china. we will step up our ipr protection and further open up our market. at the same time, we also strongly urge the u.s. side to loosen its export controls to china and also urged the u.s. government to treat the chinese enterprises working in the united states in a fair manner. i think as long as we were close together -- work close together, we will find more and more opportunities and we will find more and more when-when results. -- win-win results. i hope that the seminar could be

a catalyst to boosting cooperation between china and california and san francisco. and help bring more tangible benefits to the economy and the people of both countries of both sides. thank you very much. [applause] >> thank you, vice minister. now we will proceed with the signing ceremony. that will be emceed by [unintelligible] >> [speaking foreign language]

good morning, distinguished guests, ladies and gentlemen. i am from the investment promotion agency. it is my honor to be the emcee of the signing ceremony today. matt have the honor of inviting the distinguished leaders -- may i have the honor of inviting the distinguished leaders to the podium for the signing ceremony? [speaking foreign language] let's invite the hon. avenue sen -- gavin newsom, honorable edwin lee, the hon. minister of the deputy of commerce, the consulate general of china in san francisco, the minister of the embassy of china in the u.s.

[speaking foreign language] and the tenant governor newsome is mcclaren's -- lt. gov. newsom is joining us. [speaking foreign language] for the first year, the

investment promotion energy and china sf to sign a memorandum of understanding. they are recycling the purchase contract. congratulations. [applause] [speaking foreign language] let's invite both to sign the letter of tintend for soybean

purchase -- intent for soybean purchase. congratulations and thank you. [applause] [speaking foreign language] let's invite the china chamber of commerce and paramount. and blue diamond.

the china chamber of commerce and blue diamond growers to sign the project on imports of all men's -- almonds. thank you. congratulations. [speaking foreign language] ladies and gentlemen, this is the end of the signing ceremony. congratulations to the organizations and companies and thanks to the distinguished leaders witnessing the ceremony. thank you very much.

supervisor farrell: think you for joining us for the government audit and oversight committee meeting. i want to thank the court today and members of sfgtv. >> please make sure to silence also found that electronic devices. completed speaker cards and copies of any document should be submitted to the clerk.

the items will appear on the july 17 board of supervisors agenda unless otherwise stated. can recaitem #1, authorizing the of 9800 square feet for 21 months for the department of emergency management and the office of the assessor recorder. president chiu: this is a pretty straightforward resolution to authorize release of 9800 square feet for 21 months for our department of emergency management and the office of the assessor recorder. if the department representatives have any other comment in regards to that? pretty straightforward. supervisor farrell: we will open to public comment. any members of the public wish to comment on this item? public comment is closed. can i entertain a motion for this? president chiu: to the committee

report. supervisor farrell: a motion by president chiu, as a recommendation for the next board of supervisors meeting. without objection. do we have any other items? meeting adjourned. >> good morning. welcome to the city operations and a neighborhood services committee. my name is sean elsbernd, chair of the committee. i am joe -- joined by supervisor carmen chu and supervisor christina olague. mr. clerk, please read item number one. >> hearing to consider the premises to promises transfer of a type 48 on-sale general public

premises liquor license from 2700 16th street to 398 12th street, district 6, 2 mark e. rennie for double rainbow, roadhouse tavern, will serve the communion's or necessity of the people of this city and county of san francisco. supervisor elsbernd: i will gloss over the report, but i will read into the record the department of recommendations on this item. there is no opposition for this transfer from southern station, and the department recommends the following conditions, that sales, service, and consumption and alcoholic beverages shall be commit between 11:00 a.m. and 2:00 a.m. daily. two, no noise it possible under the control of the licensee as defined on the abc-257. 3, the sale of alcoholic beverages for consumption off

premises is prohibited. four, loitering is prohibited under the control of the licensee as depicted on the abc- 257. petitioner shall utilize electronic surveillance and reporting income and that is able to view all exits and entry points of the exterior of the premises. recording shall be operational at all time. recordings shall be maintained and kept for a minimum of seven days and will be made available to law enforcement on-demand. 6, but petitioner shall not make structural changes to the interior without written approval. 7, licensee shall provide security is needed. security personnel shall be readily identifiable as security by wearing distinctive clothing with a logo with the establishment. number 8, the exterior of the premises to be equipped with lighting and sufficient power to make easily discernible the appearance and conduct of all persons. such lighting shall not disturb

