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tv   Government Access Programming  SFGTV  June 16, 2019 8:00am-9:01am PDT

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i want to talk a little bit about process. i've had a number of questions from members of this committee and your colleagues. these agreements are negotiated under the provision of charter section aa.409. it's a charter amendment that was approved by the voters in 1991. we've had many successful rounds of negotiation since then. it provides a unique mediation and arbitration process that resolves those matters over which parties cannot come to agreement. we've established tripartheid arbitration boards by charter, and where we cannot reach agreement, those boards do resolve negotiations through issue by issue decisions. the board -- the arbitration boards are compelled to take into account a number of factors, but they're generally
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well determined forms of wages, hours and benefits commonly found in public employment, typically, trying to create a balance between the employer's ability to pay and the conditions within the relevant labor markets and the cost of living. so given all that, we've -- by the numbers, we've probably -- we counted it up. we had nearly 400 bargaining sessions. we dealt with almost 2,000 proposals from all of the unions taken together, and through the process from the middle of january through may 15, we were able to resolve all outstanding matters either by agreement or in some instances, by award. we had 26 tables. seven of them were solved by negotiations, and through agreement, the remaining nine
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m.o.u.s were set by arbitration award. the generalization increases are covered in the controller's report. roughly, it's 11% over a 3-year period. the -- just by way of explanation, the city and the unions did conduct extensive analysis on the cost of living. we compared public and private wage and benefit data to inform the parties, and this ultimately led to this outcome. it does exceed the controller's projections for c.p.i. during the 3-year period, so we have built into the m.o.u.s a fail-safe in the event of an economic downturn in years 2 and 3. if the joint report shows an increase of $200 million or more, the wages are delayed but not denies.
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city employees at the end of that term will receive that full percent and a little bit more. it's compounded. you'll see in the report that there's some minor differences in the settlement in terms of the economic value. most of that is by wage adjustments that were targeted adjustments. most of those resources went to our lower wage earners, notably the crossing guards had a base rate increase of $2 an hour. the sheriff's cadets, people who you see when you walk in the building here, had a 5% general increase in addition to the wage increases in the main body of the contract. we also resolved -- i'm just providing examples here -- a long-term dispute of concern with the seiu regarding internal relationships between
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two key classifications in the health department, certified nursing assistants and patient care assistants. there have been no changes or diminution to our health benefits. we've created a process by converting category 17 and 18 employees to civil service. we addressed comp time and overtime issues, trying to limit the caps on compensatory time which, when not used, build up liability over time as it gets more expensive as you go. we'd spent a lot of time and made a number of changes in our no discrimination policies. we brought the standard language into conformance with changes in law since they were
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last negotiated years. we created diversity, fairness and inclusion committees with the seiu and with local 21. we made some changes to our grievance procedures to define clear pathway for resolution for discrimination complaints. we changed our rules for personnel files, making it hard harder for employees to vacate findings of e.e.o. policies from their records. and finally, all contracts will be brought into gender kn neutrality from the executive order. we did make a number of changes to our procedures to further encourage resolution of problems at lower levels within the whole city, some joint committees to resolve problems.
