Like to ask him about you can finish, i dont want to interrupt. Actually, this is part of the process. Im trying to learn. I am not the expert. Somebody of here promulgating the legislation, there someone else who has expertise. I want to hear from the person. I want to defend the integrity of the work that we do which is come at the end of the day, an estimate. It is not Electrical Engineering where there is an answer. It is economics. I apologize for the wonky notes. When we had the consultants look at the occurrence, the way they started, they looked at wetland costs today. They looked at what Construction Costs today which is astronomically going up between 515 per year. And they looked at what rents are today. That is how you start one of these things. They came back and they said, office space doesnt work. And we said, that is not a good answer because they are trying to build it. What did you do wrong . They said, what we think we did wrong is we need to understand that these projects have been in the pipeline for a while. What that means is they probably got their land for a little bit less. We know it they bought their land for. They may or may not have contract guaranteed minimum contract with a contractor that gives them some shielding, probably not too much. The last piece is that we are looking at todays rents, as high as they are. They came back to us on what they said is, obviously empirically we need to fix this because projects are trying to build today. We did another run that we think is more real that assumed that rents would up, that land cost went down. Theyve owned their land for a few years. We left Construction Costs a lot because we do that these people dont have a deal with a general contractor yet. That is what made it work, okay . The baseline was this pipeline scenario where they adjusted prices. Obviously we you do a study like this if it doesnt reflect reality as a baseline, its not going to give you a good estimate of what happens when you change it. As i. Courtney, thank you for sticking around. Do you have any reason to doubt, the supervisors internally doubt the 89 milliondollar estimate that would be raised . Yes. The Economic Impact report assumes that our baseline growth is 430,000 square feet per year. We know our pipeline is much more robust than that. It is more like 700,000 square feet. With that being said, the revenues would be much greater and that would be an increase over the current fee that we arty have. We are estimating about 400 million over the next seven years. Just to be clear, when talking to the developers who are in the pipeline what we hear from them is look, we dont like this, this doesnt make us infeasible. That is what we are hearing directly from these developers. From which a developers . Developers who have already submitted their applications. Can you give me a size range of a typical developer . These are large up projects who are telling us this. Just to be clear. Large up projects are not frankly part of my purview here. Our constituents is Small Business, of which i am a member. Have you heard from any smallcap developers that feel this fee is sustainable infeasible . To my knowledge, we have not heard from any smallcap developers about anything about this legislation. Okay. How many smallcap developers or even in the works . There is 700,000 square feet of smallcap in the pipeline that has either submitted an Office Allocation application, or another pre application of the Planning Department. So, uh, your feeling is that it will generate 400 million in revenue over seven years . Roughly what 60 million per year . 57 million. Thank you. I mean, thats a remarkable discrepancy between what the controller report has found. The folks that are tasked with analyzing this. Who on the Supervisors Office can return to to find out about their expertise and learn how they arrived at this number . Share. Those calculations were done by me. The Controllers Office has been very clear that the estimates are based on what has been done in the past. It is not meant to be a look forward it is a look back. I would be happy to produce data for you around the pipeline projects, just how many square feet are going to be generated over the next ten years. Great. I happy to be talking to the source. That is helpful. Your projections of 400 million is based on what is currently in the pipeline right now not any new additions to the pipeline . That is correct. Say some of these other folks are right, maybe they are right, maybe they are wrong. I dont have a crystal ball. If any of them are right, and the number has a detrimental impact on development, have you modeled that . First of all i would say that the projections are not showing detrimental impact. They are showing about a. 1 Slower Growth year over year. We are not losing office space. We are not dramatically slowing it down. Im sorry, just to be clear. What is your projections are the controllers projections . The controllers projections. Want to make sure. What were your projections . Sure. We have not projected what a potentially looks like to have Slower Growth. What we have been told directly from developers in the pipeline is that they will continue on with their projects. Largecap, not smallcap. Correct. I think we have identified there is a voice missing from this. Sure. That is the vast majority of the development that is happening. Right. Again, what comes to mind is survivor bias. What we are seeing is the ones that can afford to develop, in part because of how this has been laid out. I just want to point out, sorry to interrupt you, commissioner, i listed out a lot of the smallcap projects and who the tenants are. Small businesses are also ending largecap process. Development is 100,000 or million square feet those could be multitenant spaces as well. The kinds of small tenants that can afford to pay 100 per square foot, i think it was 89, that is a very different