>> 2012 small business commission meeting. the meeting is being called to order. guerdoare would like to remind everyone to turn those cellphone off or on to silent. the first item is roll call.

goo[malkoroll call] next item. you are on item number two, approval of the meeting minutes, the march 12, 2012 minute superior -- minutes. >> all in favor? >> aye. >> item 3, general public comment. this allows members of the public to speak on issues and suggest new items. please note this is for items

not on the agenda. comments will be limited to 3 minutes. >> what i am here to speak gone, it is good to see supervisor winner here, and not about reducing the amount of restaurants, it was so insane. i have a situation not too long ago where there was an ice cream place before, and my clients wanted to put new frozen yogurt, and they said, that is not the there was a lot of stuff going on like that, so i am so proud of supervisor wiener to have gotten that legislation through. i am bothered on north beach

were conditional use is still required, i was hoping it would not agree, but i think we should look into, planning has done it before they had administrative hearings. you're looking between four months. it could take as long as six or nine months to get a conditional use hearing, plus fees. it can really get up there, so i would like to see some action done. we need to help small business. that is what you are here for. that is what i am here for your you. we will be trying to do something about that, so i wanted to say a few words about that, and thank you for giving

me a few minutes to speak about that. >> thank you very much. any other public comments not on today's's agenda. seeing none, public comment is closed. next item, please. >> you are now on item number four, discussion of possible action for the board of supervisors, public works code mobile food drug location. this is an ordinance to amend section 1.4852 modified permissible distance between mobile food facilities and schools, and to adopt environmental findings in your binder, which is the ordinance texas, and we have a presentation by supervisors got leaner -- supervisor scott weiner.

>> i believe the next item is also involved, if i not mistaken. are they called separately? >> you can combine the items. >> let's call the items together. >> item 5 is discussion of possible action to make recommendations for the board of supervisors, mobile food facilities of certain institutions and special districts. this is an ordinance amending to allow mobile food facilities of certain types of institutions, subject to specified conditions. it also makes findings of consistency with the general plan.

explanatory documents, and we have supervisors got leaner mr. scott weiner -- we have supervisor scott weiner. >> i think they will move forward together, so thank you, commissioners, for giving me the opportunity to address your about these pieces of legislation. our small-business food scene is a very important one in the city. it creates a lot of jobs and entrepreneurship opportunities for people who may not have those opportunities otherwise, and it also adds to the vibrant and diversity of our city. he mentioned the legislation sponsoring to simplify our permitting process for food and beverage establishments, which the food committee unanimously

recommended to the board, but before you today are two pieces of legislation i am sponsoring relating to food trucks, and food trucks are a key part of the food and small business sector in this city, and last year, i got involved, and we have some attention, particularly downtown and in union square, and i got involved to see if we could come up with a solution that treats everyone fairly, recognizes the important role it plays in our economy but also recognizes food trucks are an important part, and we want to make sure we have rules to allow food trucks to exist and flourish while we treat them

fairly, so the pieces of legislation are pieces of that. i continue to have a working group of my office is facilitated with various stakeholders, including food truck operators, a property owners, to see whahow we might t to take a look at our broader permits to be as fair as possible. i anticipate the two and will be able to do a lot of things administratively, and there are some legislative ideas and that may end up getting attached to the public works current legislation before you today. i am working on those, but that is in flux up a moment. the pieces of legislation before you today, number one, the works code amendment would change the required distance of food trucks on our streets for middle schools and high schools.

about five years ago, the board of supervisors adopted a well- intended legislation i believe overshot the required food trucks 3/5 team hundred feet or three city blocks from each and every middle school and high school in the city. three blocks in an urban setting is a lot, and if you look out of my -- at a map, there are parts of the city were a significant swath of the neighborhood is completely off limits to any food trucks being on the street, so my legislation would reduce about to one city block or approximately 500 feet. i am amending the to bring it back. i thought a city block would be

easier to enforce, but the department of public works feels that it should be a number of seat, so we would change it to 500 feet. i have had numerous meetings with the school districts and the food and fitness council, formerly known as snack pack, which is led by parents and others concerned about student nutrition, and we are hoping to get some kind of consensus with the parent advocates. the policy goes behind the legislation enacted five years ago are to protect those student lunch program, so we have students not attempted to leave campus, so we have food trucks hauling directly in front of schools, and to improve student nutrition. while i agree food trucks should

