chunk is federal funds. the great majority is federal funds. i do not know to what extent we have others. supervisor avalos: are these funding sources accounted for? are we looking to close any gaps? >> this will be the last piece to funding this project. supervisor chu: thank you. colleagues, we have the items before us. >> madam chair, supervisor at avalos, if you could refer to page 26 of our report, in the bottom left corner, there is a breakdown for the muni system ready replacement project for all the different funding sources. >supervisor chu: thank you for that additional information. colleagues, can we except the recommendations? without objection. colleagues, on the items to four to the full board with

recommendations, item five and 8, and to forward to the full board with recommendations as amended, items 6 and 7. can you send those out without objection? we will do that. and if i can make a request to the department to make sure that you submit all of the amended red line versions to our court by the end of the day today so that we can have it for today's meeting. 5:00. thank you. item nine. >> item 9. ordinance: 1) recognizing small business month in may 2012; 2) amending the san francisco planning and building codes to waive fees for the month of may for certain façade improvements; 3) making findings including environmental findings, findings of consistency with the general plan, and priority policies of planning code section 101.1. supervisor chu: thank you. this is an item that i have pulled together. it is a fairly simple one. it is a small business permit

fee waiver for the month of may which is all this this month. we have a number of individuals here to answer any questions. in particular, i want to thank chris from the office of small business, as well as nicole from our core management area. this is a permit fee waiver for awning replacements and installation of pedestrian-the lighting. the waivers apply only to permits issued in the month of may, which is the city's traditionally celebrated small- business month. waivers apply only to small businesses defined as 100 or fewer employees. this was a recommendation that was put to us and we have accepted. the rationale behind this is on the replacements and storefront improvements really do help to create a more vibrant commercial corridor area and encourages residents and visitors to feel welcome in the neighborhood. in terms of the rationale

behind of the best in the lighting, it is just to make sure we are improving public safety as we're moving forward. there are many layers of fees through dbi and the planning department. there are separate fees for the awning covers, replete cent of structures, and of course, if there is wording. these can add up to hundreds of dollars for most -- even the most basic science. this item is simply a fee waiver for the month of may to allow for easier movement forward of awning replacement and insulation of small or pedestrian-level lighting. the fee waiver legislation has been approved and supported by the small business commission. dbi's coded by surry counsel and the building inspection commission and plans department as well. in terms of the financial impact, we believe it will be relatively small. in the last three years, the average revenue for on a permit for dbi in the month of may was $12,000, so it is a relatively

small amount. right now, we believe there are an outstanding projects that might be coming in the month of may in the excelsior district, which would be great to have in place. in terms of outreach, which we have often heard from this committee about how it is we would try to spread the word, we would be working with office of small business and zero two d and have already translated fires in place. he hoped to work with supervisors' offices to get the word out to aren't local merchants associations. this is a time-limit proposal and i hope that my colleagues will be supportive. no presentation from the department at this time, but they are available for questions. this item also does not have a budget analyst report given the small the impact of this legislation. colleagues, if there any questions? if not, we can go to public comment. let's open this up to public comment. any members of the public at wish to speak on item 9?

>> good morning, everybody. my name is nicole. i am the corridor manager at excelsior action group. we are a community and economic development organization. we were to revitalize the corridor of mission street and the excelsior. i am here today to strongly support this fee waiver program for our small businesses in the month of may. working daily with low incomes small businesses as a court or manager, i realize they have very little working capital and for them, a facade improvement is a luxury. they do not get the sought improvements for years if not decades. the impact really shows. our commercial corridor right now is dirty, dated, and in general, has a blighted appearance. residents note this as well. in a community needs session that we conducted in october

