years of distinguished service to the city and county of san francisco. could i have a second to the motion to adopt the resolution? seconded by supervisor campos. this resolution has a requisite purely commendatory finding as well as brown act funding. any public comment on this? seeing none, same house, same call. without objection that shall be the case. madam clerk, read the in memoriams. >> clerk calvillo: today's meeting will be adjourned in memory of the following individual, on behalf of supervisor cohen, for the late mr. robert allin allen price. >> president chiu: is there any more business in front of the body? >> clerk calvillo: that concludes our business for today. >> president chiu: ladies and gentlemen, we are adjourned.

[ gavel ] >> good afternoon everyone. >> good afternoon. >> it's monday, september 17th, 2012. s the meeting of land use and economic development committee of san francisco county. our clerk is miss alisa miller, miss miller could you lose give us announcements. >> please make sure to silence all electronic derises and completed speaker cards and all documents should be submitted to the cleric. items acted upon today will be on the september 25th board of supervisors agenda unless otherwise stated. thank you, we have four agenda items today. generally during public comment we give people up to 2 minutes per person if there is a lot of

people on the issue and there is a buzzer that goes off after 30 second goes. so my hope is that people will really listen to the buzzer before their time limit is up. i wanted to thank the staff from sf.gov, charles and jesse larson for televising us today on sfgtv. >> miss miller, please call item 1. >> item no. 1, hearing on the budget and legislative amount's report on the possible impacts of forual retail on fresh food businesses. thank you. this item controls to us from my work with a broad coalition of neighborhood advocates and small businesses and a coalition of organizations throat the a city look at formula retail on corridors and the neighborhood character of our communities. i requested a special report through the legislative budget

a.'s office that looked at impacts of large formula retail businesses on our small local businesses. the hearing showed there was a growing number of formula retail businesses moving into san francisco and this included the threat of large scale retailers like wal-mart. the tactic or approach used by some of these large companies to break into urban areas is to have stores that contain fresh food components and often communities that have a lack of fresh food. while this can lead to greater access to fresh food it comes to the cost of small businesses, closures and lost jobs and lowered standards. we reviewed the planning department's memo on the status of existing retail controls which showed and i will just

rereiterate points made by the planning staff. i wanted to thank anne marie rogers from the planning staff that helped us get the data from 2004 to 2007. ask it typicks to be a contentious issue in many of our neighbors and especially neighborhood commercial districts or ncd, particularly with pet food and pet food supply stores. and national restaurant chains like subway and starbucks. of the 31 formula retail conditional use cases between november 2007 and july of 2011, 71% of these formula retail business were eventually approved by the planning commission. the planning staff also verified that the planning commission approved most

applications despite the supposed barriers in place. for example, prop g, the formula retail ordinance. the planning department received about 31 formula retail applications since 2007. so that is 31 since 2007. and only three of the applications have been rejected. so that is almost all of them approved. new data for 2011 and 2012 show that a continued increase in formula retail stores encroachment into is san francisco is verified as well. he wanted to thank the budget and legislative analyst's hard work on this report and look forward to explaining the methodologies. so with that, colleagues, i would like to introduce fred russeau. >> good afternoon, char mar and members of the committee, fred russeau from the budget and legislative analyst's

office. so chair at your question supervisor mar we prepared a report analyzing possible impacts of formula retail on the fresh food businesses in san francisco. and a brief recap of the objectives of the study. we were asked to use similar studies conducted in other cities and analyze the impact of fresh food businesses that controls 20% or more of market share came to san francisco? and specifically you asked for its impact on small fresh food businesses and jobs. total square footage of fresh food retail space that is currently available and what the impact on it would be. the impact on supportive industries, the cost of fresh produce available, and the

