Transcripts For SFGTV Small Business Commission 10316 20161020

Naiments, completion of a speaker cards will help inshurure proper spelling in the written records mptd deliver speaker cards to commission secretary. There is a sign in sheet at the front table for those that would like to be added. Please show our slide. It is our custom to begin each somewhat Business Commission Meeting Office of Small Business is the only place to start you new business in San Francisco and best place to get answers about doing business. Firfs stop with a question about what to do next. Lets get going. Who all do we have today . Lets do roll call. Item 1, call to order and roll call. Adams, here. Dooley,. Dwight, herement ortizcartagena, here. Toursarkissian, here. Riley. Commissioner zouzounis, here. You have quorum. Mrs. President joining us are the City Attorney and new City Attorney matthew lee who are here to help us through the legacy business. Working closely with our office and with developing the rules and regs, so we have lots to put before you in general questions and getting policies and direction from you. I dont have the Legal Expertise so we have our City Attorney today. And then also joining us is our intern lewis who is here. Will be attending the meeting. Great. Iletm 2, general Public Comment. Members of the public on matteress within the jurisdiction but not on todays calendar and address for future consideration. Any members that would like to comment on anything not on todays agenda . Seeing none, Public Comment is closed. Item 3, discussion and action to make recommend aishz file number 160962, police code limit ded Live Performance permit. Director of Entertainment Commission to extend from 10 olauv to 11 p. M. The hours during which Live Performanceess may be presented in the union street nirebd commercial. For this item we have legislative aid from supervisor mark farrell kanishka karunaratne. Welcome. Thank you. Good afternoon president dwight and members of the commission. Kanishka karunaratne. The item is legislation to allow an extension of limited live permit hours in the Union Straight neighborhood commercial disterability. Existing laws allows this receive rive performance from 24 entertainment. These permits known as llp allow a business to offer Live Performance as a secondary purpose until 10. They are issued to restaurants and bars with live music. After have ing a llp for a year they can extend to 11 p. M. The Entertainment Commission may grant requests if there are no significant Public Safety or nuisance concerns relate today the establishment or llp. The ordinance allows llp holders in the union street neighborhood commercial district to apply to extend from 10 to 11 p. M. As they would be able to dine a majority of the city commercial corridors. There is only one llp holder, it is bus stop bar and they have had no complaints since having their llp issued a year ago. We hope your support this legislation so the Good Neighbor business has a chance to extend performance hours. Thank you for having me and available for question. Any questions . I have a question. Go for it, and what was the purpsh of the exception . What why is it in place . Because when the llp definition was created there were neighborhoods that did not want to ever extend past 10 p. M. Did you have any objections in the neighborhood . We do krobjection from had Golden Gate Valley Neighborhood Association. What purposedo they formulate the reason for the objection cephal . I dont think they have a objection to this business bullet t but concernbed a slippery slope. In this specific neighborhood . Yes. Commissioners any other questions . Okay, open up to Public Comment. Any members of the public that would like to comment . We have a couple speaker cards. Gabe fer oni and second is robert burr dough. Welcome. I own the bus stop on union street. Just looking to get the limited live extended for a hour. We are right now going until 10. 11 oclock would just make things a lot bet frr the performance of this license. A lot of the bands we get good bands. They all have second and day jobs so a lot of them cant get there till 7 so get at 8 and set up about 8 30 play for about a hour and half it it is over. People are just start ing to come off of dinner and 9 30 and it is over. We are paying the bands and trying to do this right and be responsible and dont think the extrahour will do harm to anyone but benefit the area, benefit the band and help us make this permit better. We are not asking for anything else. All we want to do is one hour. That is pretty much it. We are very responsible with it and there are customers that appreciate that we do keep caerfck closed and doors and windows closed. We try toto make this a good thing and think livens up the neighborhood. The neighborhood needs a little help and things like that this help. Thank you for coming out today. Okay. Any questions . We cant question, we can just listen. Okay cool. Thank you. Good afternoon commissioners. Im robert bar del. I was president the Golden Gate Valley Neighborhood Association when the limited Live Performance rep. Legislation passed and on board when we came on to support this 10 p. M. Hard cap. Golden gate valley itself took no position on the legislation. That is because so many people in the neighborhood had been traumatized over the years by the drinking problems that are associated with union street. If any of you know it, there are a lot of bars and restaurants, many stay open late especially in college and profootball season and can get hairy out there so a lot of people want to stop anything associated with bar squz rest rants. I have come to see it was a mistake. For the reasons gab suggested. The dands are getting warmed and people come in and bring a different crowd to the bus stop. I live a block away and lived a block away for over 30 years. It is a different crowd that comes in. It may be suburban rchlt live music is a good thing. It was a tradition on union treat when i moved in many were not here or too young to remember bullet there were several places included the matrix which is a high end venue. There was paw sawn madras which had a piano and singer, a very coom place. There were others. This is a way for union street to regain something and maybe bring a little life back, at least a little culture. We dont have a Movie Theater screen anymore, there is a very little it do and this is a small thing. 11 oclock isnt midnight or 1 a. M. Friday and saturday is cool. The Entertainment Commission has present discussion. If they want to say sunday through thursday done by 10 30 or 10 i think people at the bus stop can live with that. The Entertainment Commission is there and protect the neighbors who have complaints so ask you to approve this. Thank you very much. Any other comments . Seeing none, Public Comment is closed. Any questions . Commissioner toursarkissian, are you on the list . No im not. I like to support the legislation. I have been in the bus stop several time squz lived at laguna and broadway so it is right there and what i really like about it is, he promotes local bands. Like local San Francisco bands that are still around and still forming in the city. I had the pleasure of seeing a few there and he is absolutely right, they stop at 10 oclock and it kind of a bummer so i would definitely support this legislation up to 11 oclock p. M. Commissioner ortizcartagena. I concur with my colleague commissioners adams. Especially farrell is from the neighborhood. He has the pulse of the neighborhood and seeing what you say. I had businesses there in that area and definitely i think you are handling it appropriate low ly so i support the legislation as well. Any other comments . Alright. We can take action on this. Like to have a vote. I make a motion to approve the extension for the limited Live Performance. Seconded anybody . I second it. Ortizcartagena seconds it. All in favor . Aye. Aez opposed . That passes 70. There you go. Go have live music. Thank you. Alright. Next idem, please. Item number 4, discussion and possible action to make recommendation on the board of supervisors file number 1607553, planning code. Exemp son and general adsign penalties. All non xhrjs signs exempt from regulation. Increased penalty for display of general adsigns. Shorten for vilesh that agrew. Allow property leans for unpaid. Affirming the planning departments under the California Environmental quality act and consist wnt the general plan and 8 priorities policy section 101. 1 and finding public necessity convenience and welfare under planning code section 302. Discussion and action. Welcome back. Thank you. Lee hepner from Aaron Peskins aufs and here a couple weeks ago and happily returned today with clarification. This is file 60553, which in pertinent part enhances penalties for new illegal general advertising signs. We are not chaisking the definition of general definition or the deaf finition of any type of sign, we are however enhancing the penalties for new illegal general advertising signs which are already illegal. One the questions i just want to recap where we were last time and address the questions that came up. One of the questions that came up last time with respect to the definition of general advertise tg signs. That is planning code 6 o2. 7 and what does it mean for a sign to advertise a product that is sold or offered at the business . A general advertising sign set in the planning code when it is actually a fixed to a property is what we talk about, advertising something which is not sold or offered there or incident frl the business operation. The clarification from the Zoning Administrator is that it is mostly fact specific inquiry which is unsettling to the body but the fact is the general advertising sign which enforcement is taken are clear cut. A couple examples we talked about a coke cola sign, that is a general advertising sign and only sold at the wall greens. Thais a general adsign. A coors sign, like a neon coors sign on the enterier of a bar facing out isnt affix today a window isnt a general an advertising sign. What we are talking about is really signs that are painted on to the window or affixed like a vinyl sign on a window is general advertising sign. With resfeckt to gray area there, which i try today get to the it bottom of with the Zoning Administrator and think is really important with respect to enforcement of the law, i confirm the goal is compliance with the controls and that to the exthrent is flexibility in enforcement and that about getting business tooz comply with taking them down and only in the most extreme circumstances would enforcement measures bow taken. So, again, with respect to that enforcement, i think it is critical to understand the enhanced penalties we provide in the legislation giveathize city a tool against bad actors and the example that came up in the last hearing and prompted this legislation was the example of the verizon sign in super 50 put up on the exterior of the embear dareo tower jz took up 25 floors. This was such a egregious example and the city did not have a tool to require them to take that down in a expeditious time. We can issue a notice of violation and then the owner of the sign has 30 days to take it down. If you are putting up a big sign for a special event that sign is only relevant for the term of the special event which is much shorter than 30 days and need a different tool to leverage the cities enforcement power to get the sign to come down. That is what we are talking about with enforcement. A couple other things, there are a lot of definitions of various types of signs in the planning code. Window signs, roof and business and historic signs and there is a significant amount of overlap. I do cht to provide the good news that awnings and signs that name the business are not general adsigns, those are business signs so not taking about a sign that says original joes on