Small Business

Fixing PG&E’s blackout problem

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EDITORIAL The electricity that San Franciscans buy from Pacific Gas and Electric Co. isn’t just expensive — it’s unreliable. That’s what figures from the California Public Utilities Commission show (see "The blackout factor, page 8). In fact, PG&E has more blackouts than any of the public power agencies in the Bay Area.

That has a significant impact on local businesses — but neither City Hall nor the small business community is paying much attention to a multimillion dollar problem.

During the worst days of the California energy crisis, rolling blackouts were a regular event, and the press and public talked constantly about the impact of power outages on businesses and the economy. Now that the worst of that crisis is over, many blackouts get no news media attention at all. But the problem is still serious: reliable power is critical to most business in the Bay Area, and even short-term outages can hit the bottom line.

That’s why public power agencies like Silicon Valley Power in Santa Clara and Palo Alto’s municipal utility put substantial resources into infrastructure upgrades and repairs. PG&E, which as a private company seeks to keep costs down to fatten profits and reward highly paid executives, has fallen far behind on its system upgrades. That’s why, for example, underground explosions keep happening in San Francisco, shorting out power systems and plunging neighborhoods like the Tenderloin into blackouts.

State law requires PG&E to pay claims for economic damage caused by system failures. Restaurants that lose frozen food, for example, can fill out a form, go through a cumbersome process of proving the extent of the losses, and get reimbursed. But PG&E rarely advertises or promotes that program, and lots of small businesses know nothing about it or never manage to file claims.

And even the claim process doesn’t cover lost business, lost customers, and the loss of reputation.

State Sen. Mark Leno, who owns a small sign shop (and has suffered from blackouts) has asked the California Public Utilities Commission to investigate PG&E’s reliability and mandate that the company meet basic standards for keeping the lights on. But so far, that agency is ducking. Leno has promised legislation if he gets no results from the CPUC, and he should proceed with a bill that would set minimum reliability standards for private utilities and provide significant penalties for failing to meet those targets.

San Francisco needs to take action on the local level, too. The supervisors should hold hearings on electricity reliability and demand that PG&E executives explain the reason system failures are so much higher here than in other Bay Area communities with public power systems. The Small Business Commission should set up (and publicize) a process for filing complaints about PG&E and include information about filing claims in its outreach material.

And as the city continues to wallow in budgetary disaster, city officials (and small business groups) should take note of the lesson here. Public power is not only cheaper — it’s more reliable. And that means it’s good for business and the San Francisco economy. *

Editorial: Fixing PG&E’s blackout problem

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State law requires PG&E to pay claims for economic damage caused by system failures.

EDITORIAL The electricity that San Franciscans buy from Pacific Gas and Electric Co. isn’t just expensive — it’s unreliable. That’s what figures from the California Public Utilities Commission show (see “The blackout factor, page 8). In fact, PG&E has more blackouts than any of the public power agencies in the Bay Area.

That has a significant impact on local businesses — but neither City Hall nor the small business community is paying much attention to a multimillion dollar problem.

During the worst days of the California energy crisis, rolling blackouts were a regular event, and the press and public talked constantly about the impact of power outages on businesses and the economy. Now that the worst of that crisis is over, many blackouts get no news media attention at all. But the problem is still serious: reliable power is critical to most business in the Bay Area, and even short-term outages can hit the bottom line.

Who’s in charge again?

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By Tim Redmond

I’m glad to read in the Chron that Christine Soto-DeBerry likes her job, and is willing to defend her boss against charges that he’s flouting the needs of Latino business leaders, but her descrition of her responsibilities in the Newsom administration was a little weird:

“Being a Latino, a minority, in this administration, that has not been my experience,” Soto-DeBerry said. “I am essentially second in command, which speaks volumes about (Newsom). I have been very humbled by the opportunity, and a lot of advocates are grateful to have a Latina in a high post in the administration that they can reach out to.”

“Essentially second in command?” Does that mean that Steve Kawa isn’t the chief of staff anymore and Soto-DeBerry reports directly to Newsom? Or does it mean that in the Newsom administration, she and Kawa are running things anyway because the “First in Command” is never around?

By the way: The complaint small business owners had was not that Newsom didn’t hire or promote Latinos in his administration. The problem is that Newsom is planning to fire the popular Christopher Iglesias, director of the Human Rights Commission, and they fear that the HRC won’t be as vigorous about helping minority businesses get city contracts.

Corporations co-opt “local”

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news@sfbg.com

HSBC, one of the biggest banks on the planet, has taken to calling itself "the world’s local bank." Winn-Dixie, a 500-outlet supermarket chain, recently launched a new ad campaign under the tagline "Local flavor since 1956." The International Council of Shopping Centers, a global consortium of mall owners and developers, is pouring millions of dollars into television ads urging people to "Shop Local" — at their nearest mall. Even Wal-Mart is getting in on the act, hanging bright green banners over its produce aisles that simply say "Local."

Hoping to capitalize on growing public enthusiasm for all things local, some of the world’s biggest corporations are brashly laying claim to the evocative word.

This new variation on corporate greenwashing — local-washing — is, like the buy-local movement itself, most advanced in the context of food. Hellmann’s, the mayonnaise brand owned by the processed-food giant Unilever, is test-driving a new "Eat Real, Eat Local" initiative in Canada. The ad campaign seems aimed partly at enhancing the brand by simply associating Hellmann’s with local food. But it also makes the claim that Hellmann’s is local, because most of its ingredients come from North America.

It’s not the only industrial food company muscling in on local. Frito-Lay’s new television commercials use farmers to pitch the company’s potato chips as local food, while Foster Farms, one of the largest producers of poultry products in the country, is labeling packages of chicken and turkey "locally grown."

Corporate local-washing is now spreading well beyond food. Barnes & Noble, the world’s top seller of books, has launched a video blog under the banner "All bookselling is local." The site, which features "local book news" and recommendations from employees of stores in such evocative-sounding locales as Surprise, Ariz., and Wauwatosa, Wis., seems designed to disguise what Barnes & Noble is — a highly centralized corporation in which decisions about what books to stock and feature are made by a handful of buyers — and to present the chain instead as a collection of independent-minded booksellers.

Across the country, scores of shopping malls, chambers of commerce, and economic development agencies are also appropriating the phrase "buy local" to urge consumers to patronize nearby malls and big-box stores. In March, leaders of a buy-local campaign in Fresno assembled in front of the Fashion Fair Mall for a kickoff press conference. Flanked by storefronts bearing brand names such as Anthropologie and the Cheesecake Factory, officials from the Economic Development Corporation of Fresno County explained that choosing to buy local helps the region’s economy. For anyone confused by this display, the campaign and its media partners, including Comcast and the McClatchy-owned Fresno Bee, followed the press conference with more than $250,000 worth of radio, TV, and print ads that spelled it out: "Just so you know, buying local means any store in your community: mom-and-pop stores, national chains, big-box stores — you name it."


THE REAL BUY-LOCAL MOVEMENT


In one way, all of this corporate local-washing is good news for local economy advocates: it represents the best empirical evidence yet that the grassroots movement for locally produced goods and independently owned businesses now sweeping the country is having a measurable impact on the choices people make.

"Think of the millions of dollars these big companies spend on research and focus groups. They wouldn’t be doing this on a hunch," observed Dan Cullen of the American Booksellers Association, a trade group which represents about 1,700 independent bookstores and last year launched IndieBound, an initiative that helps locally owned businesses communicate their independence and community roots.

Signs that consumer preferences are trending local abound. Locally grown food has soared in popularity. The United States is now home to 4,385 active farmers markets, a third of which were started since 2000. Food co-ops and neighborhood greengrocers are on the rise. Driving is down, while data from several metropolitan regions show that houses located within walking distance of small neighborhood stores have held value better than those isolated in the suburbs where the nearest gallon of milk is a five-mile drive to Target.

In city after city, independent businesses are organizing and creating the beginnings of what could become a powerful counterweight to the big business lobbies that have long dominated public policy. Local business alliances — such as San Francisco Locally Owned Merchants Alliance, Stay Local! New Orleans, and Phoenix’s Local First Arizona — have now formed in more than 130 cities and collectively count about 30,000 businesses as members.

In San Francisco, the buy-local movement is strong. Voters and elected officials have erected bureaucratic barriers to new chain stores, and citizens have used those tools to fend off even respectable chains such as American Apparel, which earlier this year tried unsuccessfully to open a store on über-local Valencia Street. The San Francisco Small Business Commission runs a buy-local campaign that was created in December by such unlikely partners as the Guardian, Mayor Gavin Newsom, and the San Francisco Chamber of Commerce (see "Shop local, City Hall," 5/6/09).

Through grassroots buy-local and local-first campaigns, these alliances are calling on people to choose independent businesses and local products more often. They also are making the case that doing so is critical to rebuilding middle-class prosperity, averting environmental collapse, keeping more money in the local economy, and ensuring that our daily lives are not smothered by corporate uniformity.

Surveys and anecdotal reports from business owners suggest that these initiatives are changing spending patterns. While the federal Department of Commerce reported that overall retail sales plunged almost 10 percent over the holidays, a survey in January by the Institute for Local Self-Reliance (where I work) found that independent retailers in cities with buy-local campaigns saw sales drop an average of just 3 percent from the previous year. Many respondents attributed this relative good fortune to the fact that more people are deliberately seeking out locally owned businesses.

CORPORATIONS TAKE NOTE


None of this has slipped the notice of corporate executives and the consumer research firms that advise them. Several of these firms have begun to track the localization trend. In its annual consumer survey, the New York–based branding firm BBMG found that the number of people reporting that it was "very important" to them whether a product was grown or produced locally jumped from 26 to 32 percent in the last year alone. "It’s not just a small cadre of consumers anymore," said founding partner Mitch Baranowski.

Corporate-oriented buy-local campaigns that define "local" as the nearest Lowe’s or Gap store are now being rolled out in cities nationwide. Some represent desperate bids by shopping malls to survive the recession and fend off online competition. Others are the work of chambers of commerce trying to remain relevant. Still others are the half-baked plans of municipal officials casting about for some way to stop the steep drop in sales tax revenue.

Many of these Astroturf campaigns are modeled directly on grassroots initiatives. "They copy our language and tactics," said Michelle Long, board president of the San Francisco–based Business Alliance for Local Living Economies and executive director of Sustainable Connections, a seven-year-old coalition of 600 independent businesses in northwest Washington state that runs a very visible and — according to market research — very successful local-first program. "I get calls from chambers and other groups who say, ‘We want to do what you are doing.’ It took me a while to realize that what they had in mind was not what we do. Once I realized, I started asking them, ‘What do you mean by local?’ "

Examples abound. In Northern California, the Arcata Chamber of Commerce is producing "Shop Local" ads that look similar to the Humboldt County Independent Business Alliance’s "Go Local" ads, except they feature both independents and chains. Spokane’s "Buy Local" program, started by the chamber, is open to any business in town, including big-box stores. Log on to the "Buy Local" Web site created by the chamber in Chapel Hill, N.C., and you will find Wal-Mart among the listings.

