Small Business

End poverty and create wealth with public banks

Michael Redmond
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By Ken Walden

OPINION How would you like to increase your spending power by 10 times (or more), relieve student debt by more than 90 percent, increase Social Security benefits, lower taxes, increase pay for teachers, and lower loan amounts for homes and small business to 1-2 percent?

I’ll bet I have your attention. I’m sure you think this is crazy talk, but this is based on a movement that is already happening. It’s the public banking movement.

In 1950s, the buying power of the dollar was over 10 times what it is today. That means you were able to buy 10 times the amount of goods and services with a dollar compared to what you can now.

What happened? Why is it so hard for most people to just barely get by these days? And why are so many are not getting by at all?

First, let’s review how money is created. Did you know the money we have in circulation today is created out of thin air? Most of it is just an entry in a computer system. A small percent is printed dollar bills like you have in your wallet or purse, and a very small percentage is metal coins.

Money is simply trusted as being worth what it says on the bill, coin, or computer screen. Did you also know that money for loans is created this way as well?

When you take out a loan from a bank (for a home loan, a student loan, a business loan, a car loan, etc.), the money that the bank loans you (with interest charges) is not taken from other people’s deposits. It is made (mostly) out of thin air. It is simply an entry in their computer system … that’s it.

Most people think they are borrowing money that is deposited into the bank by other people, but this is not true.

Here is quote from Robert Anderson, the secretary of the US Treasury in 1959, on this topic: “When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits: it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.”

Why is this a problem? Let’s look at how much interest we’re paying on a variety of loans. If you buy a house for $500,000 in 30 years at an average interest rate, you will pay an additional $580,000 in interest on money the bank made from thin air. With a public bank you, would pay less than half this amount.

On public projects like bridges, roads and schools, 30-50 percent of the cost is interest. The new span of the Bay Bridge that was just opened at a cost of $7 billion, the interest on this project is estimated to be an additional $7 billion. It’s estimated that the cost of almost everything you buy is increased by 35-40 percent because of interest.

This is just the tip of the iceberg.

The solution to the problem is a public bank. With public banks, these billions of dollars of profit (via interest) are recycled back into the public treasury instead of funneled off to private banks.

If you think this is some theoretical fantasy you should know that San Francisco is currently looking at creating a public bank, 20 states are also considering them, and North Dakota has had a public bank for over 90 years. This is not a new idea.

It’s impossible to give you an in-depth overview in a short article so please go to our website (www.whattheworldcouldbe.com) and on the ‘Solutions’ page click on the box titled ‘Creating Jobs, Student Debt Relief, & the New Green Economy’.

Public banks have the possibility to dramatically change our lives for the better and you can help.

Ken Walden is director of What the World Could Be.

Parking and the gentrification of food

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STREET FIGHT Professor Don Shoup, an icon in San Francisco planning circles, is famous for illuminating that there is no such thing as free parking. In his voluminous book The High Cost of Free Parking, Shoup breaks-down the costs of building parking spaces and the land underneath.

Beyond that there’s lighting, insurance, security, maintenance, ventilation, financing, contracting, and surveying costs. There’s also the additional property tax on the parking, and piling onto that, the vast external costs to society with congestion and pollution from car trips generated by parking.

While all of this might seem obvious, the virtue in Shoup’s work was to show how the costs of parking are regressive and passed onto communities, especially low income households and non-drivers. For example, a grocery store bundles parking into the price of food and this is disproportionately borne by non-drivers.

In a sense, free parking causes the gentrification of food.

In San Francisco, underground parking costs anywhere from $80,000 to $100,000 per space to construct. In the proposed supermarket at 555 Fulton Street, the 77 spaces proposed underneath the store will cost anywhere from $6.1 million to $7.7 million to build.

That’s millions that will be passed on to a grocery store tenant and ultimately to shoppers. And that’s just to build, not operate, the parking. This adds more burden to the already tight pocketbooks in a gentrifying city like San Francisco.

Parking also complicates the issue of grocery stores and formula retail, making developers prefer a chain store because it can access the financing to build parking. So parking literally “drives-up” the rents for tenants seeking to lease the space. This makes it more difficult to find an affordable, local, non-chain grocer while also translating into higher food prices, since grocers transfer the cost of parking onto all shoppers regardless of how they got there and regardless of the shoppers’ income.

All of this came to a head last week at the San Francisco Planning Commission hearing on 555 Fulton, a proposed mixed use development that might include a grocery store. The Commission voted 4-2 to lift a formula retail ban on this site, concluding that only a chain store is “economically viable.” (Disclosure: I publicly advocated against that exemption as a member of the Hayes Valley Neighborhood Association).

This was not just a blow to the city’s unique character in terms of guarding against chain stores. It undercuts sustainable and affordable urbanism and will lead to gentrified food. Here’s a brief summary of what happened:

In the early 2000s, the old Christopher Dairy at 555 Fulton, between Laguna and Octavia, was identified as a good location for a supermarket as part of a larger mixed-use development. The site was folded into the Hayes Valley formula retail ban to encourage an independent, community-based supermarket with fresh produce, high quality food affordable to nearby residents, and jobs for locals.

In 2010, the Planning Commission approved the first iteration of this project, with 136 housing units above a non-chain grocery store. Neighbors were very excited to have a local supermarket to serve the whole community and the developer did not try to circumvent the chain store ban. The community and Planning Department were working together.

In late 2012, the site and its entitlements were sold to a new developer, Fulton Street Ventures. It immediately informed the community that it would seek to lift the ban. HVNA unanimously opposed lifting the ban and Planning Department staff supported HVNA’s position. At that point, it seemed that the planners had read and understood Shoup.

For its part, HVNA compiled a list of potential non-chain store candidates and proposed creative ways to make the site work for a locally owned business, with perhaps some space allotted to a hardware store or other neighborhood-serving shops. HVNA also proposed reducing the parking at the site in order to make the store affordable.

The Market and Octavia Plan, which includes 555 Fulton, allows a grocery store to have less parking than the 77 the developer wants, and even zero parking. The developer could eliminate some or all of the parking, reduce construction costs, and reduce the asking price for a lease. This area is flat, incredibly walkable and proximate to thousands of existing residents, with thousands more on the way.

A car-free or car-lite grocery store can deploy innovative ways of delivering groceries, such as a jitney service or delivery vans, for those who need such service, and to limit the amount of store parking to a small number of car share and disabled parking stalls. This kind of grocery store would be at the cutting edge of truly sustainable urbanism, while also providing more affordability to all residents of the community.

Yet another Shoup axiom is “Planning for parking is more a political than a professional activity.” Instead of being creative, Fulton Ventures balked at the parking ideas and employed divisive race-baiting to push its profit-driven agenda. It financed a quiet campaign to accuse anyone supporting the formula retail ban and reducing parking as racist and elitist. It leaned heavily on City Hall and somehow got the Planning Department to suddenly retract its support for upholding the chain store ban. Sup. London Breed, who remained publicly detached, insisted that all she cared about was an affordable supermarket, but she offered no path to achieve it.

In a confusing Oct. 3 hearing, supporters of Fulton Ventures LLC made below-the-belt public comments that seemed to come straight out of a Tea Party playbook. It was tough to watch. Their position was that a chain store with excessive underground parking was the only way to an affordable grocer — anything short of that was racist. The commission voted 4-2 to lift the ban.

By lifting the formula retail ban, the city lost leverage for making the store affordable while also providing fresh food for thousands of people within walking distance. And the many car-free households of the Western Addition and Hayes Valley will get to breathe the car fumes from upscale shoppers. The commission gentrified food.

All is not lost though. The damage done by the Planning Commission can be overturned or fixed at the Board of Supervisors. Breed states she cares about affordability, local small business, and the city’s transit-first policies. She can put conditions on this project that reduces the parking, or decouples the parking from the lease for the commercial floor space, thus making the project economically viable for an affordable grocer. She can demand other creative and sustainable solutions which planners so far have not considered. She doesn’t have to give it away to a chain store. And if you care for affordable groceries with less driving, and want to stop the gentrification of food, write her and let her know.

Activists try again to stop Jack Spade

Sasha Cuttler
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Activists try again to stop Jack Spade

The fight to keep suspected formula retailer Jack Spade out of the Mission resumes this evening (Wed/9) when The Stop Jack Spade Coalition lays out it’s case against the men’s clothing chain before the Board of Appeals in an attempt to force the business to go through a conditional use permit hearing. [UPDATE: Activists say they won a big victory last night, not just winning that vote but maybe convincing Jack Spade to withdraw its application completely. We’re working on confirming things now and we’ll have more details soon.]

The new push against Jack Spade comes less than two months after an original appeal found the retailer not to be in violation of the neighborhood’s formula retail ban, with the opposition campaign getting written support of Sups. Eric Mar, John Avalos, and David Campos. They join a growing list of those opposed to the retailer, one that currently features former Board of Supervisors presidents Matt Gonzalez and Aaron Peskin and Assemblymember Tom Ammiano.

If the coalition is granted a rehearing, it will be the second time an appeal is heard on the matter. On Aug. 21, the Board of Appeals ruled against the retailer in a 3-2 majority decision, but the decision still lacked the four votes required to revoke the building permits.

Jack Spade — currently slated to rent the former Adobe Bookshop storefront at 3166 16th Street — was originally granted its business and building permits sans conditional use hearing, an act that was supposed to be unheard of for a prospective national retailer inside a neighborhood with a formula retail ban.

The 2004 formula retail ordinance requires a businesses to get a conditional use permit before moving into certain San Francisco neighborhoods if they meet the “formula retail” criteria. Part of that criteria states that a store can have no more than 11 “retail sales establishments located in the United States.” Jack Spade, pre-Mission store, has just 10 unique stores, which allowed them to circumvent the hearing process.

But according to 5th & Pacific’s public records, the holding company (formerly known as Liz Claiborne) that owns Jack Spade, the high-end men’s clothing store is not an independent business but rather a sub-brand of Kate Spade; a women’s clothing store with 94 locations in the United States alone.

The coalition opposing Jack Spade’s now-imminent Mission migration is using this piece of information as Exhibit A in their fight against the retailer. The coalition is claiming that by not acknowledging the fact that Jack Spade itself was part of a far larger corporation, the retailer violated the formula retail ban by claiming “independent business” status.