original joes. That isnt a advertising sign or a retail store with the name or 25 percent off sale, that isnt a general advertising sign. That pertains to items somd in the store. I confirmed window signs are those adhered specifically to the window and i think while the primarily legislation is to add ad hoc illegal bill boards the enhanced penalties to the extent they are general advertising signs advertising something not sold or offered that that premise. I want to make a couple final points here. The first is that general advertising signs whether large or small do contribute to urban blight and should be removed. I thainkt think thats Good Foundation thmpt voters affirmed this with lathe 80 percent of the vote and the legislator grappled to find the right tool tooz enforce which is a ban on new general advertising signs. The second point to drive home is the process established by the ordinance, there is flexibility baked into this. I know it is less than 30 days we limited the window for correcting or appeals a notice of violation from 30 day tooz 3 days or 5 days in the event that notice is mailed out , but there is flexibility to the law and dont think it is practical this is used as is a sword against Small Business. This is a tool to get at the large bad actors like the verizon taking up 20 stories of embarcadero tower. I hope that addresses most of the issues that came umon the last matter. Thank you for taking the time to come back. Commissioners, any other question snz i have a question. Thank you for all the research it is significantly more than i prepared last time. Quite a bit. I see the materials are a example where it says examples of general advertising signs is that something you provided . No. One the examples that i have lut butt you may not have it i dont think i do. Advertising onit is a grocery store. I see. Would you say that based on the research you completed and the definitions that you have described to the commission, under what circumstances this sign would be considered a general advertising sign or otherwise not . This looks like a run of the mill Corner Grocery store with the pepsi cola and see it all the time so want to know what extent that falls under the definition of general advertising sign. Just looking at this, this is a general advertising sign and let me sflain with respect to a business sign, there is a inticate part the business sign that says if you advertise j and b liquor and it is a big signi believe this gets to your point commissioner. You have a pepsi logo in that sign so this looks like it is adjacent to the business sign and maybe not a part of 23459 business sign and that would render this a general advertising sign. If, however, the pepsi logo is integrated fl into the business sign as long as the pepsi logo is under 25 percent the sign it is a business sign and not a general ad sign. This looks like a general ad sign because it isnt part the business sign. You gave the definition of wallgreens and said there is coke ad it is general ad sign because it is incidental to the business. Would you say pepsi or coke is also incidental to the business . I think that falls in the same category. There will be a lot of signs in the city in violation ofim just telling you. There are quite a few. Just walking the streets of San Francisco a lot of Grocery Stores have signs of products they sell that may be considered incidental. Just making this legislation doesnt effect the definition of that signage. But there will be a shortening the period for remedying the problem. The Planning Commission could go after these signs today and give them 30 days instead of 3, so i think it iswe would speculate to say they are going to use this now to go after signs like this. This has been there a long time. Probably pepsi paid for the owners sign for the right. The reason i bring this up is not that i expect a major change in the policy of the city. Our duty is look from the Small Business angle and point of view. I bring it up so is it is clear. I think it is interesting question about enforceability and practical enforcement in the city. This is a new general ad sign it is illegal. But to the extent it isnt enforced, doesnt matter. What is a law is a law to the extent it is enforced. Is it important because we increase the penalties for this and shortening the time. It may effect Small Business. Pepsi sign even though it isthat is fine because anything already in place when the law came into affect was grand fathered so this general ad sign where you see the pepsi, that was there before the ordinance was voted in. I just dont want to [inaudible] whether it is grand fathered or otherwise. It is a fact that it will somewhat effectcould effect Small Business. Thats all. It isnt like it will change the definition but it is shortening the time and increasing the penalties. We should admit that at least. That is a fact. I think it is a fact and in my comments i think there is nexability flexibility to allow the city to work compliance and not jump towards fines. That should be reserved and think will be reserved for verizon putting up a 25 story ad. Good. You can quote me on that when it comes to a court of law. Thank you for your prezen itation. Thank you commissioner adams because that makes a difference. I just have one simple question and this is really kind of more details like cultural in the mission like paint which means affixed like we have mu nudeo sunday does that fall under the category . That incidental to the business. Munudeo is on the menu. It is general. I think lee said those type of products as long as they are not sold at all in the location are not effected. Okay. So, it is good. Last time we had a question about incidental so do you have aquer answer . Yes, and the answer i provided is in my conversation with the zoning adsmin strairt it isnt fast and dry. As with any law that ultimately is determined in the courts and interpreted in the courts such is the definition of incidental to business use or business itself. In this circumstance it bears out in the hypotheticals we des cussed. The coke add on a wallgreens is a good example of something that is in the gray area, but our zoning adsmin straighter considered incidental to the wallgreens business. Commissioners any other questions . Thank you, lee. Thank you so much. Any members that would like tacomment on the item . Seeing none, Public Comment is closed. Our action if we wish to take it is to approve or not approve the legislation as it is written or any changes you like to see. We have a motion . It is taking from 30 day tooz 3 days. Precisely it will get some things cleared up. Im for this and have no issue with it, i studied what lee just gave us and lived with my company with sign laws and i actually had a general use sign on columbus in the columbo for years. I dont know if you remember the sterling sign and qu and i do get where people are putting stuff on side of buildings that shouldnt be there. Make a motion . Ill make a motion to support. Second. Roll call . All in favor . Oppose d. Im opposed. Two opposed. That motion passes 5 i didnt oppose. I thought you said you did. Adams, yes. Dooley, yes. Dwight, yes. Ortizcartagena, yes. Toursarkissian, yes. Riley, yes. Zouzounis, no. That motion passes 61. Thank you, lee. Next item. Item 5, presentation and discussion on final rules and regulation and application for the legacy Historical Preservation fund, Business Assistant Grant Program. Discussion and possible action and our presenter is regina dickendrizzi. Thank you. So, commissioners this is a possible action item. It is not required because at the october 3 you will before you face a Public Notice action to take to approve and move forward the rules to the board of supervisors as required through prop j. I want to provide a follow up in regards to where we are and have a discussion and we also have our City Attorney here if there are clarifying questions that you may need. And to recommendations you made at the august 25 meeting to staff to gep the final rules and reg ulations. Not much changed accept for two component, but lelt let me just walk you through. So, we have the scope, which sh still very similar to the rulesas to what was proposed before. And what is the criteria for a legacy business. The application timeline, you directed staff to extend the timeline to december 15 to accept applications and approved a resolution toyou approved a resolution to request to the board of supervisors to low the office the office to extend the bunds for Business Assistance grantd. Any app caigdss submitted after september 30. The fallying year we will revert back to the rules that prop j set out for thebeds assistant grant filing period being july 1 through september 30 of each fis cal year and the grants awarded after that. Verify caigds ication of use of funds, with the City Attorneys advase vise recommend we provide the recommendation of use of fupds be used to use only to promote long term sustainability of the legacy business and help legacy businesses retain in San Francisco. Not have a itemized list of what is acceptable and deniable means of use of funds. If you have questions in regards to that, then we we just learned this is called fact based determination. I think we should leave it as discretionary as possible. Then, again the criteria set in proposition j that the applicant has no financial or legal obligation outstanding to the sate and county oof of San Francisco and that because of the grant allocation is based on the number of full time employees and number of full time employees of the preceding year up to january 30 of the preceding year so the business will need to provide verification of full time employees and states there is direction in terms of how to make that determination of full time equivalent employees so take thg total hours of the employees during the period and divided it by 40 and divided by the number of individuals. Rounding it up to the number of full time employees. So, we are requesting verification. We are strongly encouraging that verification comes through an official pay roll document provided by pay roll service but do recognize some of our very small legacy businesses may not have a pay roll service so well work with them to find an acceptable means of verifying their full time employees. We do have a section of the Grant Application the Business Assessment where we ask a list of question and this will help determine if the is businesses that might benefit from our Additional Services and programs that we have with our nonprofits and for Business Technical assistance. Business stabilization grants we are asked businesses to note any additional stabilization grants they might receive from the sate city so we can track along with the grants they receive through this program and overall effect on retaining businesses. And then the rules and regs go into the amount of grants and the grant allocation is based on 500 per full time equivalent employeeess in San Francisco. In San Francisco a business may have another location in the bay area. Up to 100 full time equivalent employis and the total combined grant paid to all legacy business between july 1 and june 30 shall not exceed what is appropriated in the legacy business account. And then it goes through allocation requirement should we have more Grant Applications then we have fund in the Business Assistance account and that process and how those fund will be dispersed. We are asking for this grant that businesses become a city vendor, but if they are not able to be a city vendor, than we are working with nonprofit to administer funding, but there will be a administrative fee with that. That the business will have to pay. Is that just as a mechanism for payment . Yes. Because the city can only disperse to a city vendor if it is a business . To insure that the business is able to get the maximum amount of grant we recommend the city