THE BOMA ADVOCATE

With Ken Cleaveland

Ken Cleveland

BOMA Thursday luncheon:
Are good times here again?

January 26, 2006, 11:30 a.m.

BOMA proudly welcomes Margaret Duskin as its first luncheon speaker of 2006. As a recognized market leader, Ms. Duskin has sold or leased over 9 million sq. ft. of commercial property, and has represented international and national corporations, investors and major business tenants. Ms. Duskin offers an insider's perspective on San Francisco's office market conditions -- the highlights of 2005 and where we're headed in 2006. C&W's market research data is a renowned resource to building owners and developers.

The San Francisco office market has experienced absorption that has led to a distinct drop in vacancy rates, significant rental rate increases, and an unprecedented booming investment market that has already surpassed previous all-time volume and pricing levels.

Ms. Duskin has been published or quoted in articles in the New York Times, Wall Street Journal, the San Francisco Business Times, Northern California Real Estate Journal and many others. She has been a featured speaker to California Society of CPA's, Continuing Education of the California State Bar, Commercial Women in Real Estate, The San Francisco Real Estate Roundtable, and numerous other organizations. She's an alum of USF and Stanford Advanced Management College. BOMA is pleased to welcome her back!

Members: $50.00, Non-members: $50.00. For online registration, click here

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BOMA and Union Square Association challenge
Daly downtown parking restrictions

December 30, 2005

BOMA and the Union Square Association (representing the major retailers in the city) filed a petition earlier this month challenging the Planning Department's decision to not require an Environmental Impact Report (EIR) on a proposal by Supervisor Chris Daly to severely limit new commercial and residential parking in the C-3 (downtown/parts of SOMA) district. A similar appeal was filed by SFSOS two weeks prior to ours, and all three appeals will be subject to a public hearing on January 10, 2006 at 4:30 p.m. at City Hall, in the Board of Supervisors legislative chamber. BOMA Members interested in protecting parking should make an effort to attend this meeting.

BOMA, SFSOS and the Union Square Association contend that such a major shift in parking policies does have a major environmental and economic impact on residents, businesses, property owners, and visitors to the city and must have a more thorough analysis before being considered by the Board of Supervisors. The associations believe such a measure would both severely reduce the construction of future housing in the downtown area as well as make that which is built more expensive. Passage would ultimately impact the availability of commercial perking spaces for use by employees, visitors, and families, as homeowners would usurp more of such spaces for residential parking purposes. Prices for parking would also rise, due to the limited supply imposed by these new restrictions.

Specifically, Supervisor Daly's proposed ordinance would do the following things:

- It would reduce the parking allowed in new residential buildings from 1 space per unit to ½ space per unit. (The Planning Department and Commission recommended ¾ space per unit.)

- It would prohibit any new non-accessory commercial parking and stand alone garages in downtown San Francisco.

- It would require all new parking spaces above .25 per unit to be non-independently accessible. (meaning having to employ a valet service or use car stackers, etc., adding huge costs)

- It would prohibit the city from considering future approval of narrowed sidewalks and porte cocheres to accommodate passenger loading for hotels and restaurants.

- It would require that parking spaces be sold or rented separately from housing units in new developments of 10 or more units. (Ironically, except for affordable housing projects!)

BOMA is working with a consortium of organizations to oppose these new restrictions, and to support an alternative that would use market forces, rather than policy mandates, to reduce future car usage and the need for new parking in the City. BOMA, SPUR, the Union Square Association and others could support some of the ideas included in Daly's legislation, such as the separation of parking spaces from the cost/rent of future downtown residential units, the requirement to include bicycle parking and car-share spaces ini new garages, and even to mandate the application of strict urban design standards for any new above grade parking structures, but the organizations cannot support Daly's reduction in the one-to-one parking space allowance, his proposed ban on new garages and non-accessory commercial parking in the downtown area, or his ban on porte cocheres for restaurants and hotel guest accommodations. As importantly, BOMA, SFSOS and the Union Square Association have called upon the Mayor and the Board of Supervisors to conduct an economic study of any new parking restrictions before considering them, as we believe there are significant and negative economic impacts on the business community and visitor/tourist industries that could result from such parking restrictions, if adopted.

