Small Business

Davis snags a trio of top progressive endorsements

Sasha Cuttler
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Davis snags a trio of top progressive endorsements

District 5 supervisorial candidate Julian Davis is emerging as the progressive standard-bearer in that competitive race after today receiving the endorsements of a trio of top progressive politicians: Sups. John Avalos and David Campos and attorney Matt Gonzalez, the former board president, mayoral candidate, and D5 supervisor.

Gonzalez had endorsed appointed incumbent Sup. Christina Olague – who he appointed to the Planning Commission in 2004 – but he withdrew that endorsement last month after being frustrated by a series of actions in which she sided with Mayor Ed Lee, moderates, and developers over her longtime progressive colleagues and constituents.

Avalos and Gonzalez are endorsing just Davis, at least for now, while Campos added to his early endorsement of Olague by today endorsing Davis and John Rizzo, who had earlier snagged the other prized progressive endorsement by winning the support of Assembly member Tom Ammiano.

Davis, who was already endorsed by former supervisor and local Democratic Party chair Aaron Peskin, said he’s thrilled with today’s triple endorsement. While some have questioned his anemic fundraising so far, raising less than $10,000 as of June 30, Davis notes that he had been in the race for less than a month before that deadline and that he expects to have more than $150,000 to get his message out.

“What these endorsements signal is a confidence from San Francisco’s progressive leaders, not only in the vision of this campaign, but in our capacity to win,” Davis told us.

Avalos said that he has confidence in Davis’ values, experience, and his ability to run a strong race that will help to reinvigorate the progressive movement.

“Julian is a solid candidate who has been around for years on a number of progressive causes. Running for mayor, I was impressed with his connection to neighborhood issues ranging from small business development to urban cycling and youth and worker rights. His campaign has a good buzz about it, one that I expect will resonate with District 5 residents,” Avalos told us.

The malling of San Francisco

Andrew Lam
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The malling of San Francisco

steve@sfbg.com

Shopping malls filled with national chain stores and restaurants are in many respects the antithesis of San Francisco. They’re the bane of any metropolis that strives to be unique and authentic. And those just happen to be qualities that make tourism this city’s number one industry.

The logic of modern capitalism, and its relentless growth into new markets, has already placed a Target or a Walmart, and a Nordstrom, Macy’s, Ross, or a JCPenney — along with a bevy of Starbucks, Applebee’s, Jamba Juice, and McDonald’s and myriad other formulaic corporate eateries — in just about every town in the country.

Do people really need them here, too? And in a city renowned worldwide for its scenic beauty and temperate (albeit sometimes foggy) climate, do people want to shop in the enclosed, climate-controlled malls popularized in the small or suburban towns that many residents came here to escape?

For me, the answer is no. Frankly, malls have an aura of artificiality that gives me the creeps — but I freely acknowledge that not everyone feels that way. Some San Franciscans may like malls and chain stores while others don’t.

But it doesn’t really matter what any of us think. Left unchecked, it’s the market that matters — and the logic of the market gives chain stores a huge competitive advantage over the mom-and-pops. Their labor and supply costs are lower, their financial resources are more extensive and appealing to commercial landlords, and their business models are based on constantly opening new stores.

All cities have to do is just say yes. And San Francisco has been increasingly saying yes to malls and chain stores.

The economic desperation that set in since the financial crash of 2008 has overcome the trend of resistance to so-called “formula retail establishments” that had been building in San Francisco during the years before the recession.

So now, rather than dying from neglect, the Metreon mall has been brought back to life by a huge Target store set to open this fall, the second Target (the other one at Masonic and Geary) going into a city that had once eschewed such national mega-retailers.

Just down the street, in the heart of the city’s transit-rich commercial center, the CityPlace mall that had been abandoned by its previous owners after winning city approval two years ago is now being built by new owners and set to open next spring with “value-based” national chain stores like JCPenney.

Projects funded with public money aren’t immune either. The new Transbay Terminal transit center now under construction will have its own mini-mall, with 225,000 square feet of retail, much of it expected to house national chains. Even more retail will be built on the ground floor of the dozen other nearby residential and office buildings connected to the project.

And it isn’t just these new malls going in a stone’s throw from the Westerfield Mall, Crocker Galleria, San Francisco Center, and other central city malls. All over town, national chains like the Whole Foods and Fresh & Easy grocery stores are replacing Cala Foods and other homegrown markets, or going into other commercial shells like the S&C Ford building on Market near the Castro.

Just a few years ago, the approval of Home Depot on Bayshore Boulevard (since then sold and opened as Lowe’s, another national chain) was a hugely controversial project approved by the Board of Supervisors on a closely watched 6-5 vote. Now, Lennar is building an entire suburban-style complex of big box stores on Candlestick Point, hundreds of thousands of square feet — without much controversy at all.

Even Walmart — the dreaded poster child for huge corporations that use their market power to drive down wages or force local stores out of business — is reported to be actively looking to open “a couple” of stores in San Francisco (see “Walmart sets sights on San Francisco,” June 24, San Francisco Chronicle).

To Livable City Executive Director Tom Radulovich and others who have long encouraged San Francisco to embrace the kind of urbanism advocated by famed author and activist Jane Jacobs — which emphasizes unique, neighborhood-based development that enhances public spaces and street life — accepting the malls feels like giving up on more dynamic urban models.

“It’s sort of an admission of failure,” Radulovich said. “It’s the failure of urbanism in San Francisco.”

 

 

MID-MARKET SYMBOLISM

Mid-Market Street is a bellwether for the type of city San Francisco may become. Every mayor since at least Dianne Feinstein in the late 1970s has called for the redevelopment of Mid-Market into a more active and inviting commercial and social corridor, and few have done so more fervently than Mayor Ed Lee.

Several city studies have explored a wide variety of ways to accomplish that goal, from eliminating automobiles and transforming Market Street into a lively pedestrian promenade to using redevelopment money, tax breaks, and/or flashy lighted signs to encourage distinctive development projects unique to San Francisco.

“But the city failed, so the market filled the void,” Radulovich said.

It isn’t that all shopping malls or enclosed commercial areas are necessarily bad, Radulovich said, citing the influential work by writer Walter Benjamin on the roles the enclosed “arcades” of Paris played in public life. “They work when they are an extension of public spaces,” Radulovich said.

Yet that isn’t what he sees being built in San Francisco, where what gets approved and who occupies those spaces is largely being dictated by private developers who are more interested in their bottom lines than with the creation of a vibrant urban environment where people are valued as more than mere consumers or workers.

San Francisco isn’t alone in allowing national chains to increasingly dominate commercial spaces. In fact, Stacy Mitchell, a researcher with the Institute for Local Self-Reliance, said that until recently San Francisco was one of the best big US cities in controlling the proliferation of chain stores.

But the city has lost ground since its anti-chain high water mark in 2007, when voters approved Proposition G, which expanded the controls on formula retail outlets — generally requiring them to get a conditional use permit and go through public hearings — that the Board of Supervisors had approved in 2004.

Those controls are only as good as the political will to reject a permit application, and that doesn’t happen very often. A memo prepared last July for the Planning Commission — entitled “Informational Presentation on the Status of Formula Retail Controls” — found that of the 31 formula retails applications the city received since 2007, just three were rejected by the commission, six were withdrawn, and 22 were approved.

It’s gotten even worse since then, as the two Targets and other chains have been courted and embraced by Mayor’s Lee’s administration, whose key representatives didn’t respond to Guardian interview requests by press time.

Mitchell said it’s not nearly as bad in San Francisco as it is in Chicago, New York City, New Orleans, and other iconic US cities whose commercial spaces have been flooded with chains since the recession began.

“It’s nothing compared to the no-holds-barred stuff going on in New York City right now,” Mitchell said. “Walking down Broadway now is like a repeating loop of the stores you just saw further up the street.”

It isn’t that these cities are actively courting the national chains in most cases. It’s just that in the absence of strong local controls, developers and large commercial landlords just prefer to deal with chains, for a variety of reasons.

“If you’re just going with the flow of what developers are doing,” she said, “you always end up with national chains.”

And that’s what San Francisco has started to do.

 

 

MALLS LIKE CHAINS

Stephen Cornell, the owner of Brownie’s Hardware and a board member of the nonprofit advocacy group Small Business California, said chains have a huge competitive advantage over local businesses even before either one opens their doors.

“In general, landlords tend to like chains more,” said Cornell, whose business has struggled against Lowe’s and other corporate competitors. “The landlord always worries: is this guy going to make it and do they have the funds to back it up?”

Big corporate chains have lawyers and accountants on staff, and professional systems established for everything from buying goods to opening new stores, whereas most local entrepreneurs are essentially figuring things out as they go along.

“They’re very good at selling themselves,” Cornell said. “They’re going to manipulate the system perfectly, whether it’s the city and its codes or dealing with neighborhood merchants.”

And for large malls, Cornell said the problem is even worse. Brokers that fill malls have standing relationships with the national chains — most of which are publicly traded corporations seeking to constantly expand and gain market share — and no incentive to seek out or take a chance on local entrepreneurs.

“Chains have a lot of advantages,” Cornell said.

Mitchell said there are two main ways in which malls favor national chains over local businesses. In addition to the relationship between mall brokers and national chains, malls are often built with financing from financial institutions that require certain repayment guarantees.

“What they want to see are credit-worthy clients signed onto those places, and that means national chains with a credit rating from Standard & Poors,” Mitchell said, noting how that “automatically locks out” most local businesses.

Cornell also noted that national chains have already figured out how to maximize their efficiency, which keeps their costs down even though that often comes in the form of fewer employees with lower pay — and less reliance on local suppliers, accountants, attorneys, and other professionals — which ends up hurting the local economy. In fact, big chains suck money out of the city and back to corporate headquarters.

“All those people are making money and spending money here, so you have to look at the full circle,” Cornell said.

Mitchell said there are often simple solutions to the problem. For example, she said that city officials in Austin, Texas recently required the developer of a large shopping mall to set aside a certain percentage of the units for locally owned businesses.

So rather than hiring a national broker to find tenants, the developer hired a local broker to contact successful independent businesses in the area who might be interested in expanding, and the project ended up greatly exceeding the city’s minimum requirements.

Mechanisms like that, or like the formula retail controls pioneered in San Francisco, give her some hope. But she said, “Whether the counter-trends will be enough to counter the dominant trend, I don’t know.”

 

 

PUBLIC SUBSIDIES

The increased malling of San Francisco isn’t simply the result of official neglect. Often, the city’s policies and resources are actively encouraging the influx of chain stores. A prime example is the massive redevelopment project on Hunters Point and Candlestick Point that city voters approved in 2008 after mega-developer Lennar and most San Francisco political officials pushed the project with a well-funded political campaign.

“If you’re selling the land to Lennar for a dollar, and then building all the automobile infrastructure for people to get there, then that’s a massive public subsidy,” Radulovich said of the big-box mall being built on what was city-owned land on Candlestick Point.

That public subsidy creates a cycle that makes San Francisco less intimate and livable. Creating commercial spaces on the city’s edge encourages more people to drive on congested regional roadways. These spaces are filled with national chain stores that have a direct negative impact on small, locally owned stores in neighborhood commercial districts all over the city, causing some of these businesses to fail, meaning local residents will need to travel further for the goods they once bought down the street.

“Those neighborhoods are going to be less walkable as a result,” Radulovich said, noting how the trend contradicts the lip service that just about every local politician gives to supporting local businesses in neighborhood corridors. “There’s a certain schizophrenia to San Francisco’s economic development strategy.”

Sup. Eric Mar has been working with Jobs with Justice San Francisco and other groups to tweak city policies that have allowed the chains to proliferate. Last year, Mar held high-profile hearings in City Hall on how national chains impact local businesses, which pointed to the need for additional protections (see “Battling big box,” Jan. 3).

This year, he’s working on rolling out a series of legislative initiatives designed to level the playing field between local interests and those of Wall Street and the national chains it champions.

Last month, the Board of Supervisors approved Mar’s legislation to add banks to the city’s formula retail controls, a reaction to Chase Bank and other national banks snapping up vacant stores in neighborhood commercial corridors such as Divisadero Street.