But there’s a huge difference — even on strictly economic grounds — between shopping at a local chain store and a locally owned store. Studies have shown that $45 of every $100 spent at locally owned stores stays in the community, helping other local businesses and supporting government services, whereas only about $13 of every $100 spent in chain stores remains local.

When the city of Santa Fe, N.M., decided to launch a campaign to encourage people to shop locally, the Santa Fe Alliance, a coalition of more than 500 locally owned businesses that has been running a buy-local initiative for several years, signed on. At the kickoff in March, the alliance’s director, Vicki Pozzebon, emphasized the economic impact of shopping at a locally owned business versus a chain.

"After that, the city asked me not to push the $45 versus $13, but just say ‘local.’ " Pozzebon said.

The city’s message, according to Kate Noble, a city staffer who runs the program, is that shopping at Wal-Mart is fine, as long as it’s not Walmart.com. But Pozzebon said, "It has only diluted our message and confused people."

These sales tax–driven campaigns may well be doing more harm to local economies than good, according to Jeff Milchen, co-founder of the American Independent Business Alliance. "If you encourage people to shop at a big-box store that takes sales away from an independent business, you’re just funneling more dollars out of town."

The irony of trying to solve declining city revenue by trying to get people to shop at the local mall is that the mall itself may be the problem. While many California cities are facing budget cuts and even bankruptcy, Berkeley has managed to post a small increase in revenue. Part of the reason, according to city officials, is that Berkeley has more or less said no to chains and is instead a city of locally owned businesses that primarily serve local residents. That creates a much more stable revenue base. Berkeley hasn’t benefited from the temporary boom that a new regional mall might create, but neither has it gone bust.
Stacy Mitchell is a senior researcher with the New Rules Project (www.newrules.org) and author of Big-Box Swindle: The True Cost of Mega-Retailers and the Fight for America’s Independent Businesses (Beacon, 2006). This story was commissioned by the Association of Alternative Newsweeklies (AAN), of which the Guardian is a member, and is also running in other AAN papers this month.

PG&E

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Fixing PG&E’s blackout problem: State law requires PG&E to pay claims for economic damage caused by system failures

Guardian Editorial

EDITORIAL The electricity that San Franciscans buy from Pacific Gas and Electric Co. isn’t just expensive — it’s unreliable. That’s what figures from the California Public Utilities Commission show (see story below). In fact, PG&E has more blackouts than any of the public power agencies in the Bay Area.

That has a significant impact on local businesses — but neither City Hall nor the small business community is paying much attention to a multimillion dollar problem.
Click here to continue reading editorial.

The blackout factor: PG&E’s poor reliability record costs businesses millions
By Megan Rawlins

Noel Birbeck makes signs. In a low, nondescript building tucked into a south of Market side street, a printing machine spits out personal greetings and corporate messages in all colors, shapes, and sizes.

Until the power goes out.

“We print things that are up to 50 feet long,” said Birbeck, the business manager of Budget Signs. “If the power goes out at foot 35, we have to start the printing process all over and throw out all that time and money that went into the initial printing.”
Click here to continue reading.

SOS: Stop VC bailout at expense of small business

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Scott Hauge, founder and president of Small Business California, and Christopher White, of the Bay Area Innovative Alliiance, are sounding the alarm on behalf of small business.

Next week, Congress is scheduled to vote on reauthorization of the Small Business Innovation Research (SBIR) program, which directs $2.2 billion annually in federal grants to small technology businesses across the country.

The problem, according to Hauge and White, is that the House bill contains a provision which changes the definition of small business to include subsidiaries of multinational corporations and companies that are majority-owned by multi-billion venture capital funds and other large financial institutions, including foreign financial institutions.

Click here to read their statement. They recommend that people call Rep. Nancy Pelosi’s office and Rep. Jackie Speie’s office to oppose the changes and keep the original SBIR small business eligibility criteria in place.

Presenting Guardian Small Business Winners

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By Bruce B. Brugmann

Scroll down for Paula Connelly’s photos of the 2009 Guardian small business award winners

For years, small business leaders have criticized City Hall for spending only a fraction of its hundreds of millions of dollars of public purchasing money with local businesses.

Wednesday night (5/20/01) at the Guardian’s annual Small Business Awards Ceremony, Board of Supervisors President David Chiu and the new executive director of the Small Business Commission Regina Dick-Endrezzi acknowledged the wrongway policy and pledged to work to change it and put millions of dollars of city money into local businesses and the local economy instead of spending it for good and services out of town.

Chiu, a former small businessman and former president of the SBC, said he had campaigned on this issue and would do all in his power as board president to fire up a “Shop Local, City Hall” campaign.
Dick-Endrezzi said the SBC would make it a central issue on the commission agenda. She also said she wanted to promote a Shop Local campaign for the 55 per cent of the city’s work force who lived outside the city.

Both Chiu and Dick-Endrezzi pointed out that the city was dependent on small businesses as the backbone and economic engine of the city. Yet, they could not get much of the public money that the city spent each year for goods and services.

Chiu said the issue was not new with him and waved to Steve Cornell and Scott Hauge, battle-scared veterans sitting in the audience, and said they had been at it for “l0 or l5 years.” He asked Hauge how long. “Twenty years,” Hauge said. Cornell and Hauge were both pleased with the statements and said they were awaiting the action.

Chiu spoke as keynoter for the ceremony and handed out the award certificates. Dick-Endrezzi spoke as an award winner for small business advocate. She was making her first public remarks as the new SBC head and, in outlining the issues for small business and the SBC, gave every indication she was the right choice by Mayor Gavin Newsom for this critical City Hall position. Guardian Executive Editor Tim Redmond served as master of ceremonies, which were held in the bar area of the Teatro Zinzanni theater.

Photos of the winners:

To read about our 2009 Small Business Award winners, click here. Read Tim Redmond’s article, Shop local, City Hall!, here.

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Employee-Owned Business Award: Church Street Flowers. From left Stephanie Foster, Rachel Shinfeld, Brianna Foehr. Redmond on the left, Chiu on the right.

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Small Business Advocate Award: Regina Dick-Endrezzi with Supervisor Ross MIrkarimi Guardian Publisher Bruce B. Brugmann on the left, Chiu on the right. Dick-Endrezzi is a forrmer aide to Mirkarimi.

How to recapture foreclosed homes

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Text by Sarah Phelan

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Courtesy of the San Francisco Housing Development Corporation.

As the Guardian’s report about foreclosures in San Francisco reveals, they are concentrated in the southeast, where working people and communities of color live, making efforts to recapture these properties and resell them as affordable housing units a worthy endeavor.

But for those who believe buying these properties isn’t the best use of city money in stringent budgetary times, it’s worth looking at what’s happening policy-wise elsewhere in the Bay Area.

Last month, a dozen Democratic U.S senators joined their Republican colleagues to defeat a bill that would have allowed judges to reduce mortgages in bankruptcy courts. President Obama, facing strong opposition from the nation’s surviving banks, did not pressure lawmakers to support the measure, and the Senate killed a plan to spare thousands of homeowners from foreclosure through bankruptcy.

Steven Zuckerman, managing director of the California branch of Self-Help, one of the largest community development financial institutions (CDFI) in the United States, says his organization was deeply involved in supporting that legislation. And he doesn’t buy detractors arguments that lowering mortgages in bankruptcy courts would cause banks to raise other people’s mortgage rates.”

‘The bill only included mortgages that already exist,” Zuckerman, who blames the bill’s failure on the “lobbying of bankers’ associations,” told me.

According to information posted at its website, the North Carolina-based Self-Help has already provided billions in financing to small business owners and nonprofits nationwide in an effort to create and protect ownership and economic opportunities for minorities, women, rural residents, and low-wealth families and communities.

And locally, Self-Help is one of several CDFIs trying to help communities like San Francisco’s southeast sector and North Richmond in the East Bay, which have been hard hit by the recent wave of foreclosures sweeping the area.

”We do have a program and a product that we are trying to make available to groups that work in areas with high foreclosures,” Zuckerman said.

Local businesses underrepresented in city contract awards

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By Rebecca Bowe

At Monday’s Land Use and Economic Development Committee hearing, Human Rights Commission Executive Director Chris Iglesias reported on how many locally owned San Francisco businesses benefit from city-issued contracts. The Guardian spotlighted this issue recently.

Across the board, the data showed, most city contracts are awarded to outside firms. (One speaker referred to them as “the Halliburtons of the world.”) The number of prime contracts and subcontracts awarded to non-local businesses was disproportionately higher than those awarded to local businesses, minority-owned businesses, or women-owned businesses, the data showed. Between September of 2006 and December of 2008, Iglesias noted, 35 percent of all city contracts went to certified local business enterprises.

In terms of city departments, Public Works led the way by awarding some 48 percent of its contracts to local firms. The airport issued just 10 percent of its contracts to local businesses, the port contributed 22 percent, and the Public Utilities Commission awarded 34 percent. Citywide, just 9 percent of term-contract awards and 7 percent of blanket-purchase orders were made through local firms.

Board of Supervisors President David Chiu, who formerly served on the city’s Small Business Commission, was less than thrilled by the findings.

Shop local, City Hall!

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news@sfbg.com

On Dec. 3, 2008, just before noon, Mayor Gavin Newsom arrived at a press conference in Noe Valley to remind city residents why it’s important to shop locally. The mayor climbed out of his shiny new hybrid SUV, walked into the Ark Toy Company, showed charts and graphs, and talked about how money spent in town helps the local economy. Joined by Steve Falk, president of the San Francisco Chamber of Commerce, Newsom urged holiday shoppers to look first in San Francisco before buying something on the Internet or in some suburban mall.

The mayor’s shop-local press conference was a clear sign that the debate over the role of small business in the San Francisco economy is over. Everyone from the mayor’s business advisors to the Chamber of Commerce to small business advocates and progressive economists now agrees that small local businesses provide the vast majority of the jobs, keep their money in town, and generate more tax dollars, more wealth, and more prosperity for this city than the big out-of-town chains.

It was a picture-perfect scene, until KPIX-TV reporter Hank Plante asked the mayor an embarrassing question: Why, he wanted to know, did the Mayor’s Office buy Newsom’s new car in Colma?

Newsom said he didn’t have a clue.

Actually, the reason was pretty simple: the dealership in Colma submitted the lowest bid. But San Francisco lost out on the sales tax, a local Chevy dealer that was going out of business lost a local sale, San Francisco workers lost a commission — and in the end, the city almost certainly lost more on the deal than it saved with the Colma discount.

That’s the untold story behind the mayor’s promotion. San Francisco, as a buyer of goods and services worth hundreds of millions of dollars a year, does a terrible job at shopping local. Indeed, for years small business advocates have been trying to get city officials to make it easier for local merchants to get city contracts — and they’ve made very little progress.

"I’ve worked so hard on this, year after year, and nothing ever happens," Scott Hauge, a small business activist and organizer, told us. "After a while, I just threw in the towel."