2011, we found storefront appeared as a top concern for people in the excelsior. there are 13 businesses that will benefit directly from this program. 11 of them are enrolled in the excelsior action groups, and an additional two are enrolled in the sf shine passat improvement program. both of these programs are matching programs. even though the improvements generally come from public funds, the businesses are very much invested in their facade improvements as well. in conclusion, i very much support this and hope that we can make this happen for our businesses. thank you. supervisor chu: thank you. any other members of the public that would like to speak on item 9? seeing none, public comment is closed. supervisor kim? supervisor kim: i just want to express my support for this

resolution. i think it is important comments as we talk about supporting our small businesses, that we recognize them in more of the ways than one in the month of may. i appreciate this coming before us. in particular, not just because we are trying to support small businesses, but this will also support neighborhoods by increasing lighting and passat improvements to our neighborhoods, which i know is a big issue all across the city. so i am pleased to see this before us and am happy to support this. supervisor chu: thank you. i also wanted to provide you with an opportunity to say anything if you wanted to, chris, bill. >> i could speak briefly. on march 12, 2012, the commission voted 7-0 to recommend approval. we found waiving these fees will

serve as incentive for many businesses, especially those that operate in low profit margins, to replace these awnings and replace lighting. i did want to note this is an opportunity to offer an incentive to businesses that cannot typically qualify for tax credits or other incentives the city offers. we just wanted to reiterate our support and offered to help without reach and other assistance. supervisor chu: thank you. >> bill strong with the department of building direction. we are excited about supporting this on behalf of small businesses. we want people to have permits for improvements they are making. we think this is an excellent attempt at the program. we look forward to supporting it. thank you. supervisor chu: we have for public comment. do we have a motion to send the item forward?

we have a motion to send item forward with recommendations. i want to again thank regina and chris from dbi. without objection. thank you. item 10. >> item 10. ordinance amending the san francisco administrative code by adding chapter 14c, sections 14c.1 through 14c.3 to provide for a downward adjustment in price or upward adjustment in rating of a proposal or bid from a california benefit corporation for a competitively- solicited city contract. supervisor chu: thank you. this was an item that was before us three weeks ago at this committee. i would like to allow supervisor chu -- president chu, to say a few words. >> i want to thank all of the city staffers have worked hard since last year to get this legislation to where it is today. this legislation has probably been revised in its entirety since its original introduction. i want to thank the human rights

commission and particularly the director and her staff, who are here to say a few words on it. i want to think the small business commission that spent a number of meetings talking about this. i want to thank oca for their review of this, and i also want to thank the budget analyst. we have incorporated recommendations that are the rose has made with regard to the legislation. i want to take a moment and do a quick summary of where we are because it is different from what we had initially proposed last year. with regards to who would potentially benefits from a benefit corporation discount, we have made it clear, the lbe world will not be touched. the matter your size, if you are competing for a bid, there will not be a benefit corporation discount provided that would

potentially knock out an lbe, all things being equal. i know there were issues around contracting. we did put in an amendment to also make clear no nonprofit contractor would lose a contract to the benefit corporation that receive a discount. there were some questions raised about whether non-san francisco benefit corporations could potentially receive a discount and beat out a san francisco business that was not either and lbe or nonprofit. we have included language to insure that does not happen. at the last meeting, three weeks ago, supervisor avalos brought up the idea of the so-called chevron subsidiary issue, the possibility that a subsidiary that was a benefit corporation could still be potentially controlled by a larger parent company that was not a benefit corporation to address that

concern, we have put in language to explicitly not permit those types of subsidiaries to apply for this benefit. in addition to those changes, we have also made it clear, this is a discount program that would only apply to contracts that less than $10 million in size, because that was raised by some of our enterprise departments as a concern. colleagues, as you know, we have significantly reduced the discount size. initially, i propose a% discount. at about a 4% discount. i have also initially proposed if you were an lbe and benefit corporation, you could receive 12% of the discount. that additional 2% that lbe's receive is no longer part of the legislation. also concerns raised by the budget analyst and several of the committee members about how we ensure benefit corporations are doing the right thing, providing the types of benefits

to the world and our community that we want. we have included a number of amendments to address that. first of all, there is now a requirement that any business that is applying for this discount need to have been incorporated as a benefit corp. for at least six months preceding the application of the discount. on top of that, this legislation does not go into effect for three months, to give the agencies time to adapt to the possible use of this discount. one thing that was suggested by the budget analyst was to provide hrc with a greater role of ensuring the verification of corporate statuses. there are two additional amendments placed on this legislation to address that. hrc will have a role in not verifying the corporate state. in addition, there would promulgate regulations to insure third-party verify hours that are part of the benefit court