vendor but those that cant we partner with a nonprofit but do charge administrative fee. I have a question for businesses that are already vendors, should we have a line for them to put that number . Yeah. Is that the same as lbe, local Business Enterprise no, some businesses are certified lbe but not a city vendor. There will be reapplication requirements per your direction you requested both for this and the rent stabilization that we make the reapplication process as easy and smooth so will work on trying to automate that as much as we can over the next year. So, any questions in regards to that . Commissioners, any questions . I dont have any questions. Alright. So, the next thing is we have the application for the businesses. The instructions are pretty inform what is in the application so we have the name, they need to check all the appropriate things in terms of their on the registry and quurnt all the legal and financial obligationwise the city and that they provide information of what they intend to use the fund s for. There is certification for that and certification for the full time equivalent and in section c is the section where they fill out what they use the funds for. Uhhuh. Um, and then the section e is the Business Assessment questions and so there are a series of 10 questions that we ask the business to help us see if there are additional supports that they may want to engage with our program that the city offers. Section f is that should they want to engage in any of the programs just to make it easy they can find sign they are willing to work with the Small Business Development Center who is one of the city programs. This way they can do then and there and it reduces intake process with the Small Business Development Center. Section g asks as i said in the rules and regs it asks about business stabilization grants and that businesses are receiving and this also can be a sf shines grant, other Grant Programs that the city has. So, again instruction on becoming a city vendor and so that is pretty much it for the application. So are there any questions . Um, curious question number 8, will the business be expanding . Okay. Not a prerec. Maybe a perfunterary question but think that comes out intended use of grant if it was for expansion. I just dont want people to feel compelled to answer that question, yes thinking that is the right answer. Then we can provide clarity on that. Again, that is to help to see what they think for furcher future Business Plans and if they need help the purpsh of the grabt is sustainability not sustainable grouth just want to make sure people dont feel that we are sending mixed message with that question. Commissioners questions or comments . This looks Like Commercial Bank application. And it does ask the right questions. From the bankers among us. Okay. Well, should we open up Public Comment . We can open to Public Comment. Any members of the public who would like to comment . Seeing none, Public Comment is closed. We have a option to approve it today or wait till next meeting, correct . My recommendation is wait to the next meeting. We will draft a resolution for this and also with the registry Application Program for prop j which we did not do and need today submit the file rules and regs with the Registry Program so will do both of those at the same time. I do know commissioners you have concerns regarding the longterm financial components of the financial obligations and so while that is not in our initial rules and regs so we can get this moving forward the City Attorney and i and you want to support this direction will continue to Research Means of which we may be you know, you expressed a concern so staff is able to work and research some of those ideas to bring back before you. I dont see a reason to hold it up and with ilsee whait happens. Like anything it will be subject to funding and dont know the demand yet so time will tell. I think this will be great progress to get this approved next time and present to the board of supervisors. Thank you all for the work you have done so far and for your assistance. Alright, so, we can move on to the next item. Item number 6, presentation and discussion on rules and regulations per taining to legacy business program. Rent stabilization account program. Discussion and possible action item. So, commissioners, again wei agendized as a possible action item but not expecting any action. So, what i like to do is there are some sections of the rules and regs that we are developing that we need perhaps policy direction and so well take time to walk through this, then what i like to do is get your feedback, work to create a more finalized document , again, have additional review, iew hopefully at the mondayoctober 3 meeting and get finalenough input and direction for us to do the official 10 day posting we will take action on these final rules and regs at the october 26 meeting. Is it october 26 . 24th meeting. So, to help you kind of walk through and understand with the rent stabilization grant, so, to understand the amount of the grant, is step one is the amount of the grant is awarded 450 per square foot up to maximum of 5 thousand square feet per location for the improvement area. The improvement area was put in to delineate we are providing grants for the area that the business is actually occupying versus particular common area space. Can we put per year, please in the real estate world sometimes rents are described on a per year basis or per month and a number as low as 450 can be contrued as a per month number. Thank you. Um, and then for the first year we will balance our request through what is allocated into the rent stabilization account. So, and those obligations hopefully will be met. Everything is on a first come first serve basis, so if there is enough funds in the account at the time the Property Owner applies, then they are awarded the full amount for their grant request for that particular year. It is getting close to the end of the fiscal year a lands lord applies and not enough to fully fund them we fund what we can and when we make the budgepet request we make the budget request with the full amount that is needed to fund all the Property Owners that applied and awarded a grant in that year. So, if there are not enough funds is this prorated eke equally or is there discretion some are fully funded and some would notd . Not . Moving into the noecs next fiscal year if i put in a budget request of say 100 thousand because chat is what is needed to meet the obigations for the grants approved the Previous Year and then the city comes back and the board of supervisors come back and say well put 80 thousand, then yes it is proportional. If they come back and say, we will put in 150 thousand into the budget, then we will fully fund the businesses grants in the Previous Year and then we will fund as we are able to fund any new grant coming up that year. That actually not what im getting at. If we in our discretion decide to grantto award grants in excess of the available funds because we have the discretion to do that, are we bound or is there language that says we have the discretion to roll back any specific grants or would we apply it pro rata across all existing grants so we are flot in a situation playing favorites. We can never overextend what is allocated into the account. Over subscribe the amount of money available by handing out more grachbts that we could fully fund, so we can fund as many grants as we want, but once we fully funded a bunch in the past and have a extramoney and go fl to a new fiscal year we allowed to make more grants and can over grant and basically say in the nextbecause everyone has to reaplay and say here is what well do, giver everyone a hair cut because we decided we want to give out more grants than we have. We can only cut one string of hair. Just saying it would bewe should contemplate this because we could find ourselves in a position where we are maybe deciding well let some people have their fullfunding and some people not and that becomes a question of fairness. Manucan you provide guidance on that based upon the regs . Unless i misunderstand the a ability to make grants i would like to ask some question after manu. I dont know if you can see me. You can go up. I just dont want us in a position of being perceived as doing something that is inconsistent or playing favoritism. I think question was, if you have an amonet appropriated in a given year and too many eligibility grantees that you cant everybody at 4. 50 do you have to allocate everybody down or tell certain grantees they dont get grant this year. What i propose or speculating is we get to a steady state where we granted fully given full grants to a group of grantees and we enter a new fiscal year and whether we get more or less money, we get an amount of money and everyone is still fully funded but have more people and say they want a grant and decide to give a few more grants because we have pressure to doe, in the evonet those grants exceed the amount that the fund has to fund everybody to their full allotment, does everybody get a pro rata hair cut across the board or do the new people get smaller grants and the old peoplethe current participants are fully funded, or if we get into a sich tuation with a down budget cycle which is not out of the question, then all of sudden do give hair cut to some the existing . How do we arbitrate the distribution of fund in the situation where we have grantees getting fully funded and faced with a situation where we are under funding some or all. That is good question because this is probably one the more complicated parts of prop j. There are 2 or 3 levels. First lets say we are at july 1, 2017 and the board of supervises appropriated lets say 100 thousand for this account. So, the first thing you do is you look at all of the landbord existing grantees and you say well in order to fund these grantsees atwe fund all at 4. 50 we dont need to talk about 4. 50 because we fund a variety of things not justerant stabilization so wroo we have a situation where some is rent stabilization and some is Business Assistance grants so im interested in the general question of all the grantees whether real estate. It isnt limit today the we get a lump sum. How we apportion between the two Different Things is not written into law. We dont have a percentage base that have to go to rent stabilization versus general assistance. That is a good question. It is dependent how the board gives the funds thmpt board of supervisors could say here is 100 100 thousand for Business Assistance and 20 thousand for rent stabilization. Im not presently aware those are two separate fund. I thought this was all fund with the ability to make grants for general assist squns rent stabilization and that was left up to us to make those determinations and left to the board reserve the discretion to direct that funding and just to provide clarity. With the first year the board of supervisors did wrun one lump to let us see what will be ahead of us for the grant allocations and i think we will have enough for our first year, but then moving forward in prop j as part the report there are two very specific accounts recollect , so we will shift the monies to do our grant dispersements into the Business Assistant account and rent stabilization the super visor can allocate dollars specifically to those two accounts . Correct. I want to clarification the rules per taining to Business Assistance program are different as to allocation from the business preservation fund. The general question ismay create confusion. I think i would want to have that question if i may treated separately. We can deal with them separately but will come in both funds that there are existing grantees and more are contemplated and exceed the allocation, whatever it may be for whatevereter either fund how Going Forward we treat existing grantees and new grantees in terms of prorating any new allocations. We can talk about them separate lee, if you like. I didnt mean to derail your explanation. Speaking specifically to rent stabilization grants. First you have money allocated beginning of the year and around the time the office should have determined how many eligible grantees are so there are budget there are 10 grantees, if we pay them all at 4. 