Hauge is devoting his energy these days to statewide issues. But on the local level, there’s a growing sense that the city needs to do more to help small local businesses get their share of the massive public spending pie.

"The Small Business Commission has made it clear that this will be a priority over the next year," Regina Dick-Endrizzi, the commission’s acting director, told us.

Nobody knows exactly what percentage of city contracts for goods and services go to local businesses. Hauge said the Mayor’s Office did a limited survey about a year ago, but the data wasn’t very good. And while Newsom signed an executive order in 2005 directing departments to look for ways to patronize local businesses, there’s not much to show for it.

"I think probably less than 10 percent [of city spending] goes to local businesses," Hauge said.

Board of Supervisors President David Chiu, a former small business commissioner, agrees. "I think it’s accurate to say that at least 70 to 90 percent of all city contracts go to out-of-town businesses," he told us.

As Dick-Endrizzi pointed out, city purchasing has strict rules — and for good reason. "In most cases, you have to put out a request for proposals and take the lowest bid," she said. "If you didn’t have that, you’d have a big problem with favoritism."

But when the lowest bid is the only criterion, San Francisco businesses are at a distinct disadvantage.

"Say a city agency wants to buy five hammers," said Steven Cornell, owner of Brownie’s Hardware. "I have the hammers for $6, but somebody in Nowhere, Miss., can sell them for $5.99.

"Well, the shop in Mississippi doesn’t have to pay San Francisco’s minimum wage, doesn’t have to pay for sick days, doesn’t have to pay for health care … We’ve asked businesses to contribute to all these good social policies, then those businesses get penalized because someone else can sell something cheaper."

Cornell — who says he agrees that local businesses should pay well and give their workers benefits — is frustrated that when it comes to purchasing, the city doesn’t give anything back. "We lost S&C Ford, we lost Ellis Brooks Chevrolet," he said. "Those were all union jobs, with good benefits. And how many cars did the city buy from them?"

When Cornell was on the Small Business Commission, he remembered some small locally owned cabinet-making shops came to complain about a $4 million city contract for woodwork. "They told us that they lost the contract to a Canadian firm," he said. "The costs of operating in San Francisco were higher than in Canada, so they couldn’t compete."

"We do not as a city reflect the fact that we ask employers to do good things for their workers," Chiu added. "When we spend perhaps $1 billion a year in city contracts, those employers don’t have a level playing field."

Sure, on the surface and in the short term, the city gets a better deal when it awards contracts based entirely on price. But San Francisco has, as a matter of public policy, already decided there are good reasons to give minority-owned contractors some advantage in bidding, and that public contractors should pay prevailing union wages and offer benefits to domestic partners. Local enterprises get a modest advantage in some bids, but nowhere near enough to make up for the cost difference of operating in San Francisco.

And as Newsom himself has made clear, spending money locally has a long-term economic benefit that almost certainly outweighs the price differential in most bids. "When Newsom bought his car in Colma, the city lost the sales taxes, and lost the multiplier effect of the money being spent in town," Cornell noted.

In fact, a 2007 study by Civic Economics, sponsored by the San Francisco Locally Owned Merchants Alliance, showed that if city residents shifted just 10 percent of their purchasing from national chains to locally-owned businesses, the city would gain 1,300 new jobs and $200 million in economic activity every year.

Imagine the activity — the positive benefits to the local economy — that would come with the city shifting, say, 25 percent of its spending to local businesses.

Obviously the city can’t buy everything in town. "Nobody in San Francisco makes Muni trains," Cornell noted. But a lot of what city departments buy, from hammers and paper to cars and trucks, is available from local suppliers — or could be. "If the city made it known it was looking to buy something locally, some entrepreneur would come along and figure out a way to supply it," Cornell said.

So how could this work on a policy level? It’s not that complicated. The city controller, or the Human Rights Commission, which oversees contracting policy, could devise a formula showing how much the cost of complying with city laws like the minimum wage, health care, and sick days (laws that most of us, and many small businesses, fully support) drives up the cost of doing business in San Francisco. Then give local merchants an equivalent advantage in the bidding process.

In other words, if the hammers at Brownie’s Hardware cost 25 cents more than the hammers in Nowhere, Miss., because Cornell pays for his workers’ health insurance, he should only have to come within 25 cents of the cut-rate suppliers’ price to get the city’s business. And if the taxpayers have to fork over a few cents more to buy local hammers, the money will come back, and more, from the demonstrated benefits of shopping locally.

Chiu thinks that’s a good idea, and he’s already taken the first steps to forcing the city to shop local. Chiu introduced legislation in April requiring the city to set aside a portion of all contracts for locally-wned businesses and to increase the financial advantage local firms get in bidding.

And at Chiu’s request, the HRC will appear before the supervisors Land Use Committee May 11 to present the latest data on how much city spending goes to local businesses. "I’ve been asking for this for two years," Chiu said.

"It is unwise for our city not to take $1 of public money and give it to a local business that will pass that dollar onto its local employee, who will then spend it at another local business," he added. "The multiplier effect of this is that money spent locally is better for the economy, and for the taxpayers."

Our 2009 Small Business Awards

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>>More on SFBG.com
Why can’t City Hall shop local?

EMPLOYEE-OWNED BUSINESS AWARD

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Photo by Pat Mazzera

CHURCH STREET FLOWERS

"It was really all about trust," says Stephanie Foster of Church Street Flowers, when asked about the benefits and perils of transferring ownership of the delightful bouquet boutique — and perennial Guardian Best of the Bay winner — near the Castro to the employees. Foster, along with Rachel Shinfeld and Brianna Foehr, took over in December 2008 from previous owners Michael Ritz and Thomas Teel, who’d run the shop for a decade. "The three of us had worked here for a while and we knew our stuff, so Michael and Tom knew they could rely on us to preserve the legacy. And the outpouring of support from our neighbors and regular customers has been overwhelming."

The ownership change of the cozy shop, bursting with vibrant blooms and friendly energy, went off without a hitch. "We were part of the lucky few who received a small business loan before the economic collapse," Shinfeld says. "But our business plan was smart, and the bank saw that we knew what we were doing." And, even in the current climate, business is thriving. "Our arrangements aren’t your standard cookie-cutter stuff," Foster says. "People nowadays want personalized, reasonably priced, green-minded, and locally sourced. We fit into all that — most of our flowers are from the downtown flower market and we keep an eye out for organic. Plus we strive to create a real connection with our customers, so we can give them exactly what they want."

"Sure, there have been some adjustments," Shinfeld adds. "There’s a lot of paperwork — and the first thing we needed to tackle was a Web site redesign. But our experience working here helped us through, and I think we’re just beginning to blossom in our new roles." (Marke B.)

CHURCH STREET FLOWERS

212 Church, SF

(415) 553-7762

www.churchstreetflowers.com

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GOLDEN SURVIVOR AWARD

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Photo by Charles Russo

GREEN APPLE BOOKS

What is the special ingredient that transforms a business from just another store into a place that makes people feel inspired and connected? After 42 years as a San Francisco independent bookseller, Green Apple Books and Music seems to have found it. Located on Clement Street in a building that predates the 1906 quake, it’s a "big, sprawling, dusty and funky new and used bookstore," as co-owner Pete Mulvihill describes it, creating an atmosphere for interactions that might seem impossible in a big-box store. Several weeks ago, for instance, a customer approached the store clerks, presented a CD, and requested that they play it. He also asked them to clear out the philosophy room. "I want it to myself for just a minute," he explained. The staff complied, the music started, and the man whisked his girlfriend into the philosophy room and proposed to her.

"To me, that’s an honor that somebody loves the place so much that they would propose to their girlfriend here," says Mulvihill, one of three owners and an employee for more than 15 years. A founding member of the San Francisco Locally Owned Merchants Alliance, he has been at the forefront of a push to identify and promote the city’s small, independent businesses. "Locally-owned businesses recirculate more money in the local economy than national chains," the SFLOMA Web site points out.

"Frankly, we’re invested in the community," Mulvihill explains. "[We] love San Francisco, and we don’t want to go anywhere." (Rebecca Bowe)

GREEN APPLE BOOKS

506 Clement, SF

(415) 387-2272

www.greenapplebooks.com

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CHAIN ALTERNATIVE AWARD

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Photo by Charles Russo

HUT LANDON

Hut Landon is responsible the past few years for helping direct millions of dollars into small business in San Francisco and beyond, and millions more into the local economy.

He does it through his energetic and creative leadership of two key organizations that promote the interests of locally-owned small business. Landon has been the executive director of the Northern California Independent Booksellers Association (NCIBA), which promotes the interests of 200 independent bookstores in the region. He is also executive director of the San Francisco Locally Owned Merchants Alliance (SFLOMA).

Under Landon’s stewardship, the two groups commissioned a pioneering 2007 study that quantified the value of locally-owned businesses in the city. Their stunning finding: if consumers redirected l0 percent of their retail purchases from chains to locally-owned merchants, the result would generate about $200 million for the economy, l,295 jobs, and $72 million new income for workers.

Landon’s timing could not have been better. As the economy tanked, local merchants and neighborhood business organizations used the l0 percent consumer shift as a mantra. The study also pointed out that the local economy could get another big boost if the city would shop locally with the tens of millions it now spends outside the city for goods and services.

Landon likes to use the example of two brothers who live together. One works on Potrero Hill and eats lunch at one of the many locally-owned restaurants. The other works at Stonestown shopping center and eats at a chain restaurant because that’s all there is out there. The Potrero Hill money, he points out, stays in the community. The chain store money is sent back to headquarters. (Bruce Brugmann)

HUT LANDON

Northern California Independent Booksellers Association

1007 General Kennedy, SF

(415) 561-7686

www.nciba.com

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SMALL BUSINESS ADVOCATE

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Photo by Abi Kelly

REGINA DICK-ENDRIZZI

Small business owners often feel as if they don’t have many advocates at City Hall. But they do have Regina Dick-Endrizzi.

Dick-Endrizzi, acting director of the Small Business Commission, has been moving rapidly on ways to help small businesses feel more comfortable dealing with the city — and to help them thrive in a tough economic environment. She helped establish the Small Business Assistance Center, which guides local merchants and prospective entrepreneurs through the thicket of city regulations. "It’s a tremendous asset," she told us. "When people walk through the door, we can take the time to help them develop a roadmap to doing business here." And she’s a driving force behind the Shop Local campaign, which will launch this month with bus shelter and bus-side ads designed to encourage San Franciscans to keep their money in town (co-sponsored by the Guardian).

Known in political circles as a former aide to Sup. Ross Mirkarimi, Dick-Endrizzi has a solid background in business. She moved to San Francisco in 1986 to open the Haight Street Buffalo Exchange store, and worked with that company for 13 years. "We bought our inventory from local people, and I had to have a close relationship with local small businesses," she said. "I have an intimate understanding of what it takes to run a business."