Now he’s working on legislation that would mandate minimum labor and community benefit standards for chain stores — including grocery outlets such as Fresh & Easy — and study how chains affect San Francisco’s overall economy.

“There should be good neighbor policies when they come into a neighborhood,” Mar said. “Some neighborhoods are so distressed they may want a big box grocery story coming in, but we need to try to mitigate its negative impacts.”

One of his partners in that effort is his brother, Gordon Mar of Jobs with Justice, who argues the city needs to have a clearer picture of how national chains impact local communities.

“We’ve definitely seen an increase in corporate chain stores coming into San Francisco in the last year, and nobody has really been tracking it,” he said.

While the Planning Department’s quarterly pipeline report shows that applications for retail outlets has held steady at about 3 million square feet on the way in recent years, it doesn’t break out how much of that is national chains — let alone how that impacts the city’s economy and small business sector.

The city’s Legislative Analyst is now studying the matter and scheduled to release a report later this summer, which Gordon Mar said will be helpful in countering the narrow “jobs” rhetoric that now dominates City Hall.

“They are exploiting the economic recession by saying they’re bringing much needed jobs into the city and serving low-income residents,” he said. “But when you bring out the facts about the impact of these low-road retail stores on neighborhoods and small businesses, there is a net loss of jobs and a lowering of labor standards.”

 

 

VALUING MALLS

Yet the fate of those controls is uncertain at best, particularly in a tough economic environment in which the city needs revenue, people are desperate for jobs, and many residents have seen their buying power stagnate, making the cheap goods offered by Target and Walmart more attractive.

“It’s complicated stuff,” Michael O’Connor, a local entrepreneur and former member of the Small Business Commission who favors formula retail controls, told us. “Stores like Target do appeal to lower income families…The progressive agenda needs to understand that working-class families need somewhere to shop.”

O’Connor acknowledges how small businesses like those he owns, including a clothing store, often can’t compete with national chains who buy cheap goods in bulk. So he said he favors protections in some neighborhoods while allowing chains in others, telling us, “I don’t have a problem with the Target going into the Metreon.”

That argument also held sway with city officials when they considered approving the CityPlace project two years ago, which was presented as a mall filled with “value-based” stores that would be affordable to median income San Franciscans.

“At the time, the decision was around whether a value-based retail operation made sense in that location, and the answer was an emphatic ‘yes,'” Barbary Coast Consulting founder Alex Clemens, who represented the project, told us.

On a national or global level, there are good arguments against reliance on national chains selling cheap imported goods, which has created a huge trade deficit between the US and countries such as China that costs American jobs — ironically, the very things that some use as arguments for approving chain stores.

“The recession has created a climate of desperation where cities are more easily swayed by the jobs argument,” Mitchell said, noting the falsity of those arguments by pointing to studies showing that the arrival of chain stores in cities usually creates a net loss in employment. Finally, supporters of chain stores say the cash-strapped city needs the property and sales tax revenue “Because they say they’ll produce a lot sales tax revenue, they’re going to get away with all kinds of shit,” Cornell said, arguing that shouldn’t justify city policies that favor big corporations, such as tax breaks and publicly financed infrastructure. “I certainly don’t think [city officials] should be giving them any advantages.” There are few simple solutions to the complex and interconnected problems that result from the malling of San Francisco and other cities. It’s really a question of balance — and the answer of whether San Francisco can regain its balance has yet to be answered. “Given the mayor’s approach to economic development, it’s inevitable that we’ll have more coming into the city,” Sup. Mar said. “But the ’50s car culture, and the model of malls that came in the ’60s, don’t build communities or strong neighborhoods.”

No deal yet on business tax reform as competing measure are introduced

Sasha Cuttler
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No deal yet on business tax reform as competing measure are introduced

Mayor Ed Lee and his business community allies failed to reach an agreement with labor and progressives by today’s deadline for submitting fall ballot measures to the Board of Supervisors, leading progressive Sup. John Avalos to introduce a business tax reform measure that would compete with Lee’s proposal.

The Avalos measure would raise $40 million in new General Fund revenue to restore recent cuts to city services while Lee’s would essentially be revenue-neutral, although Lee did tweak the formulas to raise about $13 million in new revenue that would be dedicated to a new Affordable Housing Trust Fund, which would be created by another ballot measure that Lee was having a hard time funding in the face of business community opposition.

“I don’t believe trickle down economics works, except for the 1 percent,” Avalos told the Guardian, arguing the importance of recovering revenue that the city lost when the biggest downtown corporations sued the city in 2001 to invalidate a gross receipts tax. Both the Lee and Avalos measures would gradually convert the current payroll tax into a new version of the gross receipts tax, which is preferred by most of the business community.

So, will voters in the fall be faced with competing ballot measures? Probably not, according to the same sources from the business and progressive sides of the negotiations who told us last week that it appeared a deal was in the offing, something they still believe.

“This is the beginning of the negotiations,” said the business community source, noting that both measures won’t be approved until next month, with discussions about merging them ongoing. “I’m sure this is part of the process and they will agree on a number.”

Our labor source agreed, predicting the two sides will come to an agreement because neither side wants competing ballot measure, but noting that Lee appears to be trying to create divisions between the progressive revenue coalition and the affordable housing advocates. “That’s just positioning on their part, but it doesn’t feel like good faith bargaining,” the source said.

Mayoral Press Secretary Christine Falvey seemed to leave the door open for compromise, telling the Guardian, “The Mayor believes that to be successful, we should continue building consensus around business tax reform and that it’s important that the business community continue to be key partners in that effort.”

Lee is trying to placate an emboldened business community, which has taken a hard line position on opposing new taxes even while seeking ever more tax breaks and public subsidies. In fact, Sup. Mark Farrell had another business tax cut on today’s board agenda, cutting the payroll tax for small businesses at a cost of more than $2 million to city finances.

“I believe we need to do all we can to incentivize job growth in our small business community,” Farrell said.

Avalos said he agrees with helping small businesses – which is why both his and Lee’s business tax reform measure shifts more of the tax burden to the large corporations that have been so profitable in recent years – but that “we should not be putting a hole in the city’s budget to do so.”

In a sign of just how strong the business community has become at City Hall compared to the progressive movement that had a board majority just two years ago, the tax cuts were approved on a 10-1 vote, with only Avalos opposed.

Sup. Cohen answers some Impertinent Questions on sunshine

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b3 Note:  I sent some Impertinent Questions to the supervisors who voted against Bruce Wolfe, an excellent task force member,  and for Todd David (See other sunshine blogs.) To their credit, Sups.Elsbernd and Malia Cohen responded, Sup. David Chiu said he could not make the deadline but would reply with a new deadline.  Sups.Wiener and Farrell and Carmen Chiu have not responded.

Dear Bruce –
It was nice to see you the other night at the Potrero Hill Boosters dinner. I believe very strongly in the Sunshine Ordinance, transparency and efficiency in government. I also believe that the Sunshine Ordinance Task Force is an essential component of ensuring that our City departments are open with members of the public. As I mentioned in my comments on Tuesday, I have significant concerns with opinions of some of the Task Force’s members that the City Charter does not apply to them in the same manner as it applies to all other elected and appointed bodies in the City. I also have concerns about the inefficiency of Task Force meetings and the process by which complaints are adjudicated. I was encouraged by the qualifications of a number of new applicants that applied to serve on the Task Force. In particular I believe that the newly appointed members bring a diverse skill set in consumer advocacy, media relations and community involvement in governmental issues. It has also been one of my commitments as a member of the Board of Supervisors to increase the diversity of the membership of our City’s appointed bodies, whether that be on the Small Business Commission, Entertainment Commission or the Sunshine Ordinance Task Force, and I believe that the new appointees bring a much needed level of diversity to this body. I also want to stress that we still have a number of seats that the Rules Committee has not yet recommended appointments to. I know that it is my intention and I would also bet that it is the intention of my colleagues to ensure that these remaining vacant seats meet the requirement to have a physically handicapped individual on the Task Force, as well as individuals who bring expertise and experience in the above mentioned areas.

Always at your service,
Supervisor Malia Cohen

B 3 comment: Your “strong” belief in the sunshine ordinance and task force is admirable but would be more so if you didn’t reject knowledgeable representatives from the organizations with open government and public access credentials and experience.  And if you weren’t voting for the big development projects that want as little sunshine as possible on their contracts and operations and lobbying. 

What small business owners care about

Zelda Bronstein
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What small business owners care about

Since the mayor’s office still insists that any business-tax reform ought to be revenue-neutral, and since he and other continue to talk about the myth that a payroll tax hurts job growth, I found the latest Bank of America survey of local small business owners fascinating.

Here’s what the survey found: Small business owners are concerned about (1) the cost of healthcare (2) access to credit and (3) finding qualified employees. Local taxes aren’t even on the list.

Now, if you ask almost any business operator whether he or she would like to pay lower taxes, most will probably say, sure. And I agree that a gross receipts tax is a better way of spreading the burden around. But the notion that slightly raising business taxes would hinder job growth in any significant way isn’t supported by reality.

In fact, if you used higher taxes to improve the schools (and thus the education of the future workforce) it would do more to keep employers from leaving San Francisco than cutting taxes. If the state of California went to a single-payer health-care system — dramatically reducing the cost to employers — it would do more to attract jobs to this state than all the tax cuts in a Republican’s wet dreams.

And if Bank of America and Wells Fargo would start loaning money to small businesess, you’d see almost immediate job growth.

How’s that for a Small Business Week agenda?

Our 2012 Small Business Awards

Jesse Hawthorne Ficks
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Our 2012 Small Business Awards

WOMEN IN BUSINESS

KELLY MALONE, WORKSHOP AND INDIE MART

In a tech-obsessed society, our hands navigate today’s gleaming gadgets more often than those of yesteryear: a sewing machine, say, or a manual drill. DIY goddess Kelly Malone has spent years trying to change that — and in so doing has created a business that serves as a cultural touchstone for the budding Divisadero Street corridor.

Malone’s brick-and-mortar shop is named Workshop (1798 McAllister, SF. 415-874-9186. www.workshopsf.org), and it’s a place where aspiring crafters receive hours of instruction in oft-neglected skills like sewing, knitting, and terrarium-making — all while drinking Pabst Blue Ribbon and meeting new friends. After receiving an enthusiastic response from her Indie Mart (www.indie-mart.com), a handmade craft fair she started six years ago in the backyard of her Mission digs, Malone saw a need for a hub for would-be crafters.

“I wanted to create a space that was super ‘hit it and quit it,'” she says. “Where you could come in and take a class, but you didn’t necessarily need to become some expert knitter. A place for people to sit down and get their hands dirty, learn to make something, and get inspired.”

Malone started Workshop on scant funding. Instead of relying on bank loans, she looked to her immediate community for investors. “I’ve started every business without money, which has forced me to really put myself out there and grow my businesses by meeting people and being super-passionate about what I do,” she says.

Malone says having a big budget to open her businesses would have been fun, but saving her pennies and having flea markets and garage sales to pay for sewing machines gives her more street cred, DIY all the way.

And like our favorite kind of businesspeople, Malone hardly sees her enterprises as a sterile way to make a quick buck. “I’m never going to get rich off these businesses, but if I get to the point where I can have a couple people on staff like I do now, and have enough to pay bills and go get some beers, hey, that’s good enough for me.” (Mia Sullivan)

CHAIN ALTERNATIVE

SPORTS BASEMENT

Although based locally, Sports Basement (www.sportsbasement.com) is technically a chain, as it now boasts four locations: an 80,000 square-foot building at the old commissary in the Presidio, SoMa’s brick-and-wood location, a store in Sunnyvale that once mimicked the inside of a computer (look for the remaining “ESC” keyboard sign), and another nearing Mount Diablo in Walnut Creek. But beyond the fact that it offers the only real alternative to national conglomerates when it comes to one-stop athletic and outdoor gear, the retail company is fiercely dedicated to its Bay Area community. Plus, its cozy, with hand-painted cardboard signs detailing specials, comfy couches, and super-friendly staff.

