>> small business commission meeting for october 24, 2022. this meeting is being held live on tv and available online and listening. call in (141) 565-5001.

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ramaytush ohlone land acknowledgement the san francisco commission acknowledges that we are on the unceded ancestral homeland of the ramaytush ohlone who are the original inhabitants of the san francisco peninsula. as the indigenous stewards of this land, and in accordance with their traditions, the ramaytush ohlone have never ceded, lost, nor forgotten their responsibilities as the caretakers of this place, as well as for all peoples who reside in their traditional territory. as guests, we recognize that we benefit from living and working on their traditional homeland. we wish to pay our respects by acknowledging the ancestors, elders, and relatives of the ramaytush ohlone community and by affirming their sovereign rights as first peoples.

>> second. >> [roll call] >> you have a quorum. >> item no. 2. >> >> good afternoon commission. ted eagan with the commission office. we have a report covering september and to answer your questions about the state of the city's economic recovery.

>> slightly up from july but near low record on employment. one of the aspects of the city's recovery that has been pretty strong is tourism. >> it slowed a bit in the summer and now we are seeing more air

travel which is 74% which is a reversal that we have been seeing over the past year. another thing that is notably changing in the city's economy is the housing market and values have dropped to 4% since august. apartment rates are flat which is good related to other cities where rents are dropping but our apartments are still down 9% from before the pandemic which is the largest drop of any large city in the country. overall san francisco has a weak recovery. the jobs declined since september 21st. we just received the report and will not be reflected until our

october report that are reflect the job loss and still a very strong unemployment rate. in august, we saw some job growth in tourism which is good and for a long time we began to see jobs decline in tech and business and professional services and information. the data that we just got from dde, we may have turned the corner as there have been lay offs and tech stock has gone down in the last few years. >> may i interrupt you? the yellow is 2020 through august 2022, the blue is july through august of 2022. it says

employment change, is hospitality still down? >> yes, it's still down. >> thank you. this is showing the number of employees in san francisco and continues to rise but not as high as it was before the pandemic. the reason is there is not as many in the labor force than before the pandemic. this is a data tracker that we have every month on people's mobility in san francisco. what we learned from the early days during the pandemic is that people were staying home comparing overlie time which is

san francisco versus the state of california. people are still spending about 10% time away from home or 10% more time from home. we also tracked the times at work places which includes people who are working from home and that number is still down and there is quite a gap between from where we are and where the state is above 40%. another look at the work from home phenomenon from the tracking system we are the red line and pretty stead around 40% of normal during the last couple

months. our office is 37% of where we were that week. again, it's a fairly week recovery in the office sector and i point out that other than the office recovery is about 60% of normal, we are basically two days a week on average and office around 3 days a week on average. i would say that on a national level, most indicators of economic activity have recovered. restaurants have recovered and the one is offices that have not recovered. another thing we track each month is new business

administration. we have seen throughout the pandemic new rates of new business formation which is disappointing because we know a lot of businesses closed and we are beginning to see a slight up tick but nothing like what we saw before the pandemic. the rate for new business formation are maybe 25% less than they were before the pandemic. we have had good recovery since the pandemic. our city has recovered since june with the convention business and we have seen since then the occupancy come down a little bit.

the peak with the low line and below the other line, we are at 20% of normal up to 90% of normal in june and that has trailed off a bit and in the office 70% better than normal. there is quite a gap between where san francisco is without that revenue recovery and other cities that we are comparing ourselves against here. domestic air travel has recovered, still lagging and tied with la at this point. other places are at 100%. international, the recovery has

been quite strong and the north international market and north of denver and trans-pacific and what los angeles and seattle participate in. our recovery has been quite strong and we are in a group of cities and not an extreme outlier. that's good news. what we have been tracking throughout the pandemic is the shift how people are getting around and we are seeing an increase in volume on bridges and 92% prepandemic level and golden gate bridge a little bit less. more traffic in people coming to offices and we see that with the speed data coming into san francisco. the average before the pandemic was a little over

