good afternoon, supervisors. debby lerman from the san francisco human services network. i wasn't intending to speak, but i just feel compelled to note that the mayor's budget instructions at this point do not include any cost of doing business increase for nonprofit service providers. we spent this morning in a very educational set of presentation about the homeless services in this city and the city's nonprofit partners are on the front line of every aspect of those services, yet we have a 15 -- 6 or 7 years we had no ip crease, although we do appreciate the increases we've received, lower than the annual cti. so, our service providers are facing a myriad of pressures. [speaker not understood] raising the minimum wage,

[speaker not understood], affect our health care costs. the next thing is going to be how our rents are going up and we cannot simply continue to provide services as they are now unless something is done about the cost of living increase. we asked the mayor to fund the cpi this year. we would prefer to take it out of the annual politicized process and have it be something that the city would ultimately institutional eyes through some mechanism so those increases could happen in a rational way through multi-year contracts and automatic escalators. that is something done in every other kind of contract the city has, whether it's city leases or supply contracts or for-profit contracts erg. there's no reason why nonprofits should be treated differently and we hope the mayor's office come to you before the budget comes to you. we hope to have your support there. >> thank you very much.

anybody else wish to comment? thank you, supervisor. my name is richard heasley, i'm on the steering committee on the human services network, executive director of conard house, a nonprofit provider to the city and county of san francisco since 1960. so, i just want to underscore what debby norman just said. nobody here really wants to hear nonprofit contractors come with hat in hand talking about cost of doing business, but that's what we have to do, that's what we've done, we'll continue to do until this issue is politicized and treated in an automatic way. debby mentioned the three ways to do this. the cpi indexing approach. there are some counties in california that actually tie their contractor cost of doing business to labor negotiation outcomes. we are also capable of submitting five-year budgets

with responses to our rfps, which we're always ready to do, but nobody asks us for that. so, you need to consider this in the light of the issues of what you're expecting us to do, particularly with affordable care act implementation. we're prepared to do as we have always done, extraordinary things to make systems of care work as efficiently and effectively as possible. that when organizations like mine take a 52% turn over among my key billers from federal medi-cal, it affects not just the quality of service, but affects our bottom line and our ability to deliver those serve is he. now is the time when you actually need us. you need us to be helpful. you need us to be healthy. you need our strength and wisdom and experience. so, we would like to see this

cost of doing business issue go away. put it in the instructionses and we would be very pleased. >> thank you very much. any other speakers, please, on item number 3? okay, seeing none, public comment is closed. [gavel] >> thank you very much, ms. howard, and we'll continue these discussions. can i have a motion to table item number 3? >> so moved. >> we can take that without opposition. [gavel] >> okay, like to note i have been joined by board president david chiu and supervisor jane kim. at this point, mr. clerk, will you call item number 4? >> item number 4, ordinance appropriating $2,515,000 to the mayor's office of housing for fiscal year 2013-2014, establishing the nonprofit rent stabilization program. >> okay, thank you very much. this item was sponsored by president chiu and supervisor kim. i will turn it over to first president chiu to speak. >> thank you, colleagues. and appreciate all the work you are doing today. i know today is a long meeting. so, today, colleagues, i am asking along with supervisor kim for your support for a

supplemental appropriation before us to assist nonprofits that have been impacted by the rising commercial rents in the mid-market tax exclusion zone. we have all heard the many stories of the challenges facing the nonprofits that are responsible for our social safety net and this is a supplemental that would be funded directly by the tax increases in our city would be receiving in the zone during -- it is based on revenue growth so it is likely to get bigger as additional construction projects in the area are completed and assessed. this supplemental is one larger piece of a collaborative effort to protect nonprofit organizations that are providing vital services to our residents from displacement. the mayor's office of housing and community development along with supervisor kim have convened a working group to assess and recommend policy solutions and my office has been closely involved with that process. this supplemental will be