50 and have a pot 30 thousand left over. We can assume our existing grantees will requalify. That is the assumption you make and remaining money you can allocate that to new grantees and the way it works for the rent stabilization grant is it on a rolling basis. If there are any funds left over after allocation to eligible grantees from prior years that remaining pot of money is dispersed on first come first serve basis to anyone who applies. So the answer is any available funds will be distributed to new grantees on the basis of our ability to give them grants and that it will not negatively effect existing grantees. It should not because they have the First Priority towards the funds. If the is that written . To the statute that they existing grantee has first right . Yes. In the full amount . It is up to the full amount because that is what im thaucking about. There is the problem. If the board appropriate 20 thousand for 30 grantees the existing grantees can get a grant at the full 4. 50. Lets just speculate we dpot pressure to add a few grantees and already bumping up our existing allocation, just speculate. We say okay, we will yuld to that and we will allow 3 new grantees but there are this much money left over, so making at allocation do we give each a dollar or everybody 2. 50 instead of 4. 50. Everyone has to reapply so existing grantees are not grand father under to the program and have to reaplay and it is our discretion to give whatever amount in the new cycle we deem is available and so do we say, we have 4. 50 people and 1. 50 people or new ball game we look at the square feet and money and divide and the new number is 3. 73. I thipg it st. The former. So then we just have to be prepare frd the situation that we are suggested that we allow new people into had program where we say great, guess what, they geech each get 100 bucks. Just sayingso, i just want to clarify Going Forward that we know what the rules are so we are not telling people if we let a few more people in they get a hair cut. If you are in and good and your money wont go down unless the appropriation goes down. The whole thing is under water obviously that is scenario where everybody gets a hair cut but if it goes under water because of new addition, then we just need to know that we can let in new people at a smaller rate but we need to preserve those rates aurd in existence. Correct. And i think further down is a queshz in terms of in that pressure we have the abilitythere is another example for us to review with you about going in asking for a appropriation, or a supervisor may say, i want this business to be get the grant, how much will i be able tohow much is needed to be able to fund the program. So, not that going for budget supplementals is the best thing to do, but it is a mechanism that the board can do in and of themselves, or there is a clause in here that allows us to be able to go and do that make a supplemental. Can i get clarification . Is it spread out the pot or seniorty. Simple words. First come first serve and that is how we allocate the pot, if we add people we spread it outism it is combination of both. I can basically first you look at what is your pot and the first people who get to take from that pot are siniority. Existing grantees can each take up to 4. 50 per square foot. If there isnt that much then they all have to share equally. They may enup for only 3 dollars per square foot. After they all taken their initial draw , then if there is anything left over new grantees share that pot. But they center to get in line and that is one at a time. So in the event that we are right at stasis and have allocated all the fund. We have 100 grantees and they all get 3. 75 because there wasnt 4. 50 and let everyone have 3. 75. In the new year if everyone requal ifys and have the same amount of money and everyone gets 3. 75 we will not admit new grantees because there are zero dollars. I understand that, i have been trying to slow it down. The reason why is this body here, all of us, we get put on blankest blast like we are not giving fund because last week i was a at a Small Merchant Association and said we want to be part of it because we want the funds. The perse is give all this money away that we dont have. Why i keep reiterate this is so the public knows it is your supervisors that allocate the fund in general and the pot isnt that big. With each new funding cycle we report to the board of supervisors where we are, whether we are fully allocated or not and it will be on both them and us to decide whether there will be any kind of attempt to increase the allocation. The supervisors can say this is a Successful Program and want to sponsor a increase or we may say this is a Successful Program and we dont see the political will to put more money and want to recommend that more money go into it. Eter we advocate or they can advocate or the mayor can advocate for additional funding if it comes to that. I just want to anticipate success and in the avent it is over subscribed in the year how we deal with existing versus and think you explained that basically we will fully fund up to a point and then once those numbererize numbers are locked in we preserve the allocation so we are not like causing someone to say i got 3. 75 and i got 2. 5 0. That isnt sustainable funding. If we mandate a business come to us with a proposition that says i need this money to be sustainable and give the money and claw it back and put them in a unsustainable situation we have not done right by that. We understand. I think we all understand here. I think it is more of a communicating that to had Small Business owners that we dont have really at the end of the day we are not the authority so supervisor cz promote us but the supervisors fund the program. People will say, the small Business Commission are not funding new businesses. What happened to the funds. The pot isnt that big. That is what i want to tell the public. The pot is very small and it is your supervisors that can increase the pot. We are in a positionwe are the stewards of whatever funds are allocated and so we want to be responsible stewards of that fund. We have less power than the board of supervisors to advocate for increasing that fund, just because we arethis is not in historically been a body that looks to get things funded that goes to that for funding, and so outside our own department. So, anywayi think duly noted. We are the fiduciary supervisors of a fund that wewrong word, stewards of a fund we dont control so we will kooour do our best to adpinster the funds and make sure anyone that is grant td funds continue said to get that same amount granted because they will factor than amont into their Sustainable Business and plan and well cross the bridge when we get to it. If we get in a situation where we existing grantees a lesser amount than they are planning or accustomed to. I have a question. You said first come first serve. I want to just for clarification purpose get to the third year. First year we have a pot of 100 thousand and allocated mung among businesses and have the funding to do so and the next year we had additional 50 thousand to fund the additional landlords, so we have a fully funded without any problems of overerage or proration so we have given everybody first come first serve. The third year the fund goes down to 100 thousand and now i would like you to formulate that clearly so everybody understands as to what rule you apply for the first and second year. Are you going to fund fully the first year to the exclusion of the seblgd second year. You are asking the notion of tenure . I think i understand the question. Would you fund 100 thousand the first come first serve or you use the because you are now 100 thousand and funded the prior year first and second. What proposition j says is that fund are given to thethe phrase is qualified landlords from prior years so doesnt distinshuish of nlsh group of 100 group of landlords and second group. In year 3 they are all prior qualified landlord said so to be treated alike, so if there are Insufficient Fund they all get the same prorated mount. Every in the pot is treated equally regardless when they come into had plan. Everyone in the plan is in the plan regardless how long they have been in the plan in terms of deciding who gets what. Why is existing in the plan. It would be prorated eke whael across the existing grantees regardless how long they are in the program. The second question is, the request for increase the budget midyear lets say, would be for emergency purposes, correct . Not for any candidate we want to bring in the program has to be acute or special case . The language says, if the commission determine as business faces a immediate risk of displacement and that a fully funded 4. 50 square foot grant prevents such displacement but there are Insufficient Funds to fund the grant then the commission may may a appropriation. Misspoke, may request a supplemental appropriation. They wont let us give away anything. Would you say if you have over applications say supervisor submit or mayors office, you will not be able to make that requist unless you find that there is a immediate problem with some of these can didates immediate risks of displacement and would be able to prevent displacement. If we are asked by the mayor or board of supervisors have you had any landlereds interested in submitting a grant, do you have enough funds qu if we say no they say what isif they ask the outstanding obligation we can provide that obgaigds obligation and they can make the determine augz. We are not making specific request but providing information if they want toiigate claritythere is the emergency funding in proposition j where the commission can request a supplemental, but if the mayor or board of supervisors request and make a determination and self initiate we can provide that information. Prop j doesnt prevent the mayor or bode how much is in at any time. At the last meeting my question was when we run out of money can we stop accepting application s and i guess the answer is yes. I think answer is no because you want to keep accepting applications because only if you applied and deemed eligible you can deemed a prior qualified landlord so if you dont accept the application the new grantees can never get we dont have to make a grant. We can accept the application but dont have to make a grant. We have to accept the application . Right. Wlrfb whether we can found it is dependent on the supervisors. Correct. I think commissioner toursarkissian i understand what you are saying. It should be black and white so everybody understand and it is messy. If t is ourthe City Attorney made things very clear and think he can summarize them again but it is clear how the funding will take place. The first and vecd and following years. If you run out of money how you allocate. I think there is quite a bit of clarity. I think we have to reiterate the clarity over and over. I understandthis will be a problem. I think part of the rules and regs is for us to make sure that where we need to really one, add additional clarity and that is part the commissioners responsibility with prop j is adding that clarity and definition and then for us as staff what we end up puttingmaking public or put in materials talking about the Grant Program making sure that how the funding works is very clear. I think just because the City Attorney is here you should say it one more time on the guidelines that we are obliged to follow so people watching and then for the record understand step by stepi xoe you went through it but want to hear it one more time because this will be a problem. You mean in terms of the how the funding is funded. Years, 1, 2, 3, grantees and when you proata. I knowthe more we reiterate people understand. Ill do my best and think as director said we can try to do this in the regulations. High level so you have money into a pot. The board of supervises puts it there and the commission doesnt have control over how much the board aprubed ts to put thip pot. You have the pot and look at all the grantees who already qualified from prior year jz they get firstthey are the firstfirst dibs to had pot and each grantee can take up to 4. 