30 miles an hour, the speed in september was below 30 miles an hour, congestion is worse than what it was during the pandemic, that may be the one unfortunate area of full recovery. why is that happening? one reason is the people are still avoiding transit. this is the bart exit and entrance to downtown san francisco. not a lot of movement in that during the summer. we saw a little bit of a boost since september but we are around 30% than normal on the bart. 30% with bart, that is very significant implication for the recovery of this city's economy. we can't refill downtown without bart and the parking spaces for everyone to go back to the office by driving and downtown

san francisco has really built much of that space after bart was completed. we really need to have people ride the rail traffic, the rail transit infrastructure to have a full recovery downtown. this is the bart traffic which is a little bit better than san francisco, a slight upward trend but not that much better. we had flat apartment rents, last month, september. that was relatively good, the rental market naturally is starting to soften and in san francisco it didn't soften and now it's flat. we'll continue to watch that one. there is room to grow since san francisco is still down compared to the pandemic and that is unusual compared to other big cities. looking at the home ownership

and sales in the state, we saw a regrowth and now that the housing market has returned. not dramatic but a quicker and slightly housing drop in market. our building permittivity and housing development has been well below since the pandemic and that is the result of the rapid rise in mortgage rates in housing. i think that covers our quick review of the city's economy and where things stand. the main thing we are watching up for in the upcoming report in the month to come is whether or not we see

weakening in the labor market. we haven't published thus far is job listings. we may have a job report to include with this report. we have seen a slowdown from about 6,000 to 3,000 a month. when job listings would generally slowdown before you start to see actual drops in that employment. that's kind of what we are waiting for. obviously the macro economic situation this year has been one of reducing federal spending or reducing growth and federal spending certainly and also rising interest rate with the intent of cooling the economy. we haven't really seen that yet but expecting to see that in the months to follow. those are the economic changes in the report that we are going to be watching. i will be happy to

take any questions at this time. >> great. thank you so much. commissioners, do we have any questions? >> thank you so much for your presentation. that was really eye opening, i guess, even though we know but to see the metrics, it's really helpful and brings different ways to look at opportunities, i think for the city. i have a few different questions that don't all flow together quite yet since i nodded my head prematurely. [ laughter ] one is, i'm kind of curious as to what your thoughts are in terms of what the recovery might look like once asia starts to open up a little bit further, if

that might fill in some of those gaps and how far those gaps might be? >> that could potentially mean lots of different things. simply from the perspective of increased international travel out of china to the united states. that would be great for our tourism. i'm trying to track with numbers with the numbers of deglobalization and reshoring of production that happened in china and trying bring production back to the u.s. and what does that mean for trade with china? i'm not seeing a lot in the data just yet and i don't know what that would mean other than an leavation of supply change which was a cause of inflation. i think the

inflation has moved well beyond the supply and chain problem and certainly stronger chinese recovery would benefit those things. i think those are the two things i would point to. >> when you see the international up tick in denver and phoenix, where are those coming from? >> probably mexico and alaska. my understanding is where their international market is focused. >> okay, i'm also kind of wondering in terms of convention, the up tick in june and made such notable difference, how many consequences is that to actually make a noticeable -- >> i think the big one that month was the rsa. i think that was probably the one, i can't remember of any other big ones

outside. there may have been smaller ones. it was several months ago and i don't remember the details of that convention. that was what was happening at that time. >> i'm going to work on my questions for a bit. >> sorry for putting you on the spot. >> commissioner >> hello, thank you for your

very interesting report. i have a future question which there is a talk of a recession coming in the quarter of next year. i know it's hard to predict but the economy in san francisco might recover enough to be not as affected by this recession? >> i actually think it will be more affected than most because of the tech industry is being affected by capita rate. you have to remember with the tech industry in san francisco in particular, there are some profitable companies but a lot of companies are trading on hopes and dreams. i'm not

disparaging that, but when people are talking about investment in stocks, we get a lot of investments and those that are not there aren't mature enough to really grow, or with a few exceptions they don't have the resources to continue to grow in an environment where it's harder to attract new investment. because of the outside industry, i believe it's going to become harsh. we have a lot of places to go but it could be worse. now, the mitigating factors, a lot of the tech workers are still working from home. if they are laid off, we are not seeing their lunch traffic because they are working

from home. in other words the economic impact of that industry has been weakened by the pandemic. it's by far the most recovered part of our local economy and grown by 50,000 jobs since the start of the pandemic. the impact of the industry isn't the same, so the impact of losing that industry wouldn't be as bad. >> thank you. >> commissioner ortiz? >> thank you for the report. our community has a lagging effect. what do you think is going to go on economically in our city that