Founder Eric Prosnitz came up with the Sports Basement idea in an effort to create a more personalized experience in an off-price retail outlet, something tailored more closely to Northern California’s environment. Products change every week, discounts rule, and employees are encouraged to treat customers as individuals with a continuum of outdoor lifestyle needs. And the Basement recognizes that it’s an expansive company with the power to affect various neighborhoods. Last year, its locations hosted more than 2,000 community groups at 7,000 events, averaging around four events per store per day. Ten-15% of the retail space serves as free community space. Examples: Walnut Creek holds a fundraiser in the form of a kid apparel fashion show, Sunnyvale hosts ASHA for India, an organization dedicated to providing education for underprivileged children in India; Bryant St. houses the AIDS Lifecycle organization, and Presidio is the meeting spot for Golden Gate Mother’s Group — just to mention a few.

Aaron Schweifler, Director of Operations at Sports Basement, says the staff is encouraged to be creatively autonomous, and hopes each store will provide a shopping experience that can “wow” local residents. We are wowed! (Soojin Chang)

TENANT ADVOCATE

GREG MARKOULIS, AMERICAN INDUSTRIAL CENTER

In 1975, Greg Markoulis of American Industrial Center (2345 Third St., SF. www.aicproperties.com) was scouring San Francisco to find a new home for his family’s 25-year-old shoe manufacturing company. When American Can Company, one of the city’s oldest and busiest industrial complexes, offered an attractive deal on a vacant Third Street building, Markoulis gladly took them up. The new abode reinvigorated the company, transforming it from a street corner location to a community space housing more than 285 businesses — now including graphic designers, commercial photographers, architects, light industrial manufacturers, a winery, a yoga center, a martial arts studio, and a medley of Web-based companies and art collectives. That expansive spirit soon spread, helping to reinvigorate the entire Dogpatch area, which had suffered a lengthy period of industrial decline.

Thirty-seven years later, AIC still keeps the family ethos alive. When making executive decisions, Greg Makoulis says the company’s priorities align much more with how relatives interact with one another rather than those of a typical business. “The ideas of the oldest generation with the most experience are considered first,” says Markoulis.

As this side of town is rapidly undergoing gentrification, he could very well have sold the building to a corporation. But he sees his tenants as valuable community members, not just paychecks. Markoulis thrives on finding working solutions to accommodate his tenants, and respects the fact that people’s needs are ever-changing. Markoulis describes AIC’s priority to be “giving everyone a stable place to operate in.”

In Markoulis’ experience, one of the biggest challenges that AIC has faced over the years has to do with the cost and time for newly opening businesses to acquire permits. He hopes to see changes in San Francisco’s building and planning department, because he thinks a faster turnaround would help foster employment opportunities. (Soojin Chang)

CULTURE CHAMPION

DON ALAN, HEMLOCK TAVERN AND CASANOVA LOUNGE

“I think the challenge for San Francisco is to take care of the venues that its got,” says Don Alan of the ever-shrinking live music scene here. Alan has contributed enormously to the preservation of live rock in the City by the Bay with his raucous Hemlock Tavern space in Polk Gulch (1131 Polk, SF. 415-923-0923, www.hemlocktavernsf.com) on the site of former gay bar the Giraffe. He’s also a preservationist of dive bar ambiance, opening Mission District favorite Casanova Lounge, full to the brim of attractive indie young ‘uns on the make.

Alan got his rock start in the on community radio in Madison, WI, soon coming to SF and opening storied live bluegrass and jazz cafe Radio Valencia. “We opened the Casanova while we still had Radio Valencia and we realized that a bar format would work better for live entertainment than a cafe format,” Alan says. “We opened the Hemlock in 2001 after we closed Radio Valencia. I was really excited about having a space like this. I was very interested in having a kind of old Wisconsin tavern feel because that’s where I grew up. It was perfect for me, finding a space that had a small venue so we didn’t have to be concerned about getting 200 people in every night, so we could book the kind of music that we wanted and to have a big enough bar to support that.”

“But basically this is a subsidized entertainment operation. The money is made at the Hemlock’s bar and the culture happens in the back room with the shows. The culture wouldn’t happen without this up here.” So go buy a beer or eight, already, and then take in one of those rarer-and-rarer raging shows. (Mirissa Neff)

EMPLOYEE-OWNED BUSINESS AWARD

MANDELA FOODS COOPERATIVE

“In high school, all I wanted was there to be a place to find fruits and vegetables,” says Mandela Foods Cooperative (1430 Seventh St., Oakl. 510-452-1133, www.mandelafoods.com) worker-owner James Berk. “I never thought I’d be the one that could provide that. It’s an interesting place to be in.”

Before the store opened, Berk’s native West Oakland was a food dessert. A dependence on convenience stores for nutrition was leading to rampant bad health in his community, so when the opportunity arose to be a part of a for-profit, organic-heavy grocery store in Mandela Marketplace, he took it. Responding to the neighborhood’s request, the shop employs and is owned by community residents. These worker-owners make all the shop’s decisions in group meetings, aiming for consensus when it comes to many essential issues.

Now, nearly three years after opening its doors, Mandela Foods Cooperative is a neighborhood staple. The majority of customers live within a radius of a few blocks and come to snap up bestselling items like orange juice, coconut water, and kale (a vegetable Berk said he had never heard of before working at the store.)

Ready-made food is also popular, from full plate meals to sandwiches that neighbors drop in to buy, despite a Subway next door. Though the shop’s focus continues to be on organic, naturally-produced foods, worker-owners see a need for a greater diversity of products: cheap staples alternating with more spendy products geared towards sustainable foodies. Business is stronger than ever right now, too — Berk says the small shop is on pace to break even this year.

So how is it banding with your neighbors to bring the rest of the block ingredients for a healthy diet? About as positive as you’d imagine it to be. “There’s a unity here that I’m not accustomed to,” says Berk. (Caitlin Donohue)

ARTHUR JACKSON DIVERSITY IN SMALL BUSINESS AWARD

CHERYL BURR, PINKIE’S BAKERY AND CITIZEN’S BAND

Cheryl Burr has no idea why her first bakery boss left her 16-year old self in charge of the pastries. “I would never have let a teenager do that at my business!” she chuckles. But really, the guy was showing prescience — Burr and business partner Chris Beerman, who originally shared space in a bakery-bento retail window in Potrero Hill, opened the doors of their Pinkie’s Bakery (1196 Folsom, SF. 415-556-4900, www.pinkiesbakerysf.com) in SoMa nearly three years ago and have been tickling sweet teeth with their skills there ever since.

“I’ve always been a super-strong personality,” Burr tells us, sitting in the sunny table area of Pinkie’s. Though the Asian American breadsmith built a respectable career in high-class kitchens around the city, there came a moment when she wanted to be able to execute her own vision. “I’ve gotten to this point in my career where I didn’t want to answer to anybody.”

So she took control of her own trajectory, renting space in a commercial kitchen, starting her own hustle. Burr supplied pies to wholesale accounts, mainly friends of friends she’d met through her years in the restaurant business. Her commercial space is part of a culinary reinvigoration of the neighborhood around Seventh Street and Folsom. Pinkie’s is a stone’s throw from Bloodhound Bar, Sightglass Coffee, Radius restaurant, Terroir wine bar and more. “There is definitely a sense of community and partnership around here,” says Burr, who will sometimes refer to the strip as “Folsoma.”

Pinkie’s is also a room away from Citizen’s Band, Beerman and Burr’s freshly-sourced diner. The same customers that come for Burr’s famous levain bread and apple butter morning buns can now also order a dinner of poutine with wild mushroom gravy and crispy pork belly right next door.

“We want to continue to refine what we’re doing here,” Burr says when asked about her future business plans. Did that young woman on her first baking job envision the success of her own bread basket? She smiles. “I’m not entirely sure what I envisioned, but it’s different.” (Caitlin Donohue)

GOLDEN SURVIVOR AWARD

PHIL’S ELECTRIC

During World War II, Phil Sidari was commissioned to make artificial limbs for disabled US veterans returning home. The shortage of finished goods during wartime also prompted Sidari to begin constructing small appliances out of spare parts. Thus, 61 years ago, Phil’s Electric (2701 Lombard, SF. 415-921-3776, www.philselectric.com) was born.

Sidari passed away at the ripe old age of 103, but his friends Vicki and Bob Evans took the reins in the 1970s when Phil decided to retire. Vicki says the store has gone through quite a few changes over the years, including a relocation 28 years ago from Fillmore Street to a quiet corner near the gates of the Presidio.

The shop is intimate, homey, and entirely a family affair. Bob and Vicki’s sons Tom and Ken help their parents run the business and provide excellent customer service to their patrons. Phil’s Electric specializes in the repair of vacuums and lamps but also sells coffee makers, blenders, vacuums, razors, and a host of other small electronic items.

Yet the rise of cheap, disposable electronics has made it difficult a business that’s founded on, well, fixing things. “In the past, almost everything got repaired, but that’s changing,” says Vicki. “For example, you can buy a Cuisinart coffeemaker that, after its warranty, there are no parts for it. So you throw it out. Whereas, say 12 years ago, we would have had a part for that and fixed it for you.”

Phil’s Electric also faces stiff competition from the Internet and larger stores. But it does have some advantages. “Internet companies are working out of a warehouse somewhere, so they don’t really have any commitment to the neighborhood or the city or the community,” Vicki says. And the unique thing about San Franciscans, according to Vicki, is our interest in supporting neighborhood businesses. “If we moved this to a suburban area, I don’t know if we’d have that many loyal customers.”

Vicki’s favorite part about the business? The human aspect and her autonomy. “You can interact with your customers and really try to be flexible and meet people’s needs.” (Mia Sullivan)

SMALL BUSINESS ADVOCATE

CALIFORNIA MUSIC AND CULTURE ASSOCIATION

Two years ago, during the climax of the police and regulatory crackdown on San Francisco nightlife that we dubbed the “War of Fun,” the California Music and Culture Association (www.cmacsf.org) was formed to advocate for all the club owners, promoters, DJs, and other creatures of the night who create our urban soundtrack and culture.

Since then, CMAC has become powerful advocate on behalf of nightlife, demonstrating an influence on Mayor Ed Lee and other city leaders and promoting an understanding at City Hall of the important role played by nightlife, which a recent Controller’s Office report found accounts for $4.2 billion in annual economic activity.

“As the recent Controller’s report demonstrated, the small businesses that make up the nightlife economy have a huge impact on the overall economy, and we’re happy the city is starting to realize this,” Alix Rosenthal, co-chair of the CMAC board, told us.

Now, with the help of newly hired Executive Director Laura Hahn, CMAC hopes to move from playing defense against crackdowns and punitive legislation to playing offense by expanding its membership and developing a proactive agenda that will help nightlife and its purveyors flourish.

“Now that we don’t have our back against the wall, we’re trying to expand,” Hahn told us. “We want to bring it to even smaller business owners like individual DJs, promoters, and individual musicians — the backbone of nightlife in San Francisco.”

But not matter what new realms CMAC gets into, small business advocacy will always be at the core of its mission. As Hahn said, “We want to focus on standing up for the little guys who don’t have people fighting for them in City Hall.” CMAC will host the 2012 San Francisco Nightlife Awards, Thursday, May 31 at Mezzanine, doing even more to bring local nightlife to the fore. (Steve Jones)

GOOD NEIGHBOR

SHANNON AMITIN, FARM:TABLE

“People always ask me if I ever consider expanding,” Shannon Amitin, owner of farm:table (754 Post, SF. 415-292-7089, www.farmtablesf.com) says over the phone, although I swear I can hear his eyes twinkling. “I usually laugh and say, ‘Yes, but only if I can find a much smaller space.'”

The joke — or rather the good fortune — here is that Amitin’s bustling Tenderloin cafe and restaurant squeaks just shy of 265 square feet, with a large communal table for sharing some of the best gourmet dishes in the area. Those dishes are delectably evanescent: the three-year-old resto’s changing daily menu is Tweeted each morning for your rising and shining appetite. Featured as I write this: polenta cake + yukon potato hash + soft egg, asiago + rooftop herb frittata.

