>> the meeting of the small business commission. the time is now 5:07 p.m. and the meeting is being called to order. first item, roll call. commissioner president adams. >> here. >> commissioner clyde. >> here. >> commissioner dwight. >> here. >> commissioner dooley. >> here. >> commissioner o'brien. >> here. >> commissioner o'connor is excused. commissioner. >> here. >> thank you, commissioners. item number two. presentation and discussion on the proposed transit sustainability fee. presentation by michael yarne, office of economic and workforce development. >> chris, i want to go back to our roll call if i could really

quick. newly appointed president of this commission, i would like to publicly welcome mark dwight to the commission and we are very excited that you are on our commission and we would like you to say a few words, if you could. >> i'm honored, thank you. i'm mark dwight. i'm the founder of a small business out in dogpatch called rikshaw bag works. i have 22 employees in my business. we manufacture here in san francisco, a variety of bags, tote bags, things of that nature. i, let's see, i'm also the founder of s.f. made which is an organization that supports local manufacturers. it's a not for profit here in the city. and then my only previous experience here in city hall was on the back streets business advisory board two years ago looking at the eastern neighborhood and

neighborhoods and land use policy. it's an honor to be here. president o'brien: thank you, chris. ok. >> good afternoon, commissioners, michael yarne, office of economic and workforce development. commissioner dwight, nice to see you up there. i'm going to try to be brief. it's a somewhat complex topic that we're covering today. i would beg your forgiveness as i move through a large volume of material and my hope is that as, when i complete the presentation of many of your questions will be answered. i'm then more than happy to answer any questions that are left unanswered. with that being said, what i'm presenting tonight is actually not just a fee, it's an entire program. it's the transportation suss sustainability program. this is the effort of four agencies an interagency committee made up of office of economic and workforce development, mta, the

transportation authority, and the san francisco planning department. and it's been a pretty extraordinary two-year effort at this point. the goals of this program are to, in general, better align city practices with citywide policy goals and more specifically, we have an opportunity for the first time ever to harmonize ceqa with our city's 40-year-old transit first policy. by transit first, that policy includes not only transit, but pedestrians, and bicycles, all modes, other than the single-occupant vehicles. this also presents an opportunity to integrate impact fees with the ceqa process. believe it or not in san francisco and most places in the state, when developers or a project sponsor pays an impact fee, there are no ceqa benefits associated with that impact fee. it's almost like the two things live in different universes.

i'll explain more of that later. it's part of an ongoing evident from our office and the planning department to attempt to streamline ceqa review. it can take sometimes, add years to a project approval which makes many new development projects in feasible or extremely difficult to finance. >> and then finally, this presents an extraordinary opportunity to fund a high efficiency transportation improvements that results in measurable mitigations on a citywide basis. in the past, the transit impact development fee has been charged on commercial uses, but it has not been particularly well employed and this is an opportunity to redesign how we spend the money to spend it on what i would call big bang for the buck projects. so those are the goals. what specifically does the program do? it does three things. first, we would be the first city in the state of california to change the way we do

transportation impact analysis under ceqa. we would move away from an auto centric view to a methodology that emphasizes transit trips and transit or actually transit reliability and transit overcrowding specifically. second, this program will create a universal citywide fee that is called the transportation sustainability fee or t.s.f. that would be applied to all commercial and residential uses, net new, net new commercial and residential uses in the future. and then finally, for the first time ever, the city will be doing a 20-year look at all future projected development in the city, residential and commercial. and measuring the affect of that development on the city's transportation system as a whole and also measuring a package of improvements to offset that effect over 20 years. so those are the primary components of this program.

the history, i'm going to try and move quickly through this, but needless to say, this dialogue began in 2003 with the transportation authority recognizing that there was an inconsistent ensi with how we did ceqa work and our transit first policy. for many of you may be aware that our bike plan, for example, was locked in litigation and actually an injunction was issued that did not allow us to put a single bike lane or a bike rack for almost three years. this was a ceqa lawsuit. and the way we do ceqa transportation study, again, is often category to the goals of let's say bike mobility or transit. this was recognized a long time ago out of this 2003 directive, the transportation authority generated a report that recommended replacing l.o.s. with a more nuanced metric that focused on transit and bikes and people. based on that work, this committee that i mentioned, the four agencies got together to

initial a nexus study to understand what sort of fee we could generate to fund those improvements that i mentioned. there was an opportunity in 2009, the state revised its ceqa guidelines. these are the regulatory guidelines that tells cities how to use seekway to do everything including a transportation study. we were able to sit down with their attorney and get language specifically in the state guidelines that allows this project to move forward in san francisco. 2010, we spent the entire year modelling what package of transit and bike and ped and street improvements could we fund that would offset that cumulative projected growth. and it was, actually it was an iterative exercise. we had to test many different packages of improvements. the goal was to get the dollar amount as low as possible. so i will repeat, to get the biggest bang for buck, we did not want to create an expen is receive fee, but we also wanted

to solve a citywide problem. 2011, we finished that study, finished the draft nexus and came up with an expenditure plan to fund that package of improvements. we are now very close to introduction a draft ordinance which would launch this program, although that ordinance as you will learn has to sit for a year and a half to a year and three quarters for e.i.r. to be done. somewhat ironic. just to dig into the details a little bit more. this fee, excuse me, this program would change ceqa methodology. it would adone done automobile and focus on delay and crowding on transit. this would not hobet the city as looking at l.o.s. combh when it does planning. transbay for example, when you're studying how streets would change in the neighborhood, the planning department can still look at