will probably never recover or change or what's going to linger the most because we are going to get a whammy. because it's the inflation. it's like the 70s to me. i need to prepare my community, what's going to linger and what should we be preparing for? >> i think the two things that i worry about for the local economy now is the recession that i have been talking about. not every economy is predicting a recession in the second quarter of next year but the majority at this point and the majority would think it's a fairly and brief and mild recession in the next six months or so because it's only being caused by the federal reserve. if they keep raising and there

isn't control, they are moving to plan b and that is not great because you are still stuck with inflation, but that's different than a financial crisis or major economic shutdown. which is not to say that will happen # and what will happen in san francisco. we have never seen this level of over heat negative the economy. in that world, we still have downtown san francisco pretty empty and our airport maybe missing 25% of the

customers and same with the hotels. for those numbers to recover, i think you will need more than just coming out of the economic cycle. i think you will need kind of a reset and people are going to have to make do with lower prices on things than they had expected to see before. for example, hotel rates are down but people are not filling the rooms at any cost, are but if you see downward hotel demand, at some point you start to say, our hotels are just too expensive and the same thing the office buildings will say and that will basically mean that we need to have a less value coming into the economy before we see things fill up again. i have major kind of questions for the downtown office bart complex because i don't know how bart can really go forever based on 30% occupancy. i don't know

any enterprise that can say we are just not going to have 70% of our customers and everything will be fine. that can't go on forever. for bart service, you can't serve those offices and you can't get people down there. the half of the cities office workforce that lives outside of san francisco needs to be able to get there. if they don't get there, they have a whole cascading effect on the county. offices are 65 percent of the city's gdp. if the office market stays in a permanent low or recession, then that affects everything else. the housing rate is down and i would say it's office related. our housing is weak and because

it is so expensive is you need to live here to get access to a san francisco high paying job, but if you don't need to be here to get access to that job, if you can do it remotely, then why would you pay so much for a condo in san francisco. if our housing is over pricing, that implies the recent housing development because no one is performing this work. it's the sector that drives the economy particularly office and tourism. what i think will have to happen in this economy is a reset and prices and values that industry is used to. in the case of offices, it could take a long time because they are about 25%

vacant and that number will go up before it goes down and there is a hiring freeze or down turn in the industry that's been taking the office space in the last 15 years and that's the sector where people are most comfortable working from home. you are looking at a high vacancy and pretty weak demand before you start talking about the recession. that's kind of the 1-2 punch that i'm afraid the city's economy is facing. >> that reset from a percentage perspective, what do you think, 25-30%? because we were artificially per square foot in the office building, what does that look like so we can start preparing because that does have a trickle effect to office and small business and nobody is going to hold you to it.

>> i won't make a forecast but in the last recession, you saw 30%. i tend to be kind of bullish of a long-term future because i'm not just being a booster. the companies that are here pay really great salaries. if you are anywhere near northern california and can get to san francisco 3 days a week, why would you go to another job in another city that pay less than san francisco. if you say, i'm going to go along the corridor because i don't like the commute. i don't

think remote is the future. i think hybrid is the future. people are going to be connected and need some office space, but they might need less office space that it will take a long time to work out. i think we are looking at a bigger mega bay area, and i do think that ultimately san francisco will be able to drop people in from a larger area, but perhaps not as widely, but that's an advantage that san francisco has that other places can't have. if you have been working in san ramon, you can't get there from santa rosa. >> i'm also bullish, generationally bullish as san francisco ever was. >> that's right. >> put your money here after a recession. >> commissioner huey?