“Rooftop”? Yep, farm:table harvests most of its herbs and many greens from its roof, adding a bit of green to the neighborhood. Coming soon, another bit of green in the form of a farm:table parklet, whose funding was secured via, what else, Kickstarter. Farm:table itself has become a community hub for nightlife characters, nonprofit advocates, and office workers.

And yes, there is delicious coffee. Amitin cut his teeth dripping cups of Blue Bottle behind the original’s counter, but became disillusioned when Blue Bottle tipped from a friendly experiment into a chain-aspirational juggernaut. “I saw what I didn’t want to do,” he says. “That’s what led me to something small and personal. I have really good people working for me, in a vibrant area, with a crowd that’s open to new flavors. I want to keep that magic.” (Marke B.)

READERS’ CHOICE

PINK BUNNY

It’s been open less than a year, yet Marina luxury erotic goods boutique Pink Bunny (1772 Union, SF. 415-441-7399, www.pinkbunny.biz) has hopped into our readers’ hearts — and possibly other parts as well. Founder and CEO Serene Martinez showcases quality adult toys from the likes of Jimmyjane and gorgeous lingerie in a lovely, well-curated space. Union Street, get kinky!

 

Tax equity

Jesse Hawthorne Ficks
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3
Tax equity

steve@sfbg.com, yael@sfbg.com

A broad consensus in San Francisco supports reforming the city’s business-tax structure by replacing the payroll tax with a gross receipts tax through a November ballot measure. But the devil is in the details of how individual tax bills are affected, which has divided the business community and given a coalition of labor and progressives the opportunity to overcome the insistence by Mayor Ed Lee and other pro-business moderates that any change be revenue-neutral.

Service Employees International Union Local 1021, San Francisco’s biggest city employee union, last month launched a campaign demanding that the measure increase city revenue, setting a goal of at least $50 million, which represents the amount the city has lost annually since 2001 when 52 large downtown corporations sued to overturn the last gross receipts tax. The union is threatening to place a rival measure on the fall ballot.

“This call for it to be revenue-neutral didn’t make a lot of sense given all the reductions in city services in recent years,” said Chris Daly, the union’s interim political director. “It’s fair to at least get the money back that we lost in 2001.”

The union and the city recently agreed on a new contract that avoids more of the salary cuts that SEIU members have taken in recent years, but workers could still face layoffs under a new city budget that Lee is scheduled to introduce June 1. Lee, Board of Supervisors President David Chiu, and business leaders working on the tax-reform proposal have until June 12 to introduce their ballot measure.

But they don’t yet have an agreement on what the measure should look like — largely because the technology sector (led by billionaire venture capitalist Ron Conway, the biggest fundraiser for Lee’s mayoral campaign last year), the traditional businesses represented by the San Francisco Chamber of Commerce, and the small business community are pushing different interests and priorities.

“The technology industry has to realize they have a tax obligation like any member of the business community does,” Jim Lazarus, the Chamber’s vice president for public policy, told us.

Conway is reportedly using his influence on Lee to push for a model that keeps taxes low for tech companies — even if that comes at the expense of other economic sectors, such as commercial real estate and big construction firms, which will likely see their tax obligations increase. Yet some Chamber counter-proposals could end up costing small businesses more money, creating a puzzle that has yet to be worked out.

But one thing is clear: The business leaders don’t want to see overall city revenue increase. “If there’s anything that is unifying in the business community is that it’s revenue neutral,” small business advocate Scott Hauge told us. “We’re not going to increase revenues, that’s just a given, so if we have to do battle then so be it.”

SEIU and other members of progressive revenue coalition that has been strategizing in recent weeks are hoping to exploit the divisions in the business community and arrive at a compromise that increases revenue, and if not then they say they’re willing to go to the ballot with a rival measure.

“We’re working on trying to recover what we lost in the 2001 settlement and then some,” Sup. John Avalos, who has been working with the progressive coalition, told us. “We have to have something going to the ballot that is revenue generating.”

 

 

LABOR’S CAMPAIGN

For labor and progressives, this is an equity issue. Workers have been asked to give back money, year after year, despite the fact that big corporations have been doing well in recent years but haven’t contributed any of that wealth to the cash-strapped city. Labor leaders say that after they supported last year’s pension-reform measure, it’s time for the business community to support city services.

“When we talked about Prop C, we said if our members are doing this with our pensions now, we’ll see next year what businesses do with business tax,” said Larry Bradshaw, vice president of SEIU Local 1021. “Then we read about secret meetings where the labor movement was excluded from those talks.”

Anger over the “secret meetings” of business leaders that Lee assembled to craft the tax reform measure — meetings at which no labor leaders were included — helped inspire the fierce protest campaign that defined the SEIU’s recent contract negotiations.

In the first weeks of negotiations, workers were already up in arms. Protest marches at SF General Hospital and Laguna Honda Hospital brought hundreds of hospital workers to the streets. These hospitals serve some of the city’s poorest populations: Laguna Honda patients are mostly seniors on Medi-Cal and General is the main public hospital serving the city’s poor.

On April 5, city workers got creative with a street theater protest that involved six-story projections on the iconic Hobart Building. Protesters dressed as rich CEOs and handed out thank-you cards to commuters at the Montgomery transit station. SEIU’s “The City We Need, Not Downtown Greed” campaign included a website (www.neednotgreed.org), slick video, and direct mailers portraying CEOs as panhandlers on the street asking city residents, “Can you spare a tax break?”

The most dramatic civil disobedience came on April 18, when more than 1,000 workers rallied outside City Hall — along with several progressive supervisors — and then marched to Van Ness and Market. Protesters blocked the street, resulting in 23 arrests. At that point, increases in health care cuts and pay cuts to city workers were still on the table.

That was followed the next week by hundreds of workers staging noisy demonstrations in City Hall, and then again on May Day when SEIU workers were well represented in actions that took over parts of the Financial District.

In the end, the demands of union representatives were met in the contract agreement. Health care cost increases and pay cuts were eliminated, and a 3 percent pay raise will kick in during the two-year contract’s second year, a deal overwhelmingly approved by union members. Labor leaders hope to use that momentum to force a deal with the Mayor’s Office on the tax reform measure — which some sources say is possible. Otherwise, they say the campaign will continue.

“We may end up on the streets gathering signatures soon,” Daly said. “We need to figure it out in the next few weeks.”

 

 

THOSE DEVILISH DETAILS

The Controller’s Office released a report on May 10 that made the case for switching to a gross receipts tax and summed up the business community’s meetings, and the report was the subject of a joint statement put out by Lee and Chiu. “After months of thorough analysis, economic modeling and inclusive outreach to our City’s diverse business community, the City Controller and City Economist have produced a report that evaluates a gross receipts tax, a promising alternative to our current payroll tax, which punishes companies for growing and creating new jobs in our City'” the statement said. “Unlike our current payroll tax, a gross receipts tax would deliver stable and growing revenue to fund vital city services, while promoting job growth and continued economic recovery for San Francisco.”

Daly and Avalos say progressives agree that a gross receipts tax would probably be better than the payroll tax, and they say the controller’s report lays out a good analysis and framework for the discussions to come. But despite its detailed look at who the winners and losers in the tax reform might be, Daly said, “We haven’t seen an actual proposal yet.”

Lazarus made a similar statement: “Nobody likes the payroll tax, but the devil is in the details.”

But it’s clear some businesses those with high gross receipts but low payrolls — would pay more taxes. For example, the finance, insurance, and real estate sector now pays about 16 percent of the $410 million the city collects in payroll taxes. That would go up to about 21 percent under a gross receipts tax.

“Several industries that could face higher taxes under the proposal, such as commercial real estate, large retailers, and large construction firms, felt the increase was too sharp,” the report said under the heading of “Policy Issues Arising From Meetings with Businesses.”

The report highlighted how the change would broaden the tax base. Only about 7,500 businesses now pay the payroll tax (others are either too small or are exempt from local taxation, such as banks), whereas 33,500 companies would pay the gross receipts tax, which the report identified as another issue to be resolved.

“While some businesses appreciated the base-broadening aspect of the gross receipts proposal, others felt that too many small businesses were being brought into the Gross Receipts tax,” the report said. Hauge also told us that he fears a tax increase on commercial real estate firms could be passed on to small businesses in the form of higher rents. “I don’t want to see the business community split,” Hauge said, although it’s beginning to look like that might be unavoidable. The big question now is whether progressives and labor can find any allies in this messy situation, and whether they’ll be able to agree on a compromise measure that all sides say is preferable to competing measures.

2012 Small Business Awards: Reader’s Choice

Maria Poblet
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0
2012 Small Business Awards: Reader’s Choice

In honor of Small Business Week, the Guardian presents its yearly honors for locally-owned enterprise. Businesses that give back, female and minority entrepreneurial leaders, employee-owned companies, and exemplary small business advocates are highlighted.

Once again, our Small Business Readers Choice Award will be given:

What is your favorite small business in San Francisco?

Cast your vote now!

SOS: Vote to save the Small Business Administration!

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Scott Hauge, the indefatigable founder and president of Small Business California, put out an email SOS today asking people to vote in a Wall Street Journal poll asking if the Small Business Administration should be eliminated.

“While the SBA is not perfect, it is all businesses around the country have,” Hauge noted. The Guardian heartily concurs.   I asked Hauge  where this was coming from.  He replied that the WSJ had an article a couple of weeks ago saying small business did not create jobs and were not meaningful jobs.  They were applauding big business.”

To put some facts on the issue, the Guardian commissioned  two major independent  studies in 1985 and 1986 that demonstrated conclusively that the net new jobs in San Francisco were created by small businesses. Hauge confirmed our job creation results with a study he commissioned with economist Kent Sims  in April 2006. This job creation point is now acknowdedged by virtually everyone, from the Chamber of Commerce on up and down. President Obama has recognized the value of small business  job creation and has elevated the Small Business Administration to cabinet level status. Vote no below–and get the word to our California congressional delegation.  b3

 

 

The failure of Lee’s business tax plan

Zelda Bronstein
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The failure of Lee’s business tax plan

The Mayor’s Office and city finance officials are circulating drafts of a new business tax plan that would largely abolish the payroll tax and replace it with a levy on gross receipts.

Ben Rosenfield, the city controller, and Ted Egan, the chief economist, have been meeting with business groups and presenting what’s described in the documents they’re circulating as “one possible idea.” And there’s some very positive news about the proposal: It would greatly broaden the tax base (only about 10 percent of the city’s businesses are hit by the payroll tax) and it’s designed to be somewhat progressive: Businesses with higher gross receipts would pay a higher percentage tax.

The plan is complicated — since some types of industries (retailers, for example) have high gross receipts compared to payroll, and some (financial services) have high payrolls compared to gross receipts, the levies are broken down into four schedules. At the lowest end, companies with comparatively large gross reciepts would pay between 0.05 percent and 0.125 percent. At the highest end, the tax would go from 0.220 to 0.535.
But there’s one central — and simple — element of the proposal: At this point, it’s entirely revenue neutral. In fact, finance officials say, over time the total tax burden paid by local businesses would go down, since payroll tends to rise slightly faster than gross receipts.

That, sources say, is something the mayor has made clear he doesn’t want to budge on. He’s not willing to accept a plan that raises the total amount of money the city gets from business taxes.

Which puts him in synch with what some business groups want: “The business community thinks this should be revenue-neutral,” Scott Hauge, who runs Small Business California, told me.

But in a city that faces a large structural budget deficit, some supervisors have other ideas. “I want to look at new revenue possibilities,” Sup. John Avalos said.

And even the current proposals would let banks, which are exempt from local business taxes, escape without paying anything.
In reality, the proposals are less then revenue-neutral. Rosenfield and Egan project that the new tax system would lead to the creation of 2,500 jobs a year — mostly because businesses over time would be paying lower taxes.

Hague told me that he’s not sure exactly how business leaders feel about this. “We don’t know yet how it will affect people,” he noted. But some political leaders have been clamoring for years for the elimination of the payroll tax, which, by taxing employment, appears to be a damper on job growth.