industry will be required -- better corporation will be required to give third-party for vacation. this is comparable to what other states have required of the benefit corporation. finally, we have included amendments to track the impact of this legislation. for the next two years, every six months, hrc, in coordination with the comptroller, will provide an evaluation of the impact of the program, and after the first two years, every year, there will be a similar evaluation done. unless there are any questions, i want to bring of the director theresa sparks to talk about the legislation from her perspective. i want to thank her and her staff for all the work she had done with this. >> good morning, supervisors. i want to thank supervisor chiu's office for the work they

have put on this. with limited staff, we have made some contributions, along with the budget analyst, which makes this a cleaner and easier ordinance to implement. the things we were worried about where the complexity of the verification and complexity of analysis of the benefit of these corporations were providing. this piece of legislation now, which we totally support, actually addresses those issues. one, is it gives thehrc the ability to contact the secretary of state's office to verify these organizations are benefit corporations in good standing, and have been for at least six months. on the back end, it gives us the ability to promulgate rules and regulations to determine the benefit and what the impact of the benefit is overall. we have determined, with an

organization called labs, have discovered -- promulgating now standards -- standardized set of standards for good practice for these types of corporations. organization is called ic alliance. they have published standard setting codes, impact codes, assurance coats, and credibility principles for third-party vera fires. consequently, we can adopt rules and regulations which includes these types of alamance into the requirement of the third-party verify your peer that way, if the organization -- we verify a given third-party verify error has verified the benefit corporation good, then

we know they are all applying the same set of international standards to that evaluation. with those amendments, we think it is a very solid piece of legislation. our lbe's are protected 100% in this legislation, as our san francisco corporations and nonprofits. we support this 100%. happy to answer any questions. supervisor chu: i do have a number of questions, but i would like to ask the budget analyst if he wants to present on any changes made to the reports. >> members of the committee, madam chair, in response to the committee's questions, we had initially looked at construction contracts and give you the estimated impact of that. we also have now looked at professional services contracts

and concluded that you really cannot tell what the impact would be by granting discounts, whether the lbe, benefit corporation, or whatever. of professional services contracts, cost is just one factor. therefore, the city cannot track the result of granting any discounts specifically related to what the additional cost would be because of the various other factors that were determined in a sporting professional services contracts. we also, at the committee's request, looked at various commodities. the only one that was applicable -- we did a small sample of automobiles and found in this small sample there could be an additional cost of about $17,108, 2.9%, based on this sample that we did.

our recommendation, we certainly consider this legislation to be a policy matter for the board. with respect to the involvement of the hrc, presidentchi chiu has incorporated that into the legislation. supervisor chu: for commodities and professional services contracts, this impact contract between $100,000.10000000 dollars -- $100,000 and $10 million. generally, a lot of commodities were purchased below the $100,000 threshold, except for the purchase of vehicles. i am also wondering what the impasse on the muni is. would this apply to muni? i would imagine they purchase more vehicles or replace them with parts that are more expensive compared to what we do generally. so this is perhaps a question to

the sponsor or hrc. does it apply to muni? >> i do not know. let me ask nicole to come up. she is our senior contract compliance officer and acting manager of the division. >> good morning, supervisors. a lot of the contract law to not apply to muni. there are several exceptions. we would have to consult legal counsel if this is one of them. supervisor chu: did we consult with muni in the process of developing this legislation making sure that apartments new with this was? >> we reached out to a number of departments. we had a meeting with you see. i was conferring with staff whether we touch base with muni. vehicle contracts are generally significantly larger than $10 million.

assuming that, this would not impact that. happy to also touch base with you one more time to verify that. supervisor chu: i also believe relative to the purchase of vehicles, muni has replacement parts that are probably higher ticket items, especially with our light rail vehicles. i would hate to add an additional burden on the muni system. >> as you know, hrc does not oversee implementation with muni. they have their own implementation department, and oversee their own implementation. they actually oversee their own chapter 12 of implementation as well. so we have a limited contact with muni. supervisor chu: with regards to the benefit corp., in terms of being a california-registered benefit corp., would this discount applies only to california-based companies, or one other registered benefit corporations outside of the state qualify as well?