50 and if there isnt 4. 50 for everybody per square foot then they each have to take the asame amount so you prorate the total pot. If there is more than enough to fund all of the grantees who qualified in Previous Years at 4. 50 per square foot and still money left over, that money can be given a first come first serve basis to newly qualified grantees. And then of course over time you may run into the problem you run out of that remaining section of the pot and in that situation what praep prop j says if fully funding a grantee prevents immediate risk of displacement the commission can recommend to the board of supervisors a supplemental appropriation to fully fund that grantee. That is only a request . Only request. The commission will notif there is a immediate risk of displayment, the commission can not require the board of supervisors to fund the grantee. Okay, keep going. You stated to commissioner riley that we should continue accepting applications because that application made the prior year would make you qualified landlord. Is that correct . I think that is correct. And then would you say that that landlord then if that prior year has been qualified but not been funded has to reaplay the following year, correct . I believe that is correct. And then i want to make sure that i think maybe this is to commissioner rileys question, is that lets say we know we have 50 thousand left after funding the prior year obligations and we want to say, we want to make sure that we have at least enough money to fund 5 businesses and the average business we are funding now is x amount of dollars, we cant sort of preportion out that. We have to allocate as much as we can grant as the Grant Applications come in. I believe that is correct. It isnt a question i looked at specifically but believe that is right. Can you make note of that and well that may be a question coming up down the road and hadnt thought about that until this discussion. Alright. So, all r there furter questions about the allocation and funding to continue on . Nope, im satisfied. Okay. So, then there is a provision that if a landlord fail tooz reapply for the grant or do not qualify then those funds that would have been allocated to them get put into the pot for future grants. We are proposing that we do have a 30 day grace period for landlords thatthey are required to apply on the anniversary the date the grant and propose they have a thirt day window to reapply. Kwrrks that is normal business practice. Yes. Because the funding cycle, this is not in proposition j but think this is Good Practice for the office and administering the program, that on or before july 30th of each fiscal year the office of Small Business notify all landlords who qualify for inrent stabilization grant the prior year. The amount of the grant that they will receive when they go to reapply in that next fiscal year. Again, either one affirming they will be fully funded or two, if it seems that what is appropriated in the next budget they will not be able to be fully funded and notified in advance. We had discussion whether to notify the businesses as well and manu thinks it is consisten with prop j to inform the business that who is Property Owner is receiving the grant to also be notified. I totally agree with that. We have landlorded who may mot Pay Attention tothey have other things going on and may be remote and as twee pointed out here, landlord s are not in the practice of reviewing their leases on a annual basis. They do a lease for a term for the very reason that reviewing leases is expensive so you they want to move on so you can anticipate a case where the landlord is like i forgot about that so think the Business Owner has got to know so they polk their landlord and say will we do this again or not. Also, if they are not fully funded the business is able to anticipate obligation they may be held to for the rent. My understand ing is any short fall is passed to the tenant; correct . Generally speaking, yes. The jeopardy is at the lessers level, not the owners level. Ultimately. The tenant is a Interested Party and has a stake and there is no privacy issue so think it st. Very prorept appropriate beside it the legal issue that im sure you looked at and approved makes sense from a policy point of view. Um, so just to clarify and already had discussion there are two primary types of grant, which is the primary one which is the one in which the landlord applies for and that grant process and the second, is the emergency grant that manu talked about where a business would be immediate risk of displacement. I do want to make it clear the way it is written in prop j does say that the first amount of the grant goes to the business and then subsquentsly go tooz the Property Owner. So, it leaves very open what situations would create that kind of a scenario. Does that mean the first money goes out as a Assistance Grant . If the munopy goes directly to the business, then that would be i would assume that is dulled out as a Assistance Grant saying we give the money to the Business Owner, whereas, the real estate assistance fund, that is a contract between us and the landlord, is that correct . It is in this one exception where it is written that does the legislation contemplate this . Yes. So in the provision discussing the whault whault what i call the displacement grant it states the supplemental appropriation if approved is used first to pay the grant to the legacy business. It doesnt state it is paid to the landlord. It isnt for the purpose of paying rent . Yes, it is still a rent stabilization grant. It is calculated on the basis of 4. 50 per square foot rather than ftes. It is coming out of rent stabilization side of the fund . Yes. That account. Got it. I didnt know if there was discussion or Additional Information that neesds to be sort of drafted here interms of what are appropriate triggers for this immediate displacement or if you want to just leave it to staff discretion at this opponent to bring to your attention . I personally believe it should be left to the discretion of staff. It is very difficult to predict what the elements may be to ascertain whether the business in the immediate risk of displacement. It gets into the timing of how much time would go on to take that additional step to bring it to the commission, have them review it. That could play into that decision. So, then that is the next question. Instead of creating scenarios, i do want to know, do you want staff to first get Commission Approval to make the recommendation for the supplemental . We can make the determination and say we think that this business runs the risk of displacement. We feel confident bringing that to your attention because it will be the exception, not the rule, and then what i like to just make sure so procedure we have it clear, do we bring it to your attention and go to the board for supplemental. What type of control would you like over that . The request comes to osb and takes to supervisors . Is there any clear guidance you can seeit does say the commission can ask for the supplemental but through asdo you have recommendation as to whether the commission needs to act . My understandingin the legislation is the small Business Commissionthat is the approving body for any grant, is that correct or is osb and or the supervisors also have the ability to approve a grant independent of the they dont get involved as well . They dont think can approve a appropriation. They can make recommendations. Even their recommendations are recommend aigdss to us. Can we read maybe the section . We ak approve something they dont approve they and not approve something they do. The question i have isis the small Business Commission the only body that can approve a grant or are there other bodies . The board of supervisor does not get involvedat least it isnt stated in prop j gets volved at the grant stage. Members of the board as well as the mayors can nominate to the registry which is a requirement to be a grantee. As i stand here now im not sure what the osb does versing the commission, but it is confined to those two bodies. Paragraph c says, if the small Business Commission determines the legacy business faces immediate risk of displace . Ment. If the small Business Commission otherwise delegatesi dont know if it can but it looks like the Small Business must make the determination based on the recommendation maybe of the office. My understanding that the commission alone are the fiduciary stewards of money to be granted. We arethis is the body that approves all grants. Thats my understanding. I dont think that the staff of the osb is empowered to give a grant without the approval of the commission and as you stated, it doesnt appear that the supervisors or mayor are included in the legislation specifically are given the directive to make a grant if they so think it is necessary. I think the language is such that everything is referred to the commission. Those functions are reserved for the small Business Commission, that isnt to say the board cant pass a different ordinance. Just to clarify, so likewise someone isnt railing on the office of Small Business for not doing something when it is the commission that has to do it and has to go through all the proper notifications to do something. It isnt like we go, give you money right now. You came in today and give you money, no we have to notify and have publicly notify we will consider action on a grant of any kind, emergency or otherwise. Correct . I dont know if we have to publicly notice. I think you could delegate that responsibility to staff to award the grant based upon the rules and regs or in the rules and regs that we bring forward to you the grants applications for you to give final approval. [inaudible] who releases the funds . If will be through our office. So, we will administerthat is why we have businesses sign up as a vendor because we will let our financial people that we work with in the larger oewd say okay, here are these list of recipient that get this amount of money. Oewd has Signature Authority . No they just issue the payment. Basically you and the us staff have the Signature Authority to issue the grant. I dont have a answer to this, more of a concern, but based on the supplemental and emergency request or whatever, my concern will be what the criteria because this can be publicized . It has to be black and white. It is also true, a emergency requirement does not i dont think bypass the need to make a application. You cant come in here and plead your case and give money to someone just because we feel sorry for them at the moment. You have to also say that you x number of fte or x amoupt of square feet and not in arares with the city. We dont violate any the other preernls. Procedures. There are 10 from each district and maybe only two get approved realistically what is the criteria. There is no real shot gun wedding here. I understand that, but do you understand this could be subjective and i really likei agrewith your commissioner toursarkissian. It has to be black and white. It cant be to a certain degree, right . Black and white all most. All most. Right now it is a lot of subjective criteria. We havent had our first [inaudible] it could be that you and the commission