health impacts on consumers and workers. and you also asked us to address labor standards and prices among different segments of retail grocery industry. our methods were to first identify the existing industry in san francisco, relied largely on the department of public health. because they keep track of retail establishments that sell fresh food for licensing and permitting purposes. and they have a fairly good database that we used for that purpose. we then reviewed other studies that have been done, primarily a study done in the city of chicago, that tracked the impact of the opening of what is called a wal-mart supercenter. in that city. and they reviewed the impact on similar retail establishments within the area. and on sales tax and on jobs. and then we relied on another

study that used the chicago methods, but applied it to new york city for potential opening of a wal-mart in manhattan. a few disclosures on this. we weren't reviewing a specific project or a specific store or a specific location. so this is a more general approach and we had to make some assumptions because of that. relying on some other studies that have been done, we were able to do so and apply those to san francisco. there were data limitations. there is no great data source that has all the information that you were asking about. so that we could roll it all up and present a neat package. we have had to go to many different sources with limitations. first on the topic of labor and employee health standard because one of your questions, supervisor mar, what the impact would be on wages and health

benefits and so forth of a large formula retail store coming to san francisco? and our conclusion there is that the city has a number of laws in place that provide protections. the minimum wage ordinance. the health care security ordinance and the paid sick-leave ordinance all in the administrative code provide some protections. and here is a summary of what those laws provide right now. minimum wage of $10.24 an hour that would apply to any formula retail store in san francisco, as well as the requirements for health care security. which is based on the size of the establishment. so some of the smaller stores may not have it, but certainly a large formula retail establishment would provide that coverage, would have to provide that coverage in san francisco. again, back to the department of public health and their database, we were able to

identify stores that sell or likely to sell fresh foods. the database showed 1144 establishments in san francisco. we have displayed them in this table, which is also in the report by supervisorial district and by size. so you can get a feel for the make-up of the industry by district. and you can see that most of the establishments are small, less than 5,000 square feet. and a small number are the larger over 20,000 square feet. those tend to be more the formula retail establishments, larger supermarkets. so it's a small business industry. this table is from the same source, but it breaks out formula and non-formula. so here you can see of the 1144

establishments we found 192 are formula and by that we're using the definition from the planning code that specifies what a formula retail is. there has to be eleven or more establishments in the u.s.. it has to have certain standardized merchandise, look, signage, pricing structures and so forth. so those are the formula stores and as i said, they are a smaller percentage of the total, but comprise a large percentage of the big establishments. >> mr. russeau, that looks like it's a little over 10% of the 1144 retail businesses. yes >> yes, that is right and the rest being non-formula. while the department of public health database doesn't show number of employees per establishment and there is no

data source we found that has that. but we were able to get many data on the industry overall in terms of wages and number of employees. so in the context of -- if you look at all retail businesses in san francisco -- there are 39,969 employees as of 2010, working in retail. then of those, about 20% or 8298 work in the retail food establishments and that is what is shown in this table. it breaks it down by supermarkets and other grocery stores, which is the majority of them. convenience stores. specialty food stores which would be, for example meat market or fish market, something of that nature and fruit and vegetable markets. on the right, that is based on an average. so that would includes for example, the 29,178 for the supermarkets

would include everybody working in the store from a store clerk to the store manager and that is an average salary. we do know for retail as a whole, average hourly wages and this is provided by the california employment development department for sales persons are $11.71 an hour or more than the minimum wage required in san francisco. for cashiers, which would be a large job or employ many people the average wage is $11.30 an hour. the chicago study that i mentioned, that was done by loyola unit their center for urban research and learning and what had they found in studying the impact of wal-mart in the city, that there was an impact on similar local retail

establishments and most prominently felt within one mile distance of the new store. they tested it for four miles out, looking at before-and-after records of businesss in place and found for each mile that they went, the impact was lessened. the impact was 25% of similar is establishments selling similar merchandise as the wal-mart were closed within one year. and then that pattern continued for the four miles, but to a lesser degree the further from the location. >> chicago is less dense than san francisco, so san francisco might even have a much larger impact than the chicago study? >> correct. and the store is not in downtown chicago. it's a little west of down. so even less dense that the city core. >> supervisor olague has a question.