As the move-in date for the Mission’s unwanted addition grows near, the coalition has taken up the cause once again, mustering support from nearly every constituency available.

It will be bringing its revamped case to the Board of Appeals, this time with testimony seemingly focused on the misleading nature of Jack Spade’s classification as an “independent business.” That should prove to be an effective move for the coalition, because Jack Spade isn’t an independent business, and they don’t try to classify themselves as such outside of San Francisco.

In fact, according to 5th & Pacific’s 10-K filings with the SEC, the “Kate Spade brand offers fashion accessories for women under the Kate Spade and Kate Spade Saturday trademarks, and for men under the Jack Spade trademark.” The two brands even share the same CEO: Craig Leavitt. Declaring that the two companies are independent of each other based on product offering is like saying beef and milk are independent of  other because they come from different parts of the cow.

Now, armed with an updated defense, the Coalition is taking a second stab at the appellate process, one they feel good about. In a letter to the Board, executive director of the Valencia Corridor Merchant Association (VCMA) Luis Granados said, “If the findings section were fully taken into account [last time], we believe the Board will see that Jack Spade is formula retail, as set forth under the law.”

Or as Gonzalez wrote in a letter to the Board of Appeals: “Issues of corporate ownership and/or corporate structure have been a matter of debate in previous hearings regarding Jack/Kate Spade’s permits.  While nowhere in the planning code does it require the consideration of corporate ownership/structure, neither does the ordinance forbid a consideration of corporate ownership/structure.  Indeed, in order to fulfill the clear intent of the law in a common sense manner, it will be necessary, in some cases, to consider corporate ownership/structure.

I urge you to grant the VCMA’s request for a rehearing of Jack/Kate Spade’s permits in order to prevent manifest injustice.”

And considering the momentum that the anti-Jack Spade movement is now gaining, the optimism isn’t unreasonable.

Activist Andy Blue, who helped organize the protest, acknowledged the high bar needed to overrule the flawed ruling by the Planning Department, telling us, “We’re cautiously optimistic, but it’s a long shot.”

Friends in the shadows

Michael Redmond
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Friends in the shadows

rebecca@sfbg.com, joe@sfbg.com

It’s a simple fact of life: Money buys influence. But in San Francisco, despite strict sunshine laws to illuminate donations to city agencies and gifts to the regulators from the regulated, money still circulates in the shadows when it flows through the coffers of “Friends” in high places.

Major real estate developers, city contractors, and large corporations often lend financial support to San Francisco city departments, to the tune of millions of dollars every year. But the money doesn’t just flow directly to city agencies, where it’s easily tracked by disclosure laws. Instead, it goes through private nonprofits that sometimes label themselves as “Friends Of…” these departments.

They include Friends of City Planning, Friends of the Library, a foundation formerly known as Friends of the San Francisco Department of Public Health, Friends of SF Environment, and Friends of San Francisco Animal Care and Control.

The Friends pay for programs the departments supposedly cannot cover on their own. Bond money can build a skyscraper, but sometimes not fill it with furniture. Agencies are barred by law from funding an employee mixer or a conference trip, so departments turn to their Friends to fill in the gaps. Adding bells and whistles to city websites, holding lunchtime lectures, hiring a grant writer — or, in the case of the Department of Public Health, bolstering health services for vulnerable populations — these are all examples of what gets funded.

The extra help can clearly be a good thing, but the lack of transparency around who’s giving money raises questions — especially if it’s a business gunning for a major contract or a permit to build a high-rise.

City agencies receive outside funding from a wide variety of sources. Sometimes grants are made by the federal government, or a well-established philanthropic foundation — and according to city law, gifts of $10,000 or higher must be approved by the Board of Supervisors. But in the case of organizations like Friends, which are created specifically to assist city government agencies, the original funders aren’t always identifiable. And the collaboration is frequently much closer, with city staff members serving on Friends boards in a few cases.

the circle of donations to "friends of" foundations

Friends board members told the Guardian that their partnership with government helps bolster city agencies in a time of increasing austerity, in service of the public good. But do the special relationships these influential insiders hold with high-ranking city officials come into play when awarding a contract, issuing a permit, making a hiring decision, or determining whether a developer’s request for a rule exemption should be honored? Without more transparency, it’s tough to tell.

City disclosure rules state that any gift to a department must be prominently displayed on that department’s website, along with any financial interest the donor has involving the city. But Friends and other outside funders are under no obligation to share their supporters’ names, much less financial ties, when they distribute grants. Meanwhile, the disclosure rules that are on the books seem to be frequently ignored, misunderstood, or unenforced, our investigation discovered.

How are donors repaid for their support? Consider the controversy earlier this year around Pet Food Express, which won approval in June for another store in the Marina District despite opposition from four locally owned pet stores in the area that fear competing with a large national chain. Pet Food Express won the unlikely support of the city’s Small Business Commissioners, some of whom reversed their 2009 positions opposing the chain’s previous application.

SF Animal Care and Control Director Rebecca Katz personally lobbied the commission to support Pet Food Express, at least partially because the company has donated pet supplies valued at $50,000 to $70,000 per year to the department. That’s a lot of money for a cash-strapped city department, but a pittance compared to the profits of an expanding national chain.

It’s moments of clarity like those, when the public can easily trace the line from donations to political influence, that show why disclosure is so crucial. But those moments are few and far between when trying to trace the funders of private foundations and Friends organizations, where deals often happen in the dark.

 

WHEN DEVELOPERS ARE FRIENDS

At the Merchant Exchange Building in May, a crowd of high-profile real-estate developers mixed and mingled with city planners, commissioners, and even Mayor Ed Lee, wine glasses in hand. Sources told the Guardian that most of the planning staff was present, and not all were happy about having ribbons and name tags affixed to their shirts, as if they were being auctioned off.

With around 500 in attendance, the event was an annual fundraiser hosted by the Friends of San Francisco City Planning, a nonprofit organization that accepts contributions of up to $2,500 per individual to lend a helping hand to the Planning Department. This year’s event was titled “Incubator Startups, New Jobs for the Future,” hinting that the development community shares the mayor’s affinity for new tech startups and the droves of high-salaried IT professionals they’ve attracted to the city.

Some Friends of City Planning board members are major real-estate developers who routinely seek approval for major construction projects. Others are former planning commissioners, or have a background in community advocacy.

Amid widespread concern about displacement, gentrification, and the overall character of San Francisco’s built environment, no city department has greater influence than Planning. An individual’s interpretation of the Planning Code can carry tremendous weight; it’s a series of small decisions that shape a project’s profits and the look and feel of San Francisco’s future. And with cranes dotting the city’s skyline and market-rate construction catering to the wealthy while middle income residents get priced out, the amount of capital flowing through the development sector these days is astonishing.

In this dizzy climate, there might seem to be something askew about affluent developers and land-use attorneys rubbing elbows with city regulators, all eager to pass the hat for the Planning Department. Whiff of impropriety or no, the fundraiser appears to be totally legal.

“We aren’t violating the law — that I know,” Friends of City Planning Chair Dennis Antenore told the Guardian. “We’ve had legal advice on that for years.”

There is close collaboration between Friends of San Francisco City Planning and the Planning Department — a partnership so entrenched that it’s almost as if the nonprofit is an unofficial, private-sector branch of the agency.

“We are certainly thankful and appreciative,” Planning spokesperson Joanna Linsangan told the Guardian. “They’ve helped us for many, many years.” The additional funding is needed, she said, because “there isn’t a lot of wiggle room” in the departmental budget.

Each year, Planning Director John Rahaim submits a wish list to the Friends, outlining projects he wants funding for. This year, he requested $122,000 for a variety of initiatives, including training support to help planners assess proposals for formula retail (read: chain stores). That’s a hot-button issue lately, and one that shows how seemingly small decisions by planners can have big impacts.

When the department’s zoning administrator ruled that Jack Spade, a high-end clothing chain that opened up in the old Adobe Books location on 16th Street, wasn’t considered formula retail and therefore didn’t need a conditional use permit, neither widespread community outrage nor a majority vote by the Board of Appeals could reverse that flawed decision. It was a similar story with the Planning Commission’s Oct. 3 approval of the 555 Fulton mixed use project, where Planning Department support for exempting the grocery store for the area’s formula retail ban made it happen, to the delight of that developer.

Even though the planning director makes specific funding requests each year to the Friends and pitches the projects in person at their meetings — and the Friends publishes a list of the grants it awards to the department online — the Planning Department is not reporting those gifts to the Board of Supervisors.

“I confirm that the Planning Department did not receive any gifts,” Finance and IT Manager Keith DeMartini wrote in official gift reports submitted to the Board of Supervisors for the years 2011-12 and 2012-13. Those reports were sent to the board on Oct. 7 and Oct. 4, respectively, well after the July filing deadline and after the Guardian requested the missing reports.

The Friends typically funds two-thirds of the requests, said board member Alec Bash, totaling around $80,000 a year. In 2012, the Friends awarded a $25,000 grant to make the department’s new online permit-tracking system more user-friendly, making life a lot easier for developers.

When asked what safeguards are in place to prevent undue influence when the director is soliciting funding from a nonprofit partially controlled by developers, Linsangan responded, “those are two very separate things. One does not influence the other.”

She stated repeatedly that planners are not privy to information about individual contributors — but the fundraisers are organized by a board that includes identifiable developers, and anyone who attends can plainly see the donors in attendance. Nevertheless, Linsangan insisted that planners would not be swayed by this special relationship, saying, “That’s simply not the way we do things around here. We do things according to the Planning Code.”

But as the ruling on Jack Spade shows, as well as countless rulings by planners on whether a project is categorically exempt from the California Environmental Quality Act, interpreting the codes can involve considerable discretion.

The public can’t review a list of who wrote checks to the Friends of San Francisco City Planning for the May fundraiser. Since the organization waits a year between collecting the money and disbursing grants, donors stay shielded from required annual disclosures in tax filings.

But Antenore says the system was established with the public interest in mind. “We don’t reveal the contributors, because we don’t want anybody to have increased influence by a donation,” he insisted. Bash echoed this idea, saying the delay was to “allow for some breathing room.”