>> i guess my question draws from the history of recessions because our small businesses are already teetering around with very high cost of doing business. much of that in our salaries and minimum wage and being able to live here. if we are looking at a reset of values in terms of how much we can charge for things, like in the restaurant business what do you see happening in the small business sector because it's very much different than tech because i can't hybrid the small business sector generally. >> the reset i was talking about is probably more in the realm of real estate than in the realm of

service and goods providing services, but i do think the small businesses sector in general is a unique problem that are not just temporary, and labor is a primary one. i have been studying the demographics of people moving out of san francisco since the start of the pandemic and through 2021 which is the last time that we have official census data, san francisco lost more population than any other city in the country and i think people were quick to say all of those tech workers moving to wherever and that was some of it but that was 55% fewer people working in food service occupations in 2021 than 2019. a very very big drop in the lower wage force in san francisco because people got laid off in 2020 and many of them moved

away. the data isn't out yet to find out where they really moved to. if they moved across the bay, that's a drag but not as big as if they moved to the san fernando valley. >> if i'm a low wageworker in this city, then this doesn't make sense anymore. some people will say, i can afford to live nearby enough to be able to make myself

available to work in san francisco. i would be super surprised if the prices on restaurants are permanent and would be more concerned about the salary side than that and i do think it's the whole situation. >> in regard to bart, there is a record from work to leisure type

traffic. there is some leisure in going to games but wondering if there is an opportunity to find more leisure to bart traffic? >> what we see what bart releases is traffic by week and hour of the day. for example, monday and friday are particularly bad compared to prepandemic because people are not going to work on those days, but the weekends are better. the weekends are 60% of normal and that's very important for retail and getting the local for entertainment, the bay area market and to san francisco. it's just 60% the last time i checked. it's not 100% but better than the office situation. i do think some other things that are notable, the early mornings are a lot worse than the 8:00 hours which means

to me that people are not doing the long distance to bart anymore and doing the local recovery and we'll have to see what comes of that trend. i will agree that the recovery of the weekend traffic for bart is kind of like the recovery in hotels. it's not 100%, but it's better than offices and that may be something that comes from downtown with the more entertainment focus and they have the same issues with the retail workers. >> we need to think about how do we attract more regional movement to be able to help with some of these other hours. >> i agree.

>> thank you. >> commissioner carter? >> thank you for the presentation. this is the talk that everybody wants to know about right now. as a restaurant owner, what is san francisco without our restaurants? so we definitely need companies here to support. i think i'm interested in what other industries to talk about and i heard the mayor talk about life sciences. what are some of the industries that are in the talk? # and what other industries can san francisco model? >> i would say biotech that is important in this economy and grown rapidly and has doubled in the last five years and in person industry. it's a good target, a good thing to go after. the thing to remember is that it's doubled and still less than

10,000 jobs in a city where employment before the pandemic was about 700,000 jobs. so there is about 10 or more jobs in information technology for one job in biotech. i don't think there is that much demand that we can absorb to grow there but we can expand more and there is lots of signs with people with lots of property and pivoting bio tech. the office of economic workforce and development is about to embark in a study and look at specifically in future areas in a diversification of the economy and i wouldn't want to speculate before that study is off the

ground. they are looking at what works in the bay area but hasn't happened in san francisco and maybe look at how this works in san francisco. i have done this working in economic development strategy places and we were based in san francisco and we would go to cities all over the place and they would say can you tell us how we can have this type of economy? no. because it's not suited for what we have in san francisco and vice versa. san francisco is a very very unique economy and particularly very expensive place and the wages are very high and the industries that would work and many other cities just won't work here and the on the other hand, we would love to steal your tech companies and move to

wherever and they have more recently wanted to be rooted in the bay area. i think it's always a good idea to take stock and say, where are we under performing and what kinds of things can we go after, but from an economy point of view, the only lead of san francisco is austin, texas, and it has a profile very similar to ours, entertainment, nightlife, and very much the same kind of model. i know that people are talking about other cities from a planning point of view, but other than austin, our city economy is very unique.

>> commissioner ortiz? >> what is the relationship to our city's budget and our cbo's, all that we fund in this city? >> i'm not sure because of the work we do is the type of model we have and what i can tell the commission in the good news in the short-term that things like prop 13 and long-term leases, should protect our office property tax for the next couple of years, 2-3 years. prop 13 has the effect of

because office values have gone up in san francisco and can only go 2% a year, unless the building is sold, that means it's sold for less as a market value. that cushions the city in a down turn. during the great recession, we didn't see much of a drop in the down turn. that's a sure thing, if it's a drop in demand, then let's say eight years in the future, we have managed to get office occupancy down but the rent is 40% than what it is now, that's going to affect the value of the property and property taxes. i think particularly with property tax, we are going to see that coming. business tax

which is another major source of business tax, we saw that immediately because people didn't spend as much in san francisco and didn't owe that much tax. the big tech companies had really strong companies and strong revenue growth. we saw a down turn in this tax but it would be more terrible if we saw tech go down. i'm worried these companies will have reduced sales and may see some more weakness in that, but probably won't go down worse than 2021. the others have mainly been disappointing to recovery. hotel tax but the two is property tax.

