Transportation committee for monday, september 16, 2019. Im the chair of this committee, aaron peskin, joined by vice chair supervisor safai and to my left, supervisor haney. And were joined by supervisors fewer and mandelman. Our clerk is erica major. Any announcements . Yes. Please make sure to silence all cell phones and electronic devices. Completed speakers cards to be included as part of the file be given to the clerk. Supervisor peskin could you please read the first item . Item number 1 is ordinance amending the plumbing code to delete the local amendment to the california code referring to the San FranciscoPublic Utilities rules and regulations and Cross Connection control, affirming appropriate findings. Supervisor peskin thank you. Are there any representatives from the department of building inspection or the San FranciscoPublic Utilities commission who want to speak to the fact that we are going to continue this, because apparently, those two organizations have not yet come into agreement on this. Are you coming up on behalf of either one of those organizations, or just no, youre just walking around. Okay. Is there any Public Comment on item number 1 . Seeing none, Public Comment is closed. And, colleagues, this actually was one portion of the Building Code that came to us wherein there was agreement between two departments. And i was told last week that they had come to agreement, but apparently they have not. So id like to continue this item to the call of the chair. Is there a motion to do so . Made by supervisor safai and well take that without objection. Item continued to the call of the chair. Please read the next item . Item number 2 is hearing on state of the Restaurant Industry, including but not limited to strategies city departments are utilizing to support Restaurant Operators through the permitting and inspection process. Supervisor peskin thank you. I would like to associate myself with it. Insofar as the culture of convenience, the culture of expensive rents and many other things, some of them imposed by an array of fees and Public Policy positions that this supervisor and this government have voted on have had, i think, a deleterious collective impact on the Restaurant Industry. I want to thank supervisor fewer for calling the hearing and turn it over to her. Supervisor fewer thank you for allowing me to hold the hearing today on the state of the Restaurant Industry. Restaurants are a vital part of the backbone of neighborhoods. In my conversations, many have shared what they love about doing businessed in neighborhood, but also have talked about the challenges of opening food establishments on our corridors. Many of our departments have implemented a number of strategies to streamline and improve their support of our Small Businesses, but we know there is still work to be done. The goal of todays hearing is to look at how departments are improving their systems, and also to look at how departments can Work Together to provide clarity in the overall process to provide a road map. Im hoping today we can take a wholistic look at the climate of the Restaurant Industry in the San Francisco and zone in on the permitting processes. Restaurants and the variety of a restaurants and different cuisines help to make us a worldclass city. And a Culinary Destination for people all over the world, but this industry is suffering now. And these challenges actually threaten their very existence. It is the hope of the hearing that we can examine how we as a city and county of San Francisco legislators can support this industry. Today well be hearing from the golden gate restaurant oh, the workforce develop, the department of Public Health, Planning Department and tax collector. Anybody else with comments . I see supervisor mandelman. Supervisor mandelman thank you. I wanted to just thank supervisor fewer for calling for this hearing. In my district, there has been a very steady and troubling drum beat of restaurant closures. And vacant store front, especially in the upper market castro area that i am very concerned about. And then we have also heard troubling stories from a number of folks trying to open new restaurants, about how hard it is to get through the various processes and permitting requirements. We made a mozest change to eliminate the modest change to eliminate the requirements, but there is a lot more the city can do to facilitate entrepreneurs to get a business established. Im interesting in hearing more from departments and folks in the industry about what is going on out there. Supervisor fewer thank you very much. Lets start with the hearing. Id like to call up lori thomas, the policy chair of the golden gate restaurant association. Thank you. First of all, i wanted to good afternoon and thank you, all, for taking the time. Many have you have known me over the years. Ive been in the industry for a long time. What id like to do is speak on behalf and give an expert summary overview of the golden gate restaurant association. I still own and manage two restaurants in San Francisco. And we really appreciate your time. I know there is a lot of people who wanted to be here today, but have to run their restaurant, so were going to give them feedback. Im going to read the overview here. So what we wanted to do today was address concerns were having with hard issues our industry is facing. Were going to start with facts to bring everybody to the same page. This is taking the number of sales tax permits in 2018 and from the bureau of labor statistics, we have 2500 eating establishments and generating 4. 