can always continue to amind its rules and regulations. Correct . Thats correct. And so you can wait and see what comes before you, but my question is, do you want us to have a filter bring it before you or do you want tojust want to make sure you may be in the position of having to make the decision of say ing yes, staff go request a budget supplemental. Do you want any criteria that we are using to help filter what to bring before you . My question is also, are you saying that this emergency thing will be specific or we run out of money, we have 4 that we think need to be funded . You know what i mean . Is it that specific or more saying we used our many and need 50 thousand more to give everyone what they need. Or are we saying we just pick out certain businesses and say they get it because they are so needy . There are two scenarios one is spontaneous where someone comes and says im facingi got word faum my landlord theerant is going up x and im out and it is comes down in the next month. The other situation is we see a demand for this program, we are getting close to being fully subscribed and want to go to the board of supervisors and say we anticipate throughout the course of the next 9 months we will get another x amount of applications and we like to be able to fund some of those , here is the mount of money we think we need to dathat. That is discretionary oppose today emergency. May i give a scenario so we can muchb on. Let me just tell youlet me give you a suggested rule and then tell me if it works or not. Okay. Lets say the staff gets the emergency applications, make recommendationsthey center to make applications of course as our president said, and the staff quickly considers these applications and make recommendations to the full commission, and the Commission Decides to seek new funding to cover these emergency cases, would that be in compliance with section 3 c of proposition j . Can i read it to you . Sure. It says, if the small Business Commission determines a legacy business faces a immediate risk of displacement and that a grant under subsection c 1 of will prevent displacement, but there is Insufficient Funds in the legacy rent stabilization account, after subtracting amounts to be paid in the fiscal year, the Small Business may request the supplemental appropriation on the board of supervisors. I can continue to just to completely quote that paragraph. Such supplemental appropriate is used first to pay the graant to the legacy business that face as immediate risk of displacement with any remaining amount available to pay grants it new qualified lap lords. Do you conclude that you can steek seek more money than you thought is required to cover the businesses facing immediate risk of displacement . Surei this can the commission can always request more if it wants to and the boferd supervisors can always approve or choose not tew prove more. What the last sentence suggests is that the board can appropriate amounts sufficient to pay the grant and there could be remaining amount left over. Potentially you could seek more money for legacy businesses facing immediate risk of displacement, is that your understanding . Yes would you say it has to go through the small Business Commission or is that power can be delegated and if there is delegation with the exception to the rest of the application . In order to be compliant with the entire process where the staff makes recommendation squz the commission approves, correct . I want to make sure i answer your question. Im not sure i understood it fully. I think the commission could direct staff to seek appropriation. Does that answer your question . Do you think it has to be commissions decision to seek additional funding to cover the needs of businesses risk of immediate displacement . Are you asking if the office of Small Business can make the decision on its own . Yeah. Unless the Commission Said the office of Small Business cannot dothat, i dont see what the office couldnt ask on its own, but i think and speaking off the cuff because this is not something i really looked at closely, but prop j seems to contemplate staff comes to commission and commissions recommendation go to the board to ask for more money. That is appropriate under prop j to be in lean with what it said . I would say that is the legally safe est way. Anderse that provides clarity on direction to make sure we are good with that. I think going back to commissioner dwights question and clarification is does proposition j stipulate as it did for the registry all the grants come before the commission for approval or is that something that the commission can delegate to staff just the stapdered operations of administering the grant . I would have to look at it. I have nt done that. We will get back to you on that. The reason that is important if we have the existing grantees and they come up for renewal we may want to just delegate to staff and say you guys do the review if everyone is good then go ahead and do it. Rather than having to go through the whole process here at this commission meeting. That would be a practical reason to clarify that so that we dontwe can be expedient about reauthorizing existing grantees. Okay. And then we already talked about the 30 day. Again, there is no amount oweed. The business would verify then. There is a section in proposition j that talks about legal relationships, so it says landlords must not be related byopeership directly or indirectly to the legacy business. If there are relationships under the broad definition the landlord isnt eligible to apply. But, not having expertise in this area, i think manu suggested that we dpet a little more clarity around what does related by ownership mean directly and indirectly and so i think well continue to work on that, but i thought it plight be good to get direction and expertise from you commissioner toursarkissian in terms what to look and how to define this when the Grant Applications come in we can look at that and assess whether there is a legal relationship or not. We should look at other laws in the city and see how that is interpreted. But in my opinion is that any ownership interest in a property should be grant for disqualification. That is, if a you are a tenant and have 10 percent, 5 percentany interest other than possessry intrest, ownership interest than that means that you have a stake and you ought not be able to benefit from the program. The second isue is, if a Family Membersay your father or mother or close Family Member is a owner of the property and you are the tenant, that also should be looked at and define what means family relationship to what extent and right. I think the point that regina was making is that it may be a policy decision for the commission to decide what constituted related. A father renting commercial space to a child may be a easier case to say they related and konet qualify. What if i rent space to my 4th cousins brotheren in law does that qualify as a relationship . Is there precedent in any other regulations that determine what is a family relationship . That is something i havent looked at for today. We know that shell corporations and there are all kinds of financial constructs which help hide relationships of owners and so i dont knowwe are not experts in that. If we are presented with corporation xyz owns the buildings and we cant get to the owners of the corporation are, then we have no way knowing the corporation is owned fwie the tenant parents or grand parent or distant relationship or them sevl. Can it be complicated and have a llc or structure owning and may have severals who may be corporation jz the tenant may be a their e share holder. Im sure manu will find a definition. I think maybe one the questions i have you, do we want to go stricter or broader in terms of looking or just have manu continue to research and come back before you with a set of recommendations . The most simple thing is the property could be owned by a divorcee of theyou can be separated by divorce and therefore no long arFamily Member and own the build{lease to a prior Family Member. Does that disqualify. You suggesting rime say thrg are probably lots of property in the city where the property went to the non family party but the famy is still leasing; i think we should differ this. We pointed out there are complication around the definition of related partose so if there are precedence we can fall back on that is great so we dont krto go to the process of redefining it. Ill continue to work with staff on that. Cool. And then the lease terms, so the lease terms to be able to bebe awarded a grant is sign a lease for up to 10 years and so we are proposing that situation like a 5 year where the tenant has the option to renew for 5 years meets that requirement or any other kind of combination there of. But it has to be the tenant option to renew. That you support. And the total Square Footage so this is wrewoo woo are proposing a unique policy suggestion for you to provide us feedback on. So, the initiali think the simplest concept around being the grant be awarded is 100 percent rent credit offset, so we want to propose an idea that to help incentvise pro Property Owners to renegotiate at a lower percentage, the lower the percentage they renegotiate the rent increase, they get to actually keep more of the rent subsidies for themselves and there is less going for the rent cred it offset. For example, if a landlord does a 10 year lease and there is no rent increase that it is 100 percent. If it is between 0 and 4, the same thing. If it is between 5 and 9 percent, then 12. 5 percent of what the subsidy goes for is for the rent credit and 87. 5 is for thp landlord to keep. The higher the rent increase is, the more that it goes for the rent credit. So, thats at concept that we are proposing and manu researched it for us that it doesnt interfere with commercial rent control because these are funds that are being received from us. So, im not completely following this. So, this is limiting the amount of money that the landlord is eligibility for based on the staying within certain boundaries of rent increase . They are eligible for the full amount so it would be if theylets say they raise in the lease renewal or extension they only raise the rent by 5 percent or 9 percent and they would retain 87. 5 percent of that 4. 50 per square foot, the 12 and a half percent goes to the rent credit offset for the business. Now i think most people are thinking whatever grant amount we giv the Property Owner it is direct rent credit to the business, right . So it helps offset the rent increase by the amont that we allocate to the business. We are proposing a concept that to help encourage smaller rent increases the Property Owner retains the subsidy for themselves. The smaller the rent increase stays with the landlord and less to the rent credit. And i dont know if im explaining it this is discretion amount used for anything so we dont want a situation where we give 4 and a half and not helping the business stay in the premises. By allocating the fund in this fashion, we are saying if you are below a certain threshold you get to keep and do whatever you want, otherwise if you go above that a portion will be paid towards reducing rent. Thats the concept of encouraging indirectly landlord to keep the percentage of increase low so they can keep that discretionary amount with that allocation between decrease or credit towards rent versus any amount any use you may want to have of the fend. Is that correct, manu . Maybe not. Your are summarizing the regulation . I think that is correct. What you said sounds to me similar to what regina said. Im confused. In this discussion my understanding is we are talking about subsidizing rent. The payment of that subsidy go thooz landlord, is that correct . The 4. 