BOMA Hosts Fundraiser for Assembly Member Leland Yee at Embarcadero Center
BOMA's Political Action Committee, in conjunction with the San Francisco Apartment Association and the Coalition for Better Housing, hosted a fundraiser for State Assembly Member Leland Yee (D, San Francisco/San Mateo) to support his run for the state senate in 2006. The event, held on December 16th at the Embarcadero Center, drew about 30 attendees and raised $7,000. Leland is running against Mike Nevin, a former San Mateo county supervisor. Leland thanked the assemblage and said, as a fiscal conservative, he would continue to oppose any plan to tax one type of real estate at a different rate (i.e., split roll) as unfair, and that he would continue to support property owner rights in the state legislature. Yee has also been a key defender of youth in the Legislature and was the prime supporter of legislation passed in the last session (and signed by Governor Schwarzenegger) that established heavy penalties on businesses that sell violent video games to minors. That law is currently under challenge by the video/movie industry.

San Francisco's Budget Woes to Continue in 2006

Wade Randlett of SFSOS recently wrote a critique of San Francisco's budget woes, and it's worth paraphrasing here for BOMA's members and other:

A recent Examiner story reported that San Francisco taxpayers poured a stunning 9.0% more of their hard-earned money into the City's coffers in 2005 than they did the year before. That's a doubling of the growth rate from 2004. But before you expect these new funds to go for improvements to our streets, parks, playgrounds and all-around maintenance, consider this: the City is still facing an $80 million deficit next year. Even more alarming for the business community, Supervisor Chris Daly was named the Chair of the City's Budget and Finance Committee, and is sure to propose new taxes on businesses and property owners in his attempt to balance the next budget. Mayor Newsom has put out the call for City departments to submit their planned budget cuts, but the real question remains: When is San Francisco really going to curb its high costs by instituting some real charter and civil service reforms?

It's no surprise that City employees are getting more expensive, with the city's pension liabilities and medical costs soaring, but it is surprising that the City based the estimated $80 million deficit on no wage increases in any of the labor contracts for this coming year. That's a huge "if", indeed. Mayor Newsom has trimmed over 1,000 employees from the city's payroll since taking office, but many more cuts are necessary. As BOMA members and others in the private sector found out during the dot com boom and bust, you have to do more with less. Instead, San Francisco's businesses and residents give more to city government and get less. San Francisco's current budget tops $5.3 billion, with $2.6 billion (48.9%) spent on roughly 27,000 employees. Before the revenue distortion from the tech boom, our City got by on a measly $3.1 billion budget, employing 24,000 employees carrying a $1.3 billion payroll price tag. That expense served 730,000 residents for a per capita rate of about $4,200 per person. Our present budget serves 752,000 residents at a rate of about $7,050 per person. Our $5.3 billion budget for ¾ of a million people is comparable to the budget for the entire state of Oklahoma or the budget for 3.8 million people of Los Angeles. San Francisco city government has one employee for every 27 residents, while Indianapolis serves roughly the same number of residents (793,000) with only 4,000 city employees, or a 1:198 ratio, and San Jose serves 898,000 with 6,300 employees (1:142). Are we really that high maintenance of a population?

And when those 40 union contracts come calling, remember that San Francisco's 48 bargaining units compares with San Jose's 11 bargaining units, Indianapolis' 3 units, San Diego's 4 units (for 1.2 million people) and Philadelphia's 4 units (for 1.5 million people). The tired excuse that SF is both a city and county is trumped by this simple fact: SF government has needed 80% more money to serve 3% more people than it did before the dot-com boom. More money has not resulted in better services.