Small Business from the kinds of Small Businesses that is not what i think most of us typically think of Small Business and dont typically have your typical restaurant, or sure. The nexus looks at her, i believe it is seven different kinds of commercial development. I withdrawal restaurant. I understand. Office space is what we occupy and i can assure you we cannot afford 89 per square foot. If i could quickly comment on the staff report that you all have that listed out to a number of different types of Small Businesses that i think are really important to maintain a level of affordability in the city. Not all of them fall under office use. We in this legislation are only focused on office use and laboratory use. Understood. Those will not be impacted by this legislation. I understand they are very important type of use. Let me ask you, in your analysis did you look out or consider the impact on revenue on the city side . In terms of . Tax revenue, fee revenue, payroll taxes . No. Did you consider the impact on jobs, construction jobs, office jobs . Did you arrive at a number . We did not do that analysis. Typically that is what our city departments will come up with. You rely on the city departments to help you figure out what the impact on the jobs are . For the most part. Typically we take in what city departments say. We take into account feedback and we hear directly from constituents and stakeholders only make a policy decision. Our policy decision was that we want to make sure that folks who are working in our Small Businesses and offices can afford to stay and live here in the city. I respect that. Let me add, i respect the challenges and offering any sort of policy suggestion, or trying to put forth anything, its always a difficult road. Hopefully there is communication and people listen to each other and Work Together and try to build consensus and consider all of the different points of view. That is our role appeared to try to encourage legislators to consider the points of view of Small Businesses like the kinds we all run. I dont think its a mystery that we are all concerned. We are concerned that the fee is a hundred 42 increase and it is dramatic and sudden. We are concerned that there is a feeling i will have an impact on our businesses, as well. I dont get, you know, i think my largest concern, frankly, is in your analysis you havent looked at the other side of the Balance Sheet here which is the cost to the city, and the impact on jobs. Im sorry yeah, im sorry, you just said you did not do an analysis of the job impact. The Economic Impact looks at the job impact. Then you disputed whether the Economic Impact report, i just asked you if you supported that, and you said, seem like you didnt. But you do . To clarify. Our issue with the Economic Impact report is the projection on office growth. We know there is a much more robust pipeline that is indicated in the report. In terms of the job numbers i dont have any specific data like i do on the pipeline to dispute that. Our take on its and what the controllers is that it is a very small slow down in job growth. Overall, and i think think another piece that is missing from it what does the Economic Impact of keeping in the city and building Affordable Housing . We know that generates a lot of jobs, too. Right. I would agree with keeping workers in the city. I think the only kinds of workers that can stay in the city would be the largecap workers if there is not any smallcap development. My biggest concern here is that this seems to take a one size fits all approach to the fee. Certainly, i think, there is room you mentioned earlier that the 25,000 squarefoot delineate or just appears to be a legacy carryover because that is the way we used to do it. I would encourage the supervisors to consider raising that. I would consider raising that quite a bit. While there may be the cloud fairs in the world that may be the beneficiaries of that, i think there is a lot of non cloud flares that would in this particular economic activity. If we cant, perhaps our business is one of them. We hear that. We have heard from the chamber, which i know there are some folks here today that are very seriously considering a smaller fee for the smallcap projects. We have been asking, and im sure you all would love to see this too, what really is the data that places Small Business with smallcap . We do think it is an important policy to objectively worth considering. I think, one of the concerns i have is when i ask about the data that would support, or not support moving in that direction, it seems like there is a shortage of that data. That has been our frustration, too. You know, perhaps in the absence of data, it doesnt seem insurmountable to get that data. It doesnt seem spending the time gathering the data would materially affect the viability, or the effectiveness of the proposed legislation. I dont think another couple of months, you know, take the time to do it correctly and in a well thought out necessarily be a bad thing to do. There seems to be calm on the one hand, an analysis that was done, by you, and on the other hand an analysis that was done by these other folks. Some analysis on what the impact might be. When they are such a difference by everyone involved may need to tread slower and more cautiously. Just on the off chance and the assumptions here about the pipeline are wrong, or fatally flawed in some way, or something youre not seeing. Generally, in my business, when i get really strong advice to not do something maybe i might still choose to do it, but i might not do it quite so aggressively. I may back off a little bit. Just to make sure i have hedged my vets as it were. My core concern, not my core concern, but a core concern goes to the heart of the proposed legislation which is if there there assumptions are correct and there is a 300 milliondollar hit to our gdp and 1500 jobs lost and there is no analysis yet on