50 per year per square foot, that check is written to the the landlord, is that correct . Not written to the tenant. To the lond lord we know it goes towards rent. I dont understand what we are talk about here, some money going the tenant. If i can interject. The idea is that if landlords get grants 4. 50 there needs to be a requirement in the regulations saying that landlordss if you get that money the purpose is help the business not unecessarily so if you get the money all has to go to lower the tenant rent. But, the idea is that if this is happening in the context of lease negotiation and the landlord agrees to limit amount of increase a very small percentage, then in that situation the proposal is that the rules would relax the requirement that the landlord use all the grant pluny and give to the tenant. In exchange for the landlord only raising the rent by 1 percent, the landlord rather than giving all the grant fund to had tenant could keep the grant fund for himself. That is the proposal. I dont understand that at all. Mythis money should be used exclusively for the reduction of rent for the tenant. I dont know why there is contemplation that a landlord uses the money for their own purpose cht that isnt the intent of this legislation. It is to preserve legacy business and offset rent increases and so i dont get why we where kant contemplating. Y i apologize if i didnt explain in more detail. Part the concept is if we thinkwhat we are seeing and hearing is we get rent increases 35 percent , 45 and 50 percent. There is no guarantee the appropriation will always cover that rent offset, where we are coming from is the concept is 4 fr the legacy business the best thing to stay in business is get a new lease with a lower percentage. And so this is coming from that concept of while we initially werewe want to have a rent credit but the sustainability of that business for the next 10 years is probably much better if it has a lower rent increase and so to encourage Property Owners to go into that direction as opposed to saying im still doing 40 percent increase and do this offset, which still may be 6 years down the road, we may flot be able to fully fund that rent credit and so then will the legacy business be able to continue the legacy business may still have a problem paying their rent at that 40 percent because of full rent credit isnt there. It is just a concept i want to throw out in terms of the idea of the what do we want to do drive and encourage aroun the lease renewals for the legacy business. My question is, so, when a legacy business is negotiating the lease, will these figures therefore be given to the landlord and say if you raise it 40 percent you wont get any of this money . How does this workis this for their negotiation this is allocation issue and not amount. There will be always 4. 50 per scare foot, it is how it is allocated. To answer your question commissioner dooley, if a concept is adopted in the rules and regs and this will be in the rules and regs and when it is time for lease renewal the legacy business once they are on the registry will be provided with the rules and regs in terms when you go fl to lease negotiation understand this for yourself with the Property Owners so it is something that is gone known ahead of time and somewhatwe would need to see something that would address this in the lease i would think. Much of what is reflected in here and even if we were not proposing this concept but it was suppose today be whatever amound mount we fund goys to 100 percent rent credit that has to be in the lease. So, for the Property Owner, for the landlord to get approved in the grant that has to bethat is a clause in the lease that they center to show up to be approved. Does that make sense . It is a negotiation tool. Well, this brings upthis is just another level of complication that any lease has built in escalation of the lease rate. Most leases do. It is very simple calculus on the part of the landlord to optimize their lease negotiation around maximizing benefit. It is possible this benefit at 4. 50 per year is way below what they can get at market and say forget it, i dont cairb about that, i will go to market right now and then we get fl to conversation, really you should be nice, you should respect the legacy nature of the business so have a copversation, the landlord says here this is about as nice as ill be. Any landlord has the discretion to make less money than they can, right . But, most people in business are have a motivation to optimize their value. They are investors in reala state. You can gain this system here and just you might go, i was going to raise my rent a dollar, but i see now i can get 4. 50 through the legacy thing and go to bat and say i was going to raise 5 bucks but ill go into partnership with my legacy business and go to bat for 4. 50 from the commission. I think we are in a period of time where this money actually is way below what adjustments to market are and think that our challenge will be whether we can use this fupd fund to prevent people from bes displaced because it is a amount substantial enough. Well find that out Going Forward. I cant contemplate us giving money that isnt going drethly to the rent for a tenant to keep them in their spot. So, ithis table here is a surprise to me that it contemplates a scenario where we have a landlord who is so nice that we are going toor there is a scenario where we might telli dont knowi canti dopet know what this is accomplishing. Just educate and read what the proposition j says as to grant. It says amount of grants following the landlord application and on anniversary shall qual nigh grant equal to 4. 5 per quer square foot up to max omof mive thousand square feet. Me reading of that talks about the grant and doesnt talk about rent reduction or anything. It is grant. So, the way i understand it is that staff and ourmanue come up with the table to further give incentive within the budget to encourage the landlord to enter into an agreement by lowering the and getting the entire discretionary amount of the grant versing a percent used to reduction of rent by keeping the yearly increase below a certain threshold. The grant itself initially at the outset does not allocate the amount toward reduction of rent. So in our discussion using that conceptualthat is how i understand it, if im correct, manue, is that creth . I think that is correct. Just to be clear, our office isnt taking a policy view on this, im just explaining what the options before the commission. This is where this is part of that and rules and regs of the commission and where the commission has some room to sort of provide some more clarity in a particular direction and so as staff we are thinking about things and so this is justwe brought this to see what your initial take on this, is this a policy direction to work on or not or do you want to say, well, our initant is that it is a rent credit and 100 percent rent credit and that is reflected in the lease. Just to be clear giving a grant we have to know what the terms of the lease are because the grant are allbus sustainability so we cant in good conscious give a grant to a landlord who says, well, im going to keep the rent, the rent will be x this year, x plus 2 percent next year and x plus 50 percent the year after that because basically it says you are sustainable two more years i then out. You delay the inevable on our dime. He says ill take 4. 50 until i dont want it and then you are out. It has to be and contemplated the notion orpha 10 year lease or 5 plus 5 or 3 plus 7, the notion that the horizon is 10 years,. Really what you in the best case hope to see is someone come and say itle you what, if i get the 4. 50 for the next 10 years you rent will be flat for the next 10 years. But we will have to look at every Lease Agreement and see what the escalation of the rent is to determine if the 4. 50 is really a sustainableis making a contribution to the the legacy business. Sustaininable to the future and what i mean by unforseeable future. It has to be the forseeable 10 years because that is thethe we said that is the time horizon we want. Thisagain, we are presenting another kind of a, before we pass the law that anyone think about the fact that rents go up and they gope up sometimes a little and sometime said a lot and what prevents it from have agstep function in a forseeable fuch were less than 10 years in a negotiation that we might blast for a grant. My concern on this particular portion was something else. Is there any implied liability like we give business advise by saying based on what we saw from the lease i think the lease is good and then we be held accountable like my business because you said the lease was good because of this grant . We have commissioners insurance . You have legal representation. I think we should leaveBusiness Owner and landlord to deal with the lease. What we are looking at is a 10 year lease, so if the personlike you say, first 2 percent and sec year 50 percent they wont sign it. No, in that case, however it is very common for the year in which the negotiation is suppose today happen whether it is year 3, 5 or 7 for there to be a big jump because that is the evonet that braings the 10tenant to the table. I go from like this and go like this and when it is about it go like that the lapd lord says remind you it is time to renegotiate your lease. I think we should leave it up to the business own squr landlord. 4. 50 maximum 5 thousand square foot is 22. 500. 25 cents a month. It isnt a lot of money. No take 4 percent and 9 percent and 12. 5 percent and talking about 2812 for the whole year. Take away 50 percent it 50 percent it is 11. 250. I dont think we should make it complicate squd keep it simple. Thank you. We are breaking piggy banks open. My question wasnt answered are we libel because we get into here is blessing leases because that sound good. We shouldnt get fl to it. Exactly. I never want to be libel for anything but is it implied because i can see potential lawsuit saying you said this lease was good based othen Grant Program. We are not in the position and nor are we ever saying that a lease is good. What we are sayingwhat we are saying is there are certain conditions that have to be in the lease for us to be able to approve the landlord to get the grant. So, anything in the lease about anywe havent gotten to the other parts of other clauses that have to be in the lease as well, so we are not even lets say you are comfortable with this direction, the fact that if at any point in time we cannot meet our full 4. 50 obligation, there is a section in prop j that says the Property Owner can cancel the lease. Okay. So, i think if i say that correctly. So, i guess the thing is, we were justi was thinking in terms of what is one the best things for a business is smaller lease reductions but if this is not a direction and want to have it be thatas commissioner toursarkissian said, well still need to drarft in the rules and regs it is requirement it goes for rent credit because now it doesnt specifically say that. A couple things, it is just not realistic because like you said, everything increasing 3 to 5 percent every year. Nou nobody is flat andagain, it is god time to advertise, it is not going save your business. 