adding now up to 3 bedrooms somehow they had it wrong and the density in the area tlarts there's a variety but single families was stated 25 percent and the remaining 75 percent are split within the apartment buildings further done down and some that have two bedrooms so a case could go made tyler certainly within the allowed density and probably a lot of the units in the area with single families i'm supportive of the merger and not take dr and, in fact, i'm going to move not to take dr and approve the project and i'd like agree you ail recognize i'm sure you're

aware of you've watched them before we don't want to lose unites and have a disposition not allowed unit to be merged this is different. one you're going to go back to the uses of the single-family homes and this is a mankind 16 hundred science naturally affordable home it's a unique thing to see that we've not seen that usually i'm supportive and commissioner moore. ms. lindsey i assume you've given us the correct interpretation of the mayor derivative. i believe you did to that pits us in a walked situation the

unit 16 hundred square feet are in the range of what he want to protect we've heard seen a family standing in front of united states with who small unit and asked us that's fine you can't live will live in a 22 hundred square feet but everyone worked that out but with a child we're supposed to support family heirs i feel backing between a rock and hard place i've supportive of the mayors directive we'll asked how to with work the directive and in this case and i and i'm looking for help from commissioner president wu there is the emotional side of obviously

wanting to supportive them but the directive is really a clear hindering block to make a decision to go outside the directive to support n this family i want to spell that out that's the reality. commissioner fong >> i surely agree with a fine balance while the the hot topic but try to keep families in san francisco and to me in this particular case this super soedz they're not changing the continues but i absolutely see your point and agree with you while we come across hairs but i'm going to take a position and defend the small family and keeping them in san francisco in

this case. >> commissioner hillis. >> i would agree with commissioner moore we're between a rock and hard place i think at mayor and other policymakers wanted to say no mergers we should say no mergers we should pass that as kind of in the planning code by we've approved some you know it's kind of things presented themselves this case is different we're getting 4 thousand square feet homes and this arising to the expectation that's why i'm supportive. the conversation as laid down out the challenge for me there is clearly a family that appears to be well meaning it's a modest house not to use others to get their single-family home they've

bought in 2007 the downturn of the market the housing crisis we weren't talking about that in that way but in the situation we're in now if anyone wants to watch this tape i want to discourage this as a way for people to buy property to accommodate their single-family homes >> yeah. in terms of dealing with the mayors directive there's discretion, you know, housing for families of low income levels and families of requirements for different sizes depending on the number of children there are situation we as a commission are allowed to have discretion as most of the commissioner have pointed out we have to use your discretion in a

sensitive way and realize this is not a case of a developer who is trying to sell this as a profit and receiving if they had to sell this place and try to buy something comparable they're going to pay a lot more when they first bought this and it may not be economically feasible to do that because it above the $1 million if we had to buy something in the inner richmond i'm supportive. >> commissioner moore. >> i want to add one other thought to what commissioner president wu said together with the residential design team and his group take the discussion forward as to whether or not having you have a small size unit recycle this one that at

least to recommend or consider a merger is something different when you have two 16 hundred square feet units and all of a sudden you say i'm going to expand this for my family. there's wisdom and this is still a small house it's sizeable but still small i want to take the thought in memory further to reflect on what is in the permissible range to support a merger no right in order to prevent encouraging others to do the same we don't want the mayors directive might be fine tuned but i want you to take this further because you realize where we are >> commissioner sugaya.

>> well, i think to continue on commissioner president wu's thought. i don't think this commission has ever taken an action and considered it to be a precedent. i think we consider everything on its merits we have all the examples of the unit mergers why we approved some and not others i think the commission has pretty much acted independently and considered everything on its own merits i'm not going to add to the tape if you watch the unit merger oh, there was one and it got approved they'll realize they're on their own

when they come here i have another thought but i can't remember it >> commissioner fong. >> i wanted to speak so we can stretch this until 8 o'clock. >> laura. >>. i hundred percent agree with commissioner president wu's thoughts not to get the real estate value having this is a may or may not dr absolutely works we're sitting here close to 8 o'clock but this works to the situation and we have, you know, disapproved mergers before i that we had denied a couple in the arrange a if the same house

