have there been attempts to set ablaze in might be unwieldy, but i am wondering

if you apply a sort of prevailing wage on independent contractors that say the prevailing wage shall be a certain level, but you have to provide information about how much is being net it out for some of these other expenses -- has that been part of the conversation? clearly in a calling situation, you know, the vehicle, the fuel, some of the inherit costs that would otherwise not be borne by that employee or the person that they were employees of the business, has there been a conversation are wrong, does it make sense to say that what we're really getting at is that that person should be paid the prevailing wage, and we want to make sure that if you back out all these other extraneous our cost of doing business items, that you still are being paid a prevailing wage? has that been talked about? >> knowing that this is a potential lightning rod in this area, there has been a lot of attention to that question. it is not just a question of semantics