>> in commercial, what is residential, now i'm curious. do you think it's going to have the same correlation? >> it's hard to say what would cause a double digit drop in housing prices or anything along the lines of what we might be thinking for offices because there are other reasons to be in san francisco than just proximity to our offices and our housing prices have grown. housing is a much bigger piece of our property tax pie, it's more than half of it. so we are very sensitive to that, but i don't think we are nearly as worried about housing down turn as we are for office. >> thank you. >> commissioner herbert? >> one more question, this might

sound strange, but if we are concerned about populating downtown and people are working from home, would it make sense to create more housing downtown and get creative with the existing structures to populate that area and the activity down there? >> we might see that happen but it hasn't happened and there hasn't been much interest in it, and i'm not happy about that because of the inflation in the construction cost and the housing for condos particularly downtown. that seems to be part of the housing market if people don't need to be here for work, i don't need to be here to live. it's not clear where the gland

is coming from there and a little bit of a catch 22 and where you would like a little vitality down there but with the resident drop, where is the vitality and the business has to be open and have staff and make money and has the challenges of that we were just talking about there. so, i can see that vision, but there are a number of obstacles for it to be realized. from someone who watches the economy as a whole, it would be better for the office of economy to have offices full than from the office value. if we turn to one of those downtowns that didn't have much central business district but had some high rise

with nightlife, i think this city would struggle more. >> that's a good point. i can't thank you for for coming down here to speak to this issue. i think the information is valuable and not only does it educate this commission, but allows us to educate our community members and help quite frankly to lobby for more thoughtful legislation and ways to help advance the recovery at the policy maker level. thank you very much for taking the time. a couple questions for you. first, i know i have asked you about this a couple different times during the pandemic. do we have any visibility yet or any sense for how we might get

visibility into net new business registration? i know the business registration you have shown is down 25%, but not sure about the new closures and the city doesn't have an automatic input into closures because there is no requirement to notify this city when you shutdown. but i'm wondering if you are aware of anything that gives us insight into net new businesses? >> first of all, thank you for your comments, commissioner. i'm happy to speak to these issues anytime. i don't want to pretend to be an expert to this related to this and it's something that we have tried to track down in the past. i think the issue is businesses know they need a business registration and they file and that's something that

we can date and it goes into the database. it's not always the first thing in the mind of a business that's closing down that i have to notify this city. it's not time sensitive from the business treasurer's office. and you see this data clumpiness. no data is closed for 80 days and probably catching up with 83 days of mail. and there is the situation of the treasurer's office that doesn't know that it's closed and they send please renew your register, don't forget to file your business taxes. and if that comes after three years, the business is

closed. i don't think we do a monthly, here is the new ones and closed ones and where we are on a net basis. i haven't tried to do the three year look back. it might be a good time to do that snapshot. >> i agree. thinking about employment. so you had mentioned that the leisure and hospitality was down and the working population was down and that is suggested that those lost jobs are made up somewhere else as tech jobs

prepandemic. so it hard to imagine that the leisure and hospitality workers got jobs as software engineers, and tech. what do we know about unemployment. i don't know how current that data is? >> i would say that your question is sort of aimed directly at the weak spot in the regional labor market data the state and federal agencies provide to us, and i would say that we cite the unemployment rate labor force employed residents every month. they are not doing a count of employed residents every month. what they are counting is how many people are working with this business

survey and the industry for employment, but what does that mean if the tech industry expanded 50,000 jobs in san francisco. they don't know how many people are in san francisco. that could be 50,000 in san francisco but they can be in lake tahoe. so that's a big unknown. they know the number of people who filed for unemployment in san francisco and they have a general idea of who are still on unemployment. that's the best source of data, but they back into the number of employed residents and labor force from the industry data using old census data about how they live and work. if that has changed since the pandemic and we know they have, they never have an