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we did change the union security provisions of all the m.o.u.s. this is the end result of the janus v. afsme decision, asking the city and employer division in particular to do everything we can to support the unions in light of that decision. we have come up with a process, worked closely with them, remaining the city entirely from any decisions about membership. it's completely between the unions and their represented employees. they are provided every two weeks with their dues disbursement, very robust report about where they work, how to contact them with city and personal information as
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required by senate bill 866, so i think that was a positive outcome. we have had reports that we have had a very overwhelming, positive response from city employees. from those unions that have ratified almost no opposition to these agreements, so we're pleased about that, and i'm happy to answer any questions you might have. >> supervisor mar: thank you so much, miss eisen. colleagues, do you have any questions? >> supervisor peskin: congratulations, carol. >> thank you. si -- thank you, sir. it's been a lot of work. >> supervisor mar: actually, i have a few questions. i wanted to congratulate you on the monumental task of getting these labor agreements done on time in a really nonintense way. really appreciate that. and just for the overview that you've just presented to the
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content of the agreements, it all sounds really good to me. i did -- you know, especially, i just wanted to flag the higher increase for some of the lowest paid positions, you know, sounds really good. i had a couple of questions on the items that the board has had hearings on. just on the exempt positions, you said there was created a process for those workers and those positions to be able to gain full-time permanent status. and then, the other one was just around racial inequities in our city government. you referred to diversity, fairness, and inclusion committees that wasn't -- there was an agreement on that. so if you could just describe -- explain a little bit more on -- for those two
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provisions. >> okay. starting with the issue of exempt employment, the -- we've had an informal structure -- informal process in place -- first of all, in exempt employment, employees and their unions have the ability to object to those appointments at the civil service commission. it doesn't seem that that process is something that the unions feel is valuable to them because there's really no history of any of those objections, so we've moved a process into the body of the m.o.u.s whereby we will meet regularly, we will provide the unions -- and local 21, again, is the union that was most concerned about this. we will provide them with regular reports of all of the category 17 and all of the category 18 appointments with whatever reasoning we have available to us in those reports. we will review them routinely with them, and where the union
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believes we made a mistake, we will go through the process of filling that position. we went through extensive bargaining at the table about exemptions, how to address it, what some of the benefits are and what some of the issues are in long-term growth. we also did, when it was raised -- and i presented this in a committee report, i believe to you. we found a growth in exempt employment over a period of time, but that was overall city employment growth generally. it's out there. we will redouble our efforts,
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but there's reasons for it, multiple reasons for it. they're embedded in the charter, and where it's being overused, we'll collect through a joint process. second issue, racial -- the racial equity questions, as you know, the mayor had saetup a task force and there had been a series of meetings around that task force involving a series of organizations and unions. the unions had expressed an interest, both unions, both local 21 and seiu that have expressed an interest in bringing that into their process. so essentially the same process i've described for exempt employment, we will do our best to have it data and fact based. we will evaluate all the city employment hiring, firing,
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discipline among those different groups. issues can be brought to the committee. is not the -- it's not the grievance issue per se, but they're meant to be problem solving groups. these are the best things that are discussed through the process, through evaluation, discussion, and doing that together. so we're prepared to put the resources into it, and we hope the unions, as well, will stay focused on these issues and work with us to resolve issues as they come up. >> supervisor mar: thank you. re really good to hear those provisions being included and look forward to those -- that being used, yeah, to address the concerns, so yeah. >> thank you, supervisor. >> supervisor mar: are there any members of the public who wish to testify on this item? seeing none, public comment is closed. thank you. >> i was told by one prominent
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labor official this morning that if we're not there, it means that we're happy, so i thought i'd report that. >> supervisor mar: thanks again, and colleagues, can we move -- recommend items 4 through 30 to the full board without objection? great. thank you. mr. clerk, please call item number 31. >> clerk: agenda item number 31 is a hearing to review the out comes of the central market tax exclusion of 2011, examining the impact on city resources, economic growth, its effect on vacant storefronts, and the negotiated community requests, and requesting the departments to present. >> supervisor mar: thank you. i'd like to recognize supervisor matt haney who is here for these items. notice, i've set time limits and will be implementing those
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as presenters come forward. >> supervisor haney: thank you, supervisor mar. i'm going to make very brief comments, and then we'll jump into the presentations which i believe we have four or five. today's hearing will be about the central market tax exclusion of 2011. this is also sometimes known as the midmarket tax break or the twitter tax break, probably more popularly known. the central market tax conclusion of 2011 was to ensure job growth in our city at a time when the country was just beginning to recover from a recession. it was targeted in an area of market and large companies, encouraging them to stay in san francisco, spur job creation and economic development. there was also a lot of conversation and commitments at
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the time that this was intended to revitalize the midmarket area, helping to fill the many retail and spaces that had been vacant for many years ago, and it was hopeful this was going to be a tremendous help to the community at large. we are just at the stage where this tax exclusion has sunsetted, just last month, i believe on may 20, and this will have the goal on looking at what happened. we know today in san francisco, 20% of our population makes over $200,000 a year, yet we have become one of if not the most unequal cities in the country. we still have over 8,000 people who live on our streets, many of whom live around the midmarket area. we have housing costs that are the highest in the country, and growing eviction rates that
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have forced out many of the diverse communities that have been here for generations. on -- in the midmarket area, we'll hear about where things are both in terms of some of the potential positive things that happened and also some of the challenges that remain. some of the things that i'm hopeful to hear about today as this tax break sunsets is most fundamentally, what did we learn and what do we do next. did the city meet its goal, how many jobs were created and who got those jobs? how was the money that these companies saved from the tax break used or redistributed? an important part of the tax community was that the companies would provide robust community benefits. what were the community benefits promised, and what
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were delivered, and how do these benefits differ from those that these companies would have provided any ways even without the tax break. and finally, what is our strategy for midmarket now? our strategy of cutting taxes for large tech companies was obviously not a silver bullet, so what do we do now to make sure that we have equitiable development that addresses the significant needs of this community? in central soma, we are about to embark in a massive increase in development, in job growth, in housing. and as we understand what happened with the midmarket tax break, i hope we have many lessons for how we develop moving forward, how we ensure that we not only create jobs, but do it in a way that truly benefits the community as a whole. so with that, i am going to open up this hearing first with a presentation i believe from the office of the controller.