Unlike some of his fellow board members from the high-end development sector, Antenore has a history of being aligned with neighborhood interests on planning issues, helping author a 1986 ballot measure limiting downtown high-rise development. He emphasized that the developers on the Friends board are balanced out by more civic-minded individuals.

Still, developers who regularly submit permit applications for major construction projects sit on the Friends board. Among them are Larry Nibbi, a partial owner of Nibbi Bros.; Clark Manus, CEO of Heller Manus Architects; and Oz Erikson, CEO of the Emerald Fund development firm.

“We’re not making use of [the funding] in a way that benefits these people,” Antenore said. “I wouldn’t do this if I thought otherwise. I have been careful to maintain the integrity of this organization.” The money is meant to facilitate better planning, he added. “I don’t think there’s any conspiracy,” he said. “We’re not financing anything evil.”

Both the Planning Department and its Friends dismissed the idea that the donations could open the door to favoritism or undue influence. So why isn’t the department reporting gifts it receives from the Friends to the Board of Supervisors, or disclosing them on its website, as required by city law?

According to a 2008 City Attorney memo on reporting gifts to city departments, when an agency receives a gift of $100 or more, it “must report the gift in a public record and on the department’s website. The public disclosure must include the name of the donor(s) and the amount of the gift [and] a statement as to any financial interest the contributor has involving the city.”

John St. Croix, director of the San Francisco Ethics Commission, confirmed that’s the current standard, telling us, “The actual disclosure should be on the website of the department that received the gift.”

Linsangan said records of the gifts are indeed available — listed as “grants” in the department’s Annual Report. But while the 2011-12 report lists grants from sources such as the Metropolitan Transportation Commission and the Environmental Protection Agency, there was no mention of Friends of City Planning.

The memo also says any gift of $10,000 and above must first be approved by a resolution of the Board of Supervisors. But last year, when the Friends provided $25,000 to upgrade the permit-tracking system, it wasn’t sanctioned by a board resolution. Asked why, Linsangan made it clear that she was not aware of any such requirement.

As is common, when it comes to adhering to disclosure laws, confusion abounds. And sometimes, only sometimes, politicos get caught.

 

READING UP ON DISCLOSURE LAWS

When the head of a city agency fails to report gifts totaling $130,000, how much do you think he is fined?

City Librarian Luis Herrera failed to report receiving that amount in gifts and he was fined exactly $600 by the California Fair Political Practices Commission on Sept. 19. Specifically, Herrera had to file a form 700 with the FPPC to state the gifts he received. From 2008-2010, the forms he turned in had the “no reportable interests” box checked.

The money was used in what he calls the City Librarian’s Fund, which is the money he keeps on hand to pay for office parties and giving honorariums to poets and speakers who perform at the library’s branches, money that wasn’t disclosed on the very forms designed for reporting it.

There are two stories of how the fine came about. Longtime library advocate James Chaffee said that it was the result of a complaint he filed with the FPPC in April, and indeed, he sought and obtained many public documents revealing the money trail. San Francisco Public Library spokesperson Michelle Jeffers disagreed, saying that the fine was the result of an ongoing conversation with the FPPC to figure how exactly to file the gifts appropriately.

“The law wasn’t clear around these forms and it wasn’t clear if he had to report them,” she told the Guardian. “For amending the reports you have to pay a $200 fine for every year it was proposed. We keep scrupulous records on every pizza party we have.”

When government officials receive “gift of cash or goods,” they must report them annually in statements of economic interest, known as a Form 700, to the city Controller’s Office. The form is kind of a running tally of who is receiving gifts from whom, a way for the public to track money’s influence in government.

The gifts came from the Friends of the San Francisco Public Library, another nonprofit that bolsters city agency funding. Now Herrera has to list the $130,000 gifts from fiscal years 2008-09 and 2009-10 on his website.

What exactly does that accomplish? As it turns out, not a whole lot.

City Administrative Code 67.29-6 defines the reporting of gifts to city departments, and one of those requirements is to make a statement of “any financial interest the contributor has involving the city.” Now that Herrera lists the Friends of the San Francisco Public Library as donors on the department website, the statement of financial interest by the friends group is this: “none.”

There are myriad donors to the Friends of the SFPL, and the group doesn’t have to state the economic interests of its donors, or even mention who its donors are. The code requires gifts be reported to the controller, and the deputy city controller told us this doesn’t apply to the “friends of” organizations, or any nonprofit foundation arms of city departments.

“If gifts are made to a department, yes, they have to disclose, so people don’t get preferential interest in getting city contracts,” Deputy Controller Monique Zmuda told us. “I know it’s a fine line. The foundations don’t provide us with anything.”

Friends of the SFPL doesn’t provide money just for pizza parties. A breakdown of a funding request from the library to its Friends shows requests up to $750,000 to advertise the library on Muni and in newspapers, funding for permanent exhibits, and the City Librarian’s personal fund. That’s just the money it gives to the library. Other monies are spent directly on activities supporting the library.

As Jeffers pointed out to the Guardian, the money isn’t spent on “trips to Tahiti.” Friends of the SPL do good city works, from a neighborhood photo project in the Bayview branch library to providing books for children. But the question is: Who’s buying that goodwill and why?

The millions of dollars in donations made to the Friends of the SFPL don’t need to be approved by the Board of Supervisors, like gifts to departments do. They’re not checked for conflicts of interest or financial interest by any governmental body. Donors give and the Friends of SFPL spend freely, financial interest or not.

When our research for this story began, no financial statements were available of the Friends of the SFPL website. After a few days of inquiries, the most recent year’s financial statements from 2011-12 were posted to the website.

Ultimately, the San Francisco Public Library is one of the smaller city departments, with an annual budget that hovers around $86 million. The Department of Public Health is a much bigger beast, with a 2011-12 budget of around $1.5 billion.

One of its main foundations, the San Francisco General Hospital Foundation, is also one of the largest nonprofits that supplements city spending. In many ways, it could be described as the model of disclosure for city foundations, although its disclosures are not by law, but by choice.

 

FOUNDATION OF FRIENDS

The Department of Public Health relies on a few entities that fundraise on its behalf: the San Francisco Public Health Foundation, the Friends of Laguna Honda Hospital, and the San Francisco General Hospital Foundation.

“They’re private nonprofit entities that are separate from the department,” CFO Greg Wagner told us. “But their roles are to support the department in its efforts.” He cited examples such as sending its staff to conferences or hosting meetings, “things that we don’t have the budget for or don’t have the staff or resources.”

The lion’s share of the DPH’s gifts are funneled through the SFGHF. Unlike many of the assorted Friends groups or foundations that support city services, the SFGHF extensively reports the sources of its $5 million in donations. The donors include a veritable who’s who of San Francisco: the Giants, Sutter Health, Xerox, Pacific Union, and Kohl’s all donated between $1,000 and $10,000 in the past two years.

But the largest gifts to the SFGHF came from Kaiser Permanente, and its financial interests in the city run deep. Kaiser came into the city’s crosshairs in July, when the Board of Supervisors passed a resolution calling on Kaiser to disclose its pricing model after a sudden, unexplained increase in health care costs for city employees. Kaiser holds a $323 million city contract to provide health coverage, and supervisors took the healthcare giant to task for failing to produce data to back up its rate hikes.

In the meantime, Kaiser has also been a generous donor. It contributed $364,950 toward SFGHF and another $25,000 to SFPHF in fiscal year 2011-12.

The funding from Kaiser and a host of other contributors — which include Chevron, Intel, Genentech, Macy’s, Wells Fargo (another city contractor), and a pharmaceutical company called Vertex — does support needed programs. They include research into the health of marginalized communities, services through Project Homeless Connect, screening for HIV, and immunization shots for travelers.

But because DPH doesn’t count much of this support as “gifts” formally received by the city, it isn’t subject to prior approval by the Board of Supervisors, or posted on the department’s website along with the contributors’ financial interests. Major contributions are disclosed in a report to the Health Commission, something Wagner described as a voluntary gesture in response to commissioners’ requests.

“Most gifts to foundations are donations to a nonprofit and do not come through the city or DPH at all,” he noted.

This distance is maintained on paper despite close collaboration with the department. In the case of Project Homeless Connect, a program that holds a bimonthly event to aid the homeless, it supports programs headquartered in city facilities. Penny Eardley, executive director of SFPHF— which used to be called Friends of San Francisco Public Health — noted that her organization occasionally makes grants or seeks funding in response to department requests. And Deputy Director of Health Colleen Chawla is a foundation board member. It’s almost like these foundations are extensions of the department, except they’re not.

SFPHF also earns revenue as a city contractor. When DPH received a grant from the Centers for Disease Control, it contracted with SFPHF to manage subcontracts with about a dozen community-based organizations.

The web gets even more tangled. The president of SFPHF is Randy Wittorp — who’s also Director of Public Affairs for Kaiser Permanente’s San Francisco Service Area. It’s a similar story with SFGHF, whose board includes several General Hospital administrators, including CEO Susan Currin.

Former Health Commissioner James Illig said people shouldn’t worry, that hospital the staff would never direct foundation funds to pet projects or mishandle funds. “They maintain a separation and a firewall,” he said, for example noting, “Sue Currin is not directing funds to her own hospital.”

But he did admit that since SFGHF’s minutes are not public documents, that “raises a few concerns,” arguing the public should be able to inspect financial documents to decide if the foundations are directing funds lawfully to city departments.

Even when the public by law has a right to access financial records of a city department, rooting out corruption can be like pushing a boulder up a San Francisco hill.

 

FROM PATIENTS TO PARTIES

In 2010 and 2011, Laguna Honda Hospital administrators and staff used money from the hospital’s patient gift fund to throw a party. And then they spent it on airfare. And then they gave laser-engraved pedometers to the staff. All told, they spent nearly $350,000 meant for the dying and the infirm, nearly half of the total funds.

The incident was big, messy, and out in the public eye. It was an all-too-rare glimpse into the shady use of public funds by public officials. But when hospital staff members Dr. Derek Kerr and Dr. Maria Rivero blew the whistle on Laguna Honda’s misuse of patient funds in 2010, they were drummed out of their jobs.