7 million in taxable sales to the city. Our industry provides approximately 65,000 working class jobs in San Francisco alone. And we represent 52 of the citys entire retail sector. We help keep neighborhood corridors vibrant. We bring business to the retail shops, many of whom are struggling in the online economy and help provide tourists with San Franciscos unique experiences. But were seeing a troubling trend. Up until about two years ago the number of restaurants opening and closing was approximately equal, but based on numbers from ye yelp, weve seen the closings outnumber the openings by 9 . This is causing a lot of worry and were not even seeing what were going to count in 2019. 2020, we expect an even greater number of closings, due to many factors were going to cover, that cover housing, permitting, economic pressures and vacant store fronts. Were going to provide proposed solutions and hope we can go further from here. Lets start with the shortage of affordable housing. We all know this. Its directly impacting our employees. With median rents for a onebedroom in San Francisco around 3600 per months and limited availability of anything that costs less, housing in the bay area is way short of our needs. Even ownership in the city is out of reach for the Leadership Teams which causes them to think about moving out of state. Those facing the greatest challenge are in the sweet spot of the earnings, 5070,000 a year. These are managers, chefs. Theyre the most disadvantaged. Were wondering what can we do . We may look at money allocated to Small Businesses, maybe there is a voucher system or something that could help to offset the rent issues. Maybe we can i know this is a tough one but expand transit hours so our employees can make it back and forth from the east and north bays and know they dont have to pay for uber or lyft to get home after everything is closed. Permitting. I know a lot of members will give examples theyve been experiencing. This can vary a lot, but if your a restaurant, it could take up to 12 months. It can be costly with the additional hearings. The rent you have to pay if you didnt negotiate it with your new owner. And also, too, you could risk being denied, which is troubling. The Building Permit progress, i know were trying to make progress, but its still confusing. And everybody that has done it successfully has been using an expediter, with i significantly increases which significantly increases the cost of opening a business. Is there a likely way that success could be delineated. Is there a way to streamline . Is there a way to overlap approval . I know there is a lot of progress, but were giving an overview. So a lot of the restaurants are on the ground floor of buildings. And so were the eyes and ears of what is happening on the streets. We hear from restaurant members of the daily challenges they face with both the cleanliness and the safety, whether its the wellbeing of the patrons or the staff leaving at the end of their shift, restaurants continue to see a rise and lack of safety surrounding their businesses. Neighborhoods with the most challenge, we know theyre the most densely populated from locals and visitors, downtown, market street, the had mission, but were also hearing from sunset and problems theyre starting to see in neighborhoods as well. Additionally, unfortunately, this summer a lot of us have seen a business slowdown, particularly in the month of july, from leisure travel. And restaurants are seeing reduced foot traffic due to conditions on the streets. And members are feeling like its not Getting Better and they shouldnt bother reporting these issues as often no issue is taken. Where is the accountability to address our Mental Health and Substance Abuse issues . This comes from an industry where were intimately aware of these issues. Solutions. So lets Work Together to clean up your streets. Ask the restaurants to participate and brainstorm what we can do and design programs that improve the Emotional Wellbeing of these communities. Now were going to get to my favorite subject. Economic pressure. So i pulled numbers, because i feel thats the right thing to do. I first want to say there has been a lot of great policy i believe in and i know a lot of our members believe in. Im just going to quote some of the statistics, because, unfortunately, some of the policies now have been in place to the point theyre breaking the business models. Wages. Since 2012, the wages have gone up 52 due to the minimum wage and the Ripple Effect on the payroll. This is a huge number for the industry, if you look at the national statistics, only keeps 35 cents on the dollar. So we can go through numbers later, but this has a huge effect. Health care. The spending requirements have caused the business costs, the spend to go up 37 in just since 2012. And combined, these two costs are making it much harder to stay in the red, particularly if you have a large amount of employees like i did at rose for example. So taxes and permit fees. We know we try to fix the gross receipts and payroll tax a couple of years ago and it didnt turn out. I know there is more reform planned. These taxes for smaller restaurants add up to thousands of dollars a year. Its a huge amount of money, you guys. And additionally, there is yearly increases in permitting fees. I wont tell you the cost of the table and chairs permits on union street, it will blow your mind. The other thing, too, i want to mention and youve heard this before from me, we need utilities, but theyre monopolies and theyre going to assign whatever rate increases they want. Pg e, water. We have no say and no way to combat. All these costs put together are breaking the business models. Fast casual and smaller bars and restaurants with little employees on their payroll are going to make it and theyre still continuing to grow, but fullservice restaurants, in particular ones with larger number of employees on the payroll are seeing unsustainable costing. What are solutions . I hate to