After several years in Mirkarimi’s office, she learned of the opening at the Small Business Commission, and plans to stay there for a while. "I truly believe in what this department offers to small business," she said. "There’s such a tremendous need." (Tim Redmond)

REGINA DICK-ENDRIZZI OFFICE OF SMALL BUSINESS

1 Dr. Carlton B. Goodlett, SF

(415) 554-6134

www.sfgov.org

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GOOD NEIGHBOR AWARD

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URBAN SOLUTIONS

Urban Solutions has its roots in the South of Market Foundation, an economic development corporation formed in 1992 in response to what SoMa merchants, residents, and community-based organizations felt was a lack of accountability in their neighborhood’s development.

A decade later, the organization changed its name and Urban Solutions was born. Two years after that, the burgeoning nonprofit opened a second office, this time in the Western Addition, becoming an important source of service in both neighborhoods.

Urban Solution’s executive director Jenny McNulty says she is currently excited about her organization’s Green Business initiative, which helps educate small business on how to conserve resources and reduce their carbon footprints — and save money in the process.

McNulty is also amped about Urban Solution’s effort — undertaken with the San Francisco Redevelopment Agency — to revitalize Sixth Street’s commercial corridor.

"We’re expanding our Green Business Initiative program, which offers free consulting to help small businesses go green by implementing cost-saving practices to increase the sustainability of their business operations," McNulty said.

Urban Solutions’ Sixth Street revitalization effort includes beautifying the area and helping businesses, in conjunction with Redevelopment Agency grants, by improving their facades, installing new awnings, repainting buildings, and replacing windows, storefronts, and entrance ways.

"Our focus is low-income businesses," McNulty said. (Sarah Phelan)

URBAN SOLUTIONS

1083 Mission, SF

(415) 553-4433

www.urbansolutionssf.org

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GOOD NEIGHBOR AWARD

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Photo by Abi Kelly

JENS-PETER JUNGCLAUSSEN

Jens-Peter Jungclaussen had a dream: Buy a gutted, camouflage-painted school bus on eBay, convert it to biodiesel, and put it to use as a mobile classroom by day and a party on wheels by night, a rollicking omnibus of education, culture, and sustainability. With a few flicks of his wrist, Jungclaussen, a former German windsurfing pro and biology and PE teacher, transforms the bus to suit the need at hand — pulling down a movie screen from the roof; unpacking a buffet table, wet bar, or set of turntables from beneath the seats; or simply switching on the "party lights." Dubbed das Frachtgut ("the good freight"), the bus has hosted dinner parties on Twin Peaks, ecology classes in Muir Woods, sunrise raves on undisclosed beaches, and screenings of The Big Lebowski (complete with bowling and White Russians). It also serves as a mobile billboard for its various local, eco-friendly sponsors and can be rented for field trips and corporate events.

The ever-enthusiastic and tireless Jungclaussen recently turned his attentions to youth education, this year offering for the first time a "mobile summer camp." Teaming up with fellow teachers Michael Murnane, Gretchen Nelson, Justin Ancheta, and Leah Greenberg, he’ll present three, 11-day sessions on wheels that will introduce young people to a variety of Bay Area natural, artistic, and historical treasures. But don’t worry, the parties will still keep rolling. As Jungclaussen promises of the bus, "What you want it to be, it will become." (Marke B.)

JENS-PETER JUNGCLAUSSEN

(415) 424-1058

www.teacherbus.com

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ARTHUR JACKSON DIVERSITY IN SMALL BUSINESS AWARD

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IRENE HERNANDEZ-FEIKS

It’s easy to assume that the purpose of Chillin’, the brainchild of Mexico City native Irene Hernandez-Feiks, is simply to have a good time. But the multimedia parties Hernandez-Feiks has been throwing for 11 years are much more than entertainment. Their actual purpose is to stimulate the economy and support one of the most difficult small businesses to sustain: the business of art.

A former designer herself, Hernandez-Feiks started out organizing weekly happy hours at 111 Minna where she would feature up to five independent Bay Area designers. Her philosophy? Charge the designers nothing for the opportunity and take no commission. The formula worked so well that Chillin’ eventually grew from weeknight happy hours to Saturday night events, complete with DJs. Now Chillin’ is a full-fledged happening — indeed, the June 13 anniversary show at Mezzanine features 180 photographers and artists, 40 filmmakers, 80 fashion designers, and 12 DJs.

But watching Chillin’ grow — and seeing participating artists transform themselves from local to international names — isn’t enough for Hernandez-Feiks. She also devotes much of her time to charity work, including involvement with Gen Art, the Mexican Consulate Cultural Affairs division, the United Nations and Natural World Museum, and the Art Seed Apprenticeship Program benefiting Bayview- Hunters Point youth.

"Because of Chillin’, I have relationships with so many artists," she says. "I want to use those connections to help everybody out." (Molly Freedenberg)

IRENE HERNANDEZ-FEIKS

Chillin Productions

(415) 285-1998

www.chillinproductions.com

Editor’s Notes

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Tredmond@sfbg.com

The first time the Guardian made an issue of the role small businesses play in the local economy, official San Francisco freaked out.

It was 1985, and only a handful of people were talking about sustainable local economies, about the connection between environmentalism and community-based economics, about how malls and chains stores were ruining America, and how spending money locally would create more jobs, with less waste of energy, than shopping at Wal-Mart or Home Depot.

The Guardian hired MIT economist David Birch to produce a study on job generation in San Francisco. His conclusion: small, locally-owned, independent businesses generated the vast majority of jobs in San Francisco. That directly contradicted the fundamental thesis driving city planning at the time; the planners and the mayor (Dianne Feinstein) argued that high-rise office development was the city’s prime source of new jobs.

The day the study came out, the city planning director (Dean Macris) called in his senior staff and directed them to work all weekend poring over our study and trying to figure out how to discredit it. Feinstein ignored us. The supervisors continued to allow high-rises to sprout, damaging small business and the local economy. The Chamber of Commerce was so disdainful of small business that a group of Fisherman’s Wharf merchants quit in disgust.

Today that battle is over. Done. The argument isn’t even an argument anymore. Everyone, from Mayor Gavin Newsom and the Chamber on down, agrees that locally-owned businesses are the lifeblood of the San Francisco economy. The mayor goes around urging people to "shop local."

But as we suggest in this special issue on San Francisco small business, the city itself isn’t doing such a great job at that. In fact, the public sector in general has been trained for so long to do business with the lowest bidder that the role a major institution like the city and county of San Francisco can play in boosting the local economy has gotten lost.

A 2007 study sponsored by the San Francisco Locally Owned Merchants Alliance shows that if local residents shifted just 10 percent of their purchases from big chains to local businesses, the city’s economy would pick up $200 million and 1,300 new jobs a year. Imagine if City Hall, BART, state agencies, the school district — every public sector agency in this city — did the same. *

Shades of green

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sarah@sfbg.com

When President Barack Obama signed the American Reinvestment and Recovery Act in mid-February, folks across the country were hopeful that the $787 billion stimulus package would help preserve and create decent jobs in their communities.

And in mid-March, when the Obama administration announced that Bay Area social justice activist Van Jones was joining the White House Council on Environmental Quality, advocates for green jobs took it as a sign that Obama shares Jones’ belief that we can fix our nation’s two biggest problems — excessive greenhouse gas production and not enough good jobs for the working class — by creating a green-collar economy.

Jones cofounded Oakland’s Ella Baker Center for Human Rights, which opposes police abuse and promotes alternatives to incarceration, and founded Oakland’s Green for All, which aims to create green-collar jobs in low-income communities. He defines a green-collar job as "a family-supporting, career-track job that directly contributes to preserving or enhancing environmental quality."

"Think of them as the 2.0 version of old-fashioned blue-collar jobs, upgraded to respect the Earth and meet the environmental challenges of today," Jones wrote in his New York Times bestseller The Green Collar Economy: How One Solution Can Fix Our Two Biggest Problems (HarperOne, 2008).

But is Jones’ definition codified into Obama’s Recovery Act? And in San Francisco, where Mayor Gavin Newsom speaks incessantly about green jobs and regularly praises Jones, will the jobs we create be for the people who need them most? And how will that play out in a city where blacks, Latinos and Asians experience higher unemployment, poverty, and incarceration rates than whites, and building construction has stalled, pitting skilled union workers against training program graduates?

Last month, an alliance of community and worker organizations from San Francisco’s working class neighborhoods sent a letter to Newsom outlining concerns about the Recovery Act’s equity, job quality, and transparency requirements.

Antonio Diaz of PODER (People Organizing to Demand Environmental and Economic Rights), Alex Tom of the Chinese Progressive Association, Steve Williams of POWER (People Organized to Win Employment Rights), and Terry Valen of the Filipino Community Center asked Newsom to ensure that ARRA funds would be used to create "green jobs and opportunities primarily for low-income people and people of color" and "high quality jobs with family-supporting wages and benefits, safe and healthy working conditions, and career ladders."

"We ask for your commitment to greater transparency and community input in shaping and monitoring the infusion of ARRA funds for San Francisco’s developing green collar economy," they wrote.

Two weeks later Newsom announced the launching of www.recoverysf.org, a Web site that seeks to track stimpack funds coming to San Francisco. Although the Web site shows that $150 million of the first quarter-billion of formula funding is headed toward infrastructure projects, it does not include estimates of the numbers of green jobs created.

Wade Crowfoot of the Mayor’s Office told the Guardian that the city is focused on ensuring that green jobs are created with these funds and that the City Attorney’s Office is figuring out what is "allowable" under Recovery Act’s guidelines.

On April 3, the U.S. Office of Management and Budget issued a 172-page memo outlining the Recovery Act’s policy goals. The goals included ensuring compliance with equal opportunity laws and principles, promoting local hiring, providing maximum practicable opportunities for small business and equal opportunities for disadvantaged business, encouraging sound labor practices, and engaging with community-based organizations.

"But will all cities include achievable, measurable requirements?" Crowfoot said. "I don’t think so, without federal guidelines."

This lack of specifics, Crowfoot says, has the City Attorney figuring out if San Francisco can include "first source" hiring requirements, in which hiring halls agree to interview graduates from local training programs first. If so, Crowfoot says, the city will seek to leverage existing funding for energy efficiency programs and conduct hire-locally campaigns in low-income communities.

But as Crowfoot notes, although we know that $1.5 million in ARRA funding is coming to San Francisco for weatherizing homes — helping to decrease the energy costs of low-income residents, reduce the city’s energy demands, and increase the number of people hired from the local community to do energy audits and retrofits — we still don’t know how many jobs will be created per project, which is the basic goal of economic stimulation.

"If we spend the dollars, say, on boiler replacement, that’s more equipment and less labor," Crowfoot said. "But the more you hire locally, the more those folks get experience, the more they’ll be well positioned to get jobs in the non-subsidized sector once the stimulus funds are gone."

Acknowledging the tension between laid-off union workers and graduates of apprentice training programs, Crowfoot said, "We are trying to figure out a balance, whereby the community is not shut out, but the unions’ needs are addressed. We want to be careful about how many jobs we say are going to be created. We don’t want to build hope in populations who already have a lot of mistrust in the government."

Michael Theriault, secretary and treasurer of the San Francisco Building and Construction Trades Council, told us that 25 percent of the region’s 16,000 building trades workers are out of work, compared to nearly full employment last year.