Eventually litigation on behalf of the whistleblowers and their complaints of corruption were found to have merit.

Kerr’s vindication came at a meeting of the Health Commission in April 2013. In the packed City Hall meeting room, the public watched as Laguna Honda Executive Director Mivic Hirose read her apology to Kerr and Rivero aloud, even announcing a plaque in Kerr’s honor.

“The hospital will install the plaque in the South 3 Hospice,” she read, stiltedly, from a written statement, surrounded by microphones at the podium. “The plaque will say: In recognition of Derek Kerr MD of his contributions to the Laguna Honda’s hospice and palliative care program 1989-2010.”

Kerr received a settlement of $750,000 and something more important: His good name cleared.

But that conflict of interest was rooted out only after years of litigation that revealed the financial abuse through legal discovery of the department’s documents — documents that should’ve been public in the first place. ABC 7’s I-Team broke the story and did much of the reporting at the time, otherwise the entire affair may have been swept under the rug.

The misuse of funds was only brought to light with the revelation of public documents — revelations not possible with most Friends groups. The Laguna Honda Hospital Foundation has also had financial dealings with potential conflicts and a lack of transparency.

The now-defunct LHHF’s board chair, former City Attorney Louise Renne, made an interesting choice for her vice chair after she formed the nonprofit in 2003. Derek Parker was vice chair of the LHHF while simultaneously heading architecture firm Anshen-Allen, with a $585 million city contract to rebuild the hospital.

So he was not only rebuilding Laguna Honda under city contract, but soliciting and spending donations meant to supplement his project. Renne wrote to the Health Commission in December 2011 that LHHF’s purpose was to manage over $15 million in donations meant to furnish the hospital with beds, chairs, and other necessities. Eventually, then-Mayor Willie Brown found funding for the hospital, reducing the foundation’s role.

In a phone interview with the Guardian, Renne said the goals of the LHHF were only ever to furnish the newly christened hospital. “Our purpose was to fill the void, if you will, for what the city and its services could not do,” she said.

But in her letter, Renne advocated for LHHF to take an active role in fundraising for the hospital for years to come. “Today, the members of the Board of Directors of the Foundation continue to assist the hospital in various phases of its new projects and operations with projects approved by the City and/or the hospital administration,” she wrote to the Health Commission.

And Parker would have potentially managed millions of dollars flowing through donations for countless other hospital projects, while heading an architectural firm with contracts to build in San Francisco. We were unable to reach Parker for comment.

“I never saw Derek use his position as an architect or position for any political gain, I never saw it,” Renne told us. But no one else would see it either, because organizations like the now closed Laguna Honda Hospital Foundation operate without public oversight.

The Health Commission itself even noted this in its March 2012 meeting, the minutes describing then-commissioner James Illig as critiquing the foundation for not being open about its source of funding.

“Commissioner Illig thanks Ms. Renne and Mr. Parker for coming to the Commission,” the minutes read. “Because (LHHF) is a project of Community Initiatives, a fiscal sponsor for nonprofits, it is not possible to find basic financial information about the Foundation or its activities.”

Divided interests on hospital board

Due to a quirk of her foundation being under the “umbrella” of a separate entity, Community Initiatives, Illig was never able to even get the LHHF’s IRS forms, he told us. “We tried to get information and reports, and the Community Initiatives [Form] 990 was giant,” Illig said. “It didn’t separate anything out.”

Illig told us that it made sense to have Parker on the board because he is monied and well connected, making it easier to solicit donations. But insiders close to the board told us that Parker’s position may have made it easier to swing getting other contracts for his firm.

Parker got another city contract building the UCSF Benioff Children’s Hospital at Mission Bay, slated to open in 2015. No doubt his firm got the job partly due to his reputation as pioneering architecture that leads to healthy patient outcomes — but then again, the board he served on also approved donations to research at UCSF.

Laguna Honda Hospital Foundation may now be defunct, but it serves to illustrate the lack of controls and oversight of the foundations beyond even gift disclosure.

 

OFF THE BOOKS

It might be characterized as a web of influence, cronyism, or just the way business is done. But is there something improper about all of this?

Private funding often represents a needed boost that allows for important work to take place beyond what could happen under ordinary budgeting. At the same time, it smacks of privatization. While departments and funders point to lean times in the public sector to justify the need for this help, the funding continues to flow whether it’s a good year or a bad year for city government. And at the end of the day, the most glaring issue of all seems to be the lack of transparency.

Are city departments ever tempted to bend the rules to lend a little help to their Friends? As long as the funding is in the dark, the public has no way of knowing.

Ethics chief St. Croix told us his office lacks the resources to visit every city website and check up on whether departments are following the disclosure rules. “If someone brought it to my attention that a department received a gift and didn’t post it [on the website],” he said, “we would look into it.”

But if the watchdogs need watchdogs, citizens who can’t even review documents that should be publicly available, then these quasi-governmental functions and the people who fund them will remain in the shadows.  

Danielle Parenteau contributed to this report.  

ADDENDUM  

When city funders operate in the dark, one of the best ways to learn about corrupt influence, misuse of funds, and other transgressions is from whistleblowers. If you have a tip for us, send us snail mail at SAN FRANCISCO BAY GUARDIAN, 225 Bush, 17th Floor, San Francisco, CA 94104. Or email us at news@sfbg.com. Just make sure not to use an email address provided by your workplace, which is less secure.

Expand protections for small businesses

Sasha Cuttler
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40

EDITORIAL Corporations and chain stores are crafty, and they can always find creative ways to get around whatever barriers that cities and counties erect to protect their local small businesses. And such barriers are important because most large corporations enjoy economies of scale, the ability to absorb sustained losses while gaining market share, and other unfair competitive advantages.

San Francisco voters and legislators have approved and expanded so-called formula retail legislative protections over the last decade, requiring stores with 11 or more locations that want to open in neighborhood commercial districts to obtain a conditional use permit, allowing the public to weigh in and city officials to reject disfavored projects.

But as we observed in last month’s saga involving chain store men’s clothier Jack Spade’s planned move into the old Adobe Bookstore space on 16th Street near Valencia, it’s still too easy for deep-pocketed corporations to make stealthy inroads into some of San Francisco’s most beloved and sensitive commercial districts.

First, Jack Spade disguised its corporate connections in pulling a building permit, then it won over the zoning administrator by claiming only 10 stores (despite the fact that it’s a national chain owned by Fifth & Pacific, aka Liz Claiborne, which also has a string of Kate Spade women’s clothing stores), and then, even when activists and small businesses won the argument and a 3-2 vote by the Board of Appeals on Aug. 21, that wasn’t the supermajority needed to overturn the flawed decision.

As they say in the neighborhood: That shit ain’t right.

Clearly, something needs to change because Jack Spade isn’t the first, and it won’t be the last, corporate-owned chain store that wants to move into the Mission and other gentrifying commercial districts in the city, including Western SoMa (where development forces have been unleashed by the city’s approval of its local area plan earlier this year), Hayes Valley, Polk Gulch, and the Divisidero corridor.

And when one deep-pocketed chain store moves in — a corporation that is willing to invest early in an up-and-coming neighborhood — it creates a strong upward pressure on commercial rents that forces out small businesses, nonprofits, and community-based organizations. And then residential rents follow suit.

Only governmental and political will can break this pattern, and it’s a pattern that must be broken if San Francisco is going to retain its economic vitality. Study after study shows that small businesses circulate their revenues within the community instead of siphoning them off to Wall Street and the corporate headquarters, and that helps the overall local economy.

Flawed ideas about consumer choice and the supposed wisdom of the supposedly free market shouldn’t distract San Francisco and other cities from focusing their economic development efforts on local small businesses, a sympathetic symbol that gets disingenuously trotted out in the rhetoric of Mayor Ed Lee and his allies even as he stacks the Small Business Commission with bankers and right-wing ideologues.

Now, with the Board of Supervisors back from its summer recess, is the time to redouble our efforts to resist corporate dominance. That should include support for Sup. Eric Mar’s legislation to change the metrics for what’s considered “formula retail,” support for Sup. London Breed’s efforts to expand protections in Hayes Valley and Sup. Jane Kim’s similar efforts along Market Street, and consideration of changing the vote threshold for the Board of Appeals and giving neighborhoods more tools to resist stores like Jack Spade.

Nothing less than the soul and face of San Francisco is at stake, and it’s up to all of us to fight for it and not be fooled by self-serving and simplistic “jobs” rhetoric. We need to call a Spade a Spade, and a corporation a corporation, and defend what makes San Francisco special: real, local people serving real, local people, not the interests of Wall Street.

 

 

Activists say a pair of Spades could beat culture and small business in the Mission

Sasha Cuttler
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94

[UPDATE: The Board of Appeals last night voted to 3-2 that Jack Spade should be considered a formula retail business, short of the four-vote supermajority that activists needed to sustain their appeal.]

Progressive activists and small business owners in the Mission are trying to draw the line against the creep the of corporate chain stores — with their homegeneity and tendency to drive up commercial rents — and they’re drawing that line at the old Adobe Bookstore where the Jack Spade corporate clothing chain was trying to quietly sneak in.

“I’m strongly opposed because of its potential to destroy the culture of this area,” Michael Katz, owner of Katz Bagels across 16th Street from the site, told the Guardian. “If they start allowing chains to come, it will be one chain store after another.”

Katz has already been experiencing the flipside of these economic boom times, recently forced to close his shop on Mission Street near 2nd in SoMa because of rising rents and competition from both food trucks and corporate-backed competitors. Now, he’s fighting to defend his Mission District turf against deep-pocketed competitors.

“This will change the special personality of the 16th and Valencia corridors,” Katz said. “It’s turning it into a commodity.”

Katz is among the dozens of people planning to show up tomorrow for the San Francisco Board of Appeals’ hearing (Wed/21, 5:00 PM, City Hall Room 416) on the Jack Spade store. The Valencia Corridor Merchants’ Association is organizing the challenge to the legal standing of a building permit issued to Jack Spade by the Planning Department in June.

Last week, that same group of activists experienced a minor setback when the Board of Appeals denied a late filing request. Tomorrow, however, they’ll get the opportunity they were seeking to argue that the store is “formula retail” and needs to submit to a public hearing before being sanctioned by the Zoning Administrator to open a new Mission location.