directed to mohcd to confirm the group's recommendations, [speaker not understood] displacement assistance and tap tal improvements as well as real property acquisition. now, since the working group will not give its recommendations at least a few months, in agreement with the budget analyst recommendation that we place these funds on reserve and release it after the working group finalizes its report. but i do ask that the budget committee recommend approval of this today so that the working group can be assured of the funding of availability when they deliberate how to use its [speaker not understood] problematickally. there isn't precise and specific data that identifies the need of nonprofit organizationseses in mid-market area. we all know there is very much indeed a very intense need for assistance as the study from october that the budget analyst had put out has documented. and we also know that the working group has been

conducting its own surveys to obtain more data on this issue. too many tenants, whether tenants in commercial buildings in affordable rent control housing have been impacted by affordability rent crisis and that is why i ask for your support. i'd like to turn it over to supervisor kim. >> thank you. thank you, president chiu, and also to the members of the budget committee. i just wanted to take a moment to thank president chiu and his office for working on this budget supplemental along with our budget office and the controller's office. and i'm happy to see this move forward potentially as one solution to support our nonprofit organizations that are facing rising commercial rents. as many of you know that have been working with our offices on this issue, we had set a fielding, called nonprofit organizationseses back in the summer when leases were starting to come up for

renewal. and there was an urgent realization that many of our commercial rents were rising by up to 30%, particularly the mid-market. we were committed not just to the positive outcomes of this legislation, but to control what negative side outcomes might be. one is of course while the city is doing well and creating a lot of jobs and seeing more revenue coming into the city that are funding these services, we are seeing very critical nonprofit services our facing aloe vicktion and faced because the commercial rents are rising so quickly. i want to recognize the budget analyst and legislative office for the report several months ago talking about what this looks like in our data. this is one of the city's response to address the impact fueling the need for more office space. as i said in the past, we

cannot leave our nonprofit sector behind as the city continues to thrive as they provide essential services that are needed to continue to stabilize our communities. just a little bit about what we've done before. this isn't the first time you've seen that, the board of supervisors then approved and appropriated $3 million from general fund reserve to support subsidies and property acquisition. this property acquisition fund was allocated to partnership for affordable nonprofit space and administer that in northern california loan fund. of the 15 organizations that receive funding, 14 still continue to operate and contribute to the cultural and economic value of the city. this is a good investment in the city over ten years ago and many of these organizations that received funding in 2000 are important institutions that contribute to our district. whether it is the presidio, the filipino-american development foundation and 9th street media

consortium. or in other development center, [speaker not understood], portola family connections, wafao house and more. so, this effort is really to be able to support and fund some of these solutions that are coming out of this working group with our nonprofit executive directors, and of course, at the mayor's office of housing. again, looking forward to seeing in. colleagues, again, i ask for your support. i know we have brian here to talk about the activities of the work group. so, through the chair, if we can have mr. zew come up. i thought this item would come up earlier. i had a meeting waiting in my office, but i'll try to come back if i can. thank you. >> thank you, supervisor kim. so, mr. zew. >> good afternoon, supervisors,

brian chu [speaker not understood]. as supervisor chiu and kim mentioned, our office has been convening a working group composed of representatives at city departments as well as members of the community, but not only through our office, it includes the mayor's office of public policy and finance, oewd, hsa, dpr, dcyf real estate division, planning department, controller's office, and about 11 or 12 community based organizations. we've had two formal meetings so far, one in december and the second one in january. we plan to have two more meetings. one in february and one more in march. our hope is to deliver the final report beginning in april to comply with requirements put forth in the working group sponsored by supervisors mar, kim, and cohen. you'll see in the budget