In the past, the Northern California Carpenters Regional Council provided CityBuild with instructors and took the lion’s share of the program graduates, Theriault explains. But under present conditions, the Council isn’t keen on another CityBuild cycle.

"I think they should work to sponsor another cycle, but the ball is also in the city’s court," Theriault said, noting that the ARRA-funded weatherization program could soon be offering prevailing union wages ($20 an hour for roofers, $40 to $50 for plumbers and electricians) that could help ease the tension. And then there’s the inconvenient truth that some union members view non-unionized solar panel installers as "scabs," creating another barrier to using green jobs to lift the underemployed.

Mayor Newsom has until June to secure and implement stimpack funding as part of upcoming local budget proposals, a timetable that has Green for All issuing a call for action to ensure that Recovery Act implementation creates green-collar jobs, ensures transparency and accountability, and supports pathways out of poverty.

"This may be the most important opportunity you’ll ever have to bring green-collar jobs to your community," Green For All wrote in a public statement. "But the planning process will be over in the blink of an eye, and your community could miss out. That’s why we’re calling on you to take action now."

Green for All field organizer Julian Mocine-McQueen is scheduled to sit down with Crowfoot this week in an effort to get Newsom to sign his group’s pledge. He said there’s been an expansion of the city’s lighting and refrigeration cooling retrofitting program, starting with small business owners who speak English as a second language. "It’s good," McQueen said. "But it’s not enough."

He believes green job success will depend, in part, on including hiring parameters. "A job in the city’s southeast sector may not pay $70,000 a year, but it would be a huge step toward creating a family-sustaining job," McQueen said, noting that the Obama administration has "to a certain extent" adopted Jones’ definition of green-collar jobs. "I’m not sure that they have codified it," McQueen said. "They have recommendations."

Asked to define green jobs during a recent media roundtable on projected budget deficits, Newsom talked about weatherization and sustainability and plans to expand the city’s training academies before handing the floor to the Office of Economic and Workforce Development’s Kyri McClellan, whom he described as his "green czarina."

McClellan, who describes herself as "the lead cat-herder" of Recovery Act funds, told reporters that San Francisco is expected to receive a quarter of a billion dollars in formula funds in the coming fiscal year, 95 percent of which have been allocated to "shovel-ready" projects that were already queued up under the city’s 10-year capital plan.

During a subsequent board committee hearing, McClellan shared job estimates — 30 jobs from the $11 million Department of Public Works street paving allocation and 250 jobs from the $18 million Housing Authority retrofitting allocation — that raised eyebrows.

McClellan said that OEWD is "moving as quickly as possible to take the dollars we’ve been allocated, get approval from the Board of Supervisors, and get programs up and running."

Observing that the city also has parallel funding for training programs such as CityBuild and a Green Academy, McClellan added that "no one is working harder than Rhonda Simmons." Reached by phone, OEWD’s Simmons said she has been working with San Francisco State University professor Raquel Pinderhughes to identify five job sectors that have "the capacity to grow the greatest number of green jobs."

These include solar installation, energy efficiency, landscaping/public greening, recycling, and green building. "In an economy like this, you have to be competitive," Simmons said. "And almost all the programs that come out of my shop are geared toward low-income to moderate-income folks."

Observing that OEWD is using a $238,000 federal earmark to seed a Green Academy and that will expand the GoSolarSF workforce incentive, compete for a $500,000 EPA brownfield cleanup training grant, and coordinate with the San Francisco Public Utilities Commission to develop "workforce incentive language" for biodiesel reuse program and energy efficiency projects, Simmons notes that it was the unions that helped create CityBuild in the first place, and the city is working to ease current concerns.

"It is our intent as OEWD designs the academy that any training programs must demonstrate that they train individuals for occupations with opportunity for upward mobility," Simmons said, after emerging from a meeting cochaired by Crowfoot and Pinderhughes to help community-based organizations understand green jobs and figure out how to link with the Green Jobs Corps that Pinderhughes set up in Oakland.

Eric Smith runs the Bayview-based Green Depot, a nonprofit that promotes biodiesel use in neighborhoods facing environmental justice issues and ran a $9,000-per intern pilot program with Global Exchange. He worries that administrative costs will chew up much of the stimulus money, citing SFPUC figures that the cost ratio for trainers to interns is about 3:1.

"There is a lot of concern in the Bayview that the money will end up going to consultants and administrators when we have people who are hungry and desperate to work," Smith said.

After two green jobs hearings, Sup. Eric Mar says that he and Sups. Sophie Maxwell and David Chiu have concluded "that unless the board takes action and gives clear guidelines and expectations, green collar job creation will be miniscule."
Noting that Oakland’s Green Job Corps and Richmond’s solar program seem years ahead of San Francisco’s efforts, Mar said his next step will be to talk with labor, environmental groups, businesses, and nonprofits to get a sense of an appropriate structure to prioritize the low-income communities as the main beneficiaries of green-collar job creation. "It’s pretty clear that the [Newsom] administration’s commitment to the numbers of jobs created is pretty small," Mar said. "The community is going to have to push for more."

Budget talks, without the mayor

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EDITORIAL The president of the San Francisco Board of Supervisors, David Chiu, is doing something Mayor Gavin Newsom should have done a long time ago. He’s putting the key stakeholders in the budget debate — labor, small business, downtown, nonprofits, etc. — in the same room and talking about solutions.

And while none of the participants want to talk publicly, it’s clear that all sides think they are making progress. The most likely outcome ought to be a winner for everyone: a special election, delayed until July, when the public can vote on some revenue measures that would blunt the awful impact of a half-billion dollar budget deficit.

For this to work, everyone is going to have to give up something. The city employee unions will have to be willing to reopen contracts and accept either reductions in raises or some layoffs. Some political leaders’ pet projects and highly paid patronage employees will have to go. Downtown will have to accept some new taxes on the wealthy; small business will have to stomach a sales tax. And the supervisors will have to hold hearings on and negotiate a budget this summer before they know for sure that the money will be there to pay the bills.

We have actively pushed for a June election, to make sure the money is there when the budget is approved — but July is a perfectly acceptable compromise. In fact, it has a certain amount of political synergy. The mayor will present a bloody, brutal, budget in May that includes devastating cuts to essential programs. The supervisors can then offer the voters a clear choice: accept those cuts — or vote to approve a package of revenue measures on a special election ballot.

The effort will be a whole lot easier if the mayor stops being such an obstructionist — and if his allies on the board are willing to join with what could be an emerging consensus. Under state law, any new taxes San Francisco enacts this year would require a two-thirds vote of the people — a tough threshold. But if the supervisors and the mayor agree unanimously to declare a budget emergency (and a deficit that equals half the discretionary money in the general fund is by any standards an emergency), then a simple majority can approve a tax hike.

So far the mayor has been almost entirely missing in action here. Although his press secretary, Nathan Ballard, told us the mayor has been meeting with budget stakeholders, that’s news to many of the people in Chiu’s group. Even business leaders, who in the past have been loyal to the mayor, are now openly criticizing his absence from the discussions. It’s crazy — Newsom is running around the state, working on his campaign for governor, while the work of keeping his city from a total meltdown is going on without him. Newsom absolutely must engage here, and start attending Chiu’s meetings. He’s been insisting he won’t support a June election, allegedly because there’s no broad coalition calling for it. But that coalition may be coming together to talk about an election in July — and Newsom isn’t even paying attention.

Meanwhile, three of the supervisors — Sean Elsbernd, Michela Alioto-Pier, and Carmen Chu — have also opposed a special election, and they’re going to have to change their tune. Even Republicans in the state Legislature — who signed a pledge never to support any tax increases — worked with the governor on a budget plan that includes some significant tax hikes. The Democratic moderates on the San Francisco Board of Supervisors shouldn’t be able to get away with refusing to look for new sources of revenue — soon, as part of the next year’s budget — to keep the city from fiscal calamity.

Newsom still MIA

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By Tim Redmond

You know the mayor is in serious trouble when his business allies say he’s missing in action. From the Chron this morning:

Scott Hauge, a San Francisco business owner who is president of the advocacy group Small Business California, said the meetings that Chiu organized this week were the first occasions small business has been brought into City Hall talks since budget negotiations started heating up several weeks ago.

“The mayor has not brought us to the table, which is very frustrating because we are the major employers in San Francisco and we are really hurting right now,” said Hague, adding that he’s worked with every mayor since Dianne Feinstein and that it is unprecedented to have a board president, not the mayor, convene these types of discussions.

While nobody who has been attending Board President David Chiu’s meetings will talk about the details, I’m getting the clear impression that business (including the Chamber of Commerce and the Committee on JOBS) and labor (particularly SEIU Local 1021) are actually making progress toward a July special election that could help prevent a total meltdown in city services.

And Newsom didn’t even send a representative to the meetings.

My favorite comment from the mayor:

“But I guess the question is, what more can I do? I can make things up to do today in order not to go down there (to San Jose)

Newsom has to “make things up to do today?” How about talking to the key stakeholders and trying to arrange a deal on a budget that everyone can live with?

Nathan Ballard, the mayor’s press flak, told us that

The mayor has been meeting with labor, business and the supervisors to work together on solutions.

But nobody in business or labor or on the board of supervisors seems aware of that.

PG&E: Blackout at Just For You restaurant

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BREAKING NEWS: PG&E electricity goes out at a restaurant just four blocks or so from the Potrero Hill power plant

By Bruce B. Brugmann

And so about 2 p.m. this afternoon (Thursday, 2/5/09), I walked in to the Just For You restaurant, just four blocks or so from the Potrero Hill power plant in the heart of Dogpatch. I wondered if PG&E had known I was coming in for my regular lunch of fried oysters.

For lights were out, the place was empty, and the proprietor, the normally jolly Arienne Landry, was sitting disconsolately in the corner with some friends and workers.

Arienne said that the electricity was off in the whole area and that PG&E had told someone who called that it would be back on at 3 p.m. “But they always say they can’t guarantee power,” she said, shaking her head at her shortened, expensive lunch hour. I asked if PG&E know I was coming. Arienne laughed.

I asked how much she was out in money. She said about $200 to $300. Arienne, who was reported in the Potrero View as a possible candidate for district supervisor, said she needed the money and would write to PG&E and ask for a reduction in her PG&E bill or other form of compensation. She said she would also copy the California Public Utilities Commission, the SF Board of Supervisors, and the Small Business Commission.
She said she would also ask the CPUC, the board, and the SBC to do a study of PG&E’s treatment of San Francisco restaurants and other small businesses on service, reliability, rates, and collection policies.

It looks to me as if she has a good and timely issue. PG&E is a notorious no or slow pay for damages to small business, but the company is quick and tough as hell on small businesses that are slow pay, which many are these days. We get lots of complaints at the Guardian about PG&E hardball policies on small business and on their customers.

Now more than ever, PG&E should be giving a break to small businesses and not shove them against the wall on compensation for blackouts and slow pay and other increasing small business concerns.