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>> supervisor mar: and mr. egan, you have up to ten minutes for your presentation. >> ted egan from the controller office of economic analysis. i have a lot of material i'm going to deliver in ten minutes, so i'm going to speak relatively quickly. i'm happy to answer any questions after the presentation is over. the legislation directed the controller's office to prepare a report on the impacts of the legislation after three years, and our office did issue the report in 2014, so some of the information that i'll share with you is updated information, and some of it is new information which we didn't speak to at the time. firstly, this chart just summarizes the payroll tax that was foregone by the city. in many years it was a relatively small amount of money.
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in two years, however, 2014, and 2015, it was close to $35 million and $16 million respectively. and i would just point out that 2014 was shortly after the i.p.o. of twitter, which it is a matter of record because of their community benefit agreement, did participate in the tax break, and it's likely that a significant amount of that foregone tax is associated with twitter's i.p.o. event. throughout the impact, what i discussed in my presentation, i'm going to look at economic indicators before and after the exclusion was enacted and then look at the pattern citywide. we have different ways with which we can look at the area. i'm going to talk first about our business tax filings, and we have a great deal of
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granularity, including some of the large properties that were not included in the legislation, not included in the tax break area but were also part of the area between vanness and 6th street on market street. and that is where we collected the business tax information that i'm going to share with you now. we saw as we reported in our 2014 report a much faster rate of growth in business tax revenue from the area before, from 2010 to 2013 than we saw citywide. so we saw over 600% increase in the area and about a 47% increase citywide. since 2013, which was the year we used for our previous report, we've basically seen a stagnation of business tax growth area in the area, but looking fr
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looki looking to 2010 to 2016, we've looked at a about a 600% increase. it's businesses that are a size enough to report their payroll expense to the treasurer's office. i believe that's about $150,000 in annual payroll expense. that number increased faster in the area than it did in the city as a whole, although there hasn't been much growth since 2013. there were other economic indicators that are best captured at a zip code level, and we're using the zip codes 94102 and 94103 to capture what's going on in the area. it's a somewhat bigger area, just to keep that in mind, but we're looking at business establishments by industry. so the census bureau annually releases information on the
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number of establishments by industry in the city as a whole, and also by zip code, so we were able to combine the zip codes and look at the businesses by industry in the two-zip code area and compare that as a whole. generally what we see is faster growth in business formation in the area relative to the city as a whole. that's clearly true in industries that have a lot of technologies, like information, which had a 67% growth. tech is a big piece of it, professional services. it's true, however, in many other industries. i would note, however, that while there was growth, there was faster growth citywide in arts, entertainment, and recreation. also in other services, which includes a lot of neighborhood services as well as grant making organizations, and there was a loss citywide in wholesale trade establishments
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that was faster in the area, and there was a lot of trade establishments in the area and in the city as a whole. we also looked at housing prices, and i'll discuss median housing prices and median rent. this is from zillow. they've actually been somewhat slower in the 94102 and 94103 zip codes than they are in the city as a whole, but again, we're talking a 74% increase versus a 94% increase citywide. when we're looking at asking rents, 36% growth citywide, a higher growth, 43 or 45% in the two zip codes surrounding the area, so increasing rental stock pressure on the area. and finally, we were able to look at some data from the
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census bureau, and particularly we looked at patterns of socioeconomic change in the residents as measured by their occupations. so this is just a short map showing the census tracts that we used, but again, trying to capture the area surrounding the tax cut region. the san francisco rent board publishes data on each eviction in the city, and we were able to extract that and overlay is on the census tract map to realize where evictions are happening and changing over time. this is the five years prior to the exclusion taking effect. you can see that the central market-tenderloin was one of the areas where it was most prominent in the city at the time. we made the same map from 2013
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to 2017. there still are a lot of evictions in the central market-tenderloin area, but there's a lot of spread in evictions in the city. so if you actually looked at the change in evictions in the area versus the city as a whole, there was not much increase in the rate of evictions. in other words, the number of annual evictions per apartment or rental housing unit in the census tract. that really hasn't changed in the area. it really has changed a lot in the city as a whole. and then finally, the last piece of information we looked at was occupational change. this was what residents of the neighborhood have reported to the census about what their occupation were, and again, we're looking thornton thomaset thomasetti -- we're looking at the 2006 to 2007 period and comparing it to the 2016-2017