idea of the labor force in san francisco and the rate is a dodgeey number. that is possible for there to be why aren't there more unemployed people if our second biggest industry is down 30,000 jobs? the answer is the unemployment rate is probably not right and the 30,000 people might have moved away and that doesn't take account of that. because the population isn't something this surveys. the only thing they are looking at is the number of jobs and the old data of the people in san francisco and the number of employed people which is low and that's why they are tying it to this. >> thank you. perhaps i'm stretching the

string out a bit but tell me if you might agree with this analysis. we have seen in the unhoused population a surge in the hispanic population, other demographics have decreased. we also see that the unemployment in leisure and hospital is still down considerably by any measure precise as it might be and down since 2019. we think about the folks that have lost their jobs and where the job losses happened which seem to be centered on small businesses which seem to disproportionately hire people

from other industries than the tech companies. could it be the decrease in small business sector is due to the increase in housing sector, could there be an a-b line to those two data points? >> it could be but i don't think the homeless trend counts to the number of people laid out in the previous years, it's possible. also, you are talking about from the standpoint of data, two totally separate world's in the same city. when the census says san francisco's population is declined by 10%, what they mean is the number of people they can find by knocking on house doors has declined by 10%. the homeless population increase

since the start of the pandemic is i don't know, 70,000 people, so clearly there is that large migration and we already know that one of the economic precariousness in san francisco, the combination of unstable employment, high housing cost, unstable living situation, these are risk factors for homelessness and that people at this sort of margins of the labor housing market are out of homes because of that situation. when you have people unemployed for that amount of time, there are many more in the homelessness situation and there is no data between the two. >> i see that challenge and why i ask the question because when

you are comparing samples and i was reading about a family who was living in an rv that had been working immediately prior to the pandemic working in leisure industry and it struck me who is unhoused that perhaps what is happening in the small business sector could play a portion of that impact on the demographic shift. >> i think it's a very good idea to be probably right to some extent. the thing i was referring to earlier about the longer run stresses on the small

business sector point to this problem that if you don't have business formation and growth then the businesses can't grow then you place more people in that situation. >> you mentioned and of course i'm awaiting this with great interest because i have pestered you about this before that your office is preparing a modeling impact to property tax revenue and secondary and third order impacts on business and tax which i'm pleased to see that you have taken that into consideration as well. do we have an eta on when we'll have some numbers to look at? >> yeah, we are vetting the model now within the comptroller's office and we'll have some numbers when stephanie calls the hearing item because of her letter of inquiry that we built this model because of it

we accelerated our model and complete it in a number of ways and we'll have numbers at that hearing. >> would that model have, i was thinking about what you said earlier about the susceptibility about the city's revenue, property tax revenue, in the short-term i agree, to a degree because no matter how low the property values go in the short-term, they are not going to the average assessed value. what i'm worried about is the contagion affect. i don't mean to over state the risk.

thinking about less economic activity and people start pulling out. >> the contagion affect, where people would say there is not enough people downtown so not important for me to go to work. that's still not the dynamic but how do i get people to come to work? we will see if there is a recession if the attitude soften on behalf of tech employees who have been reluctant to come back to the office and how much the companies want to push it and maybe we end up in a situation where there is reduced employment but some come back to

the office. that could be what 2023 looks like. the office market works more on equilibrium. they thought they couldn't work without everybody coming into an office and having this 150 square feet and looking at somebody across the table and typing away. they discovered during the pandemic, well, yes, they can and their employees really prefer it this way and they save on commuting time and they can save on housing cost. now the businesses are saying, what is really the value of this office space if they are moving to a

place where they are finding this office, they have to find someone for that space and they are going to be doing hoteling and will take a long final for people to fill up that space, but that's how downtown refills in the long run and i think that's likely the scenario because by and large the workforce is still in the bay area, by and large, people are recognizing some value of office time and the market needs to figure out how much and how do you fill up the rest of that space.