what the impact on revenue may be, it seems conceivable just looking at what is being presented to me. It seems conceivable that there is an outcome here where the money that is being generated to Affordable Housing is offset, and then some by lost economic output. We would have been better off just air marking, if the additional money raised would have that material difference, it would have been better off just air marking in the budget, instead of trying to raise it through external. We would love to earmark it in the budget. We want to remind the commission that those projections are a. 1 flow of growth. It sounds to me like is that your goal to slow job growth a little bit . No. Our goal is to keep workers in the city housed. Presumably we, i dont want to repeat myself, but presumably that extends to the people that already currently work here and already have middleclass jobs and lower middleclass jobs . Having to move further and further out of the city in order to stay afloat. At a certain foz, if office rents get too expensive, then those companies have to consider, you know, locating some else. Ive been on loop net looking in South San Francisco for some place to park our vehicles more times and i can count. Its very difficult. Apparently stripe found a way. I have not been as successful. Its actually really hard at the small sized stage. There is a point, and its not all that dramatically far off where we can continue. If the rents go up, even 510 more. That might just be what finally breaks my back in terms of being able to sustain our employees at a living wage, at a wage i feel responsible paying. We have other responsibilities there, too, of course. It is challenging. I think going to marks statement about the numbers. All of these expenses have a disproportionate impact on smaller operators when they are fixed and a flat. In other words, paying 100 per square foot matters a lot more if you are developing a 10,000 squarefoot facility, sorry 25,000 squarefoot facility than if you are developing a 250,00t vent development. That cost dont scale down, there are thick start up costs, their opportunity costs. There is a certain amount that you have to get over just to make the project even able to get started in the first place. I think that is one, if not, among many that we are not seen those smallmarket developments developments smallcap developments. Thank you for your time. I know i kept you here for an awful long time. Thank you to my colleagues, as well. Any other questions . We have some more. If only it were so easy to change and president s. [laughter] thank you for your presentation. Most of my concerns and questions are covered by commissioner laguana. This increase of 142 affects not just the downtown area, it is citywide. You may know, a lot of the Small Business owners are in the other areas like sunset, richmond. I know my dentist, my accounta accountant, you know, theyre all in the sunset and richmond outside of the downtown area. So, they may or may not be able to afford the higher rent because of this fee. Those two uses would not be impacted by this legislation. But there are others that would occupy office space and i can think of anything right now. Would you consider imposing this fee based on zoning . When you say zoning, are you referring to the size of the development, or actually the type of zoning in each neighborhood . May be, director, you can help . I think from what commissioner yee is attempting to communicate is that the economics i just want to go back. The examples i gave in terms of psychotherapist, doctors offic offices, those are in Office Buildings right now, they are located in Office Buildings right now in the c3 district. It is not just the classic office space that occupies these buildings. I think what commissioner yee is attempting to say, as the pressure rose, in the downtown area in terms of those rents, it spreads. Those small offices that might be currently occupying, in the smallcap Office Spaces that are more affordable they then may have to move more west, or south and occupy those Office Spaces and those rents go up which then mean those who are currently there may not be able to afford those rent increases. Is that how i understand . Yes. Whether or not you are a smallcap or largecap you have to pay the same 142 increase fee. Also, the graph clearly shows that all rents are rising. They track one another. To say that this only affects the large up renters is not true. The rent on my unimproved warehouse has tracked the market, percentagewise. My rent went up, it has gone up 1518 per year over the last five years. Averaging about 10 per year. I am tracking. If you change the slope of that curve, my rent is going to change exactly on that same slow. That is what the historic data. I hear that. I dont mean to belabor this. , fees have been constant and our rents are rising, some of the fastest in the country. There is a lot of other things going into this. Just to your point about what is actually in an office space. Talking to the zoning director, or the Zoning Administration administrator at the Planning Department a doctors or office, for example, it might look or feel like an office, it is still considered a different use and would be considered retail use and for purposes of how impact fees are assessed. When it is being developed that may not be known who are the tenants. Because it may not be a full medical building. Many of these Office Buildings downtown have multi different types of tenants. Kind of using that analogy means it is already preestablished who are the tenants. We just had this conversation with ken, we cannot say, you know, you preestablished for your tenants are so we can make this space, you know, this fee, and this space this fee. It gets spread. The cost of building it is just going to be the cost of building it without office fee, jobs housing linkage fee. Share. That was my understanding fro