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areas, both in the areas representing the district and the city as a whole. so we're showing the occupations, and they're ranked from highest paid to lowest paid on average. we're looking at really fast growth in occupations in this area. there was about a 43% increase across the city in residents who work in science, and engineering across the area. it is also true, however, and the subtitles are obscuring this particular chart, but personal care occupations grew faster, production occupations grew faster in the area even
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though they declined in the city as a whole. and this is generally an indication of an area whose population is growing faster than the city. another of the very important things that's happening in the area at the same time as the exclusion is taking place and changing the business mix is that there's a lot of housing being created, and that's changing or contributing to the change of the population mix in the area as a whole. there are certain middle-income occupations -- for example, the construction occupations -- in which the number of residents did decline in the post 2011 period compared to the earlier period. so just to conclude rapidly, i have a few second left, we are generally concluding in our 2014 report that there's strong growth citywide. it appears to be tide to the technology industry, but not exclusively. most of the sectors have grown quickly in the area as a whole.
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we now find residential rents growing faster than the citywide average, and we're seeing pronounced socioeconomic changes in the area versus the city as a whole, although that's encomepassing high wage and low wage occupations. >> supervisor haney: i have a couple questions, and i appreciate this. it shows that there's been high growth in the area as a whole. [please stand by]
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>> the exclusion contributed to the increased attractiveness of the area to technology companies. i'm sure that had an impact. as i said, a lot of other things going on as well, particularly the changing housing mix mountain area and just the changes in the housing market as the city as a whole. >> did we require any sort of
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more robust reporting from the companies, not just as it related to community benefits, which we'll talk about, but in terms of the jobs that they were creating, who those jobs were going to, any sort of demographic, data. i see job growth, but if, you know, 4,000, 5,000 people are moving from elsewhere and getting the jobs and that wouldn't necessarily be reflected in terms of whether the direct surrounding community is. >> to my knowledge, the only thing the businesses were required to report was the total number of employees. that's something that's part of the treasurer's annual report. we know from the census data, a decent amount about the demographics of the technology industry in particular in the city. it frankly hasn't changed very much. but to my knowledge, we were not
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asking companies to report any of that information. >> so we don't -- we know how many jobs they have or how many employees. but we don't know much about who? >> we don't know where they live or their demographics. >> okay. do you have the total number of -- i see year-by-year here, how much payroll expense tax was foregone overall? and how much was attributed -- was due to twitter versus the others? >> we certainly couldn't disclose anything about individual taxpayers. just multiplying the seven years gets you to $70 million in total. >> $70 million. and the -- last question. so the -- it seems like there was some level of kind of consistently since 2013-2014, in terms of the number of employees. and so it seems like there was some significant changes between
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2010 and 2013, 2014. and then for a lot of these numbers we're looking at, the last five years, there hasn't been a lot of change in the area, would you say that's accurate? >> i think that's right. what that probably reflects is an area where the commercial space was hit harder than average by the recession and recovered relatively quickly, so that by 2013, there really is much less vacancy than there was previously. that would be my quick explanation for that. >> anyone have questions for the controller? >> yeah. i just had a few. actually so i'm -- actually going back to the question about the total amount of tax exclusion during the entire period. it's roughly around $70 million. >> yep. >> you would say. and then in terms of the community benefits that were received, particularly for the
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tenderloin neighborhoods. maybe we're going to hear a little bit that from the ojed presentation? i don't know if you have anything to add about any economic value of the community benefits that were received? >> you know, we looked into that question when we were preparing our report in 2014. and they were just so diverse, that it was difficult to assign them a monetary value. and i think our conclusion was that certainly in the context of the value of the tax foregone. and probably in terms of the value of the impacts, the economic impacts on the neighborhood, they're relatively small. >> thank you. and then i just had a question around how this is impacted small businesses in the neighborhood. it's not quite clear from -- i'm looking at this slide around occupational change in the area. so you don't really reference small businesses. and, yeah. so i don't know if you could comment on that, particularly like neighborhood retail and
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restaurant, businesses. >> the slide on page 8, or the data on page 8, shows the detail that we've done in terms of looking at industry by industry impact. it doesn't directly speak to size. on the other hand, there aren't giant manufacturers or giant retailers, other than the technology companies and the public sector. there really aren't large-scale employers there. so i think outside of those sectors, that probably reflects the small business impact. we could dive into this data by industry size. we could do an analysis about that. but i would -- i would say off the cuff that i believe, outside of technology, most of these businesses would be small businesses. >> great. and then sort of related to that, your slides around the impact on housing costs and rents doesn't really include