the normal privacy and use of neighboring residences. those are the conditions. the staff report makes clear that there is no record of the california department of alcoholic beverage control, no record with california, no letters of support, no letters of protest but a departmental recommendation is that there's no opposition from southern station. is there any public comment? >> thank you, mr. chair and supervisors. my name is mark e. rennie. i am here today with bruce macdonald, the general manager and managing partner. we also had the owner of the property. i am kind of excited about this one. this goes back to 1960, buzz's shamrock tavern an inn. this is a large outdoor area. i had to laugh, saying what they

do, keep it being the best keep them outside? it was started in the 1980's and is much beloved. it is probably the largest outdoor patio in san francisco, with 12-foot walls around it and a beautiful garden. a large growing facility. i previously handed out a biographer y for mr. mcdonald. going back to 1999, the corner of 21st and mission was pretty scary. mr. mcdonald went in and built the cinema, which is then on the top 100 list for the last 14 years. it is a beautiful establishment, extremely well managed from a much beloved, and the neighborhood has grown up around it. going back 14 years, it was risky to go in there and build something with $30 entrees. i love the comment that you have on this handout.

it was, you are more likely to get your car broken into then find a valet to take your car in the neighborhood at that point. that said, they are going to maintain the outdoor cafe. mr. mcdonnell is going to bring a much larger food component into it. it is going to be a tavern and a food operation, and the food will be excellent. mr. mcdonald also owns, at the corner of sixth and market, another sketchy neighborhood, but he built show dogs down there, and it is doing very well, a beautiful place. he was there before the crowd. i think i will go and do some real estate purchases in the neighborhood. because i tell you, he seems to be about three, four, five years ahead of everybody else. he is available for comment. we're fine with the police recommendation. we ask that you pass this along to the full board for a vote. thank you.

>> we did read through the report. anything you would like to add? ok, thank you. any other public comment? great, we will close public comment. supervisor chu: motion to accept the item with the conditions in the record. supervisor elsbernd: can we take that without objection? that will be the order. good luck. any other items before the committee? >> there are no more items. supervisor elsbernd: we are adjourned.

supervisor chu: welcome to a special meeting of the budget and finance subcommittee. do you have any announcements? >> please silence all cell phones and electronic devices. completed speaker cards and

copies of any documents included as part of the file should be submitted to the clerk. items acted upon today will appear on the july 24, 2012 board of supervisors agenda unless otherwise stated. supervisor chu: thank you very much. would you call items one and a wheel? >> item 1, ordinance amending the business and tax regulation code to enact new article 12 a-1 to impose gross receipts tax and gross expense tax on persons engaging in business activities in san francisco, amending article 12 a to reduce business payroll expense tax rates based on the amount of gross receipts tax collected under article 12- a-1, and in the current business registration fee to generate $13 million in additional revenue. item two, motion ordering

submitted to the voters and ordinance amending the business and tax regulations code to impose a gross receipts tax and gross expense tax on persons engaging in expenses activities in san francisco, amending the ordinance to reduce business payroll expense tax rates based on the amount of gross receipts tax collected, amend the article to establish business registration fees based on gross receipts in gross expenses, amid the current business registration fees to generate $40 million in additional revenue. supervisor chu: thank you very much for reading both items. i know these are brought by a number of sponsors. i just ask whether any members of the committee would like to speak on the items before we begin. i just want to note we have been joined also by the president of the board. supervisor chiu. supervisor chiu: thank you, and i appreciate your consideration of this matter. there are a number of proposals

which have been moved forward to contemplate how we reform our current payroll tax to a gross receipts tax as well as increases to our business license fee. i want to thank supervisors avalos for his leadership as well as mayor lee for the proposal he and i have been working on. i want thank our city economist for the tremendous amount of work that they have done over the past six months to move this forward. colleagues, today, there are a number of technical amendments that i would like to make to the measure that mayor lee and i had, and i believe supervisor avalos will be making the same technical changes to his version. in general, they are language cleanups, technical corrections to definitions of financial services, other clerical corrections. if it makes sense to have

controller walk through some of the specifics, i would suggest that, but otherwise, these are mostly technical amendments to be hopefully adopted today. it is my hope we can continue this item -- these items to next week's hearing, at which time we will hopefully have more clarity about whether we can move forward with one measure as opposed to to a video or have a bit more of a robust discussion on these different matters. supervisor chu: thank you. for members of these public -- for members of the public, both these items have been called. i know a number of amendments will likely be proposed today, which will require we continue these items. rather than go forward with a full presentation today, my intention is that we will be going through the full presentation of the specific proposals in the coming week. supervisor avalos: thank you.