That’s actually a myth. The payroll tax is so minor that it can’t possibly influence any individual hiring decision. It’s true that if city business taxes in general are reduced, companies will have more money — and some might spend that on new hiring. But San Francisco, like most major cities, has to have some kind of business tax — and I can already hear some downtown types complaining that a gross receipts tax “punishes growth and success.”

This proposal is a long way from what Sup. David Chiu suggested a year ago. His plan would have included a commercial rent tax — ensuring that financial institutions that get away with paying nothing would have to contribute like other businesses. Like most local taxes, it wasn’t perfect — state law bars cities from imposing corporate income taxes and limits what else municipalities can do — but together with a reworked gross receipts tax, it was projected to bring $28 million more dollars into the city treasury — without any job loss.

But the Chamber of Commerce and crew fought bitterly against that idea, and Chiu withdrew it.

At this point, Chiu said, he’s working with the mayor and trying to get the business community to accept the idea of a change in the tax structure. But this is a rare opportunity to do two things — to make the local tax system more fair, and to raise taxes on the biggest companies to bring additional revenue into the city.

The plan will probably have to go to the ballot anyway, so why not do it right?

Herbwise: Shambhala Healing Center next on the federal chopping block

Andrew Lam
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1

When Al Shawa, founder of Shambhala Healing Center, was asked about what he was going to do now that the federal government is trying to shut down his business, he was (understandably) irresolute. 

“I have no idea. Who comes first, the chicken or the egg? Do I blame the federal government or the city? Somebody did me wrong.”

Shawa opened his medical cannabis dispensary one short year ago on Mission Street. He knew he was close to Jose Coronado Playground, but that’s why he underwent an 18-month permitting process with the city, which assured him that the playground’s clubhouse was not being used. In late February, his landlord received a letter from US attorney Melinda Haag that asserted illegal trafficking of drugs were taking place near a children’s playground. His landlord, Haag informed, risked criminal prosecution, imprisonment, fines, and civil forfeiture if Shawa’s business wasn’t out of the space in 40 days. Similar letters were sent out to roughly 12 dispensaries last autumn. Those dispensaries are now closed.

But on Saturday morning, Shawa seemed confused, and not entirely hopeless that his small business could be saved. He sat in his back office, a man trimming weed one room over. “I would hope the city would stand firm and protect these entities,” he said from behind his desk, next to a bank of security cameras. “I don’t understand where it stands on this – it should be taking a leading role.”

Posted: these signs now greet patients at the Shambhala Healing Center. Guardian photos by Caitlin Donohue

Though the SF Board of Supervisors passed a resolution in support of cannabis dispensaries’ right to operate without federal persecution last October, Mayor Ed Lee has yet to speak out on the federally-compelled closures, besides to comment that he’ll kow-tow to the authorities on the matter of marijuana’s medicinal efficacy. We asked Lee’s office for comment when the Department of Justice requested Department of Public Health records for 12 Bay Area dispensaries in February (a move that preceded the previous round of letters from Haag), to no avail. 

Shawa had previously operated a clothing store named Privilege at the address, but opened up Shambala when a fire damaged his inventory. Since opening, he said he’s become attached to many of the regular patients. “You feel like your responsible for their wellbeing,” he said, before talking about how his dispensary passed out 200 turkeys to the community on Thanksgiving, and gave the nearby Folsom Street firehouse $5,000 worth of toys to distribute during the holiday season. 

Throughout the recent travails of the medical cannabis industry, one of the more frustrating issues has been the seemingly random way businesses have been targeted by federal agencies. Shawa’s is a case in point. While he grapples with the notion of shutting his doors, the owner of a restaurant across the street, Gus Murad of Medjool Restaurant and Lounge, is applying for a permit to open a new dispensary on the same block (as reported by Mission Local). 

Lupe Ruiz, who has been floor manager at Shambala since the dispensary opened, seemed likewise shaken and frustrated with the city’s lack of response in the matter. 

“I’m kind of devastated,” she told me in between helping patients. “How do you allow someone to open and then when things get hot you don’t say anything about it?” She recalled a picnic in Dolores Park Shambala recently organized for its patients at which people played ball games and got to meet each other.

The dispensary does seem to be a gathering place of sorts – on the morning I interviewed Ruiz and Shawa, patients consulted budtenders about the right strain of cannabis for them, joking and friendly-like. Shawa says that more than one patient has teared up when he told them that the dispensary’s future was uncertain. 

“Who listens to these stories?” Ruiz concludes sadly, with a sentiment that the rest of the medical marijuana community can surely sympathize with. “People are not being heard.”

Have conservatives hijacked the Small Business Commission?

Sasha Cuttler
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19
Have conservatives hijacked the Small Business Commission?

Is the Small Business Commission really advocating for small businesses, or has the commission been hijacked by bankers and real estate developers aggressively pushing a right-wing agenda of unchecked growth and cuts to government regulation, programs, and fees? And why has the Mayor’s Office stacked the commission with these ideologues and worked behind-the-scenes to keep them in leadership roles?

Those are just a couple of the questions that have been raised by Mayor Ed Lee’s recent effort to amend the charter to give this commission broad authority over the city’s legislative agenda, which was dropped in the face of widespread opposition, and by his office’s alleged calls to their appointees urging them to vote for developer Luke O’Brien as vice president and banker Stephen Adams as president (simply reversing the roles they had played last year).

Traditionally, sources say the commission has sought to balance leadership between the mayor’s four appointees and the three appointed by the Board of Supervisors. But these days, the Mayor’s Office (mostly Chief of Staff Steve Kawa, we’re told) and its appointees (which include two bankers and one developer), at the urging of pro-development groups Coalition for Responsible Growth (CRG) and Plan C, seems to want to consolidate their control and push their agenda.

Neither Kawa nor Press Secretary Christine Falvey would address our direct question about the Mayor’s Office interfering with the internal working of supposedly independent commissions, but the Examiner today had a story about the Mayor’s Office doing the same thing on the Planning Commission with its leadership vote this week.

“If the Mayor’s Office feels the need to interfere in commission votes, it interferes with internal commission matters and the spirit of the commission,” Board President David Chiu, who has been following the Small Business Commission dynamics, told the Guardian.

Outgoing commission member Janet Clyde, who runs the legendary Vesuvio bar in North Beach, said she has long been bothered by the changing tone and dynamics on the commission: “There is definitely an agenda that is driven by the Mayor’s Office, a more conservative view…There is a big business agenda in small business clothes.”

And she said that change has been pushed by Plan C, CRG, and other fiscally conservative groups that backed Lee’s mayoral campaign. “They really saw an opportunity to use the Small Business Commission to push their agendas.”

The CRG board includes three members of Murphy O’Brien Real Estate Investments, including O’Brien and Mel Murphy, who is a mayoral appointee to the Building Inspection Commission, where he also regularly advocates for real estate interests. CRG, which did not return our calls for comment, testifies regularly at City Hall in favor of development and against regulation. Clyde and current commission member Kathleen Dooley say O’Brien has been especially aggressive in pushing his ideological agenda.

O’Brien ignored repeated Guardian requests for comment, and when we finally reached him by phone, he said, “I have no interest in talking to you.”

In December, in his role as president, O’Brien called a special hearing to discuss the Eastern Neighborhoods Plan, the massive land use plan passed a few years ago after dozens of public hearings to work out its myriad complicated details and balance the preservation of light industrial properties with housing development, providing city services, and other considerations.

“This thing really needs to be thought out a little bit more,” O’Brien said at the hearing in a video clip that is prominently displayed on the CRG website.

Commission Executive Director Regina Dick-Endrizzi defended that hearing and others that have ventured into planning, regulation, and land uses issues that seem to be the purview of other city commissions. “Every business we talk to that wants to be in a brick-and-mortar space, it’s all about land use,” she said, noting that at the commission’s last annual retreat, “they decided to take a look at impact fees and their implications.”

She also noted that the city defines small businesses as having fewer than 100 employees, and that both developers and bankers are legitimate small business advocates, noting how important loans and other capital sources are to small business survival. Mayoral spokesperson Christine Falvey also defended the appointments and their focus: “The Commission has a diverse group of individuals to represent small business. The agenda is not controlled by any one group. There is a diverse group of voices and all deserve to be heard.”

Falvey also said it’s important to have bankers like Adams, a branch manager of Sterling Bank & Trust, on the commission: “The Mayor understands the important link between conventional banks and micro lenders. While there are moderate improvements in the lending environment, understanding the current status of access to capital is critical information for the Commission in its role to advise and make recommendations to the Mayor and Board of Supervisors on policy matters and City regulations that affect either the ease or difficulty in doing business in San Francisco.”

But progressive members of the Board of Supervisors – including Sup. Christina Olague, a mayoral appointee, in her recent interview with the Guardian – have regularly derided the narrow focus and ideological agenda of the commission, particularly its mayoral appointees. Some privately call it the “Small-Minded Business Commission.”

“We need some diversity on this commission. It can’t be all white men with a particular point of view,” Dooley said.

That could begin to happen on Tuesday when the Board of Supervisors is slated to replace two of its outgoing appointees, Michael O’Connor and Janet Clyde, with two that have been recommended by the Rules Committee: Monette White, who runs Food for Soul, “an upscale restaurant and holding company,” and William Ortiz-Cartagena, CEO of Gentle Parking, which managing parking lots in the city.

But that won’t go very far in changing a commission that seems focused on using the “small business” fig leaf to push a more broad and ideological pro-business agenda. Even Chiu, who is strongly pro-business, told us, “The Small Business Commission needs to be focused on the plight and issues of small businesses.”

Will shutting down two businesses really ‘clean up’ the Tenderloin?

Sasha Cuttler
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21

It was noon on the Jan. 30 when I broke the news to 24-year-old Amer Mousa that the City of San Francisco was filing a civil suit to shut down Walid Abdulrahman, his friend and owner of the Razan Deli on Ellis Street in the Tenderloin.

Two hours earlier, City Attorney Dennis Herrera and San Francisco Police Chief Greg Suhr held a press conference out the front of the Azaal Market on the corner of Leavenworth and Turk streets in the Tenderloin to announce the dual lawsuits against the markets owners, Jaber A. Algahim and Walid Abdulrahman, for maintaining a public nuisance. Our efforts to get comments from Algahim and Abdulrahman were not successful, but Mousa spoke freely about the situation.

The City’s complaint says the deli is a safe haven for criminal activity and that Abdulrahman either allows it to continue unabated or is actively involved himself. It is not hard to understand the logic behind the suit; shut down problem businesses and the neighborhood will heal. But in a City with a history of going after small businesses as if they are the root cause of all criminality, the question remains about whether this is really about helping the neighborhood or about being seen to help.

Abdulrahman does not speak English well, so it was Mousa who answered the phone. When first asked about the store’s involvement in illicit activity, Mousa became flustered, confused, and denied any knowledge of drug activity within the store. “Maybe outside, in the neighborhood, but I wouldn’t risk my job like that,” he said at the time.

Both Abdulrahman and Mousa are from Jordan. Abdulrahman is a close friend of Mousa’s father, so close Mousa refers to him as “uncle.” Mousa came to the U.S. on a greencard in 2009 and has been studying to be a nurse. He met his future wife in school and they married in 2010. Every day he heads into San Francisco from Daly City to work in deli from 10pm until 6am to support his young family.

The Razan Deli is a pokey little deli open 16 hours a day that does not sell alcohol and keeps little stacked on the shelves. It caters for the homeless and street population with candy, burritos, and cheap pre-made frozen meals. Bigger items are left to liquor-selling competitors across the road whose owners refuse to say anything about what happens outside their doors, lest some doped-up gang member decide to make an example of them. When asked, they just stare at the ceiling and say they put their faith in God.

Outside, Ellis Street is quiet, at least during the day, with the exception of a woman in a wheelchair and another leaning against a wall who mumbles something about robbery and cackles to herself. Stopping at any intersection along Turk Street invariably means being approached by dealers. The greatest concentration stand just outside the Azaal Market while they chatter constantly and offer passers-by narcotics with incomprehensible street names.

The lawsuit was the result of a two-year undercover operation by the SFPD that claimed to have found evidence of a “pattern of illegal activity” at each business. The complaint and police statements claim the deli acted as a safe-haven and intermediary for drug dealing and buys stolen goods for resale. To build the case, undercover officers visited a local Walgreen’s and asked the business to donate items before trying to re-sell the product to businesses in the Tenderloin, while slipping in the fact that they were stolen goods.