Mission resident Kyle Smeallie has been working with the VCMA to oppose the mens’ clothier’s advances on 16th street. In the case of Jack Spade, the Planning Department has enforced only the narrowest definition of “formula retail” as a business with 11 or more locations, while failing to defend the broader spirit of the law.

Since Jack Spade is owned by Fifth & Pacific (aka Liz Claiborne), according to Smeallie, it is a corporate chain store. Though it indeed has only 10 locations, Jack Spade “has a complete imbalance of power and resources, which is exactly what the formula retail legislation aimed to remedy in the first place,” said Smeallie.

Fifth and Pacific also makes clear on its website the Jack Spade is an expanding chain: “Under Fifth & Pacific, Jack Spade has begun to spread its wings and is now poised for broader expansion. Although management would not disclose a precise volume breakdown, Fifth & Pacific’s CEO William L. McComb said on an earnings call last year that Jack Spade ‘can be a $100 million men’s business with very high margins.’”

That’s “margins” as in profit margins, meaning that this corporate chain can has an economies of scale that allows it to buy goods for cheap and sell them for whatever people will pay, which is an ever-increasing amount in the rapidly gentrifying Mission.  

Experts have advised the activists that their best approach is to argue that Kate Spade and Jack Spade are essentially the same store, with well over 11 locations nationwide, since corporate parentage is not explicitly prohibited in the formula retail legislation approved by voters in 2006.

“We’re going to make the case that, since it’s named Spade, it has benefitted from the association with Kate Spade,” Smeallie explained. “Legally, we have a case to say a Spade is Spade and they should be considered one and same.”

In the past, this strategy was successful in thwarting an effort by “Black Fleece by Brooks Brothers” to open a neighborhood location by claiming that it was, effectively, just another Brooks Brothers. In that case, however, the full name of the large-scale retailer was present in the subsidiary’s label.

Canned again

Erica Hanna
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6
Canned again

news@sfbg.com

In the newest of the city’s recycle-pocalypse saga, two Safeway recycling centers are shuttering their services, further narrowing the places in San Francisco where consumers can get their can and bottle deposits back from the government.

The Japantown Safeway on Geary Boulevard already evicted its team of recyclers, and the Safeway at Church and Market streets will soon follow suit.

Early media reports suggested the services would soon be replaced by reverse vending machines, but Safeway spokesperson Wendy Gutshall told the Guardian it’s still exploring all of its options.

“In San Francisco, it is easy to recycle with curbside recycling,” she told us. “The vending machines are a relatively new option and we have been testing them in other locations.”

Safeway has two options for those locations, in lieu of a recycling center: Pay a state-mandated fee to offset a lack of recycling, or to use the reverse vending machines.

The vending machines are a growing problem for San Francisco consumers, advocates say, because they process only one can or bottle at a time, making it nearly impossible for consumers who bring bags full of recyclables to process their buyback in a timely manner.

Ed Dunn, the executive director of the Haight Ashbury Neighborhood Council, which formerly oversaw the recycling center at Kezar Gardens in Golden Gate Park, thinks this is a trend that may not stop.

“This wave of closures will trigger (more closures) in in-store recycling across the northern half of the City,” he said. And the numbers back that up. There were 30 recycling centers in San Francisco as recently as 1990, and the state agency Cal Recycle shows there are now only 20 — an unspecified number of which are recycling vending machines.

Cal Recycle said only two of them are vending machines, but a visit to some of the sites revealed there are more than two, and that there may be a discrepancy in its data.

Safeway’s option of just paying the fee is a growing trend, Cal Recycle said. As recycling centers in San Francisco go the way of the dodo, consumers and small businesses feel the pinch. The lack of recycling centers triggers state laws requiring local businesses to pay fees of up to $100 a day if they don’t provide buyback when a nearby recycling center closes.

Supermarkets who make more than $2 million annually, like the two aforementioned Safeways, serve as “convenience zones,” mandated by California law. Those zones cover a half-mile radius around a supermarket that are convenient places for consumers to bring their recyclables to get back their five or ten cents per can or bottle.

But when large supermarkets like Safeway apply for exemptions with the state at a cost of $100 a day, or $36,000 a year, the burden of recycling falls onto each one of the businesses in a half mile radius around those supermarkets.

That liquor store on the corner? They have to pay people for their bags of recycling, or pay the same fees as the Safeway. Many businesses can’t afford either option, said Regina Dick-Endrizzi, the director of city’s Office of Small Business. That, and they don’t have the space available to put the reverse vending machines as an “out.”

“When you’re a transit-first city, it’s harder. This law was really written for suburbia,” she told the Guardian. “We’re getting denser.”

San Francisco’s density means Safeway’s decision can affect many local businesses. If a convenience zone in Santa Rosa closed, for instance, maybe five businesses would be affected — and they’d have plenty of space in a parking lot to deal with recycling.

But when the Haight Ashbury recycling center closed down, more than 50 businesses were affected.

The state bill was crafted in 1986, which makes it outdated in a number of ways, Dick-Endrizzi said. But the convenience zone requirements need to be amended on a state level, meaning a fix could be months or years away. “This is not going to be a quick solve,” she said.

In the meantime, stores must apply for exemptions, which are numbering too many in San Francisco at this point, said Mark Oldfield, communications director for Cal Recycle.

“The point of the convenience zones to have places for people to recycle,” he told us. “If they’re all exemptions, there’s no place for convenience.”

But even when supermarkets put in recycling machines, consumers and the city still lose out, critics say.

Kevin Drew, the zero waste coordinator at the city’s SF Environment, brought the problem to the Small Business Commission in December. “I’ve heard concerns from homeowners and consumers saying ‘There’s not a place to take my bottles and cans, I’ve got to drive there, and there’s a huge long line when I get there.'”

That’s the rub: When many San Franciscans think of people who collect bottles and cans, they think of the homeless, maybe vagrants, certainly poor, who take them from our curbside bins and trash cans. But even if you don’t identify with those folks, they’re not the only ones depending on these recycling centers.

“My experience in going to the centers and seeing what happens is that where there are certainly is a robust group of scavengers and poachers,” Drew told the Small Business Commission. “There’s a steady flow of people from a restaurant, people coming with kids… You’d be surprised.”

He said that of the $18 million a year in recycling San Francisco produces, two-thirds of that comes from recycling centers. So if you think “everyone” uses curbside recycling, think again. The Guardian’s research bears out the idea that there are still regular folks using recycling centers. As we covered the city’s closure of the Haight Ashbury Recycling Center (see “Canned,” 12/4/12), we met families, kids who brought in recycling for their allowance, bar and restaurant owners who wanted to make money back instead of paying for curbside recycling, and yes, vagrants. One of the customers we talked to was Kristy Zeng, a 30-year-old immigrant from China who worked with her 62-year-old mother to support the family with recycling revenues. “People look at her and say she’s too old [to get another job],” Zeng said. Finally, there’s the impact to the city to consider. Anyone who has ever been in Dolores Park on a sunny afternoon understands the role that recyclers play in keeping San Francisco clean and providing an elegant way for the poor to earn a living. With Safeway’s decision, both benefits are being diminished.

Jack Spade tries to sneak into a beloved Mission spot, triggering a community backlash

Sasha Cuttler
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16

The Stop Jack Spade Coalition is throwing an impromptu fundraiser tonight (Wed/7) at the Make-Out Room to help support local business and oppose chain store blight in the Mission.

Jack Spade, an upscale men’s clothing chain owned by Liz Claiborne, has plans to set up shop at 3166 16th Street, once home to Adobe Bookstore. The community bookseller of 25 years moved south to 24th Street in June, having been ousted from the space by two consecutive rent hikes. The second time, Adobe General Manager Chris Rolls tells us, “the landlord rejected continuation of the lease, which was outrageously expensive and, for this neighborhood, a bit alarming.”

Opponents of the deal say the men’s clothing retailer signed a $12,000 per month agreement on the storefront shortly after Adobe failed to meet its landlord’s exorbitant demands. (Note: A Jack Spade representative contacted the Guardian after this story was published to say this figure was “exaggerated,” but would not disclose any other financial details.)

Jack Spade has gotten this far by failing to apply for a conditional use permit, a pesky little measure imposed by voters in 2006 to thwart corporations chomping at the bit to turn San Francisco neighborhoods into sanitized strip malls.

Turns out Jack Spade is a subsidiary of one such corporation, Liz Claiborne, a fact downplayed in the chain’s original application to the Planning Commission. Even a modest 10 storefronts nationwide, sadly, doesn’t confer small business cred on a menswear line owned by a company with a $2.88 billion market capitalization.

Conveniently, the Jack Spade label has just one too few stores to be formally defined as “formula retail” by Proposition G.  But the Valencia Corridor Merchants Association has been hot on the case, circulating a petition that Jack Spade play by the rules of other big businesses and submit to a public hearing anyway.

A similar effort was successful in preventing an American Apparel store from opening just up the street in 2009 and in slowing the insatiable gentrification that has steamrolled local culture in many other once-unique and affordable cities.

Tonight’s event will feature live music and stand up comedy.  Chicken John Rinaldi promises to host an auction and “talks about what we can do to stop this bullshit.” Doors open at 7pm and $5-$15 will be collected at the door, with proceeds to benefit the campaign for a public hearing next week.

Mayor on local health care policy: “Everything is on the table”

Sasha Cuttler And Mary Magee
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15

A recent controversy has been brewing around San Francisco’s Health Care Security Ordinance, the 2006 legislation authored by then-Sup. Tom Ammiano that created Healthy San Francisco, the city’s medical services safety net program for the uninsured.

As we explain in greater depth in an article for tomorrow’s issue of the Guardian, influential forces in the business community such as the San Francisco Chamber of Commerce and the Golden Gate Restaurant Association have been publicly raising questions about the Health Care Security Ordinance in light of the federal implementation of the Affordable Care Act, aka Obamacare.