We’ll follow Arienne’s request for compensation for damages. And we urge other small business people and their customers/residents to email us their problems with PG&E service and rates. There’s no reason, except for PG&E resistance, that the CPUC and SF shouldn’t start monitoring how PG&E treats our local small businesses. More: they should provide ombudsperson help during these tough times.

Meanwhile, I must report that the power at Just For You did go back on a few minutes before 3 p.m. And I did get my usual lunch of fried oysters with lots of red cajun sauce. They were better than ever today. B3, who sees from my office window the fumes of the Potrero Hill plant, pumping poisons into the city every minute of every day, courtesy of PG&E and Hearst journalism

Without a net

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› news@sfbg.com

The Board of Supervisors heard more than four hours of public comment at its Jan. 27 meeting, as hundreds of labor representatives, public-health workers, homeless advocates, hospital staffers, and others crowded into the board chambers to sound off on the deep budget cuts that many charged would leave they city’s critical-services safety net in shreds.

The message was chilling.

On the ground, the budget cuts Mayor Gavin Newsom is proposing translate into staggering losses in services that segments of the city’s most disadvantaged populations rely on. Among those who will lose their jobs: some San Francisco General Hospital staffers who are trained to watch the cardiac monitors. "They are the first responders when someone goes into cardiac arrest," nurse Leslie Harrison told the board during public comment. "This is a life and death job — literally."

The Huckleberry House, which was established in 1967 and provides assistance to more than 7,000 homeless youth each year, may face closure.

Homeless shelters are already being forced to turn away two out of three clients seeking a bed due to lack of space, according to Coalition on Homelessness Executive Director Jennifer Friedenbach.

Demand for hot meals from the St. James Infirmary, a clinic for uninsured sex workers, has tripled since the onset of the recession, Executive Director Naomi Akres told the Guardian. As a result of the cuts, the clinic will lose its ability to continue either the food program or an outreach program that aims to get people off the streets.

Other areas that face funding reductions, according to a tally of midyear reductions issued by the mayor’s office, include some programs that administer STD testing and HIV prevention services, the Adult Day Health programs at Laguna Honda Hospital, aid for foster care, and the Single Room Occupancy Collaborative (which assists low-income tenants living in dilapidated hotel rooms across the city). San Francisco’s Human Services Agency will lay off 67 staffers.

Of the $118 million in midyear cuts rolled out by the mayor’s office last December, some $46 million will be shed from health, human welfare, and neighborhood-development services.

The midyear reductions, which will begin to take effect Feb. 20, are aimed at addressing a steep drop-off in revenue for the 2008–09 fiscal year. Now, health and human services providers and others across the board are anxiously looking ahead to the next round of blows, which will be dealt to address a projected $576 million deficit for the 2009–10 fiscal year, which begins in July. That figure could be reduced to $461 million after budget cuts, according to Deputy Controller Monique Zmuda.

Newsom has known about the gravity of the current budget problem since late October, when City Controller Ben Rosenfield issued a memo projecting fiscal disaster. "Since the adoption of the budget in July, the City’s economic outlook has significantly worsened, particularly since the onset of the global financial market upheavals that began in September," the memo states. It goes on to predict a worst-case scenario of $125 million in tax-revenue shortfalls for the 2008–09 fiscal year.

Cuts in frontline services don’t have to be the only answer. Supervisor Chris Daly has introduced an alternative budget proposal, which includes reductions in funding for management positions, cuts in the city’s subsidy to the symphony, and a reduction in the size of the mayor’s press office in an effort to free up funds that could then be diverted back to critical services. "I don’t think any of the choices are good. There’s really only the lesser of the evil," Daly noted at the meeting.

The choices the city faces were described in clear terms. "I’m sorry to say it, but you have some tough decisions in front of you," Friedenbach told supervisors when it was her turn at the podium during public comment. "You have to choose between abused children, or the symphony. You have to choose whether you want to decimate the mental-health treatment system — or do you want to get rid of the newly hired managers since the hiring freeze? You have to decide whether you want to cut half of the substance-abuse treatment system — or do you want to create a new community justice center that will have nowhere to refer its defendants?" Rather than choose, however, supervisors voted 6–5 to send Daly’s alternative package back to the Budget and Finance Committee for further consideration. The swing vote was Board President David Chiu, who was elected president with the support of the progressive bloc.

Had Chiu voted for Daly’s alternative, it wouldn’t have mattered much — the mayor would almost certainly have vetoed it.

Eight supervisors — enough to override a veto — did demonstrate a willingness to move forward with a June special election. With Supervisors Sean Elsbernd, Michela Alioto-Pier, and Carmen Chu dissenting, the board voted to waive deadlines that would have prevented new tax measures from being placed on a June 2 ballot.

Several different tax ideas are under discussion. According to a list of preliminary estimates calculated by the Office of the Controller, slight increases over the current rates of taxes levied on business registration, payroll, sales, hotel-room stays, commercial utility users, parking, property transfers, and Access Line fees together could bring the city an estimated $121.6 million per year.

Other proposals include creating parcel taxes for both residential and industrial property, gross-receipts taxes on rental income for commercial and residential properties, a local vehicle license fee, and a residential utility users tax. If all of those proposed new taxes were voted into effect, the city would have the potential to raise an additional $112.9 million.

The problem: under state law, unless the mayor and supervisors unanimously declare an emergency, any tax increase would require a two-thirds vote to pass.

Supervisor John Avalos voiced strong support for the special election. "I think that the people of this city are still grappling with the meaning of the crisis that we’re in," Avalos told his colleagues.

Avalos amended out the possible new parcel tax, increased parking tax, and utility-users taxes, and instead proposed two new revenue measures that could be added to the ballot: a vehicle-impact fee, and "a possible new tax to discourage the consumption of energy that produces a large carbon footprint."

It won’t be easy to pass any of these proposals. Business interests are mobilizing against the very idea of a special election. In an e-mail newsletter distributed by the San Francisco Chamber of Commerce, a "call to action" urged supporters to contact Supervisors and voice opposition to the emergency election.

The language in the Chamber of Commerce message closely resembled that of Small Business California, which put out a message to the small-business community warning that higher taxes "would be the straw that breaks the already strained back of our local businesses, resulting in more layoffs and acceleration of our downward spiral."

Labor organizer Robert Haaland asked supervisors why they would be afraid of allowing voters to decide on the tax-revenue measures. A poll commissioned by his union, SEIU Local 1021, demonstrated that a significant portion of voters would rather raise revenues than allow vital services to disintegrate.

Even if new revenue is raised, Haaland told us, no one is under the illusion that there won’t be painful cuts. "Everyone’s going to feel some pain," he said. "It’s a question of how much pain."

Bad budget ideas

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EDITORIAL There’s nothing easy about solving a half-billion-dollar budget shortfall, and most of the people involved in the grisly process of making the numbers add up at San Francisco City Hall know there will be blood on the floor. Labor unions representing city workers know there will be layoffs, salary concessions, or both. Community-based organizations handling critical front-line services know they’ll have to reduce staff and curtail their mission-driven operations. The supervisors know that a lot of good projects and great ideas won’t get funded this year.

The mayor, unfortunately, isn’t acting as if this were a crisis at all — he’s been out of town more than he’s been around the past few weeks. The San Francisco Chamber of Commerce and, sadly, some small business leaders, are refusing to accept the idea that taxes — some taxes, not enough to stave off deep cuts, but enough to prevent disaster — ought to be part of any budget package.

And along with the cuts — which, as Rebecca Bowe reports on page 11, will have far-reaching implications for San Franciscans — a number of really bad ideas have been floated, most of them quick fixes that would generate cash for now, but lead to serious problems later.

Among the worst ideas the mayor has put forward — in fact, it’s one of the worst budget ideas we’ve ever heard — is the notion of increasing the number of condominium conversion permits from 200 per year to 1,500 per year, and possibly allowing every property owner waiting for a conversion permit to get one, now, for a price.

It’s true that selling off condo conversion permits would bring in revenue. Raffling off building permits and planning code variances would bring in money, and so would selling development rights in city parks, and so would auctioning off appointments to boards and commissions. There are lots of stupid ways to generate cash, and the fact that a proposal would be lucrative is not by itself an argument in favor of it — even in times like these.

There’s a good reason the city limits condo conversions. Nearly every piece of property that becomes a condominium was once a rental unit, and the speculative pressure to take rent-controlled apartments and turn them into market-rate condos is immense. It’s bad enough that tenants — particularly those with relatively low rent — face eviction every day because of the state’s Ellis Act and the push by real-estate interests to create tenancies in common. Without conversion limits, the number of those evictions would soar; rent control would be eviscerated, the cost of housing would rise, and the economic cleansing of San Francisco would roll forward another few giant steps.

Newsom and his real-estate industry allies like to say that this sort of proposal is painless, since nobody has to pay higher taxes. Only people who want to convert their units, and are willing to pay a high fee for the right, would wind up paying. But that’s silly — the tenants of San Francisco would pay the cost — an immense cost — while the wealthier property owners made profits.

Selling off the taxi medallions (see "Don’t privatize the cab medallions, 1/21/09), another Newsom idea, fits in the same category. In the short term, it could bring millions into the city coffers. Long term, it would turn control of the taxi industry back to speculators and big companies, hurting the drivers and the public.

The mayor (and Sup. Sean Elsbernd) also like to talk about eliminating set-asides — those parts of the budget that voters have earmarked for particular purposes. But most of that money (the Children’s Fund, for example) goes to worthy programs: eliminating the "set-aside" protecting doesn’t save any money unless you cut those programs.

There are plenty of good budget ideas out there (see "Beyond the bloody cuts, 12/17/08). But the supervisors ought to make it clear that the bad ones are off the table.

PS: Where were all these anti-tax folks in the Chamber and the small business community, and supervisors like Elsbernd, when the city had a chance to bring in millions without any new taxes — by creating a public power system or raising utility franchise fees? They were siding with Pacific Gas and Electric Co. That’s part of the reason we’re in this fix.

Business community attacks tax proposals

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By Steven T. Jones

San Francisco’s business community has launched a coordinated campaign against calling a special election in June for new revenue measures, which the Board of Supervisors will consider at Tuesday’s meeting.

The board voted 8-3 this week to declare a fiscal emergency and consider various tax measures to help offset $118 million in midyear budget cuts made by Mayor Gavin Newsom and to close a deficit for the next fiscal year projected to be more than $550 million. All eight supervisors will be needed to call the election.

But the San Francisco Chamber of Commerce and Scott Hauge (who didn’t return my calls for comment) of Small Business California have both blasted out calls to oppose the move, using the same talking points and nearly identical language that complains, “City Hall is rushing to hold a June 2009 Special Election so it can put proposals for hundreds of millions of dollars in new taxes before San Francisco voters.”

In reality, current proposals call for less than $100 million in new taxes. Business leaders and Mayor Gavin Newsom (who also opposing the June election) have known since at least Halloween about the size of this deficit (which is roughly half of the city’s discretionary spending) and could have worked with progressives on the procedural issues they’re citing. So this has nothing to do with “a rush,” but is one more example of fiscal conservatives offering knee-jerk opposition to any new taxes.