Police statements say Abdulrahman bought stolen goods and helped facilitate undercover officers buying drugs from the dealers loitering outside the shop. Mousa does not deny that Abdulrahman took the bait on the two occasions he was present. “Look, we’re not angels,” he says. “When the undercover police came, they gave us razors, you know like Gillette, and my uncle bought some stolen merchandise for personal use. He didn’t buy all, he just bought some.”

If true, that would be a very different accusation than the one being made by the city in its civil suit, which has asked the court to close the business and impose an initial penalty of $25,000, additional penalties of $2,500 for “each act of unlawful business practice” and costs for the suit and investigation. In a criminal prosecution, Abdulrahman might receive up to a year in jail for receiving stolen goods of around $200 in value and a separate charge for being an accessory to the sale of a small quantity illicit substances. That is, assuming he is guilty of everything the police say he is. And they have evidence.

Yet none of that matters. Abdulrahman cannot afford an attorney; he will appear self-represented. Either he will be sent into bankruptcy or he will be run out of business. This legal fight seems lopsided, to say the least.

The City of San Francisco has a history of going after small liquor shops and markets in the Tenderloin and the Mission on a crusade to shut down criminal “safe-havens” or “magnets of drug dealing,” as Matt Dorsey, media liaison for the City Attorney’s Office, framed it during a phone conversation about the city’s tactics in choosing to bring a civil claim against Abdulrahman. “Civil cases have lower standard of evidence. Effectively we’re going to try and shut the business down. As they say, the City’s Attorney tries to take their money. The District Attorney puts people in jail,” he said.

The theory goes that shutting down such places will force the criminal element out, leave them nowhere to go and ultimately make the neighborhood a safer place. Randy Shaw, Director of the Tenderloin Housing Clinic (THC) and editor of BeyondChron, has endorsed this view and has said he “cheered” the litigation.

Shaw’s hostility for the Azaal Market, alternatively known as the Barah Market, was plain. His tone indicated the market’s continued existence was a personal slight. “We sued the Maryland and the Barah markets in the 90’s and the Maryland hasn’t been a problem since,” said Shaw, a housing right attorney turned Tenderloin political power broker. Shaw said he welcomes any city efforts to try to clean up the neighborhood. But it’s hard to see how this action will make much difference, particularly given the neighborhood’s open criminality.

“I called the police more than seven or eight times, from the cell phone,” Mousa said. “What did they do? Nothing. They know who the drug dealers are. There’s just two to four drug dealers on the whole block. Most of the others just work for them. If police don’t come and do their job, what am I supposed to do? Start shooting? … If I keep calling the police I’m going to get shot. All I can do is tell them to get outside the store. Go sell your shit outside the store.”

Abdulrahman’s shop will close, that seems like the likely outcome. Once the shutters are drawn, the City Attorney and the Chief of Police will hold another press conference and claim a great victory in their fight to “clean up the neighborhood” in the name of “families and the elderly.” It will sound good on television, and read well in the papers. Everyone will clap and agree that the streets are a safer place for it, but it seems like a huge stretch of imagination to blame the Tenderloin’s problems on these two small businesses.

“I’m a full time student, I have a wife, I’m not living by myself, I cannot live by myself or with some buddies, I need to have a home. After the store closes, what’s going to happen to me? There are no jobs right now. Even if I get a full-time job, how much am I going to make?” Mousa says. “This is just going to destroy two families, two households. What’s going to happen? Nothing’s going to change. There are still going to be drug dealers outside… This neighborhood is broken. It was broken when we got here, it will be broken when we leave.”

Lackluster finish to case that made serious political charges

Sasha Cuttler
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Lackluster finish to case that made serious political charges

A jury awarded the City and County of San Francisco $24,498 yesterday following its deliberations of a complicated civil case filed by the city in 2003 against a minority-owned computer services company accused of fraud and breach of contract, a company that countersued with a claim of being harmed by top city officials.

But that paltry sum and the jury’s verdict of shared responsibility in failing to root out corruption in city government belied the more politically significant accusations made through depositions in the case that Mayor Ed Lee and former Mayor Willie Brown overrode city staff to give contracts to a “fraudulent” yet politically connected company, which proved to be a tangential issue that was left largely unexplored at trial.

In CCSF vs. Cobra Solutions, the jury found that both the city and Cobra Solutions failed in their responsibilities to prevent a former Department of Building Inspection information technology manager, Marcus Armstrong, from fraudulently bilking the city out of at least $482,000 between 1999 and 2001. An alleged Armstrong accomplice, Government Computer Sales, Inc. – which witnesses said Brown and Lee improperly certified, and which they say they don’t remember – fled and was never brought to justice.

Cobra Solutions, which was awarded master contract status in 1998, was bound by a provision in its agreement with the city that required Cobra to “supervise” sub-contractors. The allegation of fraud against Cobra, however, was effectively dropped from the city’s complaint, but not until the end of the trial when consideration of fraud was omitted from the city’s closing arguments.

The award to the city was the difference between the monies paid by the city to Cobra Solutions ($269,739.93) and the monies paid by Cobra Solutions to Armstrong’s phony companies ($245,241.93), or the markup Cobra Solutions received from the city following the submission of several fraudulent invoices from two phony sub-contractor companies, Monarch Enterprises and Mindstorm technologies, set up by Armstrong.

Following the verdict announcement, a juror who did not want to be identified, said there wasn’t a single piece of evidence that was most compelling, but that, “the city proved its case. Cobra failed to prove its case.” The “vast majority” of jurors shared that opinion, the juror said. “It wasn’t even close.”

“The jury thought there was obviously a failure to supervise,” the juror continued. “[Cobra Solutions] took on work without even knowing who the party was that was working for them. Who was Monarch?”

Several invoices from Armstrong’s phony companies contained different addresses that the juror described as “a bit of a red flag.”

“If I’m in business, I’m not going to have someone working for me who I don’t know, and I’m not going to be paying them checks,” the juror said.

“The city also bore responsibility” in its failure to detect Armstrong’s kickback scheme, the juror said, mirroring the same sentiment echoed by then-City Controller Ed Harrington, who took the stand and conceded the city’s internal controls – as well as those of Cobra Solutions – failed to detect Armstrong’s kickback scheme.

Cobra had sought damages for breach of contract (the city’s failure to pay monies owed Cobra) and due process violations in connection with the city’s alleged debarment of Cobra from doing further business with the city.

“I’m disappointed,” said Cobra Solutions founder and president James Brady. “Life goes on. We’ll continue to move forward and repair our damaged reputation, raise our grandchildren, and focus on our families.”

Asked about the issue of sub-contractor supervision, Brady said, “I don’t think anybody could supervise a con man and the city was negligent in hiring this guy – they wouldn’t even bring him in the courtroom – so it’s just betrayal. And it’s a sad day that you hire con man and you won’t take any responsibility for his actions and you blame the small business. That’s not the American way.”

On the jurors finding that Cobra was not intentionally or defacto debarred from doing further business with the city, Brady said, “I think they got it wrong. I have no doubt about that.”

“The jury missed a lot of important facts,” said Mr. Brady’s wife, Deborah Brady, a co-founder of Telecon, the parent company of Cobra Solutions. The city had originally sued Telecon in its case-in-chief, but pursued no claims against Telecon at trial. “I don’t know how they missed them, but they missed them.”

Ms. Brady said the city gave another company, Desktop, the opportunity to defend itself against debarment, but “they never gave us that opportunity.”

“Judith Blackwell, she told the whole story in terms of Monique Zmuda saying they wanted us out, that we’re crooks,” Ms. Brady continued. “They accused us… and never gave us the opportunity to respond, ever.” Monique Zmuda is the deputy City Controller.

“I feel really betrayed by a city that I used to really love and [City Attorney] Dennis Herrera, who is our private attorney, betrayed us,” a tearful Ms. Brady said. “Ed Lee, who claims he barely knew us, betrayed us. Ed Harrington? I don’t know what that was all about, or Monique Zmuda… but Ed Lee and Dennis Herrera, they let down really good people who used to live in this city and loved this city and did all that we could to do good in the community and this city. “

“So I pretty much call it, ‘The City of Betrayal.’”

Cobra’s lead counsel in the case, Whitney Leigh, told us, “The jury made its decision. We’re concerned that the jury was allowed to find that Cobra could have breached the contract by refusing to submit to an audit by the City Attorney. So we believe there are some issues that need to be researched, so we’ll be looking at those issues.”

Asked if there would be post-trial motions, Leigh said, “Post trial motions and/or appeal.”

“Obviously we’re disappointed,” Leigh added, “but we’ll review the transcripts and see what options are available.”

Because of the possibility of an appeal, Herrera was unable to comment on the verdict or to discuss city’s costs in trying the case, said Herrera spokesperson Matt Dorsey.

 

Meet the new supervisor

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Meet the new supervisor

Christina Olague, the newest member of the Board of Supervisors, faces a difficult balancing act. She was appointed by Mayor Ed Lee, whom she supported as co-chair of the controversial “Run Ed Run” campaign, to fill the vacancy in District 5, an ultra-progressive district whose voters rejected Lee in favor of John Avalos by a 2-1 margin.

So now Olague faces the challenge of keeping her district happy while staying on good terms with the Mayor’s Office, all while running in her first campaign for elected office against what could be a large field of challengers scrutinizing her every vote and statement.

Olague has strong progressive activist credentials, from working with the Mission Anti-Displacement Coalition to protect low-income renters during the last dot-com boom to her more recent community organizing for the Senior Action Network. She co-chaired the 2003 campaign that established the city’s minimum wage and has been actively involved in such progressive organizations as the Milk Club, Transit Riders Union, and the short-lived San Francisco People’s Organization.

“One of the reasons many of us are so supportive of Christina is she is grounded in the issues of low-income San Franciscans,” said Gabriel Haaland, who works with SEIU Local 1021 and accompanied Olague to a recent interview at the Guardian office.

She also served two terms on the Planning Commission — appointed by Board of Supervisors then-President Matt Gonzalez in 2004 and reappointed by then-President Aaron Peskin in 2008 — where she was known for doing her homework on complicated land use issues and usually landing on the progressive side of divided votes.

“Coming from the Planning Commission, she can do a lot of good,” said Tom Radulovich, executive director of Livable City and a supporter who has worked with Olague for 15 years. “We lost a lot of collective memory on land use issues,” he said, citing the expertise of Chris Daly and Aaron Peskin. “We do need that on the board. There is so much at stake in land use.”

Olague disappointed many progressives by co-chairing Progress for All, which was created by Chinatown power broker Rose Pak to push the deceptive “Run Ed Run” campaign that was widely criticized for its secrecy and other ethical violations. At the time, Olague told us she appreciated how Lee was willing to consider community input and she thought it was important for progressives to support him to maintain that open door policy.

In announcing his appointment of Olague, Lee said, “This is not about counting votes, it’s about what’s best for San Francisco and her district.” Olague also sounded that post-partisan theme, telling the crowd at her swearing-in, “I think this is an incredible time for our city and a time when we are coming together and moving past old political pigeonholes.”

With some big projects coming to the board and the working class being rapidly driven out of the city, progressives are hoping Olague will be a committed ally. There’s some concern, though, about her connections to Progress For All campaign’s secretive political consultant, Enrique Pearce.

Pearce has become a bit of a pariah in progressive circles for his shady campaign tactics on behalf of powerful players. In 2010, his Left Coast Communications got caught running an independent expenditure campaign partly funded by Willie Brown out of Pearce’s office, even though Sup. Jane Kim was both its beneficiary and his client — and that level of coordination is illegal. Last year, Pearce was hired by Pak to create the “Run Ed Run” campaign and write the hagiographic book, The Ed Lee Story, which also seemed to have some connections with Lee’s campaign. The Ethics Commission hasn’t fined Pearce for either incident, and he didn’t return a Guardian call for comment.