>> thank you. another question. >> is there something where you will see where the cost of doing business is too high and do you have a sense of that and where we are at with those issues? >> we don't generally track mood and sentiment. the bay area council did surveys like that for a while frequent sentiment surveys, i don't think they have done that in a while. what we have done since the start of the pandemic because there have been several increases in the business factor in the past four years is looking at the higher incidence of tax rates and telling them to

stay home to save on their taxes. thus far, the answer seems to be no and i'm not that surprised because the work from home due to the pandemic is a major shift. and san francisco's business tax are higher than other cities but not huge for most businesses in the context in the upheaval and operation that this has caused. i think what we are more concerned about in our office and not so much and frankly when we do an economic report on taxes, we say this tax is going to shrink. this group getting the tax is going to grow. so you have a down side and upside. they don't cancel each other perfectly but not an enormous shift in economic activity.

but one of the things that an economic perspective can be helpful on is to say are you designing this tax in a way that is doing the least damage as possible for the dollars that you are getting. in other words are there ways that you can change this tax to make it less punishing of creating jobs or less predictable and this tax since we have many of them, they are too numerous and too complex, need lessly complex and that certain taxes are very hard to anticipate in advance. for example the ceo tax could be for

some businesses as big as their gross receipt tax and wouldn't know until their ceo get this large tax. so it's not a particular tax, but a city where tax seem to go up and we don't know what's going to hit us next. it's easy to put taxes on the ballot but of course they have to be approved by the voters. that is a long way of saying, while we don't see that evidence is driving taxes in the city systematically, we always say when taxes go up that it reduces employment in the tax sector and

there is a lot of features in our collective taxes that are less efficient and could be reformed in ways that are less damaging to the economy. >> it's interesting you think that. is there a way to tap into that or report or memo? >> another supervisor mendleman has asked the comptroller to prepare a report on business taxes in april. the big contextual issues there are we have a major shock to revenues and working from home. if the businesses want to avoid paying business taxes by telling others to stay away, they can do that. if they value it less, we have to think about that when we design our taxes.

>> i have two brief questions for you. in regards to the latino culture and the one who can afford this housing and they have gone, ohio is thriving with the latino population right now because they cashed out their san francisco chips and they are homeowners now and bursting at

the seams in ohio. and we used to have this large family in san francisco and now we don't. i wanted to point that out. >> that's a great point. tangentially, i have been thinking a lot about park let's and our renewal account seems to

be down quite a bit and i think about the restaurant sector and the health of the employment of that sector that i brought up earlier. i'm wondering, has your office at any point, and i have asked this question and there wasn't anybody that could point at and i have looked and asked for similar information in the city and haven't found it. has your office looked at efficacy of park let's in their ability to drive employment, drive sales taxes, the utility of parklett of what was there before, the parking spaces and anything you can say about parkletts that

were helpful? >> it may not speak to this concern of parkletts, but whether it benefited the block or taking business from next door and good for the restaurant. we found that it's good for the restaurants but not businesses on the block and there are more foot walkers. to be fair during the pandemic there were a lot of parking spaces and it wasn't hard to find parking. and there were

limits on the expectations that it was not needed. >> given on how much we are reliant on attracting people regionally, and given the relative importance of the tourist factor now versus say 2019 where i guess tourism is a function of gdp is a higher percentage now than it was? >> the problem is, it should be a bigger percentage. >> it seems like, let's put it this way, it's a lower hanging

fruit for more growth which i think is a better way of putting it. >> that's right. my thoughts around the question of parkletts in general is their ability to pluck that low hanging fruit outside of san francisco making it a more inviting place to visit and raise the attractiveness factor if you will. i'm always hunting and looking for and this is a working hypothesis and i'm always looking for the number or the data point or something that i can point to that says aha, here it is. the hypothesis has empirical backing. our analysis said that parkletts certainly are providing a net benefit to their neighborhood to

the extent that we can bring in visitors, the parkletts are accommodating. >> one last question and may be off topic, but thinking about your graphs and rents which are too high for many, particularly the small business sector, disproportionately employees. i don't know that i have empirical support for that, but it's a working presumption of mine that small businesses probably employs more low entry level jobs than larger businesses. there are two ways to solve for that and one is lower the cost of housing, the other one is to

increase entry level wages. the challenge for the small business sector seems to have always been when you increase the minimum wage, you create an incentive to have fewer workers because it's now very expensive to have entry level workers and you double up some of these -- entry level jobs and you get by with fewer people, and also seems to perhaps benefit like i have employed my son at my job and he has a home, and for him it's just spending money. i think it's a material difference between paying him $17 an hour than someone that has to support someone at home. i'm thinking a lot about this and wondering if your work as an economist, have