>> you would have to register with california. supervisor chu: if a corporation registered with california, it is a requirement to be a california-based company? >> there is not a requirement to be a california-based company, but you need to get this agreement with the state. supervisor chu: so we could be registered with california but it may not be a california benefit corporation? >> correct. again, that is why it was important for us to make sure we have protection for our local san francisco businesses that i described before. supervisor chu: i appreciate that. i know both your office and ours has worked hard to make sure that we have additional lbe programs available, in particular for micro businesses. the one area where i am still concerned about this legislation from a fundamental point of

view, what the legislation would do, we are conferring an economic benefit to a corporation which does the necessarily have a benefit there confirm back to the city and county of san francisco, so we are saying, if you are a registered corporation, registered with the state of california, regardless of whether you are in or out of the state and would you put benefits into california or nevada, we are still going to give you an economic benefit. there is no tie in to the city and county of san francisco. while i appreciate the benefits, making sure that we are not disadvantaging local businesses, i am not sure why we would provide an economic benefit to a company that is outside of our immediate area that is not confirm benefits to the local area. the one example i have with this that makes me feel uneasy is, for example, if we had b

corporation that might be located somewhere outside, whether in a different state or not, that corporation could potentially win out over an employer that is not necessarily san francisco-based, not considered a local business, but could be right across the bay in oakland, which is employing regional employees and perhaps san francisco residents. i am not sure that we would valley that b corporation status as a benefit to the city as i would accompany partner at is employing san francisco residents. that is where i am fundamentally grasping on whether or not this is a good idea. if there is a way to tighten the legislation to do that, where the benefit does confer to san francisco, i would be much more open to it. right now, i do not see how it is we are making sure that we are delivering an economic benefit to a company, wherever

they might be located, and that there is a benefit back to san francisco. i do not see a benefit. >> we have certainly thought about how we end up certify these benefit corporations and how we think about verifying the benefits they are providing. as the director can attest to, it is a very challenging the administrative process to go through this. i do understand the idea of thinking about where this benefit will go, but -- supervisor avalos: we are supposed to have those turned off. >> thank you, mr. rose. supervisor chiu: i know that is difficult from an administrative standpoint. how do we ensure that there is -- if there is a california company that is not a benefit corporation, that you have

preference to provide or allow that to win a contract over a benefit corporation that could be doing business in a different way. we could potentially consider an amendment to again tier who gets to win and when the discount is provided. i asked the director about any thoughts on this specific concern. >> we have discussed it in the past. we have looked at more of a generalized benefit to anyone and to any organization, whether they be san francisco-based or not. our commission raised that as well. that is still one of the remaining issues, and i think, the coalition still has that issue as well. there may be a way to regionalize it. i do not know of the top of my head how that would work. we would defer obviously to the supervisor for his thoughts. again, we have not looked at it from that perspective.

supervisor chu: i would be open to taking a look at how you might be able to narrow it so that you would be able to tie back in the corporation -- b corp. -- that does confer some type of benefit, whether employing san francisco for bay area residents. we know there is a cyclical impact, folks across the bay coming here. they shop here, they dine here. to me, that feels more probable -- palatable than opening up to any corporation, regardless of where you are appear that would be something that i would be interested in exploring. the other thing that i am also wondering about is -- the issue of having a third-party verify your verifying whether the b corporations are providing a benefit. i do not think that addresses which corporations do get

conferred as economic benefit. hopefully, they are a b corporation that infers that benefit back to san francisco or the region. the other thing i wanted to know about was whether you consider it a time limited approach on the legislation. right now, there is a two-year window where we do and the vibration process every six months. given we do not know how large this will balloon, b corporation status is something that is relatively new. we saw 21 corporation that we think have registered with the state. we did a quick search and showed 144 corporations in california. so i did not know what the right answer is and how quickly that will grow and what impact that will mean for us. i wonder if there would be -- if you would be open to a time limit approach, given a few years' worth of history, and then the board would have to affirmatively act given evidence

to react to this bid preference. is this something that you would consider? >> just as a point of clarification, this is something that took us a couple of weeks to figure out. there is a difference between a certified b corporation and a california benefit corporation organized under the state of california. i thing there is only 21 or so organized as california organizations under the california corporation code as benefit corporations. there are many more b corporations, and these third- party vera fires certify companies as b corporations, even though they are not certified benefit corporations. so there are out a large number of those, but the standards upon which they are based are buried. that is why supervisor chu said to make sure that these a california corporation never benefit