commercial rents are slithering lowered by not having formula retail we didn't think f that was clear because we don't know how much rent circulates in the city. if there's a lack of creates a vacancy in which it is making the neighborhood less attractive but if the rents are lower because there's no formula retail that didn't have an economic go impact that goes beyond the property owner so that leads us to the fifth issue again, we're not able to get the numbers the question how formula retail focuses the neighborhood the formula retail amongst the population is not direct evidence but a sign that people care about this issue in the

community. and it's reasonable to think it is one of the things that makes san francisco attractive to residence it has an economic impact we know for example people will pay more to live in a house in san francisco than other city and people agree to have less wages in san francisco than the bay area. we don't have the guidance there that's one of the reasons an approach that focuses on a case by case situation and considers the views of the residents in the may be is very important to so the basis of our report is there's 3 things to look at when regulating formula retail what are the relative prices between a proposed formula retail and

the other prices consumers might face and what evidence if any the consumer pays more than in the economy and what's the view of the residents of the neighborhood in terms of how the formula retail effects their perception depending on the 3 outcomes you can find a situation in which approving a formula retail burglary be good for the economy or adverse. i think that's the conclusion we wanted to reach with the report it's really guidance on how to evaluate the formula retail control and make to clear to people there are two sides to the spending question it's not a local spending within the local economy but what is paid for by the consumers in the form of higher prices if you have any

questions, i'll be happy to answer them >> thank you. i think we'll take a response from supervisor mar and open it to questions. >> i just wanted to change commissioner president wu and the planning commission for hearing us at this point mr. egon and his report buses especially to thank the planning staff mr. ram and burns as well as for their hard work the board of supervisors and the planning commission as well. i wanted to first say that i think the report by mr. egon is very important but it needs to be taken with a grain of salt in some of the areas by giving a couple of references as well i think i'm a little bit puzzles there's an analysis from our board of supervisors but not the

one presented by the planning department as well. i wanted to say i'm glad that mr. egon finds instances where formula retail can be beneficial to the city and neighborhoods i'll start by saying i think he cites and quote situations arise in which limiting formula retail is to the economy and others parts he acknowledges this could happen with prices difference between a retailer is low when spending difference is high and the consumers building the loss of an existing business will have a negative impact on the neighborhood and 3 because artist individual situations the case by case authorization maybe a complete policy to deal with the issues i think there are

other places he is acknowledging the reporting considers the spending for businesses will provide more information on the economic impact of the proposal. the approach i think he called it a typical basket bucket approach when you think about the target prices vefrs jake spad kind of high-end retailer that may have prices that are much he higher than a mom and pop or local store like starbucks versus the frap chin and similar drinks i think that's one of the issues that i ask you to keep in mind. i'll say that mr. egons report states as this analysis suggests

in general limiting this will not help the economy and not expand the local economy for the u.s. and there's no reason to building that expanding the definition of formula retail for companies that own the formula retail help spending in the city and lastly he states that the economic impact report considered the formula retail on existing businesses, however, a new formula retail could be beneficial to the economy has a whole without ben the communities by not charging higher prices. i want to say that a couple of examples are important in showing the conclusions maybe misleading in some ways. i'm drawing larger from analysis from stacey mitch to look at the

local economies she says that our report the office of economic report says that chains provide for work than formula retail do and mr. egon says fewer than 10 outlets employ 4.3 people and one major problem with the statistic the car dealings many retailers general exclude this because there's fundamental concerns because they skew the relating raults and the o e a analysis the vast amount of dealerships are not

included and it drags down the numbers oval if you take out the car dealers not significant to san francisco formula retail policy anyway and you also remove non-store retailers for the entrepreneurs like heating oil and mail order houses we see a different picture from the analysis i know that retailer with fortune 10 out let higher only 4.5 with 10 or more locates. the defensive is manipulative more than this chains handle their only distribution i'm repeat that they handle their own distribution and employ people to work in chairs where smaller businesses typically

rely on other businesses for this and the proposition of jobs that the chain stores create are not local jobs i'll repeat a portion of the jobs that chain stores create are not local they're housed at the corporate headquarters outside of san francisco the o e report fails to mention it's observe small independent businesses create more jobs across categories and generate more of the cities formula retail and across the categories that generate most of the cities business applications including clothing and grocery and casual diane. the report con seeds also the e e report they circulate more of the revenue in the local area some groups acknowledge that and