This does not even include the many opportunities where the city turns down money, such as killing a hotel project near the waterfront, or allowing more vacant warehouses to become housing, or allowing more rental properties to be converted into ownership housing, or allowing (gasp!) chain stores like Target to come into the city. Home Depot had to fight for 15 years to get into San Francisco, and was only recently approved by one vote after it seriously downsized the project, which was being proposed to be built on a former home improvement store site! The City has many ways to enlarge the tax base without resorting to new taxes, or letting its infrastructure crumble, but its leadership needs to create an economic plan for its future that accepts the fact that we are living in a global economy, and that we must become more competitive and entrepreneurial to continue to exist as a business and financial center. Creating more tax advantages for growing businesses in the City like the recent payroll tax exclusion for clean tech companies (see below) is the right approach. We must work together on a city-wide basis, and not allow district (micro-local) issues to detract from the goal of creating a sustainable future for commerce, job growth, and opportunity for all in San Francisco.

New Payroll Tax Expense Exclusion for Clean Energy Technology Businesses in San Francisco

The Payroll Tax Exclusion for Qualified Clean Energy Technology Businesses Ordinance becomes effective on January 1, 2006. The Ordinance provides payroll tax exclusion for businesses that engage in clean energy technology and employ a full-time staff of at least ten but not more than one hundred employees. The Director of the Department of the Environment ("SFE") will adopt rules and regulations to implement this new tax under San Francisco Business and Tax Regulations Code Article 12-A §906.2(c), and will make the determination on whether or not a business qualifies for this tax exemption. The city ordinance defines "clean tech" as businesses that develop, manufacture, or apply scientific advances that produce or contribute to the production of clean energy or that utilize energy produced by wind, solar energy , landfill gas, geothermal resources, ocean thermal, energy conversion, quantifiable energy conservation measures, tidal energy, wave energy, biomass, biofuels, or hydrogen fuels derived from renewable sources. The ordinance excluded the installation of clean energy technologies, any fossil-fuel-based energy production such as clean coal, clean diesel, natural gas, or any nuclear-based energy production, waste to energy via combustion or incineration, or other technologies that have been deemed detrimental to human health. The Board of Supervisors may amend this ordinance in the future to include future technologies.

New Healthcare Mandate Introduced in San Francisco

Supervisor Tom Ammiano has introduced legislation to require all employers in the City with 20 or more employees to provide healthcare coverage or pay an estimated $345 a month per employee into a health savings account to be used to purchase coverage by employees or be willing to reimburse employees directly for their healthcare-related expenses. Ammiano estimates there are 40,000 uninsured workers in the City, and that many of them are ending up in public hospitals and health clinics at great cost to the public. Providing healthcare insurance would reduce those costs. The Committee on Jobs and the Chamber of Commerce are opposed to the mandate, and the Mayor is calling for more study of the issue before action is taken by the Board of Supervisors. Supervisor Ammiano said he has the support of organized labor, the Senior Action Network, and has enough votes on the Board for passage.

BOMA San Francisco Government and Public Affairs Committee - 2005 Annual Report

The BOMA Government and Public Affairs Committee had a great year in 2005. Chaired by Angelica Ting (Landmark Exchange Management) and Vice-Chaired by Elaine Andersson (Boston Properties), the committee held ten formal meetings, many with local and state politicians as special guest speakers.

That list was truly impressive:

Barbara Kaufman, Governor Arnold Schwarzenegger's Bay Area Director

State Senator Jackie Speier

San Francisco Assessor/Recorder Phil Ting

Planning Department Director Dean Macris

Assembly Member Leland Yee

San Francisco Public Works Director (now City Administrator) Edwin Lee

San Francisco Supervisors Bevan Dufty, Fiona Ma, Jake McGoldrick, Gerardo Sandoval,

Sean Elsbernd, and Board President Aaron Peskin.