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commercial represents. -- rents, right. i was wondering -- >> my understanding is the oed presentation will speak to that and some of the retail issues. >> thank you so much, mr. egan. >> okay. >> all right. thank you. so we'll move to the next presenter, which i believe is a representative from the city administrator's office bill barnes. >> mr. barnes, you have to five minutes for your presentation. >> good morning. chair mar, members of the committee, bill barnes from the city administrator's office. i have some slides, so if we can get those up. so the central market tax exclusion was really something that we took on after the fact. it was passed by the board of supervisors. there was a community benefits component initially assigned to it. and then the city administrator was asked to do this back in 2011. so i'll give you a little bit of
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background very quickly. the central market c.a.c. replaced one that used to exist in the neighborhood, that was established for redevelopment. so for a long time, mid-market was a redevelopment survey area. redevelopment was dissolved and a c.a.c. was created with supervisor tim's support to focus on these issues. initially 11 members appointed with specific qualifications. later on that was reduced to five members from the neighborhood, because it was hard to get quorum. the purpose was to hold public hearings and make recommendations to the city administrator. only companies greater than $1 million needed a c.b.a. there were many companies that received a tax benefit, bike stores, restaurants, that kind of thing that were below $1 million. we only worked to put those over that and there's a provision in the law that a misrepresentation regarding eligibility results in penalties. if you fill out a c.b.a., it turns out you don't do that, i'll get to that example next. you're liable for all of the tax you owed, because of how it's set up.
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these are the companies that enter into a c.b.a. and the number of years that they had one. everyone thinks twitter was the first company, but it was actually zendesk, they enter into a c.b.a. from 2012 going forward. you can see there are many others. one company 21 tech, which is a city vendor withdrew, they entered into the program and couldn't meet the obligations. the three other companies with the asterisk, moved out of the neighborhoods for very reasons. they had a significant staff layoff issue, zeus lost the lease. i would note that yemer, initially a stand-alone company, it was acquired by microsoft. the program achievements at a high level were integrating employees into the community, there was a concern that people who worked at companies wouldn't be part of the broader area, that they would not be part of the mid-market. so companies began incorporating
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community information into onboarding, there were days of service. we were able to get cash grants, local purchasing and in-kind support. and companies also had a community liaison, a person on the ground working directly with neighborhood organizations. i don't want to say everything was great, because there was some significant challenges to the program. that's when this slide is about. the first challenge that the tax credit was granted by the board of supervisors, before benefits were defined. so in most development agreements that you consider, there's a scope of benefits that you approve, like the development agreement and sort of approve it and track the benefits over time. here that wasn't the case. second, we changed from payroll. so initially people were part of the program, because they were sieving a lot of money. but then the voters approved a payroll to tax change, which metropolitan that you no longer had payroll and the exclusion was less valuable. then, in addition, a stock options credit passed by the board, not requiring community benefits process and people could elect to take that instead. and then as mr. egan alluded to,
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taxpayer confidentiality laws kept us from knowing the exact tax credit value of an individual company. so when we started this process, the c.a.c. said 30% of the -- 40% of the savings ought to go back to the community. unfortunately individual companies don't have to disclose their tax savings. zen desk did, but others didn't. what we used instead is how many employees they had, how many square feet they announced. it sort of created tiers from companies larger to smaller. we can tell you with certainty how much money individual companies saved. the last thing i wanted to point out, these are positive things. four years later, twitter's neighbor nest is still going with compass community services, zen desk funded reading partners with the-to--- tenderloin reading desk. might be soft matched their employee hours with cash grants and provides free office software to any 501 c3 non-profit. they weren't paying for
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software. spotify worked worked with local hip-hop program to put together a free awesome event that folks still talk about. with that, i'm happy to take any questions that anyone might have. >> i've got a few. but anybody? no. all right. so are there -- did you have any kind of totaling of -- i mean, i appreciate some of the specific examples here. but do we know like the total amount that they contributed, the types of contributions they made, the total number of hours? and in terms of the totaling as well, i know that there were maybe some sense of some years that the companies, you know, didn't put forward things that were necessarily always complete or were late. or weren't exactly -- do any sort of sense or do we have plans to do that kind of retrospective in more of a quantified way? >> you're asking two questions.