Still, the business community will be putting intense pressure on the board, particularly the swing votes: Supervisors Bevan Dufty and Sophie Maxwell. So if you think the people should have a say in sparing some of the deepest cuts to city services by making rich people, drivers, or profitable businesses pay a little more in taxes, now’s the time to make your voice heard.

PG&E/BofA take over the Small Business Commission

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Mom and Pop lose their voice as the recession-racked small business community is feeling City Hall neglect and used by PG&E and big downtown business

By Bruce B. Brugmann

(Scroll down for a list of the Small Business Commissioners)

Here’s a snapshot of how the Pacific Gas & Electric Company and its downtown allies operate to keep City Hall safe for the illegal private power monopoly. Rebecca Bowe’s story in the current Guardian shows how a PG&E spokesperson, Darlene Chiu, and a Bank of America ally, retired Bank of America executive Irene Yee Riley, have taken control of the Small Business Commission through key commission appointments by Mayor Gavin Newsom, a PG&E ally.

PG&E’s interest is clear: to grab as many City Hall appointments as possible to protect and enhance the position of this corrupt and corrupting private utility. (See Guardian stories and editorials since l969.) And, at the Small Business Commission, to help insure that the commission does nothing to injure PG&E’s position, such as raising questions about the many terrible problems small business has with PG&E’s high rates, unreliable service, onerous collection policies, and unaccountability. How, many small business people ask, does a small business complain about any of these problems with PG&E?

Timely example of PG&E unaccountability: Chiu, since Newsom appointed her last March, has missed four commission meetings, more than any other commissioner. Bowe called Chiu at PG&E to ask why she had missed so many meetings, but Chiu did not return her calls by press time. I will try myself tomorrow. However, I am not optimistic. PG&E has long maintained a corporate policy of not returning Guardian phone calls or providing information even when its representatives are sitting on public commissions purportedly doing public work representing small business.

Mom and pop lose their voice

By Rebecca Bowe

Bank of America and Pacific Gas and Electric Co. are quite the opposite of mom-and-pop operations, yet two of the seven members appointed to San Francisco’s Small Business Commission hail from these corporations, much to the chagrin of true small business leaders.

In a heated e-mail fired off to an assortment of City Hall staffers Jan. 13, Small Business Commissioner Michael O’Connor criticized the Mayor’s Office for diluting the commission — which was set up to go to bat for the little guy — with big business appointees.

Meanwhile, funding for the Small Business Assistance Center was almost eliminated last month by the Board of Supervisors.

Click here to continue reading.

Previous Guardian coverage:

>>Volume 20.02 (PDF) An exclusive Bay Guardian study in 1985 challenges the convention wisdom that downtown development creates jobs. Instead, our study by an MIT economist shows that small business have created virtually all the new jobs in San Francisco since l980.

>>Volume 21.02 (PDF) Our updated study in l986 shows that as highrises have gone up, downtown San Francisco has lost jobs. In fact, all the net new jobs in the city have come from new and small businesses in light industrial areas and the neighborhoods

>>October 1, 2003 (PDF) The Guardian’s small business agenda for San Francisco

Mom and pop lose their voice

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› rebeccab@sfbg.com

Bank of America and Pacific Gas and Electric Co. are quite the opposite of mom-and-pop operations, yet two of the seven members appointed to San Francisco’s Small Business Commission hail from these corporations, much to the chagrin of true small business leaders.

In a heated e-mail fired off to an assortment of City Hall staffers Jan. 13, Small Business Commissioner Michael O’Connor criticized the Mayor’s Office for diluting the commission — which was set up to go to bat for the little guy — with big business appointees.

Meanwhile, funding for the Small Business Assistance Center was almost eliminated last month by the Board of Supervisors. And a report that was supposed to streamline the unwieldy permitting process for small businesses, which the administration was required to complete under the 2007 measure Proposition I, never materialized.

At a time when small businesses are struggling in the face of a dour economic landscape, strong advocacy on their behalf is needed now more than ever. But even as former Small Business Commissioner David Chiu ascends to the presidency of the Board of Supervisors, small business leaders are decrying their lack of support in City Hall.

The Small Business Commission is a seven-member body composed of three members appointed by the Board of Supervisors and four appointed by Mayor Gavin Newsom. Set up to serve as an advocate for the small business community, the commission was also chartered to oversee the Office of Small Business, a branch of the city’s Office of Economic and Workforce Development.

Last May, the office opened its Small Business Assistance Center, created to lend startups a helping hand with navigating the bureaucratic maze of permits, fees, licenses, and other hoops to be jumped through to legitimately set up shop in the city.

Regina Dick-Endrezzi, acting director of the Office of Small Business and one of four people staffing the center, says there’s a real need for the service. She said that about 99 percent of all San Francisco businesses fall into the category of "small," which she defines as having fewer than 100 employees, making it one of the most important sectors of the city’s economy.

Since the center opened, more than 1,300 small business clients have received assistance there, according to Dick-Endrezzi. Many lack the resources and capital that larger enterprises might have at their disposal, so SBAC case managers act as counselors for people who are trying to get a new business off the ground.

Entrepreneurs have sought help with things like obtaining a permit to open a vegan taco truck, acquiring a license to start a cleaning business, or filing for tax credits for an organic baby food business, to name a few examples. "This is something we really need," Dick-Endrezzi told the Guardian, "and this is something politics shouldn’t get in the way of."

Nonetheless, the center and the commission haven’t been spared from controversy. In December, the Board of Supervisors considered slashing SBAC funding. The $800,000 annual budget was ultimately granted, but it weathered midyear budget cuts of around 10 percent.

Now a new issue of contention has emerged: O’Connor has sounded the alarm that the SBC is becoming weakened by mayoral appointees who represent the large corporate interests that are often quite different from those of small businesses.

The conflict went public at the Jan. 12 SBC meeting when it came time to elect a new vice president. Richard Ventura, who heads a consulting firm and serves as executive director of the downtown-based Hispanic Chamber of Commerce, had just won commissioners’ approval to serve as president. Before a second round of votes were cast, O’Connor — who served as president for two years but declined to try for the post again — voiced his fervent opinion that "an actual small business owner" should be chosen for the other leadership slot.

"I think we need the balance of a small business owner in either the presidency or the vice-presidency position," said O’Connor, who owns the Independent music venue in the Western Addition. "If we have a president and a vice president that both come from downtown, and if three out of the four mayoral appointees on this commission are from downtown, I will be incredibly embarrassed to be on this commission. And I’m sorry, this is nothing personal — I like everybody on this commission — but small business is in a fight for its life, in this building and in City Hall."

Despite his plea, Commissioner Irene Yee Riley — a retired Bank of America executive — was elected. Although not a small business owner, Yee Riley told commissioners that she was qualified to serve as vice president thanks to her "many years of experience working with small business owners as a banker."

"I’m retired, and I have time, so I want to use this opportunity to give back to the community," she added.

Yee Riley won after receiving one vote more than Commissioner Janet Clyde, a bartender and general managing partner of Vesuvio Cafe in North Beach. "I live in the Mission District in a solid working-class neighborhood that is rapidly changing," Clyde told the other commission members during her pitch. "I know the challenges of small businesses operating far from the power and economic center of San Francisco, and I intend to work to recommend their interests … even in this difficult budgetary time."

The following morning, a dismayed O’Connor vented his frustration in an e-mail to mayoral staffers, typing "Small Business Commission … or … Big Business Commission" into the subject line. Installing commissioners with ties to large corporations rather than direct small business experience constitutes "a neutralization of the only real voice small businesses have in San Francisco," he charged.

The most recent mayoral appointee to the SBC was Darlene Chiu (no relation to David Chiu), a spokesperson for PG&E who formerly served as deputy director of communications for the Mayor’s Office. When the Guardian queried the Mayor’s Office last March on what qualifications a PG&E spokesperson brought to the Small Business Commission, Press Secretary Nathan Ballard responded with this statement: "Darlene has first hand knowledge of the challenges facing small businesses in San Francisco. She grew up working in her family’s … retail businesses in Chinatown, managing nine to l5 employees. She will also bring her knowledge of city government and communications to the commission, which will be important to the successful operations and promotion of the assistance center." (See "Newsom to small business: drop dead!" March 18, 2008 Bruce Blog.)

But since her appointment last March, public records show that Chiu has missed four of the monthly meetings. Excessive absenteeism at city commission meetings briefly emerged as an issue in September 2006, prompting Newsom to introduce a new standard with a working goal of 100 percent attendance for commissioners.

Meanwhile, not everyone agrees with O’Connor’s assertion that "San Francisco’s Office of Economic Development seems to believe small business is just an annoying little rock in its shoe."

"The Office of Economic Development is incredibly committed to keeping this commission strong," counters Jennifer Matz, managing deputy director of the Office of Economic and Workforce Development, who played a role in starting the Small Business Assistance Center. "Michael is very disappointed about what happened, but I don’t think it reflects a lack of commitment to small business on the part of the city or the Mayor’s Office."

Matz said the challenge to the SBAC came from the Board of Supervisors — not the Mayor’s Office — when they considered revoking the center’s funding. She also contends that the Small Business Commission’s voting record doesn’t demonstrate a downtown vs. small business split.

From January 2008 to this January, commissioners voted unanimously 34 out of 38 times, the record shows. But it’s on the divisive issues where small and big businesses differ that can have the most impact.

Sup. Chiu served on the Small Business Commission before being elected to the Board of Supervisors. He said commission members usually saw eye-to-eye on most items that came before the commission regardless of whether they were board or mayoral appointees. But for him, the frustration was that "it didn’t feel that either the mayor or the Board of Supervisors were focused on small business."

In his new capacity as board president, he said measures that aid small businesses will be moving up on the list of priorities. For example, he has asked for a hearing on why the report on streamlining small business regulations, which Prop. I required the Office of Small Business to complete by 2007, was never done.

Although doubts about the commitment to small business seemed to be cast on all sides, everyone we spoke with seemed to agree on one point: in these stormy economic times, San Francisco’s small businesses need all the help they can get.

Two reports released in December by the U.S. Bureau of Labor Statistics and Automatic Data Processing (ADP) provide some insight into the challenges facing small businesses nationally. BLS reported that 524,000 jobs were lost during December, bringing the 2008 total to 2.6 million lost jobs — the highest since 1993.

The ADP report showed that 281,000 jobs had been shed from companies with fewer than 50 employees. This signifies a drastic increase in job losses from this sector: between October and November, small businesses cut just 79,000 employees, according to ADP, and between September and October, they let go of 25,000 employees.

"That was the first time since 2002 that small businesses had net job losses," says Scott Hauge, president of Small Business California. What’s frightening, he says, is that the small business sector traditionally acts as an economic stabilizer.

During the battles it the mid-1980s over accelerating downtown office building construction, the Guardian commissioned a study from noted MIT economist David Birch that found that small business accounted for most net job creation in San Francisco, and that catering to corporate demands downtown actually cost the city jobs.