not be able to go directly in front of schools, 1,500 feet is too far. in addition, we know that food trucks now are a lot healthier choices, so you can not classify them all as roche coaches. we have gotten data from the school district about which campuses are actually open campuses were kids are allowed to leave school for lunch in terms of protecting the school lunch program. it turns out all middle schools are closed campuses. there is not a single public middle school where a kid can leave campus for lunch. when you look up a high schools that are completely open, it

does about six high schools, so what we are in discussion about this may be having 500 feet for middle schools and high schools except for those five or six and a larger distance for the five or six, and the current discussion is happening, and i am hoping within the next week or so we will have a consensus or something approaching a consensus that we can move forward together. with respect to the other legislation and the amendments to the planning code, if you are now no hospital campus or a school in -- a high school campus of happens to be non- commercial, even though you have portions that are not near any residences or commercial districts, you are not allowed to " of food trucks -- to put a food truck on your campus

because you are not now commercial. this would correct that and allow medical and college campuses to give notice to neighbors if they choose to put a food truck on their campus. this is fairly common sense, and we are seeing they are talking about how they cannot afford to have a comprehensive set cafeteria they had before, and they would like the option of having it on campus a couple weeks and giving students the option of a couple of choices. i know senator -- i know san francisco state takes a position and this does not affect them because they are not bound by city's zoning. that may be the case, but there are certainly campuses where this would have a positive

impact, so those are the pieces of legislation. i would be happy to hear your opinions. >> i just want to say good job. >> out sounds perfectly reasonable to me. i especially like no one city block awaybecause of the mission or other parts, i like this. >> thank you. one of the things i am trying to accomplish, we want to protect our kids and the school lunch program, but neighborhoods are a diverse place. if you look up places like our neighborhood, you have the heart of castro street swiswith busins 500 feet away, and we support

our schools, and they need to recognize they are part of the neighborhood, so we need to live together, and i think about accomplishes it. >> we have mixed views campuses where you have lots of residential and university settings, so i imagine this would allow food trucks to be in this area as well. >> any other commissioner, sir? >> i want to say thank you. finally, this makes sense. thank you very much. >> public comment, and would anyone from the public wish to speak on item #4 and item #5 from month the commission will be taking a public comments on items four and item five. public comment will be limited

to 3 minutes. it >> thank you for having me here today. thank you for engaging in this conversation thank you for your legislation. supervisor wiener touched on this. we started with nine vendors. today we have 16 full-time employees, and nine part-time employees. we worked with over 100 vendors every week, the people and playing between six and -- each one employing between six and 12 employees. one thing this legislation will do is encourage lenders to not target the financial district as a destination and give some other opportunities, so decrease pressure between britain and mortar businesses and food trucks. thank you, and we appreciate your support.

>> thank you. any other public comment? seeing none, public comment is closed. any other commissioner comment? seeing none, do we have on motion? item #4 and item number five. it >> you need to take a different motion for each item. >> do we have a motion for item #4? >> i move we recommend and for g locations. -- food truck locations. >> i will second. >> roll call. >> can i clarify, do we want to

include the comments supervisor wiener mention that we were planning to amend footage versus city blocks? did you want to include that in your motion that you support fathat? on the motion to support -- [calling votes] commissioners, that passes, 6-0. >> next item, do we have a motion for item number five. as i moved and we are proven recommend to the board of supervisors 120125 now. >> second. but we have a motion to support.

[calling votes] the motion passes, six-00 yo. >> item 6, a presentation by ted egan, discussion and possible action item. we have several items in your package, followed by some public comment we've received by e- mail, which has been forwarded to you, and included in the package. we also have a copy of power cords from several recommendations made previously. >> i do not think it will have

anything you have not seen, but it will be put together a slightly different. >> commissioners, while mr. egan is putting up his presentation, in the packet is the first presentation presented to the small-business group on march 12, and behind it is the presentation that was provided to the small business group last friday on april 6. that's what i will be going through today is the highlight of those. good evening, commissioners.