say this, but im going to, i think we should take a look again at the hcso and see if there is way to modify and adjust this ordinance to make the policy work, but make it for affordable for the Restaurant Business and look at what resources do we have that work that gavin is doing, with kaiser holding their rates and things like that. We would offer to participate, and i would really like, the gross receipts and payroll tax reform. You can have as many representatives from our industry. If there is different ways to do it, i would like it not tied to the payroll. Vacant store fronts. This is a huge, huge thing and were all seeing in the neighborhoods. Were painfully ware of increased rents and vacant store fronts and inflexible landlords. And increasing rents make these vacancies more and more likely. On king street in the press today, two are closing. Tony is closing one of his slice shops. Not only are existing restaurants looking not to renew leases, but new businesses are going to have to come up with huge cash or be large chains to make this work. What is the solution here . I dont know, maybe there is a couple here. One im thinking, is is there a way to incent the landlords to lease spaces . Or a way to give tax breaks to restaurants to help them locate in areas where were seeing the highest vacancy rates. There was an enterprise tax zone in california, that doesnt exist anymore. Is there a way to do that . That helps when you have concrete numbers to put on the table. In closing, we want to ask that you consider restaurants cannot just raise their prices to offset the costs. Customers will either stop dining out, order less and god forbid we see an economic down turn from international or national issues, were going to see more close. Were concerned about the viability of our industry and were willing to be at the table. Thank you so much for your time. Supervisor peskin thank you, ms. Thomas. Before i hand it back over to supervisor fewer, i think as your presentation elucidated, this is an intertwined very complicated web. I think in order for im going to say this to the departments for this hearing to be successful and while all 11 of us and the mayor focus on homelessness and larger societal problems, i think weve got to boil this down to things that we can do. So, for instance, i agree with you that as a matter of fact the board has taken steps in other policy areas to deal with the issue of fees, which are paramount in particularly when youre starting a restaurant when there are over 20 fees. Some of them, you dont have to avail yourselves of if you dont want the entertainment permit, if you dont want sidewalk table and chairs permit, you dont have to get it, but you have to get a dbi permit for the place. You may or may not if youre moving into a previous restaurant space, depending on the zone, have to get a cu. Mr. Star will speak to the fact there are provisions for expedited cancel uses and they conditional uses and there is the department of Public Health as to food handling, which is an ongoing fee. That is something that this board can focus on beyond issues i mean, yes, it is true that San Francisco is at the forefront of health care and minimum wage, but we have been surplanted now by state and even to a limited extent federal behavior. And were seeing that throughout many, many states. I would like in order for this to be productive, because i totally agree we want this industry, at a minimum, survive and at a maximum thrive, as was the case of many years. Which is still an empty space that is causing me grief in the middle of north beach. Sorry about that. Supervisor peskin it is what it is. Youre not the only one. Supervisor haney reminded me that when the giants lose, less people come to south park. For sure. Supervisor peskin i would like to leave the hearing im not saying this to you, but to the other speakers and supervisors and my colleagues on this panel, with ideas of concrete, real things that we can do in the shortterm. That was not to you, that was just kind of to make this a productive. I want to add thank you, one thing, i know there are things that arent directly to this hearing and i hear you, and we all understand that, but if there subsequent meetings and other commissions or areas we could participate, i would be very willing to do that, as would my colleagues. Supervisor peskin and to that end, there is an evolving discussion between the board and the Mayors Office and the Controllers Office. We know that 2020 is the year where a long thought about adjustment to the payroll gross receipts tax that has been plaguing us since the infamous lawsuit brought by General Motors and 51 other multinational corporations has been bugging us for 20 years. Were trying to figure that out. You should all be a part of the conversation. Thank you for that. Supervisor peskin supervisor fewer, thank you. Supervisor safai ill be bri brief. Some of the things that we worked on in the past year have been about reducing buffer zones for permitting and some of the things weve worked on is expanding the use of Commissary Kitchens and restaurants. That hasnt panneded to full expanded to fullservice restaurants. The idea of second floor, i know in many cases zoning doesnt allow for a secondfloor space to be utilized as a kitchen. Those are the things we hear a lot from Small Businesses and restaurants that can be helpful. So any of the ideas, at least as it pertains to this body. We are the land use committee. I wanted to add that. Supervisor peskin and thank you for leading obviously you see an engaged panel, but before i turn it over to supervisor fewer, as a high level you have changing Consumer Behavior through what we love to call the amazon effect. And then you also have a situation where individuals who do not