just want to thank my co- sponsors for this measure. very similar to the mayor's measure. we are proposing replacing in great part the payroll tax with a gross receipts tax, a new version of our business tax that will not be taxing jobs and job creation in san francisco. this work could not be done without -- this measure could not be done without the great work of the comptroller's office -- the controller's office that are reaching out to the business community to get input on how to craft a measure that can really achieve its objectives, lifting up our job creation abilities in san francisco and looking at how to create a fair tax structure in the city. i will not go into detail about the measure, but i want to make sure that both the measure i have and my colleagues are

supporting are really looking at how to support small businesses in san francisco. we have an exemption of businesses whose revenues below $1 million will be exempt from any of the gross receipts tax provision. that is something i think is significant as we are moving forward as a city. i am looking at how we can have a measure that can generate some revenue to meet the increasing demands on our public infrastructure and that is increasing when our economy is also burgeoning. that is something i think we will have a clear discussion about in the weeks to come. i am hopeful we can have one measure that can go to the ballot, and, hopefully, it is one that will have broad support between the mayor's office, the mayor, and the board of supervisors, the business community and non-business community and labor groups supporting the measure i am working on as well. that would be great for the

passage of the measure as we go forward. i have. i would like to submit a motion to accept these technical amendments, and our controller is here to talk about what we are introducing today. these technical aspects of the new version. i do believe there was discussion about where my measure is silent on the business tax exemptions that were enacted or have been enacted in the past eight years or so, the mid-market exemptions -- my measure is actually currently silent on this, meaning the it does not actually actively take them away. there is a phase-out of the payroll aspect of our business tax. my measure does not mention taking away the exemptions, but they will be phased out.

but i believe there is still discussion about continuing those exemptions in the newest version, and i am open to that as a way to actually come to some consensus on a measure going forward. >> thank you -- supervisor chu: thank you. i would ask the controller's office to speak to the specific amendments. it sounds like they are acceptable for both items one and two, so i would like the office to walk through those changes for us. >> good morning, supervisors. we have provided a one-page summary to the committee members, which is also available to the public on the podium of the amendments that have been moved to both measures today. generally speaking, we have organized these into three different buckets, so there are general changes throughout. clean up language, correcting

typos, clarify definitions versus the amendments introduced a month ago. there are higher registration fees than the initial introduce measures. it would have been paid in fiscal year 2015 -- 2014-2015. although the licensees differ, the schedule of them differs by one year. the phase i and formula, which is critical to the measure had technical errors in the math. those have been corrected now in both measures. secondly, there are changes to the treatment of administrative offices. again in the measures that are before you, if a company finds itself defined as an

administrative office, it ends up paying administrative office tax. we have placed titers greens regarding the definition of what is an administrative office for purposes of that tax. it now not only requires 50% of a company's payroll expense, but it also has u.s. receipts of over $1 billion and over 1000 employees. we further in this section more clearly define examples of what constitutes an administrative function and what is not an administrative function to provide fleet into greater clarity to taxpayers and make the measure more straightforward to administer for the treasurer's office for purposes of the 50% test. we have excluded stock-based compensation from the payroll based. that is for purposes of determining whether you are an administrative office or not. it does not change the

underlying tax, so stock compensation remains part of the base for the tax itself should a company find itself in this group. leslie, general clarifications that the administrative office tax shall be calculated on the same means basically as the current payroll tax. there are other changes throughout to clarify or amend what constitutes a taxable receipts, including some additional exclusions and definitions versus the introduction 30 days ago. first of all, a clarification that an individual doing business -- or that an individual in the city doing nothing but managing their own money does not become a taxpayer. we heard this as a possibility from many different taxpayers' reading of the legislation. so we clarified.

and individuals returns from their own capital are not subject to the tax. next, we have clarified -- and again, i think this is -- was the intent, and clearly was the -- our internal team's intent for the initially drafted legislation, but given some confusion and concern we have heard from taxpayers, we are clarifying that certain activities, the various investment funds in and of themselves, do not establish nexus with the city for purposes of becoming taxpayers. so there are a number of different specific examples in revisions you have before you wear those activities in and of themselves do not mean these kind of very passive investment funds are actually doing business here. third, in this category, we clarified that distributions from a flow through ntt --

entity that has already been taxed shall not be taxed another time when they make distributions. again, this is a means of avoiding double taxation as a fund might flop through different legal entities. next, we clarify that gains from the sale of financial instruments in real estate shall be calculated on a net basis. we can talk in greater detail next week regarding the theory behind the taxation for financial services, but it is, generally speaking, treated in other places as a net concept, which means it shall be applied that only to financial instruments sales but also to real estate sales. also, we exclude from taxable receipts tax refunds, governmental grants, so that is a summary of the major changes a summary of the major changes you see in the amendments befo