Yet now, with the small business community sometimes serving as a political football tossed between downtown and City Hall, the city’s economic base is in trouble and hoping for help from political leaders who are now contemputf8g deep budget cuts.

————

Here’s a list of all the small business commissioners:

Commissioner Darlene Chiu
Occupation: Communications, PG&E
Appointed by: mayor

Commissioner Janet Clyde
Occupation: General managing partner / bartender, Vesuvio Cafe
Appointed by: Board of Supervisors

Commissioner Kathleen Dooley
Occupation: Florist / owner, Columbine Design
Appointed by: Board of Supervisors

Commissioner Gus Murad
Occupation: Owner, Medjool (restaurant) and Elements (hotel)
Appointed by: mayor

Commissioner Michael O’Connor
Occupation: Co-owner, The Independent (music venue)
Appointed by: Board of Supervisors

Commissioner Irene Yee Riley
Occupation: Retired senior vice president and market executive, Bank of America
Appointed by: mayor

Commissioner Richard Ventura
Occumpation: Executive director, San Francisco Hispanic Chamber of Commerce
Appointed by: mayor

————-

Previous Guardian coverage:

>>Volume 20.02 (PDF) An exclusive Bay Guardian study in 1985 challenges the convention wisdom that downtown development creates jobs. Instead, our study by an MIT economist shows that small business have created virtually all the new jobs in San Francisco since l980.

>>Volume 21.02 (PDF) Our updated study in l986 shows that as highrises have gone up, downtown San Francisco has lost jobs. In fact, all the net new jobs in the city have come from new and small businesses in light industrial areas and the neighborhoods

>>October 1, 2003 (PDF) The Guardian’s small business agenda for San Francisco

So what are Newsom’s budget plans?

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EDITORIAL In Washington, Rep. Nancy Pelosi — who has never been known as a radical leftist — is proposing that Congress repeal the Bush tax cuts, now, two years before they expire. That would bring $226 billion into the federal till, enough to fund a good part of the stimulus package.

In Sacramento, Democrats are moving toward a special election this spring to allow the voters to approve a tax increase — a move that would prevent disastrous service cuts in this horrible economic climate. Even the Republicans in the state Legislature — about as intransigent a group of people as you’re going to find in public service in America — are actually discussing the possibility that they might accept a tax increase as part of a budget deal.

Political writer David Sirota, blogging on Open Left, argues that a tectonic shift is taking place, that budget fights are "tilting the terms of debate away from Reaganism and toward progressive policy goals."

But not in San Francisco, where Mayor Gavin Newsom refuses to support any sort of new revenue measures this spring. In fact, while the supervisors, labor, and others are working to try to figure out a solution to the budget crisis, Newsom has been out of town, campaigning for governor or galavanting off to Paris and Davos.

We can’t quite figure out what the mayor plans to do about a budget deficit that could reach $500 million. So far we know he thinks the city can get some money by privatizing cab medallions (a dumb idea). We also hear he’s talking about vastly increasing the number of condo conversion permits (an even worse idea that will lead to massive evictions and the end of rent control). Beyond that, he hasn’t offered anything.

We recognize the problems with a spring special election. Passing a tax measure would require a two-thirds majority, a tough threshold under the best of circumstances. The state may call its own special election in May, preempting the city’s chances. The deadlines are tight, and city officials would need to move very quickly to come up with a workable plan in time.

But there are also serious problems with abandoning the idea, or even waiting until November. We’re talking cataclysmic budget cuts here — maybe as many as 1,500 layoffs, massive cutbacks in public health, parks and recreation centers closed, fire stations shut down, police cut back, Muni backsliding into dysfunction, programs for the homeless and needy vanishing as more and more desperate people fill the streets … it won’t be pretty.

We’ve consistently argued that a June special election to raise new tax money is a reasonable option, and the supervisors need to keep it on the table. That means voting on several technical issues Jan. 27 and then moving at full speed to draft the ballot proposals. If circumstances change, the city can always back off and cancel the election.

But the mayor needs to come back to town and start getting engaged with this problem. Before he simply dismisses the June election, he needs to tell us his plan. What alternatives is he offering? What is he proposing to cut? What jobs, what services, will be eliminated?

The same goes for downtown, small business leaders, and the supervisors who oppose tax increases. Tell us — now, in public — what you propose to do about this once-in-a-lifetime crisis. The progressives are at least putting forward plans, imperfect as they may be. Anyone who refuses to support those plans should be required to offer something else.

Don’t privatize cab permits

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EDITORIAL In tough times, political leaders with no backbone for making hard decisions tend to look for easy, short-term fixes. And Mayor Gavin Newsom’s proposal to auction off taxicab permits to the highest bidder is just that — a quick fix with serious long-term problems. In fact, it amounts to the privatization of a lucrative public asset.

A bit of background: since 1978, when then-Sup. Quentin Kopp authored a measure called Proposition K, San Francisco has issued some 1,500 taxi permits, known as medallions, to working cab drivers. Under Prop. K, the medallions can’t be owned by corporations, and they can’t be bought and sold as speculative commodities. They’re owned by the city, and only people who actually drive cabs for a living can use them.

There’s a logic to that. The permits are valuable — a medallion holder not only has the right to drive a cab, he or she can lease that permit to other drivers for additional shifts. Since a taxi can be on the road 24 hours a day, the lease income is substantial, roughly $30,000 a year. But only active drivers get that benefit; nobody can hold a permit, sit at home (or work another job), and just collect that cash.

The process isn’t perfect. The waiting list for a medallion takes more than 10 years. Some medallion holders cling to their permits long after they should have retired (and thus keep driving when they should no longer be on the road). There’s no process for compensating a permit holder who becomes disabled.

But those are issues that can be addressed. The basic fact is that San Francisco has taken the position that the public benefit — a license to drive a cab for hire — should be given only to those who are using it. Prop. K prevents consolidation of ownership in the industry, prevents speculators from turning medallions into a new form of securities (which worked out so well with mortgages), and gives people who have spent 10 years or more driving a cab a chance to reap the full benefits of their work.

Newsom, however, sees those permits as a gold mine. If the city auctioned them off, they might bring $100,000 apiece. Under Newsom’s plan, much of that money would go to the city, although some would go to current medallion holders.

The plan is full of problems.

For one, it could completely change the cab business in San Francisco, shifting control of the industry away from drivers and giving it to big businesses and investors. Very few working drivers (who are lucky to clear $30,000 a year) could afford to buy permits, particularly at auction. So the first people in the market would be the cab companies, which for years have wanted the right to own and control the medallions. Private investors — wealthy individuals and institutions — would see the permits as an asset likely to appreciate, and would buy up medallions, then seek to raise the lease fees for drivers. The only way drivers could buy permits would be to seek the equivalent of mortgage loans — but the banks that handle that sort of loans typically require 20 percent down, putting many drivers out of the running. Unless, that is, some shadowy characters come along with cash loans — or unless the cab companies handle that payment, thereby getting further control).

Unless medallion ownership is limited to drivers, the entire process will get corrupted. People will drive for a minimal period of time, bid on medallions, then go into another line of work — and keep the medallion. Newsom’s office says he’s going to do that, but there are no details on the plan yet.

Cab drivers in the city talk about the need for security and retirement income. After years of driving with a medallion, they want the right to sell it for a chunk of cash. But under the current system, drivers are — and most of them like being — independent contractors.

Freelance writers, consultants, small business owners, and many others who are self-employed are responsible for their own retirement planning. Why should cab drivers get a special deal from the city?

Privatizing the permits is just a bad idea. Newsom promised last year — in writing — that he wouldn’t seek to change Prop. K. It’s infuriating to see him so quickly break that promise.

The supervisors should reject this proposal.

Editorial: Don’t privatize taxicab permits

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Mayor Newsom promised last year in writing that he wouldn’t privatize taxicab permits. It’s infuriating to see him so quickly break that promise.

EDITORIAL In tough times, political leaders with no backbone for making hard decisions tend to look for easy, short-term fixes. And Mayor Gavin Newsom’s proposal to auction off taxicab permits to the highest bidder is just that – a quick fix with serious long-term problems. In fact, it amounts to the privatization of a lucrative public asset.

A bit of background: since 1978, when then-Sup. Quentin Kopp authored a measure called Proposition K, San Francisco has issued some 1,500 taxi permits, known as medallions, to working cab drivers. Under Prop. K, the medallions can’t be owned by corporations, and they can’t be bought and sold as speculative commodities. They’re owned by the city, and only people who actually drive cabs for a living can use them.

There’s a logic to that. The permits are valuable – a medallion holder not only has the right to drive a cab, he or she can lease that permit to other drivers for additional shifts. Since a taxi can be on the road 24 hours a day, the lease income is substantial, roughly $30,000 a year. But only active drivers get that benefit; nobody can hold a permit, sit at home (or work another job), and just collect that cash.
The process isn’t perfect. The waiting list for a medallion takes more than 10 years. Some medallion holders cling to their permits long after they should have retired (and thus keep driving when they should no longer be on the road).

There’s no process for compensating a permit holder who becomes disabled.
But those are issues that can be addressed. The basic fact is that San Francisco has taken the position that the public benefit – a license to drive a cab for hire – should be given only to those who are using it. Prop. K prevents consolidation of ownership in the industry, prevents speculators from turning medallions into a new form of securities (which worked out so well with mortgages), and gives people who have spent 10 years or more driving a cab a chance to reap the full benefits of their work.

Newsom, however, sees those permits as a gold mine. If the city auctioned them off, they might bring $100,000 apiece. Under Newsom’s plan, much of that money would go to the city, although some would go to current medallion holders.

The plan is full of problems. For one, it could completely change the cab business in San Francisco, shifting control of the industry away from drivers and giving it to big businesses and investors. Very few working drivers (who are lucky to clear $30,000 a year) could afford to buy permits, particularly at auction. So the first people in the market would be the cab companies, which for years have wanted the right to own and control the medallions. Private investors – wealthy individuals and institutions – would see the permits as an asset likely to appreciate, and would buy up medallions, then seek to raise the lease fees for drivers.

The only way drivers could buy permits would be to seek the equivalent of mortgage loans – but the banks that handle that sort of loans typically require 20 percent down, putting many drivers out of the running. Unless, that is, some shadowy characters come along with cash loans – or unless the cab companies handle that payment, thereby getting further control).
Unless medallion ownership is limited to drivers, the entire process will get corrupted. People will drive for a minimal period of time, bid on medallions, then go into another line of work – and keep the medallion. Newsom’s office says he’s going to do that, but there are no details on the plan yet.

Cab drivers in the city talk about the need for security and retirement income. After years of driving with a medallion, they want the right to sell it for a chunk of cash. But under the current system, drivers are – and most of them like being – independent contractors.

Freelance writers, consultants, small business owners, and many others who are self-employed are responsible for their own retirement planning. Why should cab drivers get a special deal from the city?
Privatizing the permits is just a bad idea. Newsom promised last year – in writing – that he wouldn’t seek to change Prop. K. It’s infuriating to see him so quickly break that promise.
The supervisors should reject this proposal.<0x00A0>2

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