>> i was wondering -- i guess when it comes to certain types of products, like hardware store, for instance. so i don't know if we even have the opportunity or ability to have a case study, but i know what the target opening at 4th and mission, i'm wondering what the impact will be on the hardware on 4th street? i don't know if there is any way of tracking some of this. and certainly, what i was a little bit concerned about and this may be -- i don't even think this will even be able to measure this and may just be hypothetical. but so people might go downtown to target and pick up some supplies. then there is food there. then they might pick up some vegetables, whatever, and just go home. i'm wondering when it comes to the neighborhood grocery stores on haight street, say, or along

gearion or 4th and 5th, there has been a long standing market there and i was wondering if there would be cumulative types of impacts. i think that is why we were looking so closely at conditional use permits around pet stores and ultimately we ended up denying a couple of those because we think that citywide it might have impact in the long-term, even though it's hard to measure it. >> he i know again from the study in chicago, that was the impact on retail establishments that sold similar merchandise to what the wal-mart sold. so whatever the mix of items are, those were the type of stores that were affected

certainly the strategy on part of the wal-mart and target and certainly others they have expanded the presence of fresh food in their stores in recent years and the concept is to get people in, because people go to grocery stores more often than other kinds of stores and so it helps sales of their other items as well. so let's see, the impact then applying this model from chicago and as was used in new york study as well. we did one and two-year impacts. we located a hypothetical store. we assumed it was 80,000 square feet, which at least by wal-mart and target standards is not unusual. they have supercenters as they are called by wal-mart between 80,000 and 140,000 square feet. target has stores in the 90,000 square foot range and as they are coming into more urban areas, they are also building smaller stores. you may have heard of some of these. there is what is called a neighborhood center. one is just being constructed now in chinatown in los angeles.

and they are also trying a model called express stores which have even smaller 15,000 square feet or so of just fresh food. so we assume the model of a supercenter. we put it in district 6, assuming south of market would have more potential for a large store than some of the other districts in san francisco. but it could be located in other neighborhoods as well, but we needed to pick one to apply this model. and what we show then here and based on the loss that they recorded in chicago, we applied that to the square footage of our stores here, using the department of public health database of our current industry and current number of establishments. so within the district of the new store and that is what is shown here, within the first year, the impact would be a closure of 37 establishments. in terms of jobs, because those

stores -- we don't have specific numbers -- but they range from usually 1-4 employees. these are small, corner stores, and small establishments. so the range of jobs there would be a low of 37 to a high of 148 applying the 1:4. and then we used a midpoint in the loss recorded in chicago for the rest of the city. and that is shown here with 158 establishments closed and again, using the 1:4 ratio or range of employees, that ranged from 158 to 632 so the grand total in the first year 195 retail food establishments with employees ranging from 195 to 780. there is a second-year impact shown there that assumes that the impact is not as great in the second year, but continues. and so some stores are closed in the second year and that gets up to the 32 1, which you see at the bottom.

excuse me, the bottom of the table there. we looked at this one other way and this table, i just want to explain is showing it by district. >> mr. russeau, supervisor cohen has a question. >> if you could go back to the last slide. you said the title of slide that says, "estimated citywide impact for formula stores opening in district 6." i'm curious if you did study or analysis on some of the impacts of what it would be in district 11? they just opened up a whole foods and i'm curious to know what would happen in district 10? do you have that data? >> the next one, this is using the same model, but by district. so what we have done here is shown what the impact would be if a store such as the one we described, a large retail formula establishment located in each district in san francisco based on the number of establishments there now.

so when you are asking about district 10, the non-formula retail food establishments, we didn't count whole foods or safeways, but just the non-formula. there are 60 in place right now. using the results that they found in the chicago study, it would result in 27 stores in that district closing. >> 27 stores? >> 27, two years after opening. and then the employment impact there is between 27 and 108 jobs. so again, that assumes 27 small businesses with 1:4 employees each. >> i'm sorry, maybe i'm reading this wrong. i see 17 in the next column. >> sorry, yes. i'm looking at another table. it's the next one. so yes. in the first year, you are right. 17 and the numbers i was giving you is the cumulative in the second year, which is the next slide.