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let me answer the first one first, which is on on thing. the citizens' advisory committee had monthly meetings. there were reported prepared and talk about the progress they were making. it is true that large organizations in the community, that expected cash contributions, didn't see that happen. so when the c.b.a.s were first put in, large non-profits saying can you give us $50,000 and sponsor our event and that wasn't something that was attained. that was an earlier slide. we have togethers and can get those to your office. the reason i put the presentation together in this way, was to talk about what we were doing kind of overall and the change we're hoping to see. there were also questions about how we valued it volunteer hours. some of the community organizations suggested to value them for early age and value them at the wage an employee was making. we decided not to make that financial calculation for that reason. we can get to your office all of those reports and records over time.
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>> thank you. thank you for that. and sort of along those lines, one of the things that seems like the focus of the community benefits were more kind of different types of volunteer hours, community service days, or sort of smaller contributions. was this -- did this come as a result of -- was there direction given to the companies in terms of the type of community benefits that we wanted to see? and did any of the community benefits actually reflect any of these companies actually creating real pipelines for jobs or active participation, within their company, in terms of economic benefits to the community? was it more like one-offs, they wrote a check. >> no. those are good questions. zen set the bar for what participation would be. and their theory was that it was not good enough to stay inside the building and not go to the local businesses, to not engage with local community members. twitter because of its size was able to make huge investments. if you go to neighbor nest
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today, that's five-year project. they're funding compass in significant ways. what i would note is that we askeds what their priorities were, but the c.a.c. created a framework for what was important. at the beginning, c.a.c. members wanted to make sure that community and folks of these companies were engaging. that's what we tried to build. i think it's been successful in some ways, because companies that are no longer receiving the exclusion are still doing the community work that they began doing. and zen desk and twitter and others are still doing that. we can certainly get you information, if you'd like. the one thing i wanted to note, you asked what happened if someone didn't perform and what the penalties were there. we did not review c.b.a.s with people that didn't perform, people withdrew from the program. a lot of people came forward, here's what we expect you to do, they declined to participate and paid their full tax. that was our experience in that regard. >> are there recommendations that you would make, part of
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what the goal of the preparation was, in order to kind of talk about what we learned, one of those seems to be that maybe we shouldn't grant tax credits before we've defined benefits. basically allowed them to define the benefits themselves and had challenges at various levels of even defining for ourselves what we wanted. there are other things that you would say you would do differently, if to set up a program like this, as unlikely as this is? >> this is the only tax credit with a community benefit agreement component. the benefit that was promised by the tax credit and i think it was -- i'll let others speak to whether it was achieved, with job creation, retail vacancy, that kind of thing. we have a development agreement, when you enter into the agreement, we say here is 30% of the hours, here's the prevailing wage. here's what we expect you to do with local businesses in terms of enterprises. that stuff wasn't built in here. we're doing it on the back end. i would note that some of the
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business-to-business and tenderloin did sustain the smaller vendors, restaurants and other suppliers. but that wasn't as codified as it could have been, if thought about at the outset. >> thank you. so, i mean, i understand and it's really sad that we had the agreement and it was backwards. bad on us. but i think really moving forward, and i just feel that we really need to hammer out these community benefits. i mean, one of the things that i have experienced and i think with the non-profits in the area and the surrounding areas, is they do want to have that participation and cash value, right, to support an event or give them something to do, you know, money.