analyst report that we did not give a full recommendation as to how the 2.515 will be allocated so far. in speaking with the budget office and members of other city departments, we feel like -- we feel as if we would like to wail until the final report has been finally vetted before we determine what portions of funds could go to what solutions as acquisition and rehab, subdifficulties. we talked about many different solutions. as you'll see in the report, these looked at public private partnerships in conversations with private philanthropy i. we're in conversations with the tech industry. we're in conversations with the real estate to look at vacant or surplus city property. we're looking at vacant store fronts in commercial corridors, store front that might be available in the housing

developments. we're also looking at, as i mentioned, the possibility of perhaps short-term rental subsidies. we're in the process of analyzing the data that we are receiving from all the different city nonprofits. it looks as if when we did our survey in conjunction with the controller's office, over the past three years, the approximately at least $25,000 from us on a regular basis. so, we hope to come up with some innovative solutions. it's a very challenging problem. we've also been looking at some solutions that may involve issues that may come before this board. you will note that in the bla report they talked about the potctionv of examining impact fees, other commercial incentives, even the possibility of creating some sort of inclusionary zoning requirement. ~ possibility we're discussing with the planning department and the

[speaker not understood]. we imagine they'll be short-term solutions and long-term solutions. what we support is the recommendation that they have given in the budget analyst report which is to hold this money in reserve until the beginning of april. at that time we'll be prepared to come to you with a final report and at that time we feel that it makes the most sense for the board hopefully if you're in alignment with the report to release the fund and at that point we'll be able to give you a much better picture of how we'd like this funding to be apply to our partners. >> thank you. president chiu. >> i want to thank mr. zew for the work you put in with the working group. i look forward as that process comes to a close figuring out the allocation of fund here. clearly there is a need and we've got to figure out both where the revenues are going to help us meet this need as well as where the monies can be best used.

thank you, thank you. >> supervisor mar. >> thank you, mr. zew, especially for the work that pulled that working group together. i did have a question from harvey rose and the budget analyst report. in 2000 there was 1.5 million supplemental from the general fund reserve for art organizations and a $3 million allocation for nonprofits with 500,000 for rent subsidies. and i'm just wondering why there's no mention about the arts organizations, california lawyers for the arts, 500 million, and $500,000 of the 3 million for the rent subsidies. why is there no information on that? >> well, in terms of the $500,000 to the rental subsidy n 5,000, before i joined the department. but in terms of examining the use of that fund, as far as i

can determine, our department decided to not go forward with the $500,000 for the rental subsidy program. first, i don't know the reason for that, if it was determined that it wasn't going to be as useful as the acquisition and rehab dollars, but it doesn't appeal if that particular program -- that was for all nonprofits. hob honest, the 2.5 for rehabing the section was fully expended. the art commission, as far as i can determine, that was before the current commission was in place. it looks as if perhaps up to $500,000 was allocated in one-time grants ranging from about 7 or $8,000 up to the maximum of $80,000. it appears to have been under utilized. again, i'm not sure of the reasoning behind it, but it doesn't look as if that program

came close to expending the full amount of those dollars. >> i just hope as the working group comes up with its recommendations we have full accountability for money and that every penny is spent because the community based nonprofits really need ti know supervisor avalos is already thinking of how we support not just generally arts or nonprofits, but also maybe specifically for arts organizations, especially from communities. i also just wanted to say, too, that as the nonprofit organizations in the city, the 1,425 contracts, has the number of nonprofits gone down since that crisis after the dot-com organizations merging and even others folding during the economic crisis time, do we have many fewer nonprofits now than we did? >> 13 years ago.