you seen anything on the wage side that is clever or different or unusual to address that dealt between pay and housing but look at it from the perspective for supplying wages, certainly we have heard about guaranteed basic income as being one way to do that, but i can imagine there might be others and wondering if there is anything that you have seen or spotted? >> i guarantee basic income can help but it doesn't help with the labor supply question with the small businesses. we have done some work on the minimum wage increase in san francisco and went to $15 an hour and kind of along the lines

of what we said at the time that the voters approved is most of the sectors that pay minimum wage are growing but will grow more slowly as a result of this but there will be the additional wage income for those workers. san francisco had two sort of giant steps of the minimum wage in 2003 where we approved the first local minimum wage. there was a big increase in the number of people making minimum wage and same is true in 2014 but the market quickly caught up and now i imagine that for most small businesses that minimum wage is not a concern because they are not finding people available at the minimum wage. there is less

pressure than it was in 2014 when it was a major increase. if there was a lot of growth and demand for the small business sector you can say, we can solve the problem by adding more to the minimum wage and using the business sector to funnel more money to the lower wageworker. i think where it leaves us at least to the stability of small sector is transportation. yes, you can reduce the cost of housing, you can try, you can try to raise wages or improve

accessibility to jobs where housing is easier to afford it. given the trends that we have seen in people moving out of san francisco, i think we are going to see a lot of workers moving to the east bay. and many people moved to san francisco but i don't know that will still be the case. >> to be clear, i'm not advocating for increasing or lowering minimum wage. my question was outside the realm of minimum wage and determining what other levers might be available because it's what people go for and we also talk about housing and something

people like to talk about. it occurs to me or seems to me there is probably more input that we can adjust than just that and options that we haven't availed ourselves of. going back and you mentioned that and business owners know this so well is the labor shortage. one of the reasons to be a labor shortage is not everyone wants to commute 45 minutes for a minimum wage job and still perhaps more attractive to not commute 45 minutes each way. how do we solve for more entry level local jobs? it seems you have to make the jobs more

attractive, wage is obviously a big input into that, but there is second and third order impact and as you mentioned, there is not room to the leisure leisure and hospital sector and may be one thing we have not discussed. >> all i would say is reducing the cost of housing by removing barriers to building housing would work. improving transportation so it doesn't take 45 minutes to get to your job would work. i'm concerned that it's a long run

vulnerability in san francisco. the pleasure of being in san franciscans # san francisco as a resident made this tech industry more attractive and if you don't have the time, it's a major issue. >> we are going to check for public comment.

>> somebody raised their hand. public speaker: commissioners, you should know that people had a home. you have to make this housing element. what you can do to put san francisco in san francisco. our mayor doesn't

seem to care about it. the other factor for empirical data is the big developer close to university who wants to build 32,000 condominiums right next to that project, 1 thousand condominiums are vacant. it's okay to be an economist who practically said, you know let people live in the east bay and work in san francisco if they can. no, we should think out of the box. we should keep san

franciscans in san francisco. the problem is our mayor doesn't address our quality of life issues. she has centers where people can do drugs. for some reason that is known to her. we have never saw so many tents on our streets. we never saw so many people doing drugs on our streets. all this impacts our children. no students want to go to a place and be assaulted and see the filth and the stench we see in san francisco. >> thank you, sir. i apologize each public comment gets three minutes. thank you. >> is there any other public comment? >> there is none.

>> okay. thank you. >> thank you for coming. appreciate you coming in. >> sf new deal presentation (discussion item) the commission will hear a presentation from sf new deal reviewing the results of their report “current and future challenges: the small business landscape in san francisco”.

>> good afternoon, i'm with new deal. we are part of presenters that are going to present todaych -- first of all we have presented in the past to this commission. i want to review briefly new deal. we have been providing reviews about small

businesses representing workers and this entire city. we have disbursed $35 million and distributed 3.1 million meals to people experiencing food scarcity. our current contracts are with human services agency, sf environment and owd across all areas including shared spaces and equity grant that we are involved with. today i want to provide that relief program that we gave out 25 micro grants to over six