circulating more revenue in the local area creates additional economic activity and jobs. but it also con tends that prices at chains are 17 percent lower so theirs making a claim based on the budget analysis that prices at chains are 17 percent lower and that's according to the map to out weigh the benefits of the restriction but the office of economic analysis estimates the money that is circulate is much smaller than the other studies found i'll cite a couple according the civic economics i don't know when the study was done operating income are much higher than what they estimate

and the planning department and the safekeeping civic economy study says the restaurants grow their resources locally and food for example, and other resources the o e a assumes the resources leave the area and mr. egon says is 17 figure is to me hive questionable and it looks at the apparel stores and restaurant and retail apparel stores and restaurant were exude from that analysis and according to stacey mitchell i think she concludes the formula retail don't more harm than good and the recirculation of the revenue on the part of small businesses and

a slightly difference in dropping the price difference to 14 percent will do it. it's important to note that many of the chains that are increasing to try to open in the city's neighborhoods are those type of jack spades high-end are transparency that's what i've seen and the products carry a higher premium and i use the jake spad owned by liz clare born then the mom and pop and jack spade or a chain store drives up represent as mr. egon said but it makes it harder for the small business so the low margin can survive the study on

page 8 for example, take mr. egons report with a grain of salt and look at the great data from the strategic study it understands by creating the formula retail to locate in the san francisco neighborhood district the formula retail controls my may lower the costs by making the that neighborhoods formula retail controls may help to lower the rents reducing the costs for independent retailers this conclusion is different from what mr. egon recorded. in a study by the economic quarterly in the industry publication the invests david's preliming report that couldn't be that have a lower like san

francisco portland and maybe berkley have experienced medium income and that's dominated by the larger championships and final an important point that is missing from mr. egons report the formula retails can afford to pay higher represents like the jack spade model the store is a loss leader that pays higher represent and backed by a parent corporation. i'll ask what impact that has on the commercial rents in the neighborhood i think you can guess what happens in the neighborhoods when that type of higher end chain moves in what's the negative impact of the money going to the rent or not going into the economy. i respect mr. egons analysis but

ask you to treat his analysis with a grain of salt and your only study look at the those for the impacts on the jobs and prices by also on commercial rents as well. lastly i'll you're going to euphoric on your own statistic study i think the testimony provided by itself community members from our various are hearings and later today in 2006 prop g for the neighborhood to have reasonable restrictions on chain stores the loss of neighborhood character as the chains start permitting in this city thank you to the committee and mr. egon >> thank you. let's open up for the public comment but we're going to take the public comment

only on the formula retail so any public comment? okay. seeing none oh, please come forward >> so should i say my name i live in the outer sunset i be that an item that was forgotten in the question is the impact on tourism that comes up it wasn't discussed in the economic report and why would people travel here to go to formula retail stores they come for the uniqueness of san francisco and it was said more than once about staffing formula retail i think that all of the proposals are just adding some regulations and some ability for community members to

have a say when they are coming when staffing formula retail we're putting in a process that's all. >> thank you. is there any additional public comment seeing none, public comment is closed commissioner antonini. >> yeah. i have some questions for mr. egon. i enjoyed our presentation also supervisor mar but i read your report over in great detail he interpreted what you're report said he i want to know if you agree the way i read it there was your report comparing the same items in the basket not talking about on expensive item at one store but 17 percent more cost to consumers for the same can of coffee let's say the same product as an independence as

opposed to formula retail i read you had a 9 perris more money spent locally by independents as opposed to formula retail recirculating in the economy your conclusion it looks like there was a netted economics impact in a positive manner with a establishment on that basis alone; is that correct and yeah. we felt the local premium for the local retailers was the generous the largest possible premium to support for the local retailers and we picked that because the data was not directly on point but the best data on the subject but to answer your question yes when you comba compare the net economic impact of a directing spent on formula retail with the same amount costing the consumer more out of the pocket that

price difference out weeks ago that we attribute to local railway >> you thought our local rent there was no real evidence about the increased rent with the presence of formula retail stores although you said if there's a 3w4r50ib9d area where there are huge vacancies they went vacant because of the formula retail lack. >> it's no so much we didn't have data although it's true we felt the absence of blight issue it didn't effect the community beyond the local tenant but the suggestion without the formula retails the rent would be lower it didn't necessarily apply plea you there are broader economic

benefits in the terms of the prices. >> finally for employment for the amount of sales supervisor mar acknowledged there was a higher percentage of employment at 4.5 employees for a certain directing dollars amount as the percentage is that part of our study. >> well, i can't say where supervisor mar got his numbers i can show you if we turn on the projector this is the chart which indicates employees per million dollars of revenue from the 2007 u.s. economic consensus it is true as the supervisor indicated the numbers for large auto part dealers are higher than for smaller dealers invite not trust that is the only