>> we did, and we examined that list of 1,425. if you look at it over a three-year period, we did a filter and eliminated those that were only funded for like one of those three years. and many of those groups were one-time funds of as little as maybe $100 or $300. many of them were trade associations. so, the number of partners that received $25,000 or more for ongoing social services has actually remained fairly constant over the last three years. so, i would say while there has been a decrease in the overall number of nonprofits, which i think has been rather significant, i think the number of providers that we rely on has decreased in the slightly smaller percentage. so, yes, there's been a decrease, but not quite as significant a decrease in terms of we rely on significantly. and >> and i'll wait for the working group recommendations.

seem that rent subsidies is or capital improvement fund are important, but also multi-year grants just coming out of a nonprofit sector for stability over time as opposed to more yearly grants. i'm wondering if those kinds of recommendations are coming out of the working gluev so far with your first meeting or two. >> you know, we haven't -- nobody has brought up multi-year grants specifically in relationship to this. i know it has been something that has come up in the broader cbo task force that has been convened by the mayor's budget office. but it's a good suggestion and we can look at those kinds of ancillary solutions that can help support this report. >> thank you. >> supervisor avalos. >> thank you, chair farrell. i actually appreciate the work that's been done behind this ordinance, the supplemental appropriation. and i know that we also had a hearing last year that kind of led to the thinking around how we need to be able to support a lot of the providers of

service, nonprofit providers in san francisco. and the nonprofit displacement work group has been coming together and doing some planning. and i was also thinking that, you know, there's a great deal of changes that are happening in san francisco to our specifically the arts community. although over the many years there's a lot of art space that has been lost, and i think that it will will be really important to look at how we can increase space for the artists and one way we can do that is perhaps to lease a space or even buy a space to allow for [speaker not understood] to have a space to rent at low cost to be able to stay here in san francisco and do their work, possibly musical groups as well. i know over the years we have lost a great deal of space. so, i'm actually interested in seeing how we can expand the

scope of the nonprofit work group. how we can do more work with the [speaker not understood]. the recommendations already within the profit sector we want to be able to support through the supplemental appropriation, but i think it would be good to actually look at expanding what we could do for the arts and allow there to be different, you know, [speaker not understood] scope of that modality in terms of creating cultural space in san francisco. i'd like to see if he we could actually increase the amount of the supplemental appropriation from $2.5 million possibly to continue or to raise it to another $2 million in the general fund reserve. of course, that would lead to -- we were to approve that at the board, or committee, it would lead to a continuance.

i would like to think we could actually not just have a continuance from one week this week to next week, but a couple weeks. i can go and work with a couple artwork groups and what some of the needs are and have a two-prong approach, one that could be focused on services, also health and human services and one focus on arts, two areas of local economy and service sector that are really having a difficult time remaining in san francisco. and i think that two-prong approach could have a significant impact on overall livability in the city. so, i think an appropriation could really help with ~. so, i want to hear public comment and all of that, but i'm actually considering proposing we increase the amount of funding and expand the scope of work that we want to be inclusive, specifically to arts and cultural community

that is really struggling to remain in san francisco. >> i can't speak to the increase. that's up to the [speaker not understood], colleagues. we are interested in continuing to support the arts organizations. we have tried to actively not gauge the art commission. tom is heavily involved in this. we're using some of the innovative work that they've done, for example, with the cast model as you heard. they created an entity that would actually help acquire a building which is luggage stored in other organizations, an excellent model, arts organizations that have strong programming but may not have the real estate expertise to actually go through that acquisition process, [speaker not understood] the arts. when we did send out the survey, we actually included the grant use for the arts commission and the grantees for grants for the arts so we were not only talking to the traditional social service

agencies and [speaker not understood], we looked at nontraditional performance spaces because they need a different type of location and modality than a social service organization. so, i appreciate your comments. >> so, i do realize that we have, you know, supervisor chiu, president chiu, supervisor kim who authored the appropriation or have asked that they be amenable to that. the indication is yes, i am supportive of the underlying appropriation certainly and i do see the vast need for it. i appreciate the little bit of time that authors of this appropriation want to give and i will make good use of it. >> if i could just add a comment to that. of course, i'm happy to work with supervisor avalos and his staff to engage some of the nonprofit organizations. this supplemental came out of the work that happened in 2000 with the dot-com crash and the