In a recent article in the San Francisco Business Times, Small Business California President Scott Hauge was quoted as saying, “We question whether Healthy San Francisco should continue in its current form with the ACA coming in.” And an article published today suggests that some are continuing to question whether the HCSO can legally coexist alongside the federal requirements under the ACA despite clarification given by Jon Givner of the San Francisco City Attorney’s Office last Thursday stating that the ACA expressly allows jurisdictions like San Francisco to adopt health-care policies such as the HCSO.

Meanwhile, the message from defenders of the city’s health care policy at a hearing called by Sup. David Campos last week was clear: Funding for employee health care generated by employer contribution provisions under the HCSO will be needed more than ever once the ACA is implemented, because many people who now rely on the low-cost Healthy San Francisco for medical care will suddenly find themselves ineligible for that program and automatically funneled into a new system where they are eligible to sign up for subsidized health care, but won’t necessarily be able to afford it.

The ACA will begin enrollment in October, and will take effect in January of 2014. At that point, roughly two-thirds of current enrollees in Healthy San Francisco will either transition to Medi-Cal (if they earn up to 138 percent of the federal poverty level) or qualify for subsidized health care coverage under Covered California, the health benefit exchange created under the ACA. Things are apt to be the most complicated for Healthy San Francisco enrollees who discover they cannot actually afford to take advantage of the options offered under Covered California. 

For this reason, Campos stressed that the HCSO should remain in place without being scaled back or tampered with, because medical reimbursement accounts provided by employer contributions under the ordinance could serve to fill those gaps and help low-wage earners obtain coverage regardless of income. As things stand, Campos and Healthy San Francisco advocates said, gaps created under the ACA will be filled by stronger HCSO provisions, so the programs stand to complement one another.

But the business community, seeking what GGRA executive director Rob Black described to the Guardian as “guidance” from the city on how to move forward given the pending implantation of federal health care reform, wishes instead to open up a new policy dialogue about the HCSO. The mayor has been receptive to their concerns, and recently reconstituted the Universal Healthcare Council, a body that was previously formed to hash out local health care policy.

A key question is who will be appointed serve on that board: Department of Public Health Director Barbara Garcia will chair it, but so far the only indication of who else will be named is that it will consist of “community, healthcare, labor and business stakeholders,” according to a quote attributed to Garcia in the Business Times. Will the makeup include members of the GGRA, the business organization that sued the city to overturn the employer contribution mandate under the HCSO? 

In response to questions about whether the mayor believed the employer spending requirement ought to be revisited in light of ACA implementation, and who would be appointed to the newly convened healthcare council, mayoral spokesperson Christine Falvey responded ot the Guardian with the following statement: “Everything is on the table as the City develops a plan to best implement [the Affordable Care Act]. This is a great opportunity to see how the city can continue to be a leader in making sure San Franciscans have access to quality healthcare. We are currently updating a membership list for the Universal Healthcare Council. More information on that as it becomes available.”

Under fire again

Michael Redmond
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0
Under fire again

rebecca@sfbg.com

At a recent hearing on San Francisco’s Health Care Security Ordinance — once-controversial legislation that is now in the business community’s crosshairs once again — a nursing student stood at the podium to address members of the Board of Supervisors Neighborhood Services & Safety Committee.

She told them about her mother, who battled illness but did not have access to healthcare for 14 years due to her immigration status, recalling a day when her mother explained why she wasn’t seeking medical attention: “If I go to the hospital, I’ll bury you in debt.”

For the uninsured and undocumented, going without medical care or going into insurmountable debt could be the only options if it weren’t for Healthy San Francisco, a medical services safety net that was created by the HSCO in 2006. The program is expected to continue to provide care for undocumented enrollees who won’t be eligible for federal assistance once the Affordable Care Act, also called Obamacare, takes effect early next year.

The HCSO’s mandate that businesses provide some healthcare coverage for their employees was fiercely opposed by the business community, which challenged it all the way to the US Supreme Court. Now, those same powerful forces are gearing up for a fresh challenge that could jeopardize HCSO’s potential to fill coverage gaps that will be created under Obamacare.

Under federal health care reform, two-thirds of the enrollees in Healthy San Francisco will become ineligible to continue receiving coverage because they will automatically gain eligibility for some form of federal assistance. Those earning up to 138 percent of the federal poverty level will be guaranteed coverage under Medi-Cal. But for low-income earners whose wages hover around $14 an hour, things are far less certain because they will be eligible to enroll in the federally created health benefit exchange, Covered California, although they won’t necessarily be able to afford it. For someone earning around $30,000 per year before taxes, the estimated monthly cost for a health insurance plan under Covered California hovers at more than $200 per month, in many cases making it too much of a stretch.

As things stand, uninsured San Francisco employees who earn too much to qualify for Medi-Cal, but not enough to afford enrollment in Covered California — despite being eligible — can still access funds set aside for them in medical reimbursement accounts under the HCSO. This option may provide enough of a financial boost for low-wage earners to take advantage of federally subsidized health insurance after all.

“For working people, the implementation of the Affordable Care Act actually makes the Health Care Security Ordinance more important,” explains Ian Lewis, research director at UNITE-HERE Local 2. “There are many consequences of the ACA … and the Health Care Security Ordinance is a buffer against them.”

As it stands, the local law “makes Covered California actually work in a high-cost city like ours,” Lewis added.

Under HCSO, San Francisco employers are required to contribute toward employees’ health care on a per-hour basis for each employee working more than eight hours per week, regardless of immigration status or city of residence, amounting to an estimated $255 per participant per month.

This mandate, known as the Employer Spending Requirement, has been the target of multiple lawsuits brought against the city by the Golden Gate Restaurant Association since the landmark health care ordinance, authored by then-Sup. Tom Ammiano, was first enacted in 2006.

That same requirement also makes the local ordinance stronger than the federal law when it comes to worker protections, because the federal mandate only requires employers to offer coverage for workers who put in 30 hours a week or more. That has prompted businesses nationwide to reschedule their workers down to 29 hours per week in a gesture of opposition to health care reform, but no such incentive exists in San Francisco because of the hourly contribution requirement.

Now that federal health care reform is poised for implementation, with enrollment set to begin in October and a transition to the new system slated for early next year, GGRA and the San Francisco Chamber of Commerce are urging the city to open up a new policy dialogue about employer requirements under the local health care law — and Mayor Ed Lee has been receptive.

“We question whether Healthy San Francisco should continue in its current form with the ACA coming in,” Small Business California President Scott Hauge told the San Francisco Business Times (“Healthy San Francisco, related program to shrink dramatically, but not price tag,” July 16). Hauge has met with Jim Lazarus, the Chamber’s senior vice president for public policy, and GGRA Director Rob Black on the issue, the article noted.

Reached by phone, Black emphasized to the Guardian that GGRA employers are merely seeking guidance on how businesses should comply with the local and federal mandates. “It’s important that we really focus on getting together, and getting together quickly,” Black said, to ensure “San Franciscans have access to the full benefits and subsidies of the Affordable Care Act.”

Longtime advocates of Healthy San Francisco and progressive policymakers are watching closely. “They’ve been trying to get out of their responsibility to provide worker’s health care since the law was passed,” Hillary Ronen, a legislative aide for Sup. David Campos, said of business interests who are airing complaints about employer requirements.

Once the federal law takes effect, San Francisco employers will have the option of either providing coverage, or contributing to a city program that establishes medical reimbursement accounts for employees administered by city government, Ronen explained. A third option, “standalone health reimbursement accounts,” under which employers manage reimbursement funds for employees, will be rendered illegal under Obamacare. That system generated controversy in recent years because employers were placing undue restrictions on the use of those funds, and in some cases even pocketing the money after neglecting to inform their workers that it was available (see “Check, please,” 4/23/13).

On July 25, Lee announced that the city’s Universal Health Care Council, a body previously tasked with guiding local health care policy, would be reconvened to “examine San Francisco’s implementation of the Federal Affordable Care Act (ACA) and engage stakeholders in identifying necessary local policies” to support the transition.

In response to signals that the business community is gearing up for a fresh challenge to the city’s health care law using the ACA as ammunition, Campos convened a hearing July 25 to discuss the importance of the HCSO in relation to the federal law.

For several hours, advocates of Healthy San Francisco — many of them members of the immigrant community who would have no other options if it weren’t for the program — delivered passionate defenses of the current program. Campos emphasized that federal health care reform stood to be a great success in combination with the local health care ordinance, which would serve to fill in any gaps in coverage.

Deputy Director of the Department of Public Health Colleen Chawla explained during the hearing that of the 60,000 San Franciscans currently enrolled either in Healthy San Francisco or SF Path, a second medical assistance program, roughly 40,500 will automatically become eligible to enroll either in Medi-Cal or Covered California under federal health care reform come January. The remaining 19,500 won’t be eligible, however, mostly due to immigration status. Healthy San Francisco is expected to continue providing a safety net for those who would otherwise fall through the cracks. But when it comes to the two-thirds who are eligible for federal assistance, but may not be able to actually afford it, things would be thrown into uncertainty if the Employer Spending Requirement were altered or eliminated. “Folks in the business community would be happy to say, the Affordable Care Act is enough, and businesses shouldn’t be complicated with an additional burden,” notes Le Ly, program director at the Chinese Progressive Association. But the HCSO “is an important pillar of the total continuum of care,” he said. “We see it as continuing to complement and strengthen health care coverage.”

Burning Bacon

Michael Redmond
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7
Burning Bacon

news@sfbg.com

Bacon has its own buzz these days, infused with an almost cult-like enthusiasm that’s hard to explain. But the uptick in business that my employer, the Bacon Bacon Food Truck, has recently experienced can hardly be explained by the pork product’s faddish popularity.

Bacon Bacon is in demand more than ever, and it’s all because a small group of neighbors who raised a stink inadvertently set off a national media craze, thereby inspiring bacon-loving supporters to come out in droves and place their orders.

When Jim Angelus opened a neighborhood breakfast sandwich shop five blocks from where he lives with his wife and daughters in the Haight, he never imagined he’d set off a media feeding frenzy about bacon. But that’s what happened.

Jim is my boss. I am a news intern at the Bay Guardian and a recent hire at the Bacon Bacon Food Truck as a line cook. Our menu is crammed full of items like bacon-wrapped fried chicken, a bacon-filled parody of the It’s-It ice cream sandwich called the “That’s-That,” and in quintessential San Francisco fashion, a BLT with goat cheese called “THE L.G.B.T.”