how autos flow and move. it wouldn't live in ceqa anymore. therefore, it wouldn't be subject to ceqa lawsuits. probably of interest to this commission, if with these changes in place, all projects, all new development projects, whether they're retail, whether they're industrial, whether they're residential would be relieved of doing cumulative transportation impact analysis from the date of adoption forward. so to give you an idea, some cases, those studies can take up volumes of paper and add a year to a year and a half to approval processes. it's a big deal. project specific design issues would still be studied. where your curb cut or garage opening is, how the front of your building integrates with the streetscape or bikeway. those site-specific design issues will, of course, still be studied. it's the cumulative analysis that would no longer be necessary. all land uses would pay the fee including residential and,

again, this fee would fund this cumulative system wide package of improvements to solve our problems systematically as opposed to in an ad hoc fashion. the good news, too, for san francisco's transportation projects is that we expect most transportation projects like the bike plan or future versions thereof be r.t., rapid transit, etc., to no longer require cumulative transportation impact analysis. in a few limited cases, there will still need to be studies in those cases where, for example, a bus line or a bike line takes away a lane of traffic such that that traffic might slow down buses, polk for example would be a good example. if a lane was removed on polk, congestion rose to a level where it stalled buses, we would do a special study there. the fee, this is what most businesses and most developers are, of course, concerned about and it is of course, central to the success of this program.

the proposed transportation sustainability fee would replace tidf which is the exist transit impact development fee. once this is adopted, it would no longer be applied. it's a replacement. unlike this, it would extend to all residential uses, not just commercial uses. again, the fee is used to offset the cumulative effects of all of this growth by 20 years by improving the system as a whole. it's base parented on a reasonable share of what each land use contributes to trip generation. it would not be charged to bike or pedestrian project because they do not generate trips that delay or overcrowd transit. in those neighborhoods that have impact fees where there is a transportation component, this new fee would replace those fees. there would be no double charging. so, for example, in the eastern neighborhoods we're about $4 to $5, that fee goes to transportation, this fee would

replace that in its entirety. a project would not be double charged. this fee would be the only universal transportation fee. you should also know that the tidf ordinance itself, that is the ordinance that exists today is being updated as legally required. that ordinance is now five years old. every five years, california law requires that we update the tidf. so you will know and hear soon in the next month or so, a draft of that updated ordinance being introduced. do not mistake that for this. that is sort of housekeeping that the city needs to do. i will note that that fee -- those fee rates on the tidf when it's introduced this spring will be adjusted to account for inflation. there are slight increases in the tidf that will come into effect in the spring. that tidf ordinance against again, once t.s.f. is passed will no longer exist. this is an interim update.

i think that's the most important thing to know. i mentioned an expenditure plan that this fee is going to fund. we expect over the 20-year life of the fee to generate about $630 million. that would be matched with $820 million of other sources that we have identified from local, state, and federal funds to fund a $1.4 billion system wide improvements package. a lot of the improvements that we are funding were studied in the transit effectiveness project, many of you may know that. for example, some of these funds would go to fund the gerrie straight b.r.t., 16th street corridor electrification and upgrade for the eastern neighborhoods. some of these kentucky high performing lines would receive funds from this fee and that's what that additional $820 million refers to. those are other funds, prop k and otherwise that have already been identified. so we're able to leverage those to get a significant amount of

improvement. in this slide here gives you an idea of the fee, where it will be spent. 65% of the majority of the fee will be spent on adding buses oreille cars. that's what that transit headway improvements and service expansion means. so on a line that is heavily used, we will be able to add service to that line and this money may also be used to maintain and repair those cars, rail cars or buses. line b there, transit reliability improvements, that refers to more traditional capital projects like for example the physical b.r.t. lane separation that will be on van he is or geary. on 16th, bus and right-of-way exclusive travel pass for buses on 16th. so then about 2% would go to regional transit providers like bart to upgrade their cars to increase capacity. bart moves a lot of people in the city. a small portion will go to

perch d, bike, and transit programs. we would like it to be larger, but the modeling does not show that those programs have a marked effect on transit. and then this is probably the most important slide for business owners and developers. this piece of the proposed fee rates that you see in front of you. i think the most important thing to note is the introduction of a residential fee. at this point there has been no residential impact fee except for a few of the plan areas like eastern neighbors or residential transportation impact fee. most of the nonresidential fee levels you see here are small increases of what exist today under tidf. p.d.r., production distribution repair actually goes down substantially in the updated nexus. with updated information, we have been able to determine that those businesses generate much less trips because they have a lower employment density in general.

so these are the rates that we'll be applying across the city. remember, this is on net new gross square feet above an 800 square foot threshold. first 800 square feet is effectively free and beyond that, you pay. this is probably the most important for this commission, there are several t.s.f. or transportationsen ability fee discounts that being discussed. one specifically designed for small businesses. i want to get into great detail on that tonight. the first discount is proposed to encourage reduction of residential parking. so in districts that have parking maximums, not minimums like most of the west side, but park maximums, the most transit oriented districts, for developers that voluntarily reduce their parking below those maximums, there is a discussion of providing them an

incentive by rewarding them by waiving fees. for small businesses, there is a policy performance on the table having a conversation with those small business commission and specifically with regina and chris on this trying to develop this idea. i would ask for your actual feedback and input. the current proposal we're considering is a 5,000 square foot wafer. for the first 5,000 square feet of a small business, nonformula retail small business, we would consider waiving the fee in its entirety. the way it's currently proposed, this would mean if you are reusing a vacant 5,000 square foot building that was not retail or was not commercial and you're converting it, that first 5,000 square feet would be free. also being discussed is if you were adding to an existing retail space or an existing p.d.r. space, let's say, taking a .357,000 square foot retail store and making it 4,000, the