where for two occupant representing the upper and lower and evict on and try to mooring we would deny that but that's not a means to gain value >> commissioner johnson. >> this is really quick i support the motion, however, i will support commissioner moore's suggestion that we look at ways to put a little bit more detail behind the mayors directive i say that but the project sponsors own mission to rent the upper unit and they decided they were not going to be able because the bottom unit was not enough space so i almost

feel like i'm sure their gathering we would have been in the situation they got pregnant one year later and i'm supportive but i echo commissioner moore's comments to guide. >> decision but the may or may not discretionary review looks like it works. >> commissioner moore. >> for ms. jocelyn and memory lane we had a project on filbert around washington square about a year ago it was a young doctor from ucsf she was expecting a think child too flats and we conditioned the merger by leaving the ability to stay as two unit so the illustrate

hookups we allowed an internal connection for the life they would be in the building how have it retained it's as a two unit building because once it's a meerlgd you can't use it for two again, we left it for two out changing the structure outlet i like to go forward that would still allow for changes over time with this young family the house you might come back to the market and i as two. >> commissioner sugaya. >> yes. in defense of the staff they made the correct evaluation based on the career and the mayors diversify but i

know that's the beauty of the commission so to speak in that we take what staff as recommended and factor in other things and make the decision that way so it's not like we're rubber stamping the staff understands that that's why we have a discretionary process. >> was there a motion. >> there was a motion so commissioners, if there's nothing further there's a motion to not take doctor commissioner antonini. commissioner hillis. commissioner johnson. commissioner moore. commissioner sugaya. commissioner fong commissioner president wu no >> so that passed 6 to one and commissioners that places you on general public comment there are no speaker cards.

>> thank you. such a nice couple. >> i think your concern about the merger the people who are going to do it aren't going to come before i i can think of four or five around noah valley people do it piecemeal maybe that's the staff or other departments issue that goes on people are going to come before i are going to be honest this is my story and situation it's kind of like the all the remodels that are actually brand new buildings like the $4.5 million in noah valley that's the way it goes. . with that, general comment is closed thank you, again commissioner sugaya >> thank you commissioner

sugaya. >> colleagues at least for two meetings. >> okay meeting

>> all right. i am calling the small business commission to order. it is monday, july 28th at 2:00 p.m.. and i'd like to thank sfgov-tv for taping our commission meeting. item number 1 is call to order and roll call. commissioner steve adams is absent. commissioner mineta white. >> here. >> commissioner kathleen dooley? >> here. >> commissioner mark dwight? >> here. >> commissioner william ortiz-cartagena? >> here. >> commissioner yee riley? and commissioner tour-sarkissian. >> here. >> madam president, we have a quorum. >> perfect. >> item number 2, general

public comment, allows members of the public to comment generally on matters within the commission's purview, and suggest new agenda items for the commission's future consideration. >> do we have any members of the public that would like to make a general comment that is not on the agenda today? seeing none, next item. >> item number 3, presentation and discussion of the city economist's economic analysis of a potential san francisco minimum wage increase. today you have a presentation by ted eagan, the office of economic analysis and chief economist. and in your packet is a printed out -- is the printed out version of what is on the controller's website. >> thank you, ted. welcome. which one would you like?

>> thank you very much, and good afternoon, commissioners. ted eagan with the controller's office of economic analysis. on july 17th our office issued an he can no, ma'am ~ impact report on the legislation introduced by supervisor kim in june. and i will walk through that report and happy to take any questions you have at any time. feel free to interrupt me. the minimum wage legislation requires all employers to pay employees a certain amount per hour. currently that minimum wage is 10.74 an hour indexed to inflation. the legislation that we analyzed would raise the minimum wage incrementally to $15 an hour by july 1st, 2018. beginning july 1st, 2019, the minimum wage would then be indexed to inflation and annually rise in line with cpi. this is showing the increments that i allude to. the first increment -- i should say that the first increment