We’re open at Brick and Mortar, on Mission and Duboce streets in San Francisco, for lunch service. We recently reclaimed our original Frederick Street location, pending installation of a costly ventilation system replacement to be OK’d by the Planning Commission as a result of a dustup stemming from neighborhood complaints.

Just a typical San Francisco small business, right?

But ever since a group of neighbors in proximity to our location in the Haight filed complaints with the San Francisco Planning Department about the smell of bacon, sparking a media firestorm, things have gotten a bit surreal.

A Wall Street Journal reporter recently interviewed us for what would become a front-page article. Bacon Bacon even made Saturday Night Live in May, with Amy Poehler informing the nation that a “San Francisco bacon restaurant” was closed for its bacon smell.

Bloggers blogged, tweeters tweeted, and Bacon Bacon was thrown into the spotlight when ABC’s Good Morning America aired a segment titled, “big bacon battle sizzling.”

That media spectacle started to smell like business. Random San Franciscans, many of whom had only heard of us through recent headlines, began to walk up to the truck, stop by the new location and espouse gestures of solidarity to a crew of cooks bewildered by their sudden celebrity status. Many of these supporters had never even eaten the food.

It all started with a series of short San Francisco Examiner articles by Andrea Koskey, with catchy headlines like “Bacon Bacon Aroma Set To End,” which went viral in May. “One of the things I’ve taken away from all of this,” says Angelus, “is how few people called me [as the story was going viral] and asked questions.”

Maybe because it was about bacon, the media attention was largely sensational. “The Haight-Ashbury district was all about peace and love until bacon entered the picture,” Vauhini Vara’s Wall St. Journal story began on July 11, the day Bacon Bacon’s Planning Commission hearing was scheduled. When I asked Vauhini why she was doing the piece, said she just wanted to do more “fun” articles.

“Plus,” she added, as if to explain everything, “it’s bacon!”

 

THE SIZZLE

Angelus started the Bacon Bacon food truck two years ago, moving away from the late nights and weekends of the restaurant business to do a lunch-only truck so he could have more time with his family.

But, as he said the day before the hearing as a recently hired personal assistant scrolled through journalists’ emails, “a lot of this has been a huge distraction in running a business.”

The Wong Family, which owns Ashbury Market, offered Jim a lease on the deli portion of their building to operate as a commissary for the Bacon Bacon Food Truck (which then had four employees, Angelus included), and they started making bacon. The Planning Department stipulated that Angelus needed a “limited use restaurant” permit to operate. That’s when the trouble started.

Shortly after Angelus opened his doors in January of 2012, a handful of neighbors complained about the smell of bacon and the influx of bacon lovers to the new restaurant in their residential neighborhood. Contrary to SNL-fueled legend, none of the neighbors “complained to the cops that [they] smelled bacon.” Instead, they filed a discretionary review application, a process in which anyone can urge the Planning Department to take action if it’s found that the case demonstrates an exceptional and extraordinary circumstance. The Health Department allowed the restaurant to operate in the interim, as long as issues with the Planning Department were ultimately resolved.

But when the issue still wasn’t resolved more than a year later, the Health Department imposed a 75-day deadline by which the planning permits must be secured. Once that deadline passed in May, Bacon Bacon was shut down. This prompted the media frenzy, which continued through July 11 — when the Planning Commission unanimously ruled that it could reopen as long as an air filtration system was installed.

Four major-network television crews filmed the three-hour hearing, periodically running out of the hearing room to grab more videotape. Phylis Johnson-Silk lives around the corner from Bacon Bacon, on Downey St. “If they put in a nail salon,” she said during the commission meeting, “[these neighbors] would complain about that. Put in a bakery, then it’d be the smell of yeast!”

“I know [the neighbors] call FedEx when the truck is double parked for deliveries on their block,” said Mike Shell, who showed up to defend Bacon Bacon independently of the company in a pork-pink tie.

In an email to members of the Haight Ashbury Improvement Association, HAIA president Ted Lowenberg urged opponents to attend the Planning Commission hearing. “We have to get as many voices as possible to attend to say the Commission must take discretionary review,” he wrote. “The owner has committed a number of cardinal sins vis-a-vis the normal process of getting a business started, and to simply let this slide through creates havoc with the planning code and process. It would like legalizing Al Capone’s liquor sales because he’s been doing it for a while, whilst getting away with murder. Now is the time to scream, ‘STOP THIS!!!'”

Neighbor David Nevins described for the commission the physical “clouds” of bacon smell that wafted down the block, “almost toxic smelling.”

His wife, Inge, visibly teared up after her turn to speak. “This should not be a popularity contest,” she said. “This should be about proper placement of a restaurant … There are people on our sidewalks eating this stuff!”

In Bacon Bacon opponent David Nevins’ plea to the Planning Commission, he cited the Wall Street Journal’s interview with the head of Iowa State University’s Sensory Evaluation Unit as evidence that the bacon smell was a nuisance, while complaining the media overexposure had turned the proceedings into a “joke.”

“I have no problem with what the health department did,” Angelus said. “They waited a year and a half for us to sort all this out and it wasn’t working. The Planning Department was really banking on us resolving the issue with the neighbors.”

“This is a residential neighborhood, not a commercial neighborhood,” David Nevins said, “The commercial activity that’s existed is ‘limited commercial use,’ which means that it respects the integrity of the neighborhood that it’s in.”

If it weren’t for the Bacon Bacon buzzwords involved, it’s likely that none of us would have heard about any of this. The neighbors, who spent a lot of money obtaining top-level legal representation and footing the bill for all sorts of tests to check the credibility of Bacon Bacon’s operations, might have gained more traction if it weren’t for the public scrutiny.

But at the same time, it’s a prime example of the kind of story which gains national media attention simply because the topic is trendy.

Instead of reading about world affairs in the morning papers this week, many Americans will be reading about their breakfasts.

Small Business Commissioners support Pet Food Express over local stores

Sasha Cuttler
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34

San Francisco’s Small Business Commission has recently come under fire for its promotion of corporate interests and, most recently, advocating for an allegedly predatory pet store chain known as Pet Food Express.

In 2009, the Small Business Commission voted in favor of denying Pet Food Express’ application for a location on Lombard Street in the Marina District. Subsequently, the Planning Commission also denied the request, seemingly blocking Pet Food Express’ efforts to set up shop in the Marina. 

San Francisco’s formula retail legislation requires chain stores like Pet Food Express to apply for a conditional use permit in order to receive approval for opening new locations.

But now, Pet Food Express is back after recently filing another identical application with the SBC for the exact same spot on Lombard Street, and this time some members of the SBC are oddly supporting the chain.

As Pam Habel, owner of local Marina pet store Catnip & Bones, pointed out at the commission meeting on June 10, Pet Food Express already has a location on California Street just one mile away. At the same meeting, Susan Landry, owner of another Marina pet store, Animal Connection, added that nothing has changed in the past four years that would point toward the Marina community needing or wanting this Pet Food Express, since four pet-related stores exist within a mile of the proposed Lombard Street location.

“We were really surprised and disappointed that the commission no longer seemed to be an advocate of small business and even made comments indicating sympathy for the big chain pet store,” Habel and Landry, told the Bay Guardian jointly via email. “Commissioner Adams even said it seemed unfair to him to penalize a business that had started out small and now are being victimized for their success since they are one of the largest pet store chains in the U.S.”

So what has changed since 2009 that is now making the SBC consider supporting the proposed Pet Food Express? For one, Mayor Ed Lee’s corporate-friendly appointees to the SBC, including developer Luke O’Brien and President Stephen Adams, a manager for Sterling Bank & Trust.

Additionally, San Francisco Animal Care and Control Director Rebecca Katz lobbied for approval of the Pet Food Express while holding a blind Chihuahua adorned with a sweater at the June 10 meeting. Katz cited Pet Food Express’ many financial contributions to her agency as reasoning behind supporting the chain’s new location and expansion. According to Animal Care and Control spokeswoman Deb Campbell, Pet Food Express donates an estimated $50,000 to $70,000 in supplies annually to the city department.

“The more business Pet Food Express does, the more they grow and the more they give back to the community,” Katz told the Bay Guardian. “We take in about 10,000 animals a year on a budget of about $40 million.”

Kathleen Dooley, one of the SBC’s few existing members still in favor of promoting local business over big business, met Katz’s lobbying with criticism.

“She went up and lobbied for Pet Food Express and implied if it wasn’t for them no pets would be adopted and the animal world would be in chaos,” Dooley told the Bay Guardian. “They already have a number of stores in San Francisco, but they act as if this one on Lombard would change the tide.”

But Katz says that her public promotion of Pet Food Express is not lobbying. “I spoke to the Ethics Commission and they told me it is okay for me to talk about what Pet Food Express does for us,” said Katz.

Few of the arguments in favor of the Pet Food Express’s intrusion into the Marina actually acknowledge the store’s potential detrimental impact on the existing local businesses. Katz even publically said she thought it was ironic to protest another corporation coming into the Marina, where so many chain businesses already exist.

“The size of the Lombard location would allow for an adoption center which would have a huge impact,” said Katz. “Whereas residents have to drive to the California Street location, now they could walk.”

Unfortunately for local Marina businesses, the SBC, whose professed goal is to “work to support and enhance an environment where small businesses can succeed and flourish,” may be doing just the opposite by supporting a chain business that will undoubtedly endanger the many locally owned pet stores.

“As small businesses in San Francisco, we rely on the SBC as our voice at City Hall, not as a sympathetic voice for chain stores,” said Habel and Landry. “Because of their response last month, we no longer feel that we can look to the SBC to support small business in San Francisco.”

In her presentation before the commission, Landry drew an analogy to the previous opening of a Blockbuster on Lombard Street. Following the corporation’s entrance into the community, all four independent video stores in Cow Hollow closed within a year.

At the same meeting, Commissioner Mark Dwight acknowledged the predatory nature of Pet Food Express, who has sat on the same property for four years in order to continuously rally support in favor of the proposed location.

The pet supply stores in the Marina could face the same fate as the local video rental shops if Pet Food Express succeeds in opening on Lombard Street.