Olague told us not to worry. “He’s a friend…and I think it’s an exaggerated concern,” she said, confirming but minimizing his role so far. Yet she hired one of Pearce’s former employees, Jen Low, as one of her board aide. Olague’s other aides are Chris Durazo from South of Market Community Action Network (SOMCAN) and Dominica Henderson, formerly of the SF Housing Authority.

Debra Walker, a progressive activist who served on the Building Inspection Commission and has worked with Olague for decades, said she’s a reliable ally: “She’s from the progressive community and I have no equivocation about that.”

Olague makes no apologies for her alliances, saying that she is both independent and progressive and that she should be judged by her actions as a supervisor. “People will have to decide who I am based on how I vote,” she said, later adding, “I support the mayor and I’m not going to apologize for that.”

 

OLAGUE’S PRIORITIES

Olague was born in Merced in 1961 to a Mexican immigrant father who fixed farming equipment and a stay-at-home mother. She went to high school in Fresno and moved to the Bay Area in 1982. She attended San Francisco State University but had to drop out to help support her family, working at various stock brokerage firms in the Financial District. She later got a degree in liberal studies from California Institute of Integral Studies.

In 1992, Olague’s mother was in serious car accident that left her a quadriplegic, so Olague spent the next seven years caring for her. After her mother died, Olague left the financial services industry and became a community organizer for the Mission Anti-Displacement Coalition, battling the forces of gentrification and then-Mayor Brown and becoming an active player in the ascendant progressive movement.

But Olague never abided progressive orthodoxy. She backed Mark Leno over the more progressive Harry Britt in their 2002 Assembly race and backed Leno again in 2007 when he ran for state Senate against Carole Migden. She also voted for the Home Depot project on Bayshore Boulevard despite a progressive campaign against the project.

Olague worked with then-Sup. Chris Daly to win more community benefits and other concessions from developers of the Trinity Plaza and Rincon Tower projects, but now she is critical of Daly’s confrontational tactics. “Daly’s style isn’t what I agree with anymore,” Olague said, criticizing the deals that were cut on those projects to approve them with larger than required community benefits packages. “I think we romanticized what we got.”

So how does Olague plan to approach big development proposals, and is she willing to practice the brinksmanship that many progressives believe is necessary to win concessions? While she says her approach will be more conciliatory than Daly’s, she says the answer is still yes. “You push back, you make demands, and if you don’t think it’s going to benefit the city holistically, you just fucking say no,” Olague said.

Walker said Olague has proven she can stand up to pressure. “I think she’ll do as well as she did on the Planning Commission. She served as president and there is an enormous amount of pressure that is applied behind the scenes,” Walker said. “She’s already stood up to mayoral pressure on some issues.”

Yet even some of Olague’s strongest supporters say her dual — and perhaps dueling — loyalties to the Mayor’s Office and her progressive district are likely to be tested this year.

“It’ll be challenging for her to navigate,” Radulovich said. “The Mayor’s Office is going to say I want you to do X and Y, and it won’t always be progressive stuff, so it’ll be interesting to see how that plays out.”

But he said Olague’s land use expertise and progressive background will likely count for more than any bitter pills that she’s asked to swallow. “Sometimes, as a policy maker, you have to push the envelope and say we can get more,” he said. “It helps if you’re willing to say no to things and set boundaries.”

When we asked Olague to lay out her philosophy on dealing with land-use issues, she said that her approach will vary: “I have a very gray approach, project by project and neighborhood by neighborhood.”

Only a couple weeks into her new role, Olague said that she’s still getting a lay of the land: “I’m in information gathering mode, meeting with neighborhood groups to try to figure out what their issues are.”

But Olague said she understands that part of her job is making decisions that will disappoint some groups. For example, after Mayor Lee pledged to install bike lanes on Fell and Oak streets to connect the Panhandle to The Wiggle and lessen the danger to bicyclists, he recently stalled the project after motorists opposed the idea.

“I’m a transit-first person, for sure. I don’t even drive,” Olague said of her approach to that issue, which she has now begun to work on. “We’ll try to craft a solution, but then at some point you have to fall on one side or the other.”

 

THE “JOBS” FOCUS

One issue on which Olague’s core loyalities are likely to be tested is on the so-called “jobs” issue, which both Lee and Olague call their top priority. “Jobs and economic revitalization are very important,” she told us.

Progressives have begun to push back on Lee for valuing private sector job creation over all other priorities, such as workers’ rights, environmental safeguards, and public services. That came to a head on Jan. 26 at the Rules Committee hearing on Lee’s proposed charter amendment to delay legislation that might cost private sector jobs and require extra hearings before the Small Business Commission. Progressives and labor leaders slammed the proposal as unfair, divisive, unnecessary, and reminiscent of right-wing political tactics.

But when we interviewed Olague the next day, she was reluctant to criticize the measure on the record, even though it seemed so dead-on-arrival at the Board of Supervisors that Mayor Lee voluntarily withdrew it the next week.

Olague told us job creation is important, but she said it can’t squeeze out other priorities, such as protecting affordable rental housing.

“We always have to look at how the community will benefit from things. So if we want to incentivize for businesses, how do we also make it work for neighborhoods and for people so that we don’t end up with where we were in the Mission District in the ’90s?” she said.

Olague also said that she didn’t share Lee’s focus on jobs in the technology sector. “There’s a lot of talk of technology, and that’s fine and I’m not against that, and we can see how it works in the city. But at the same time, I’m concerned about folks who aren’t interested necessarily in working in technology. We need other types of jobs, so I think we shouldn’t let go of the small scale manufacturing idea.”

Downtown action: Sex shop Feelmore510 celebrates one year of community pleasure

Andrew Lam
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The sex shop Feelmore510 is located on the corner of Oakland’s Telegraph and 17th streets, across from an Obama campaign office, in between a pawn shop and the oldest African-American owned shoe store in town. The neighborhood is in transition, a place with old roots and a lot of new blooms – most businesses on this stretch of Telegraph opened within the last five years. Feelmore510 will celebrate its one-year anniversary Sun/12 when owner Nenna Joiner helps host Town Love, a new party at Hibiscus’ Rock Steady.

But those businesses aren’t the shop’s only neighbors. This fall, Feelmore510 also lived alongside Occupy Oakland’s City Hall encampment. Though many local business owners have expressed anxiety about the effect that protests were having on their sales, Joiner is in full support of the movement. She sometimes walked over to visit friends who were “occupying,” and was happy to donate safe sex supplies to the camp. “Sex is a basic need for survival,” she said in a recent in-store interview with the Guardian. Joiner allows protestors to chill in the store and talk politics — as long as they aren’t running from the cops.

Joiner envisions her store as more than just a place to shop – it’s also a community center. On a recent afternoon, Joiner shook each customer’s hand and asked them their name. Her goal is that all comers can shop for augmentations to their love life in comfort. 

A cross-section of Oakland’s entire population converges in this particular area of downtown. Joiner sees everyone from rich vintage porn collectors — drawn to her extensive selection of old magazines and videos — to people who ask to pay with California welfare benefit cards. 

Her best-selling items, which are taken home by customers who are male, female, straight, bi, and trans, are the queer porn films that Joiner herself directed, edited, and produced. 2010’s Tight Places features diverse actors and she made Hella Brown with a cast of all African American women. Hella Brown is made in a semi-documentary style – Joiner shot interviews with over 50 queer and trans subjects about their sexual proclivities while making the movie. 

Artfully-displayed contraptions at downtown Oakland’s favorite sex shop. 

Joiner’s films are unique in the way that they showcase different sexual practices and different body types from mainstream porn, which is often geared towards a heterosexual male audience. Her films show women of all shapes, having queer sex — fellating strap-ons and other acts you might not catch in other kinds of porn. While the films are not shot with the straight male audience in mind, that group does seem to enjoy them, often buying the first film and then returning for more. Joiner sees her films as educational tools, especially for what she calls the “brown community,” where things like transitioning from one gender to another are often socially stigmatized and restricted by financial limitations. 

“Queer women of color possess a whole different intelligence and mentality,” she says, adding that many women have a certain shyness about “packing,” (wearing a flaccid prosthetic penis underneath clothing) and getting cosmetic gender modification surgery. Joiner fully embraces her role as an educator in the Oakland queer community. 

Joiner refers to dildos as “prosthetics,” – she says that this language is less alienating to those unfamiliar with their usage. She keeps a packer on prominent display, in order to provoke people into asking questions, which can open up a dialogue about passing as a man, transitioning, or simply stuffing one’s jock with something more substantial than a tube sock. She says customer preference in prosthetics can vary. Many want a life-like phallus, while others request dildos that don’t look like penises, going for glass, sculptural, or abstract designs.

Joiner feels that she is at the intersection of several different communities in Oakland. Joiner goes to two church services every Sunday. She buys passing school kids lunch at Ms. Tina’s, the little sandwich shop next door. She’s active in the queer scene, and she’s also a small business owner who encourages other vendors to promote their own businesses by using her store as a launchpad. 

“Having a space allows other people to identify with a vision of opening their own space.” When she first opened her store, naysayers questioned her brick-and-mortar approach over the Internet. But she says a website cannot replace the tactile satisfaction of a place to gather, to talk, to share. She uses her store to hold classes on topics rarely discussed other places, like sex industry work.

Joiner wants the toys she sells to be safe and fun for anyone, and to open up a conversation about sex, gender, and pleasure with Feelmore510. It works – her space encourages one to think of sex in a different, more open way. Joiner’s toys are all just tools for lovers to transfer feeling, power, and energy between each other. There is no single way to have sex, just endless different first-time experiences. It’s a new kind of space in an old part of Oakland, open for all comers to explore their most innovative sexual selves.

 

Feelmore510 one-year anniversary party at Town Love

Sun/12 5-11 p.m., $5

Rocksteady at Hibiscus

1745 San Pablo, Oakl.

(888) 477-9288

Facebook: Feelmore510 anniversary party at Town Love

 

Mayor Lee’s call for more hearings gets wary reception

Sasha Cuttler
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Mayor Lee’s call for more hearings gets wary reception

Labor and the Left came out strongly against Mayor Ed Lee’s proposed charter amendment to require all city legislation be delayed and subjected to hearings by the Small Business Commission and other commissions if it might cost private sector jobs, putting its prospects of making the ballot in doubt.

 “This legislation is one, unnecessary; two, unbalanced; and three, divisive,” Mike Casey, president of the San Francisco Labor Council – whose executive committee voted unanimously to oppose the legislation – said during today’s Rules Committee hearing on the measure.

He and other labor leaders noted that members of the business community have plenty of opportunities to weigh in on legislation it opposes, but Lee’s proposal would elevate employers’ interests far above those concerning the environment, consumers, public health, or workers. “This legislation gives one stakeholder undue power in the democratic process, which is undemocratic,” said Kate Hegé of La Raza Centro Legal, which represents day laborers and other immigrants.

Teacher Ken Tray of United Educators of San Francisco said, “Often times ‘jobs’ is used as a red herring to divert the city from doing what it needs to do.” It was a common theme, as opponents of the proposal noted that paid sick leave, the local minimum wage, and requiring employee health benefits were all fiercely opposed by the business community. “Anything that raises workers up, we’re told it’s a job killer,” said Larry Bradshaw of SEIU Local 1021.

Small business representatives – a bit sheepishly, given the tenor of the hearing, and without support from their downtown brethren – said they were simply looking for the ability to express their concerns. “We’ve tried to let small business have a voice at the Board of Supervisors,” said longtime small business advocate Scott Hauge, a regular at City Hall.
Keith Goldstein of Potrero Dogpatch Merchants Association said, “We feel we don’t have a say in this process.”

Mayor’s Office board liaison Jason Elliott emphasized that Lee’s charter amendment would create a delay and an extra hearing or two, but that supervisors would still be free to approve the legislation anyway. “This is about public participation and feedback,” Elliott said.

But Sup. David Campos, who led the questioning of Elliott, wasn’t buying it. “What’s the reason behind this? Is there a specific reason the Mayor’s Office has decided to do this now and through a charter amendment?” Campos said, probing for instances in which the Mayor’s Office thought the business community hadn’t been heard.