i would like to update your commission on the work we have been engaged in and payroll tax reform. we have been working for several months examining potential alternatives to the payroll tax. we were directed to do so by nearly and board member chiu region -- by ed lee. it is possible to replace the payroll tax with a different tax cut would solve some of the problems the payroll tax has triggered we are still of the stage of developing an initial ideas. they will have a decision about which proposal they would like to go forward with. i will share the details, and i

am happy to answer questions you have. let me speak to the payroll tax we currently have, which is the 1.5% flat tax. this tax has been criticized on economic grounds, on the grounds it is a volatile tax and equity grounds. in terms of economic impact, it has been called a job killer, and while but maybe a consideration, it is true it is a tax cut directly falls to the cost of neighboring san francisco, and sends a direct signal but discourages hiring, and that is one major feature that is not good for the economy. another one that is important,

the payroll tax is not just of burden on the economy. the city has chosen to attack something but is growing very rapidly. in the past several years, we have had a significant increase in revenue, like when we abandoned the gross receipts a role in the early 2000's, our business tax revenue was $72 million. last year it was $400 million, so this has been a very rapidly growing source of revenue, and an increasing source of cost to the business community. we believe a gross receipts taxes base grows more slowly, so if we were to switch, in the future we would be collecting

less revenue than we would if we had a payroll tax, and that is the second reason it is not only a high burden, and we believe san francisco has the highest tax burden in any state in california. it is secondly, the payroll tax has been very volatile. the red line shows the number of employees in san francisco indexed to 1987 for 20 years and the dotted blue line is payroll in the city over the same period. while payroll has grown and jobs haven't grown, another way to look at it is, that payroll has been highly volatile and jobs have not been highly volatile. from a budgeting and tax policy point of view, it's better to have a stable source of revenue you can rely on than an unstable highly volatile source of revenue. many years, i would say when we do revenue forecasting in the

controllers office, the payroll tax is probably one of the hardest revenue streams to forecast and we've been some years positively been surprised by 10% increases in payroll tax we weren't expecting. we've also seen 10% declines in payroll tax we weren't expecting and both of those things tend to send the budget process into crisis mode. payroll tax at $400 million a year, almost all of which goes to the general fund, is the general fund's second largest source of revenue. so the extent to which we could make our second largest source of revenue a more stable source of revenue, that would be good from a budgeting point of view. and then finally there's the equity angle and of course there are lots of ways to talk about equity when it comes to taxes but one of the features that's true about san francisco's tax is that the payroll tax is paid by a very small member of businesses. it used to be about 8,000. in 2010, the most recent data i

have now, it's about 7500 businesses that pay the payroll tax out of close to 100,000 businesses that are rec stejed in the -- registered in the city so well less than 10% of all businesses in san francisco pay this tax. many of them don't pay the tax because they're small businesses that fall below the small business exclusion but that's not the only reason. about 60,000 businesses in the city are sole proprietors or partnerships that don't officially have payroll and they don't pay the payroll tax regardless of how much they earn, regardless of their gross receipts. what they earn is considered excluded from the payroll tax. the state of california constitutionally prohibits us from taxing certain banks and insurers and other financial corporations. the city has chosen not to tax non-profits. we have also designed a number of exclusions to the payroll tax for clean tech businesses or biotechnology businesses, the

mid market payroll tax exclusion from last year is an example of this that reduces the base. we have now an exclusion for the stock base compensation in pre i.p.o. companies and each of these policy measures has served to carve out more and more of the business community from the payroll tax but the biggest reason of 90% that don't pay is simply the sole proprietors and partners whose compensation soowners and woirks is not considered payroll. that's something we would look to address to the payroll tax. the two alternatives we think make progress to a different extent on all three of these issues -- on the jobs front, on the stability side and the equity side. let me talk first about the first alternative that i think we've been doing the bulk of our modeling and analysis on mainly because it's the trickiest.

and this one involved replacing the city's payroll tax completely over a phase-in period with a gross receipts tax. the payroll tax is a tax on the compensation that businesses pay to their employees. a gross receipts tax is a tax on essentially the revenues of businesses, the top line revenues of businesses. so unlike a payroll tax, it doesn't directly add to the cost of labor. it doesn't send a clear a signal not to add jobs or create jobs in san francisco. i should say that as we looked across the practices of local government finance and other cities in california, san francisco is the only city with a payroll tax as its form of business tax. about 35 of the top 50 largest cities in california use a gross receipts tax so it's a very common tax for cities in california. the key features of our gross receipts tax is, first of all,

it is a revenue neutral proposal which is to say that it's designed to generate just the revenue that the payroll tax is currently generating, no more, no less. secondly, we are envisioning a phase-in period in which the gross receipts tax is phased in over a period of time and the payroll tax is phased out. if we were to adopt this proposal or the other that i'll share with you, this would need to be approved by the voters. one of the things driving our time line is this november, because there is a board of supervisors election, under prop 218, the city could pass a general tax increase with a simple majority vote and that's the only time that could take place. so we would be developing -- the city would be developing one of these proposals or another proposal for the november ballot for a majority vote. we would, in that proposal, ha