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and i wasn't on that committee advisory when all of this was being hammered out. i can't tell you how many times non-profits have said, you know, they have an idea. hey, can't we get money from one of the tech companies. and it's not happening. we know that. and the tech companies now, i mean, they used to give a little bit of chump change here and there around. but now it seems that they have this, you know, we have a higher vision and mission of what we're going to fund. and not really going down in the weeds and on the ground to fund a lot of these non-profits doing that work. so i just think that looking forward, we really need to hammer that out. because i think that the non-profits i've talked to in my district, and that border this area, and the non-profits in that area felt really let down. that they had been there before. and then they're still there and they weren't getting the help that the tech companies and the companies were in the agreements
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with the tax benefits. they got to decide what was important. and how they were going to benefit the community. and i thought -- i think that's just really sad, because they didn't know the community. and they came in and said this is what we're going to do. and so i think really it's to the point now that we should be saying if, you know, these are the community benefits that the community wants to do and be, you know, in the weeds more than this. but i just -- and also with the small business, i know that this was suppose to help small business, and especially like food vendors. but i think so many of them, they weren't coming down to eat or use a lot of the restaurants, because a lot of those restaurants that went in or were there, they struggled. and a lot of them closed. and i think it's more of the culture, especially the tech companies, where they have -- where you can eat 24/7, as long as you're working and some of
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them even take food home. so it was just really tough for, you know, thinking that everybody was going to go down eat, after work, things like that. and so i think that's something that we really need to rethink, too, for small business and how we help them. thank you. >> thank you, supervisor. i would just note, going forward, because i thought that was -- what do we do better in the future is a good yes. a number of companies in the area did not receive a tax exclusion. and a number of them have pretty robust philanthropy programs. adobe is a good example of that, which moves into the insurance fund building and others. and so the supervisors' office, through supervisor kim, did work to try to harmonize philanthropy from all sources, not just those that were getting the tax exclusion and then connect them to non-profits, often that had to be mission aligned. but not always. and so i think one of the things that we can do going forward is give those making philanthropy decisions better guidance on the sorts of programs or initiatives that we think are important. and often people will look to
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the local supervisor's office to ask the questions, which are the most effective groups or what are the most effective activities. that would be something that we could do moving forward. >> thank you, mr. barnes. i just had a few questions. well, actually i just wanted to follow up on the points that supervisor haney and supervisor brown made around the community benefits. and really feel what you presented here today was quite disappointing and the lack of detail and the comprehensive reporting on what the community benefits have been. and especially given the fact that, there were over $70 million in tax breaks granted to, you know, 10, 11 companies. and given that there's been a public perception that the community benefits program has been very weak, if not a joke. and so i -- and given the fact that these tax breaks and the
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community benefits have supposedly been in place now since 2012, and what you presented today was just, you know, anecdotal information about alleged community benefits and so, yeah, i think -- you know, the board and the public really have a right to know what actual benefits were provided to the -- to the tenderloin and market neighborhoods. because that was a key part of -- or the rationale for granting these tens of millions of dollars of tax breaks to companies there. so when would -- one is the board and when is the public able to get a full accounting of what community benefits were actually provided? >> i'm not sure exactly sure how to respond to that pump we were asked to talk about what we thought accomplishments and challenges were. i think i was pretty candid about some of the challenges in
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a way that wasn't sugar coating anything. i appreciate the people in the community are frustrated. i did not put together a quantitative report for this committee. but can do so. the reports that were gathered on mostly basis were reviewed at c.a.c. meetings. some of the c.a.c. meetings were fairly contentious and some of them rutted in companies withdrawing from the tax. we had a robust process -- the community expectations are determined up front. so before we grant a public benefit of any type, we should be clear about what people expect and it should be incorporated into a how we do that. having said that, we will go back and pull together quantitative information and make it available to the members of the community and to the public, so they can judge to themselves. i didn't want to come here today with a power point presentation that suggested everything was great. because i don't believe that's our view. we think there are things to learn from this and thank
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supervisor haney and his staff, if we do something in the future, how do we make it's better. i appreciate your comments, supervisor mar, and we'll provide additional detail to get to your questions. >> i appreciate supervisor haney doing this after the fact recap. and without casting -- on the members of the board at that time, i think this was a terrible piece of public policy. never should have been passed. it is anti-thetical to good taxation policy. and i don't think there's any lessons about how we should apply better community benefits packages going forward. we just shouldn't do this going forward. >> that would be a policy choice for the board. [laughter] >> yeah. i understand that, bill. >> all right.