which will happen on january 1st, 2015 is the normal cpi increase that would go up from 10.74 to whatever the cpi would. the first scheduled cpi minimum wage increase happens on may 1st, 2015, which would raise the minimum wage to 12.25. then to $13 an hour on july 1st, 2016, $14 an hour in 2017, and as i said, $15 an hour july 1, 2018. there are a couple other provisions that are -- was noted in the legislation. there is a lower minimum wage that is set for category of worker called government supported employees. this essentially includes youth who are under 18 who are employed in a subsidized employment program or adults over 55 who are also employed in a subsidized employment program by a non-profit organization that provides social services to adults who are over 55.

there are some complicated language that i won't spend time going into relating to how additional growth in this category is covered under the minimum wage, but that provision is in there as well. specifically the government supported employees minimum wage begins to increase only by cpi as of july 16 -- i'm sawyer, july 1, 2016, which is two years earlier than other employees. ~ sorry the minimum wage would apply and not as government supported employees. the minimum wage would apply to those who are employed through the san francisco in-home supportive services authority, which is essentially a public authority that distributes city state and federal funds to home care for seniors and the disabled. the controller's office has done some calculation as to what thev city's share of that additional cost would be. it would begin at about 12.8 million in fiscal 2015-16, rising to 56.3 million by

2018-19. just a bit of background before i proceed with the economic analysis. the proposed legislation, san francisco is the first city in the country to establish its own minimum wage when the voters approved proposition l in 2003. that established a minimum wage of $8.50 for 2004 with a one-year delay for small businesses and nonprofits. that was the highest minimum wage in the country and it still is, and as i mentioned at the beginning it's also indexed to inflation annually. this is a chart that shows minimum wage levels that have been essentially applied to san francisco. the federal, the state, and then starting in 2004 the city's minimum wage. the -- i'm sawyer. the line that's hard to see on this, it's even hard for me to see, but it's the dotted green line at the top is where the federal minimum wage in 1968 would have been were it indexed

to inflation. the federal minimum wage and the state minimum wage are not indexed it inflation. had the federal minimum wage gone up by inflation since 1968 it would be slightly, very slightly above what san francisco's minimum wage is today. another factor that affects the context around san francisco's minimum wage is that the state has already acted to raise its minimum wage. it went up to $9 effective july 1st of this month and will go up to $10 an hour in 2016. both of those state increases are higher than a typical minimum wage adjustment so that means that absent any local action the gap between the state and the city minimum wage will, will shrink in the next couple of years. this is a chart indicating the relationship between san francisco's cpi adjusted minimum wage and median rent paid in the city. the cpi adjustor is calculated

on a bay area wide basis. that's what the bureau of labor statistics provide and it doesn't reflect necessarily the cost of living within the city of san francisco. the red line indicates the median rent paid from the u.s. census bureau from 2005 to 2012, and it is specific to san francisco. and that number, which is one component of the cost of living for renters in the city, has gone up about twice as fast as the city's minimum wage during the same time period. i should say that this is inclusive of rent control. this is not the market rent. this is the rent that renters actually pay. and obviously the market rent for vacant goes up quite a bit faster than this. we have estimated, and it's been to some extent confirmed by research that's been done at u.c. berkeley, that really no more than about 11% of san francisco worker or maybe 60,000 people earn the minimum wage as of 2013. they're heavily concentrated in the food service and personal

service occupations. we believe the industries where minimum wage workers are heavily concentrated include restaurants, retail trade, manufacturing, personal services, and also non-profit organizations in the social assistant sector. those will be the five industries that the bulk of our analysis is focused on in term of how would this minimum wage increase affect wages in these industries and how the wages in those industries affect employment in those industries and spending across the city as a whole. when we look at the economic impact factor, the minimum wage, we really see it like a lot of economic impact issues. it's essentially a seesaw of counter veiling positive and negative factors. the minimum wage to the extent it raises people's earnings does put more money in the pockets of people who predominantly live in san francisco and will spend the money in the city. that expansion of consumer