“When chain stores go in, commercial rents go up and the small mom and pop businesses are priced out of the neighborhood and replaced by even more chain stores as they are the only ones who, with their corporate structures, can easily afford high rents,” said Landry and Habel. “This is about more than one Pet Food Express application on Lombard, this is part of our battle to retain the heart and soul of our neighborhood commercial corridors.”

The Chron’s token conservative on tech hegemony

Zelda Bronstein
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9
The Chron’s token conservative on tech hegemony

It’s always fun when things are so screwy in town that the leading conservative writer at the Chron starts to agree (even just a little) with the crazy commie at this blog.

Debra Saunders is unhappy with the way the Apple store is moving into Union Square. Not because she hates Apple; she’s a Republican who loves all business. Not because she wants to save the fountain or thinks the urban design is ugly; she’s all for new development.

The problem she has is the same problem so many of us have with Sean Parker’s wedding: The technoriche don’t have to play by the same rules as everyone else:

But I think some locals object to the plan because Apple gets kid-glove treatment. Small business owners have to jump through many hoops to accommodate the Special City’s sensibilities – or else. There’s an ordinance, for example, that prohibits chain stores in certain neighborhoods. Yet when the high-tech money knocks, the door is wide open.

Yep. Small businesses don’t get special tax breaks out of the Mayor’s Office. Local merchants don’t get these kinds of special exemptions when they want to open or build something. (Try to open a nightclub in this town.)

When hi-tech money knocks, the door is wide open. And even the conservatives are getting sick of it.

 

Small Business Awards 2013

Andrew Lam
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0
Small Business Awards 2013

Welcome to a tradition we hold near and dear at the Guardian — our annual round-up of independent businesses that represent the best of entrepreneurship here in the Bay. From a local sweet shop that’s defied the Nestle odds to become the Bay’s best-loved ice cream treat to the Castro’s best new spot for punting and catching, read on for our favorite small businesses now.

 

>>WOMEN IN BUSINESS: MOTHERSHIP HACKERMOMS

>>COMMUNITY SERVICE: UNIVERSAL MARTIAL ARTS

>>CULTURE CHAMPION: HI TOPS

>>LEGACY AWARD: LA VICTORIA BAKERY

>>SMALL BUSINESS ADVOCATE: BUSINESS ALLIANCE FOR LOCAL LIVING ECONOMIES

>>EMPLOYEE-FRIENDLY BUSINESS: R & G LOUNGE

>>GOLDEN SURVIVOR: IT’S IT

>>LOCAL MANUFACTURING: BABETTE

>>READER’S CHOICE: SHAMELESS PHOTOGRAPHY

 

Small Business Awards 2013: Shameless Photography

Andrew Lam
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0

Y’all chose Shameless as your top small biz of the year, so I’m going to yield the floor for a moment to someone who voted for the photography outfit:

“Shameless is a female-owned and run business that promotes positive body image and self love while creating spectacular pin-up and boudoir images,” wrote one enraptured Bay Guardian reader. “Women (myself included) leave the studio feeling more beautiful and accepting of their bodies.”

Do you yearn for an Etta James glamour shot with tasteful cleavage, frothy updo, rhinestones dangling from your lobes? Perhaps a cheeky pose with your pumps in the air, gingham bikini and a “here comes trouble” gaze? Shameless would love to make those matinee daydreams a reality.

“We approach the photoshoot as an experience rather than just a means to an end,” founder Sophie Spinelle wrote in an email interview with the Bay Guardian. Photographers Spinelle and Carey Lynne are the minds behind the firm, whose aesthetic is firmly situated in high Hollywood glamour, sultry boudoir shots, and coquettish pin-up poses. It’s 1950s sexy, used to express the decidedly more inclusive ideals of beauty we revel in today. Thank goodness — we tend to think when it comes to satin bustiers, the more curves the better.

Spinelle holds that the primary aim of Shameless is to highlight the beauty of all women, regardless of whether the lady has a gap between her inner thighs. “In a culture where people, and feminine people in particular, are bombarded with advertisements designed to create feelings of inadequacy about our faces and bodies, we’re working to create a space where people can feel safe, beautiful, and empowered,” she wrote.

The space in question is a pink fortress of a building tucked away near the Legion of Honor in the Richmond District. Aspiring starlets, it is hard to miss — Spinelle describes it as “a cross between a wedding cake and the hotel that Kim Novak holes up in Vertigo.” Photoshoot packages start at $450, and include hair and makeup overhauls plus a pose-worthy loaner wardrobe.

It’s the stuff dreams are made of, and everyone’s welcome to play. “No model on a billboard nor the business she represents owns the realm of fantasy — we all do,” says Spinelle. 

600 35th Ave., SF. (646) 448-8277, www.shamelessphoto.com

Small Business Awards 2013: Babette

Andrew Lam
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0
Small Business Awards 2013: Babette

I cannot help but insert italics into Babette Pinsky quotes, bear with me.

“It didn’t dawn on me that I shouldn’t open a business by myself.”

“It was sort of survival for a really long time.”

“We have to show things the way we want them.”

Perhaps such signs of effusiveness are befitting for one of the Bay’s more experienced purveyors of fashion.

Pinsky started her line of comfortable, elegant items most often worn by town’s over-40 set of museum and travel-inclined doyennes back in 1968. She considers the eponymous line’s signature piece a pleated cream or white button-down shirt.

Her retail locations — there are eight Babette stores across the country with a ninth in the works for the Mid-West, and the company recently launched a thriving e-commerce site — is filled with outfits for “the woman who wants to look good without looking like her daughter,” says Pinsky, sitting for our interview with husband and co-owner of the company Steven in their Union Square shop.

But the Pinskys’ sartorial sense is but one of the reasons we’re honoring them with a Small Business Award. Perhaps just as importantly, the two provide healthcare and 401k’s for all of their 100-plus employees, and have always manufactured their clothes right here in the Bay Area, currently at their Oakland factory.

The two attribute their buoyancy in the fashion industry, in fact, to their local production line. Trade policies like NAFTA, they say, decimated the Bay Area’s fashion industry, once one of San Francisco’s biggest job sources. Their ability to continue producing quality product right here in California, they say, distinguished them from the thousands who lost their jobs over the last few decades.

Now, having survived the worst of times, Babette (the company and its founder) can be a role model company to those who would make beautiful clothes.

“The most rewarding part of this business?” asks Babette (the person this time, over a pair of round glasses that go nicely with those that Steven wears alongside her). “A big part of that is how happy [the clothes] make our customer. I’ll come into one of our stores and a woman will tell me ‘you’ve changed my life!’ I’m a clothing designer! It’s just clothes.”

361 Sutter, SF. (415) 837-1442, www.shopbabette.com

Small Business Awards 2013: It’s-It

Andrew Lam
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0
Small Business Awards 2013: It’s-It

What’s been San Francisco’s go-to cold ‘n creamy treat for the past 85 years? No, its not Dianne Feinstein. It’s It’s-It, that native warm weather snack, created on a deliciously fateful day in 1928 when George Whitney squished a scoop of vanilla ice cream between two big oatmeal cookies and dipped the resulting sandwich into dark chocolate. For more than four decades, Whitney sold his It’s-Its at Playland-at-the-Beach, until that legendary local amusement park was demolished in the 1970s. Fortune intervened, and the brand was reinvigorated — soon to travel beyond the Bay, throughout California, and into pretty much every western state, spreading yumminess up and down the coast.

The Shamieh family now operates It’s-It (the company, based in Burlingame, is headed by Charles Shamieh) and continues to uphold the tasty tradition of “the official food of San Francisco.” (Take that, cioppino!)

“Sure it’s always a tough to be the little guy — when you’ve got your Nestles and your Unilevers out there as competition,” vice president of sales Jim Shamieh told us. “But we have an amazing built-in fan base that includes parents, grandparents, great-grandparents … it’s the best kind of loyalty. And we keep it current by introducing different flavors.” (Those flavors include the Big Daddy — a “chunk of ice cream between two chocolate wafers” — and the Super Sundae, an ice cream dipped in dark chocolate and rolled in roasted peanuts). “And we distribute to Denver, Seattle, Portland … pretty much everywhere this side of the Rocky Mountains.” Sweet.

www.itsiticecream.com

Small Business Awards 2013: R&G Lounge

Andrew Lam
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1
Small Business Awards 2013: R&G Lounge

The R & G Lounge has been a fixture in San Francisco’s Chinatown for 28 years. Taking up three floors with a seating capacity of 225, it’s served as the backdrop for many a wedding rehearsal dinner, birthday celebration, and other special occasion bashes. But it isn’t just heartwarming memories of being surrounded by friends and family with a pleasant Tsingtao buzz that linger in diners’ minds. Just as often, it’s the taste of the establishment’s signature seafood plate: salt and pepper live Dungeness crab.

“It was love at first bite,” a 25-year-old Yelper gushes about the first time she tried the specialty, back when she was in the seventh grade. The dish is available year-round, sourced locally when in season.

The R & G Lounge is known for dishing up traditional Cantonese cuisine from the Guangdong province of southern China. Most of the workers are originally from mainland China, and live in the city.

“We have a low turnover,” manager Frank Wong says of his staff, which is 70 strong. Rather than puffing up any star chefs, Wong describes the working atmosphere as decidedly “team-oriented.” Conversations in Cantonese and Mandarin float through the air, mingling with the savory aromas of ox tail stew, chow mein, Peking duck, or steamed fish plucked straight from the tank. Chinatown activist groups laud the restaurant for its exemplary treatment of workers, and efforts to extend benefits to them rarely seen in the neighborhood.

The restaurant has deep roots in the Chinatown community, regularly donating to schools in the area. When hosting community-based functions, “we work a lot through the San Francisco Chinese Chamber of Commerce,” says Wong, adding that multiple family members and investors own the popular restaurant, including Kinson Wong.

This connection helps drive a steady stream of “locals, business people, and tourists” through R & G’s doors, and since its located along the route of the Chinese New Year Parade, the sound of drums and the sight of a dragon procession can make for delicious accompaniment for your meal. 

631 Kearny, SF. (415) 982-7877, www.rnglounge.com

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