Elliott continued to say it was about emphasizing jobs and taking more public input, but he couldn’t explain what’s lacking currently or what’s muting employers. Campos thanked the Mayor’s Office for being willing to work with supervisors and accept amendments – including many introduced today, which delayed the vote on the measure until next week.
But Campos questioned the need for the legislation, comparing it to the hollow jobs rhetoric from the current field of Republican presidential candidates. “It’s not just the number of jobs you have, it’s the quality of those jobs,” Campos said.

(Side note: the Mayor’s Office issued a press release today celebrating the first two businesses to take advantage of last year’s controversial mid-Market payroll tax exemption, Zendesk and Pearl’s Deluxe Burgers, which created 56 jobs between them. And to help create those great burger joint jobs, Pearl’s got Redevelopment Agency assistance, a low-interest city loan, and an exemption from the payroll tax. For hiring burger flippers that probably make minimum wage. But I digress…)

Campos said that everyone in City Hall wants to see more good jobs in the city, “but I don’t believe this is a constructive approach.” Sup. Jane Kim echoed the sentiment, saying private sector job creation isn’t the only imperative. “Lowering our minimum wage to $3 or $1 an hour would create plenty of jobs in San Francisco,” she said.

Even the more conservative third committee member, Sup. Mark Farrell, said he tends to agree with his committee colleagues and made the motion to continue the item until next week, when its prospects for passage look weak unless Lee can convince them that there’s more to this measure than just political grandstanding.

Who will push progressive taxes in 2012?

Zelda Bronstein
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Who will push progressive taxes in 2012?

Mayor Ed Lee talked to the Examiner about his plans for the next year, and it’s a lot of the usual political crap: I’m going to create jobs, I’m going to bring people together and promote civility, ho hum. But he did mention, briefly, the need to change the city’s business tax, and here’s how he put it:

We have given ourselves four months to reach out to all the business groups. There will be different views and opinions. You can have a hybrid [between a payroll and gross receipts tax], and you can also have a phase-in period of time. We want to have a good conversation with everybody and get their best ideas, and then use those ideas to craft what we think could be on the ballot. We’re not saying it has to be on the November ballot, but it could be. We want to have something that is not job punishing, but also something that does not decrease our revenue.

First: He’s going to reach out to all the business groups — but what about everyone else in the city? The level of business taxes has a direct impact on city services; is that not part of the equation? Clearly, he’s talking about something that’s at best revenue-neutral, something that “does not decrease our revenue.”

And please, don’t tell me about “job punishing” — it makes me even crazier than I already am. Look: There has to be a business tax in San Francisco. And any time you tax businesses, you take money for the city that could be used for other things. In some cases — not that many — the extra money might be used to hire a few people. In reality, for most businesses, the payroll tax is absolutely NOT a factor in job creation. It sounds bad — Gasp! a tax on jobs! — but the truth is that payroll is a rough approximation for the size of a company, and that’s what the city uses as a tax base.

Of course, we could change that to a gross receipts tax — another rough approximation for the size of a company. It’s also imperfect — some companies have a lot of money (VC funding, for example) and a lot of employees, but at this point not much in the way of sales. Some companies (supermarkets, for example) have high gross receipts but relatively low profit margins. And, of course, if you do a gross receipts tax the same people who complain about the payroll tax will have a new line: The GR tax penalizes growth! It penalizes success! The more money you make the more you pay! Unfair! Un-American! Job killer!

Because some people in this town (mostly big business types) just want lower taxes, period — not different taxes, lower taxes

So let’s get rid of the “job killer” rhetoric and start talking about what the city’s tax policy should be. And it should go like this: The individuals and businesses with the most money should pay the highest tax rates. The rich don’t pay their fare share anywhere in the U.S., and while the mayor and the supervisors can’t change federal policy, they can do their part on a modest level at home.

This a great year for tax reform in San Francisco. The spirit of Occupy is very much alive. There is, for the first time in decades, a national discussion about income and wealth inequality. There’s strong evidence that the middle class is vanishing in San Francisco. And, thanks to the wierdness of state law, in 2012, when there’s an election for the Board of Supervisors, a tax measure can pass with a simple majority vote In many ways, this is the single most important policy issue in the city, the one that defines who pays for what and who gets what and whether (public sector) jobs are created or destroyed and what kind of a city we want to be.

So let’s take it seriously. Instead of allowing Mayor Lee and the (big) business folks set the agenda, the progressives really need to move forward on a tax-reform plan that looks at making big business pay more and small business pay less — and that brings in another $250 million a year for the local coffers If gross receipts is the flavor of the day, I’m good with that — but not a flat tax. Exempt, say, the first $250,000 (or the first $500,000, whatever, run the numbers and see what we can afford). Put a 1 percent tax on the next million, a 1.5 percent tax on all receipts between $1.5 million and $5 million, a 2 percent tax on $5 million to $10 million and 3 percent on everything higher. Adjust the numbers either way, but that’s the general idea. Then add in a tax on commercial rents (again, exempt the first $500,000 or whatever) to make sure the the big landlords (who get away with murder under Prop. 13) are paying, too. And yes, based on market supply and demand, some will try to pass that on to their tenants, but companies (including a lot of law firms) that rent enough space to be paying millions of dollars a year in rent can afford to modest tax hike.

It will take the city controller or the city’s economist to do the math and see what the options are and how you get to $250 million net new revenue, so my proposal is just a start. But somebody needs to take this on, some member of the Board of Supervisors — or else we’ll just be responding to what the Chamber of Commerce wants. Who wants to be the champion of Tax Reform for the 99 Percent? Time is getting short.

Battling big box

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news@sfbg.com   

In neighborhood commercial districts, national chains and other formula retail stores such as PETCO, Target, Subway, Walmart, and Starbucks are hot button issues for residents who don’t want to see San Francisco turn into a strip mall or have local money pulled from the community.

Sup. Eric Mar and other city officials want to make sure local small businesses aren’t being unnecessarily hurt by competition from national chains, which is why he called a hearing on Dec. 5 to discuss big box retailers and their impacts on San Francisco’s small businesses, neighborhoods, workers, and economy.

“There is no vehicle to see the impacts of big business on the city,” Mar told us, saying he is contemplating legislation to do just that.

Mar was part of city efforts to keep formula pet stores from locating in the Richmond area, working with a coalition of pet food small businesses concerned about PETCO and Pet Food Express trying to move into the area. But it isn’t just pet stores.

“There is a perception that Walmart might make a move into the city since we already have stores like Fresh n’ Easy,” Mar’s Legislative Aide Nick Pagoulatos told us.

The city doesn’t have a comprehensive analysis on how these companies impact San Francisco. Mar says he wants to “have a clear scale of their influence and see what we need to do to protect small business in San Francisco.”

History of wariness

In 2004, the Board of Supervisors adopted the first Formula Retail Use Control legislation, an ordinance that “prohibited Formula Retail in one district; required Conditional Use Authorization in another; and established notification requirements in all neighborhood commercial districts.”

The Planning Code changed again after a voter ballot initiative in 2007, Proposition G, required any formula retail use in neighborhood commercial districts to obtain a conditional use permit, which gave neighboring businesses a chance to weigh in during a public hearing.

Mar said the intent wasn’t to bar big box retail from entering the city, but to simply give neighborhoods a voice. But now, he said the city needs to take a more comprehensive look at what’s coming and how they will impact the city.

Small Business Commissioner Kathleen Dooley echoed the concern, which extends even beyond city limits. “I’ve heard through the rumor mill that Lowe’s in South San Francisco is going to close and

Walmart is looking to take that space since they know they’d never get into the city,” she told us. “It’s bad enough that Target is opening stores [in San Francisco]. They are the quintessential big box because they sell everything.”

Target is in the process of opening a massive store inside the Metreon in SoMa, and another store at Geary and Masonic. Mar isn’t diametrically opposed to the big box industry, but he thinks those companies should be appropriately situated.

“I’ve seen that people in Richmond are positive toward big box like Target coming into the district, but some are nervous that it will take down business,” he told us. “There are some property spaces that are supposed to be for big box, like the property at Geary and Masonic where the old Sears and Toys”R”Us used to be.”

But it’s not easy to figure out what other big box stores have their sights set on the city. The Planning Department’s list of projects in the pipeline aren’t always filed under the name of the business, making it difficult to stay vigilant.

For example, while application #3710017 at 350 Mission Street describes the project as a “95,000 sq. ft. building of office, retail and accessory uses,” it isn’t clear what businesses are actually setting up shop. And these days, some big box stores are coming in smaller boxes.

Prototype stores such as Unleashed by PETCO are specifically designed to squeeze into smaller property spaces so they can get into neighbor corridors that are typically reserved for small businesses.

More help needed

During the Dec. 5 hearing before the Land Use and Economic Development Committee, Sup. Scott Wiener echoed Mar concerns, commenting that he wants to see how the Planning Commission could “improve the Conditional Use process since we see a pushback of strong neighborhood activity.”

Dooley recalled an issue from 2009 when the Small Business Commission formally asked the Planning Commission not to authorize a PETCO in the Richmond because “the surrounding area was already well served by pet stores.” The board ultimately stopped PETCO, but Pet Food Express did locate a store nearby, which Dooley said has already taken a toll on the locally owned pet food suppliers.

“Big box stores carry a huge number of products that impact other stores,” she said. “Big box is a category killer in the neighborhood…the Planning Commission needs new criteria for formula retail because there are several different types.”

Some superstores require parking lots, taking up additional land, and increasing traffic in certain neighborhoods. Yet one trait that most chain stores have in common is that they extract more money from San Francisco than locally owned businesses, whose revenues tend to circulate locally.

“With every dollar spent at local stores, 65 cents will go back into the community, while only a quarter will be returned from a big box.” Rick Karp, owner of the 50-year-old Cole Hardware, said at the hearing, citing various studies on the issue.

Small business owners are asking for economic impact reports to be included in project applications from chain stores to see just how they measure up to their locally owned counterparts.

When Lowe’s entered his district, Karp says he lost 18 percent of his business and was forced to eliminate six full-time jobs. He appealed to city officials to “keep big box out of San Francisco because it impacts the efficacy of neighborhood shopping.”

Once chain stores puts the locals out of business, the consumer is stuck with set prices and reduced variety. But critics say it isn’t just consumers and small business owners who suffer, but workers as well. They singled out Walmart as notorious for union-busting and poor labor standards.

“We can use our land use ordinances and powers to set a basic minimum labor standard. Big box must abide by that and also include health care if implemented in local government [legislation],” Mar said.

But Steven Pitts, a labor policy specialist at UC Berkeley, told us there is a connection between low prices and low wages.

“People who work at Walmart are poorer than those who shop there,” he told us. “Therefore, if prices were raised to increase wages for employees, the burden wouldn’t be on people of lower income.”
Opposing Walmart

To illustrate how Walmart would adversely affect San Francisco’s workforce, the hearing included two employees of Walmart, Barbara Collins and Ronald Phillips from Placerville, who helped create Organization United for Respect at Walmart (OURWalmart) to push for better benefits and labor standards.

“We want to hold Walmart accountable,” said Collins, whose last annual income from Walmart was $15,000 annually, a salary she realized couldn’t support her four children. “Walmart says they pay living wages. No, they don’t.”

Phillips said that Walmart has “a tendency to fire people for any reason and then does not have to pay for the benefits… I was one of these people, but I was rehired.”

For the past three months, Phillips says she has worked at least six days and 40 hours per week, but that she still qualified for welfare assistance.

Also at the hearing, SF Locally Owned Merchants Alliance unveiled a study showing that formula retail costs nearly as many jobs as it creates. A domino effect occurs when stores close because fewer customers circulate to other nearby stores.

But the group noted that consumer habits are probably even more important than city regulations. The SFLOMA study found that if 10 percent of San Franciscans shifted their spending to locally owned small businesses, consumers would create 1,300 jobs and $190 million in the city.

And that would be good for everyone: owners, consumers, and workers. Steven Cornell, owner of Brownie’s Hardware, said that small business pays good wages, typically above the minimum wage, as well as sick leave, health coverage, and other benefits. As he told the hearing, “Local businesses have been doing this for 20 to 30 years since we are already invested in the community.”

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