25 cent a quer sfoot wont havejust you are starting to sound like me. Come on now. Dont get cynical. I think this is overlee precryptive, the deeper we get into thaes things the longer it takes to make progress. I cant wait to stee the first one of these come across the plate because i dont know what it will look like and rather than spend a lot of time trying to over prescribe what will happen, let rr see what shows up. We have a responsibility to create a reasonable construct but i dont want to over construct it. I was going to respond to commissioner ortizcartagena but liability of the commissioners. We dont advice tenant and landlords how to enter intoa grument jz callify and give any opinion. It will be more are you qualified or not under the rules and regs. Thats it. So, then manu are we going need to per this discussion and per the expectation of the commission that it is going for hundredlet me know if im wrong in what im hearing, it is going for 100 percent rent credit and need to specifically state that in the rule and regs . It is good oo specify that. We need to see that in the lease . It is good to specify that. I think the landlord is going to make theironly the landlord can determine whether they think this money is sufficient for them to craft a lease that is acceptable to the tenant. And so i think it is entirely up to the tenant and landlered to come to agreement on a lease, the landlord saying if i get this money from the city, then here are the terms im will toog present and the tenant says if that is the terms you are presenting based on something you get from the city i dont have to know what you get from the city. I just have to know the lease im presented is accepted to me and sustainable in my best judgment for the next 10 years. That is all they have to testify to us is the landlord says, grant is good enough for me to present this least and tenant says the lease looks good, ill take it. Weird because we are nowhave two paert parties saying you give me money and im good and you are good so you should be good with. Beyond determining whether that is trully a sustainable situation fwr the business we have to take it on faith from the Business Owner who says im good with the lease and think i can leave with this for the next 10 years. So, then am i hearing we dont care what thethe commission isnt concerned what the landlord does tw the money . Y by definition it is rent related because itthe calculation of what that lease looks like is entirely depend on this amount orphmoney. The landlord may say, great, giver me the money. The rent is going up 20 percent a year because that is what the market demands and the tenant says i cant live with that. For the landlord to say i will take 4. 50 and go to hawaii it is still money in their pocket. The landlered landlord makes the application not the tenant. I know. Give a example, lets say that the landlord gives a 10 year lease and complies with the other rules, but then includes increase of 20 percent in the lease, would that landlordthe tenant is stuck because they want to stay in the premises, would you think the landlord at least the first year is entitled to that 4. 50 . My question to the tenant is this a sustainable lease because i see on the lease in year 4 you will get a 20 percent increase in rent. Why are you goting out of businesswhy do you go out of Business Today if you dont get this and not going out of business in 4 years because it goes up 20 percent . If the answer is, i dont know then i think we have to ask whether we grant that. We are not having a conversation with there business when we are deal wg the grant. When we deal with the grant obligation. On in commune cailgz with the Property Owner and landlord and ask them to verify things through the lease. We cannot give a grant without knowing what the term of the lease are. Correct, if the regs provide you have to look at had lease and have to approve every term of the lease, then you get into a very complicated set of regs. Today, if the landlordif it is legacy business and 10 year lease or 5 and 5 or combination, then you will giveit is 5 thousand square feet, extend that amount and if you tell me that regardless of what the lease amount is going be, then we not going complicate things and just go into it. Versus, making it more interesting to the lapd landlord to have discretion and amount towards the rent. That is the issue we are discussing. I think we have a fiduciary responsibility to the taxpayeroffs saf to at least have the business testify that this is a good lease for them. I dont think we can grant one dollar to any land lord without hear thg tenant say this is acceptable. We cant have the landlord come in and say i want the grant and worked with out with the 10 tenant. One requirements is wewe may not need to see everything that is in the lease but we have to make sure that the lease is signed before the grantthat is signed before the acceptance of the lease. I think we need to go a step beyaupd that. The all are lots of things in the lease but the primary thing we are concerned about is how much money the tenant spend on rent so we should see the rent clause in a lease and we should have the landlord say that is the rent jauz the tenant say that is the rent clause im signing up for and we should give it abe able to look and say, the graph on your rent looks like this, but all of a sudden it goes like this. The rent includes if i may suggest, a lot of other component so it can be the improvement of the premises and add up and sometimes it doubles, so it isnt necessarily the amount reflected, it can be a lot of other things. That can be defined as rent. The prosecuting attorney would say i have no further questions. There you have it. This is extraordinarily complicated and it isnt as simple as someone saying ill give you a break, all good, i want you to stay in business and im a nice lapd lord so this is enough money. This is going to getwe are never going know if the lease is sustainable and tenant will sur vive. We dont know that anyway, we are only here to make presumably our best judgment as Small Business experts that this business that is in distress has a tublt to sur vive if we give it Financial Assistance in the way we can give in this to rent assistance and general Business Assistance. And we can only do our best but wroo we have a fiduciary obligation to make the best judgment and dont want to make that judgment without at least scratching the surface what we are approving. I dont want to dig into every lease either anymore than my own lease but i do think that there are some high level considerations andto your point rbs , i dont in the end how we make that determine ation. The proposition j talks about a 10 year lease, correct . What are the conditions or requirements under prop j . For . For this grants to be approved . One is 10 years or combination either 10 year term or 5 and 5 or whatever. It does require a 10 year lease. It does requirethere are other requirements. One of the requirements is that the lease meets all other criteria required by the commission. We could add criteria today as our president says in addition to the 10 year lease . Sure. I mean, i guess i dont know what more we need to know. I know what i do know is that we are being asked to distribute ute fund based on fortune telling and say we think this is a sustainable situation, which nobody knows that. If we did we would make a hell of a lot more money on wall street. I have always said that i think this is a very difficult fund to administer. But, i guess im to the point where i want to get as quickly to the Administration Part to at least see what comes across the platement we may not grant anything because nothing meets the criteria that we feel mates our fiduciary operation and may see all kind of grant request that we thipg are fantastic. I dont know the answer to that yet. I do know that based on my own experience as a brz owner that the amount orphmoney that are talked about throughout the legislation are not the kind of amounts of money that save businesses on the brink of disaster. I am sort of like waiting to see what we see because i guess i support the intent, but i dont think that in practice thiswe are spending a huge amount of time trying to sort this out, time we can spend on other things and i think that this is a piece of legislation that is verywell meaning incredibly difficult to administer without just givlging away a bunch of money and not knowing. Keep it simple and stupid. Keep it soup uper simptal. You hear that all the time. Keep it soup were simple. As i read this, even on regular leases, this is mind blowing. I know your worked hard but like number e, number 1, had t has to go mpt that feels overly prescriptive. Transamerica lease is only like 6 pages long. There are a couple or policy questions so one is, what happens if a landlord gets a subsidy for a couple years and doesnt apply and after a break reapplies again . So are they considered a existing landlord in terms of the pool oaf consideration like what the existing landlord or would they be subject to the funding as a new i would bow fine with having a continuity claus that if you miss a year you fall out. You have to be year over year in the program. Once you are out of the program , you come back as a new applicant. So a new applicant a new lease. Any legal i think that is fair. It doesnt help the necessarily the legacy business but i think it is a good rule to say you center have to stay in the program and you fall out it should be a incentive to state stay in the program. The tenant will get notified in advance that their landlord is about to fall out of the program and so hope fully that insfires conversation. Do they receive notice avenue every year . We sent out notice every year . Right. But there could be a situationthere will be Different Things that come up so whether now or later on, before you but there could be a reason the Property Owner doesnt reaplay so there is a clause if they dont reapply the funds allocated to them go to the the next pool of new Property Owners or qualified grant recipient. They could decide not to do it for a couple years and then want to come back again. I think we should require that they are continuous. And then just to be clear that there is contingency clauses in prop that is that lease extension besteen a landlord and legacy business not disproved due to provision s in the lease make thg lease contiskant upon the landlord receiving a grant from the city. However if a lease contains a provision the provision must also state that the lease contingency initially this clause provided in the law that it cannot disqualify a lease because it contains this provision. It says if the landlord can get out of the e lease because they didnt get 4. 50 per square foot the landlord should be off the hook. That provision will not disqualify the lease, correct . Thats what the provision says. Thality is the in law. We were thinking about maybe i was thinking about not allowing the landlord to intentionally get out of the lease or negligently by so doing terminate the lease. That is a exception to that clause in the lease. Thats the question. It is question of fact intentionally or negligently you do notintentionally you dont pay taxes therefore you dont qualify and you trip the lease or you negligently forget to it it. The policy behind the exception is the purpose to preserve to protect the legacy business and there should not be a indirect way of falling out of the lease in that fashion. Is that a proper explanation. You are explain thg proposal. That proposal is complaint with prop j. Yes, i think so. The intent is help tenant, not allow landlords to insert contiskancies that weaken leases, does this say the landlord can not write into the lease if they do not receive the Assistance Grant that they cannot terminate the lease . The provision says if you vaclaus in the lease that says, that you can terminate the lease if you dont get the money, that should not be a grant for disqualification. That should not be ground for us disclaul qualify. Are we on to the next . The last thing so this seems like you are okay with that. The last thing is there are reasons to deny the grant if the Property Owner isnt compliant with the obligation but also if we should at any time find they fallify any information that is in the Grant Application lets say relationships and that type of thing, that would be a reason for disqualification and want to put it out there to see if we should state that the Property Owner is required to then refund the amount of grant they were oweed. . You should change the word ask to required which is may be required to return the grant