spending tends to expand the city's economy. however, to the extent that the minimum wage raises labor costs it creates disincentive for employers to hire people or to main people in employment. that tends to contract the city's economy. so, the net economic effect that we will get to is really the relative weighing of these two factors, the expansion of spending and the contraction of employment. there has been a lot of interest in san francisco's experienced in its 2004 increase of the minimum wage. it was quite a large one year increase of the minimum wage of about 26%. however, if you look at the employment numbers, and i'll go through both the employment and wage numbers right now, some of the low-wage industries in the city which would have been expected to hit hardest by the minimum wage increase like retail trade and restaurants actually declined more slowly than the city as a whole in

2004, were actually added jobs despite the minimum wage increase. san francisco as a city was still recovering from the recession in 2004 and across the board there were job losses. but as you'll see in a moment, the job losses he were either slower than some of these industries or these industries actually added jobs despite a declining city employment base and despite the minimum wage increase. so, what we've tried to do here is adjust thea sort of raw employment change numbers, accounting for both what's going on in the adjacent counties in those industries and also in the city as a whole to get the kind of a net concept of how did the industry in the city do after the minimum wage was increased relative to what the same industry did in surrounding concounties and relative to what ever industry in the city did ~. for example, in 2003 and 2004 food services in the city increased employment by .5%edthv that was a good deal slower than the adjacent

counties ~ which grew by 2%. but you have to factor in the fact that the city as a whole is declining 2.3% and the adjacent counties were only declining .2%. so, the 2004 recession was much deeper in san francisco than it what in the surrounding counties. so, when you net out both of those effects, it's actually a relatively stronger performance for food services in san francisco. thea are the two right columns under net industry change. food services actually on a net basis doing more strongly in san francisco in that time period than it is in the adjacent counties. the same is true for retail trade which lost jobs, .9% decline when the minimum wage went into effect. that's still quite a bit more than -- quite a bit less loss than the city as a whole. on a net basis, the city retail trade was stronger than it was in the adjacent counties. the same is true for social assistance, the same is true for personal services. the only real exception is

manufacturing which did decline more rapidly than the city as a whole and considerably more rapidly than it did in the surrounding counties. so, that's really the only five industries where you saw a negative employment effect the year the minimum wage went into effect relative to the rest of the city and relative to surrounding counties. it's important, however, to keep these employment effects in context and relationship to the wages because just because the minimum wage went up 26%, that doesn't mean everybody's salary and those industries went up 26%. we also wanted to do the same analysis looking at the impact on wages. for example, in 2003 the year before the minimum wage went into effect, the average city restaurant worker earned about $350 a week, 353 and worked 36.4 hours for an average hourly wage of 9.70.

9.70 was 43% higher than the minimum wage that was in effect at the time. you'll notice that it's also over a dollar higher than the minimum wage that would go into effect with 2004. now, food services is the lowest paid minimum wage industry in the city. so, if the minimum wage only took wages to something that was more than a dollar below what people were making in the industry already, it raises the question of to what extent did the minimum wage that year actually raise wages. and, so, we did a similar analysis to kind of look at that. if you take again food services, the average wage, the average weekly wage in restaurants went up 5.4% the year after a 26% increase in the minimum wage went into effect. that was higher than the adjacent counties, restaurants in the adjacent counties, only went up 3.%. but the minimum wage -- the average wage for food services

was actually lower than the city-wide average wage increase in the private sector, which was 7.1%. so, what was going on in san francisco that year is you were starting to see a recovery in wages before you were seeing a recovery in hiring. and, so, overall there was very robust wage growth, both in san francisco and in the surrounding counties, but in particular in san francisco. and one of the things you'll notice if you go down the column on the left, industry wage change for these low-wage industries, food service 5.4, retail trade 3.1, social assistance 0. personal services 4.4, manufacturing minus 0.1. every one of those industries has their wageses go up less than the overall city-wide average. notwithstanding a 26% increase in minimum wage. and when you look at the net effect on the two right columns, you basically see that for the most part they are negative when you account for and more negative