>> okay. >> 17 stores in the first year, 17 to 68 employees and you can see the impacts in other district as well. the thing i wanted to point out here is that this is assuming for each district that the store is located there. so this isn't a cumulative impact. it shows the worst effect or the biggest effect in the district where the store is located. and then as you go further out, the impact is lessened. in the case of district 10, probably some of the impact would be in san mateo county because if you go out four miles you are probably going to be crossing the border. but this table, again, is looking to each district independently and not a cumulative impact . >> mr. russeau that would lead

to the loss of 1300 jobs and 321 smaller businesses potentially closing? when you break it down by district, district 6 if a big box wal-mart opened up, that means more than half of the smaller food establishments would close if a big box wal-mart opened up in district 6 somewhere? >> i think that is correct, yes. if i followed your numbers. >> that is based on methodology from the chicago study that was used in manhattan? >> correct. i think the important thing there, supervisor, is there is some variability in here

because it could be a greater number of establishments with smaller numbers of employees. that is why i provide this range. if every store that closed had four employees, that is the worst case, the higher number of jobs would be lost, but it could be a smaller number with fewer employees. so there is some room for variation in these numbers. but i think it gives you the overall picture. and then this was the second-year impacts, which i think i already talked about. which shows the increments that occurs as the second year impacts are felt by district. we provided one policy option recommendation in our report and that is for the board of supervisors to consider. that if such a store were proposeded or such an establishment, to add to

existing regulations in the planning code pertaining to retail formula. so the idea here was to include consideration of the economic impact of a large retail food formula -- retail formula food store opening in san francisco. so that questions such as this could be answered. how many jobs are actually going to be at the new location? because our analysis is talking about retail establishments closures and job loss. obviously there is an offset. a new store would be hiring people as well. the big unknowns are how many? at what wages? what types of benefits? and so forth. and how does that compare to what is in place now? and are they the same people? the overall effect might be that many of the jobs are replaced. but they might be at lower wages of they might be at higher wages and they might not be the same individuals who are currently employed. so get at those kind of questions with

more specifics, the policy option is to consider including this in the planning code. so in the same way that retail formula applications for new stores have to go through certain reviews, the economic impact would be one of those considerations or variables as well. so that is the summary of the report. melissa flowers who worked on the report is with me here and either one of us would be happy to answer any further questions or provide more detail. >> thank you so much mr. russeau and miss flowers as well. any further questions? supervisor olague? >> i guess some of the discussion i remember taking place at the planning commission was the fact that so many of these formula retail stores are now taking on a lot

more products that they sell. so before now at walgrens they sell all kind of food products and sell liquor some some instances and pet food. you name it. they have a broad range of products that they are selling. so is there a way of possibly prohibiting the sale of certain food items or making it harder for it to be maybe, i don't know, conditional use or something. at one time, a pharmacy was just drugs and some essential things. >> that is a good point. all the drug stores appear because they have fresh food now. at safeway and whole foods you find drug stores as well. in terms of regulating that, i assume there is probably a way.

i don't feel prepared to really provide an answer to that question. i'm sure that the planning department or city attorney's office could give you more guidance on that, but i'm sure there are mechanisms to regulate that type of thing. >> thank you so much for the report. we have a number of advocates from the food access and people that are trying to get fresh food, affordable food into low-income neighborhoods that are part of the effort to look at this type of legislation and these recommendations as well. but i wanted to say that the focus on food retail is really helpful, because we're trying to find adverse impacts of large formula retail and it seems like it as has a huge impact. so it seems like it's absolutely necessary, but i really appreciate this report. it really helps us see the impacts more clearly.