crash impacted that area, and we have this pot of money. the amount of it based on what we project the property tax revenues to be, but also we intended this to be for the broader community of nonprofit organizations that include arts organizations. [speaker not understood] a champion of making sure we are really supporting our arts community that has been incredibly challenged in recent years. so happy to consider moving this forward two weeks or so if that is enough time for us to engage with the working group and the arts organizations. is there a meeting with the working group coming up? >> yes, i think it would be on the next meeting of the full group is on friday, the 21st. >> friday, the 21st. might be good for this meeting to be in budget committee right after that so we can have this conversation, but i'm happy to defer it to then. supervisor mar? >> really quickly, i'm supportive of supervisor avalos' motion to increase this

amount $2 million, but looking forward to the discussion. and then i know the controller's office made the estimate of $2,515,000 attacks revenue growth in the central market and tenderloin and that's where the estimate has come from. i would like to see that amount increased, but i also think it's responsible for us to point where that money would come from [speaker not understood]. >> okay. any other comments? mr. rose, could we go through the budget analyst report, please? >> mr. chairman, members of the committee, president chiu, on page 6 of our report, the report that the proposed 2,515,000 be supplemented from the city's general fund reserves. the corresponding to the [speaker not understood], current balance of 44.6 million. so, if the proposed 2.5 million

supplemental is approved, the general fund reserve balance would be 42,0 98,143. on page 47, as discussed today, there is an identified need to address the issue of escalating commercial rents impacting nonprofit organizations in san francisco. given the amount of funding needed for a nonprofit rent stabilization program has not been determined. whether this program, whether with call it a one-time appropriation, require ongoing appropriations is not known. the specific uses of the 2,515,000 has not been decided and finally the specified criteria for the spending has not been determined. so, for all of those reasons we consider approval of the proposed supplemental appropriation to be a policy decision for the board of supervisors. however, we do recommend that you amend the proposed ordinance to place all of the

2,515,000 general reserve, [speaker not understood], for the board of supervisors to enable that group to provide more specific [speaker not understood] on how such funds would be allocated. we would be happy to respond to any questions. >> thank you, mr. rose. colleagues, any questions for mr. rose at this time? he okay, much appreciated. at this point we'll open up to public comment. is there anybody who wishes to comment on item number 4? if there's more than one, please line up against the side wall there and we'll take everyone up one at a time. everyone will have two minutes. thanks. good afternoon, bill hirsch with the [speaker not understood] floor panel. good afternoon to supervisors chiu and kim for your leadership on this issue. i want to speak in support of the proposal. i think it's a modest amount of money. i am feeling the pressure of rent increases immediately. our rent is about to double on march 1st. so, anything that you can do to get this money out there to the

nonprofits sooner rather than later would be much appreciated. i'm feeling a little old today hearing all of these ten-year plans and realizing how many of them i've been around for. i was around in 2000 and got one of those grants from then mocd. so, some of that $500,000 did get out on the street to help nonprofits with short-term rent subsidies. thank you for your consideration. we hope we can work with you to make this happen as soon as possible. >> thank you very much. next speaker, please. good afternoon, nancy [speaker not understood] from social services. first of all, thank you so much for the appropriation and the suggestion to make the work of the task force have teeth, have legs, and continue. it is a great task force. it is a good cross-section of everyone in the community. i think one of the most important comments i've heard is that this conversation is really about the heart of the city. what kind of a city do we want

to have? do we support the nonprofit service providers? and as you've so wisely commented today, do we support the arts? both of these groups are vital to this community. so, we fully support this proposal. we look forward to continuing working with the task force. we thank you for your attention to this. >> thank you. next speaker, please. thank you, debby lerman from the san francisco [speaker not understood]. we support this measure. i want to express our appreciation once again to supervisor kim and president chiu and to brian chu for your hard work on this toshibationv. if you look at the affordable space report it looks like it was written yesterday. it gives a good starting point for the solution. what we need is a portfolio for