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tell us how you really feel, supervisor. you know, i appreciate chair mar's point there. i think that there is absolutely the perception that these community benefits were not real. that they didn't have a significant positive impact on the community. and that's created a lot of distrust, it's created division. and, you know, for us to have the actual information of what was provided, so we can look at that, the numbers is important. and it's important not because we would ever design, i agree, anything like this again. but we are asking community benefits in different formats and hopefully in more concrete, deliverable ways. but for us to understand what was done here and what sort of oversight works and when we're not having, you know, on top of it oversight, what these companies are seeking to provide
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is valuable information. so i -- i would like, you know, if you could present or prepare for us some of the -- because i imagine each month and each year, you had to summarize in some way what was provided. and from each of the companies. so that was something that i was really hoping to see. >> got it. we'll get that again to the members of the committee, we'll make it available on the internet. i would just say in closing, when the city -- administrativer, designs programs, we're about embark on a project labor agreement. we try really hard at the beginning of the process to identify what we're trying to get. we'll get the information you asked for and thank you for your time. >> yep. thank you. next department presentation from planning. mr. star. >> mr. star, a reminder, you have to five minutes for your presentation.
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>> good afternoon, supervisors. my name is aaron star. i'm the manager of the elective planning department. my presentation will focus on construction investment and permanent activity within the central market tax exclusion zone. we also looked at change of use
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permits, which represent a sub set of permanent activity. we looked at nine years prior to the tax break and then the duration of the tax break itself. we took those numbers and compared them to the same data set citywide, to see how the exclusion zone compared to the rest of the city. the data show that both the number of permits and the dollar invested in construction in the area increased between the two periods. there were 1400 permits during the pre-exclusion period and 2800 permits during the exclusion period. this represents a 92% increase. in comparison to citywide data that increase is also significant, going from .72% of the total permit citywide to 1.27% of permits citywide. also significant was the increase in construction investment through alterations permits. the value of which increased 190% within the tax exclusion zone, compared to 80.3% citywide. this shows a significant investment in existing building stock. however, overall construction
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investment didn't see the same increase when compared to citywide activity. in that case, construction investment increased from 56 -- i'm sorry, $560,000 to about $1 million, representing a 78% increase. but if we compare that to what happened citywide, construction investment went down from 2.7% of citywide construction investment to 2.17%. the disparity between permit numbers and construction investment is due to a significant increase in the amount of construction investment in the city overall during that time. specifically with regards to new construction. overall construction investment citywide increased $20.6 million to -- from $20.6 million to $49 million. and increase of about 140%. and new construction investment increased from $8.8 million to $27.8 million, or 215%. so this -- you can see the construction investment in the tax exclusion zone in orange. and the construction investment citywide in blue.
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the graph shows a dramatic increase in construction investment citywide between 2011, 2018 and beginning 2015. at the same time construction investment in tax exclusion zones stayed relatively flat. the next slide shows the permanent activity in the exclusion zone, as a percentage of citywide activity. increase here is definitely notable, with the increase in activity starting in 2012. we also looked at change of use permits, just out of curiosity, in the exclusion zone, change of use permits are needed when establishing a -- replacing a store with a restaurant or adding a new space, not previously occupied. comparing the two time periods, increased by 100%. however, when you compare to an increase citywide, as a percentage, the change-use in the exclusion zone stayed relatively flat. so our conclusion is that while
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all permanent activity increased during the tax exclusion period compared to citywide permit activity, the amount of construction in the area declined. i would also note just looking at alterations permits, the area did see a significant increase in construction investment and the number of permits. so should the city decide to use the tool again, which looks -- based on the last comments we had, the first of defined success perform what metrics will we use from the planning standpoint is a more economic activity, more foot traffic, lower construction activity and investment. the second is to take baseline measurements, this could be storefront vacancy, which i understand we do have some numbers on. maybe the mix of retail operations an services within the zone. or even qualitative measurements, where we survey pedestrian impressions of safety and cleanliness in the area. and finally, ensure the responsible departments can track the data during the tax
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exclusion timeframe. three years after it started, the department -- the planning department started using the new case tracking system. that system allows us a lot more flexibility to track data points, that we couldn't before. d.b.i. is preparing to use that system as well and once they do, we'll be able to better track the permits that are not associated with planning department cases. [bell ringing] right now the two departments are using two different systems, which makes pulling out specific data pretty difficult. and that concludes my presentation. of course, i'm available for questions. thank you. >> no questions. thank you. last department presentation, folks from oewd. you have to ten minutes for