Rebecca Bowe

Mom and pop lose their voice



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

LAFCo to SFPUC: Hurry it up already!


Supervisor David Campos sent a clear message at the Local Agency Formation Commission (LAFCo) meeting on Jan. 23, emphasizing that he was eager to move beyond the delays that have hindered progress on Community Choice Aggregation. Commissioners Michael Bornstein and Ross Mirkarimi — who represents District 5 on the Board of Supervisors — echoed his concerns, along with an array of community members who turned out to speak during the public-comment session. Meanwhile, a few members of the public warned that further delays might amount to missing the boat on federal funding for alternative-energy programs, which the Obama administration is expected to make available in the near future.

Campos, who represents District 9 on the Board of Supervisors, is also the newest LAFCo commissioner. The city agency is charged with monitoring and advising the San Francisco Public Utility Commission’s efforts to develop and implement a Community Choice Aggregation program, which was mandated in 2004 by the Board of Supervisors to help ensure the “provision of clean, reasonably priced, and reliable electricity.” A CCA program would allow the city and county of San Francisco to become its own wholesale power purchaser for citizens. The plan includes targets for purchasing power generated from renewable resources such as wind and solar, with a goal of 100 percent clean energy by 2040. But the process of getting CCA off the ground has been moving along at a snail pace.

Change you can live in?


If you ask San Franciscans about the most pressing issues facing the city, homelessness and affordable housing are always near the top of the list. While this city’s housing problems are particularly dramatic, homelessness is on the rise across urban America. And in nearly every big city, public housing projects are crumbling, suffering from years of federal neglect.

But you wouldn’t know that to look at the latest stimulus package coming out of Washington, DC.

The proposed American Recovery and Reinvestment Act, introduced Jan. 15, contains only $16 billion for affordable housing. That’s about half what advocates had sought — and a tiny fraction of what’s really needed.

The bill has the affordable housing community shaking its collective head. "Unfortunately, the news right now is not good. This first pass at the stimulus bill is not encouraging," Matt Schwarz, president of the California Housing Partnership, a San Francisco–based nonprofit working to expand affordable housing stock throughout California, told us.

Will President Obama, who barely mentioned homelessness during the campaign, look at affordable housing as a priority? Most housing activists say they’re cautiously optimistic. But some are starting to sound the alarm.

"I think, when it comes to political clout in DC, poor people and their allies are still in trouble," said Paul Boden, director of the San Francisco–based Western Regional Advocacy Project, a group that focuses primarily on homelessness issues. "It was disheartening to go to the Obama [transition team] Web site and find … a very miniscule mention of homelessness — and it’s under ‘veterans.’<0x2009>"

City officials are looking at the bright side. "Most people would agree that there’s been very little new money available at the federal level for affordable housing [in the past eight years]," Doug Shoemaker, director of the Mayor’s Office on Housing, told us. Shoemaker expects that to change under the Obama administration, especially with the pick of New York City Department of Housing Preservation and Development Commissioner Shaun Donovan as US Housing and Urban Development (HUD) secretary, whom he characterized as "an incredible leader who really understands homelessness and affordable housing."

Olson Lee, deputy director of the San Francisco Redevelopment Agency, sounded a similar note. "We’re looking forward to an administration that cares about affordable housing," he said. Projects like the Hunters View reconstruction project, which would restore a dilapidated public-housing complex in the Bayview–Hunters Point neighborhood, tops the list of projects that would shift into gear again if new federal dollars are made available, Lee noted.

But while city agencies seem to have high hopes for federal dollars that could be headed to San Francisco under the new administration, many grassroots-level affordable housing advocates are more cautious.

Longtime affordable housing activist Calvin Welch pointed out that there is still a great deal of uncertainty surrounding the allocation of federal funding under the economic recovery package. "The first test is, does the Obama administration view affordable housing — especially affordable rental housing in cities — as a priority?"

From Welch’s perspective, the answer appears to be yes. But he added that no affordable housing practitioners were named to Obama’s transition team. And in San Francisco, a pending blow to health and human services due to local and state budget cuts will bring about more distress linked to housing issues.

"When those health and human services are reduced, the effect is an increase in the homeless population, or at least the temporarily unhoused population — a population with very challenging housing needs, which is at extreme risk," Welch told us. "I haven’t seen any response to that consequence. I have not read that any portion of the Obama stimulus package is focused on health and human services." Until the details are hammered out, he said, "We’re holding our breath."

A recent report issued by the Center on Budget and Policy Priorities — a DC-based research and analysis organization focusing on issues affecting low-income families — underscores Welch’s concerns. The recession has prompted a rise in homelessness nationwide, the report notes, and an unusually large number of people are still likely to fall into severe poverty, putting them at risk of being turned out onto the streets.

"It is important that the package include funding for effective homelessness prevention strategies," CBPP notes.

Specifically, the report recommends that funding be made available for 200,000 additional Section 8 housing vouchers, which allow very low-income residents to rent privately-owned units of their choice. That number would only begin to address the need. In San Francisco, the waiting list for Section 8 has been closed since 2001, and some 13,000 people have languished on the list, according to Sara Shortt, director of the Housing Rights Committee of San Francisco. Despite the urging of organizations like CBPP, the first draft of the bill included no new additional funding for Section 8 vouchers.

The Obama administration has made it clear that new funding will become available for "shovel-ready" projects — those that are ready to move forward in a matter of months. According to the results of a survey conducted by the California Housing Partnership, San Francisco has 24 such affordable housing development projects waiting in the wings, which could provide an estimated 3,915 affordable homes and could potentially generate 4,500 construction-related jobs.

But Schwarz, president of CHP, says he’s less optimistic that those projects will move forward after seeing the proposed legislation. Schwarz says the $16 billion included for affordable housing measures in the proposed legislation was disheartening. With that figure, "We’re not expecting a significant portion of those stuck developments to get unstuck," he said. "There seems to have been some major backtracking, and we’re not quite sure where this is coming from."

While the bill falls short of what many of San Francisco’s affordable housing advocates had hoped for, it does include funding for public housing repair. "This economic recovery bill includes $5 billion to allow public housing authorities to complete repair and construction projects, including critical safety repairs," Drew Hammill, press secretary to Speaker Nancy Pelosi, wrote in an e-mail to the Guardian. "This is more than double the amount that was included for this account in the fiscal year 2008 appropriations bill and double the amount that is pending in fiscal year 2009."

But Hammill acknowledged that the need for such repairs is great in San Francisco: "The existing backlog in San Francisco is over $250 million" he wrote, "with approximately $26 million of additional physical deterioration occurring each year."

Shortt, who heads the Housing Rights Committee, looks back on the past six years as "a disaster" for public housing. "It is very likely that we’ll see an infusion in public housing and affordable housing in this recovery package," she said. But she regards the expected $5 billion for public housing capital funds as "a drop in the bucket. It’s estimated that the overall need is $33 billion nationally." .

Shortt did have praise for Donovan, Obama’s HUD secretary pick. Even so, she says, "Whether Obama himself feels strongly about housing or not, politically it’s going to take a while before it’s high on the priority of the Beltway. It’s been relegated to the bottom of the heap for so long."