category it's also true if you go down the list for furnishings and it's true for building materials and garden centers and clothing and careers stores so the majority of the ones delineated should a bigger employment at the larger railways there's a number of reasons that could be true for example, having more people shop for example. >> your study if analyze whether the formula retail claims to have on a adverse work. >> we had no data just to close off the employment question on the bays basis there's other types of in which more stores have room for employment by that

wasn't strong enough evidences to say that's an economic development. >> and finally, we're the only major city with formula retail in the united states is that true. >> i actually don't know if that's true. major meaning with the population over a certain amount >> i'm not the right source for the answer. >> thank you. thank you commissioner johnson >> thank you supervisor mar nice to meet you and thanks for coming. i have one quick question this is actually an issue that was part of the planning department analysis of their proposal as well they were not able to look at the hiring and the employment question there's privacy issues around where people live,

however, i recall when i believe it was we had created in districts left wing bayshore boulevard for large retailer for the fortune and home depot one of the reasons why the neighborhood out there hundred hunters point accepted it because they did local hire and there was a community benefit around that. did you attempt to look at any data around local hire by looking at the community and the disagreements we have in place with some businesses that came to san francisco >> the problem is getting a data set to see who would be considered a formula retail under the proposed or the current legislation and who wouldn't. it's because we have a very i don't want to use let's say a complex definition of what's formula retail and what's not

you don't have a lot of economic statistics but i will agree it is generally, the city's practice it's easier to get larger organizations to comment to an agreement we have more participation with institutions it do workforce development for bigger and smaller firms but in terms of data we couldn't compare the formula retail vs. non-formula retail >> commissioner hillis. >> thank you for the discussion it is somewhat theoretical we're not deciding between all formula retail and all not formula retail. people have choices; right? and i don't know if that came into our analysis we go to neighborhoods you can't assessing access where you get a

cheaper product from a walgreens and you can't access walgreens it's not a bike ride or car ride you can't access it >> certainly a wide variety this comes down to the question what you consider in a case the general principles of look at the price differences walgreens wants to come into a neighborhood where there is no pharmacy for example, it's going to probably offer consumers lower prices for things they need particularly in they have to travel outside of the neighborhood that's the situations where the price factor it positive you can imagine a different naked where a chain retailer times to come in and compete against t the

linkups in the local economy and sells the things at the same permits that's what we felt the utility of our climax to give you things to look at that would be economically. >> your point at the end about it's hard to define neighborhood character and put a price tag that's what we face how it impacts the neighborhood character. you talked about the value of a home but the public speaker brings up, you know, tourist like why do they come to san francisco i don't know if that was part of your analysis but people come to here from houston where you don't get the same formula retail as everything else, you know, how many

visitors come to the city because adversities got unique neighborhoods with unique neighborhood character. one of the reasons he didn't look at that one of the differences between a tourist coming to houston or san francisco the tourist that spends $250 a night so the trier of the facts windup working its way into hotel prices i wouldn't minimize the interesting and engaging neighborhoods on san francisco's tourist product it's important but if you weaken that in some cases in the name of other economic considerations the tourism industry would survive and it shows would people pay for the hotels to come to the city >> commissioner moore. >> thank you dr. egging on and

supervisor mar it's an incredibly interesting conversation it's hard to weigh the wealthy of both our statements the question i have for you i appreciate you acknowledging the neighborhood quality and the attractive on the overall city i think that's why most european travelers come to san francisco because their expensing america and experiencing the american way i think that's one of the greatest reasons why people come here but when it comes to neighborhood and corridor vibrancy you talked about the walgreens or a pharmacy coming in the issue for us is not as much having one of them by seeing all the competitors of the walgreens battling for an economic share

in the same neighborhood corridor right across the street that's the same phenomena what the same banks all our city out of attain banks wanting to compete with bank of america and it becomes hard for us to see the proliferation of the same goods the sameness comes in and detracts of what is viability important when we talk about trying to control formula retail. the latest issue people are you're going formula retail stores as well as local owned businesses for comparative price shopping only to go to the internet and ordering it from all those people. that type of competition goes

into the amazon fresh that attacks our grocery stores that going into wal-mart have you looked at that in how we look at formula retail >> let me try and address our comments in reverse order i think the question about how technology is changing retailing is going to be the dominating question this shapes the character of the city it's going to be championing to a city that has long wanted the people to rely on the material and service needs. we're dealing in another item i'm working on relating to the minimum wage the question of what's the future for retail trade in the city we