San Francisco Department of Real Estate Manager Steve Legnitto

San Francisco Public Utilities Commission Director of Communications Tony Winnacker

Proponents and Opponents of the Restore Hetch Hetchy Valley debate

The committee updated its Public Policy Initiatives for 2005-6 to keep them relevant, polled its leadership for its top concerns and priorities, and exerted its influence in the discussions at City Hall on graffiti abatement legislation, parking policies, and energy aggregation and conservation. The committee awarded BOMA's prestigious Good Government Award this year to DEAN MACRIS, as our exemplary public official of the year. The committee established stronger volunteer links with the San Francisco Small Business Network, and with SPUR. Finally, the committee turned out the largest group of local BOMA attendees to the BOMA California state legislative conference in Sacramento last March.

The Government and Public Affairs Committee will remain strong and ready in 2006 to represent BOMA members' interest at City Hall and in the state Legislature, and to formulate our positions on issues for adoption by our BOMA Board of Directors. It will continue to be the committee of activists who will step to the plate to defend BOMA's interests at all levels of government. It is one of the most important BOMA committees, and is the public face of BOMA on many issues. Any BOMA member is welcome to join it.

Are Businesses Leaving California: Myth or Fact?

There is always a lot of talk about businesses leaving California because of its high taxes, high real estate costs, high wages and benefits and excessive regulations. The truth is, according to a recent Public Policy Institute study, a lot less worrisome than many may have thought. Although relocation has generally resulted in a net loss of establishments and jobs in California over the past 10 years, these losses were negligible compared to the overall size of the state's economy. According to the National Establishment Time Series, in every year between 1992 and 2002, relocation did in fact cause a net loss of establishments (single business sites, either firms or part of a firm) and jobs in the state. The largest loss was in 1993, when 1,364 establishments moved out but only 612 moved into California, creating a net loss of 752 firms and 13,241 jobs. The smallest net loss - 26 establishments and 1,405 jobs - occurred in 2000. However, even in 1993, the worse year for job loss, the 752 firms who moved out amounted to less than .05 percent when compared to the 1.5 million total business establishments in the state. At that rate, it would take California twenty years to lose just 1 percent of its businesses. Despite the concern about business flight out of California, relocation within the state is much more common, accounting for 96.3% of the relocations between 1992 and 2002. When firms do leave California, the vast majority of them relocate to other western states. Bottom line: business relocation has had very little effect on employment in California. In fact, the majority of job eliminations have resulted from plant closures or contractions rather than relocations. Job creations through new business formations and expansion of existing in-state businesses almost equaled any jobs lost because of relocations.

Graffiti Abatement Update

Officer Christopher Putz, San Francisco Police Department's point person for graffiti vandalism in the city, recently supplied BOMA with a list or ways to fight graffiti.

· If you are the owner of the vandalized property or the property is public, file a police report by calling 553-0123.

· Take pictures of vandalism. Pictures really help to support a case against a repeat graffiti offender and to show, by the style of the tagging, that the offender has tagged numerous buildings. Graffiti photographed by itself might look like art. Including the house or vandalized object in the picture helps show the harm caused by and the scale of the vandalism. Send digital pictures to Officer Putz at christopher.putz@sfgov.org.

· If you do not have a camera, ask the police to take a picture.

· Come to court when a graffiti vandal suspect is on trial because SF judges don't always see it as a serious offense. Judges take it more seriously when the community expresses their outrage. Convicted first time offenders now receive a minimum of 100 hours of mandatory community service. Court dates for graffiti vandals are listed on the policeandcommunity@yahoogroups.com website. Paul Henderson is the District Attorney's point person on graffiti vandalism prosecution.

· If you continually paint over graffiti, taggers will eventually stop, because they do not want their work to be in vain. Paint thinner removes most graffiti.

Officer Putz reminded BOMA members that it is the building owner's responsibility to remove graffiti from their property, and to keep the sidewalks facing their property clean, or face a $500 fine. The city is considering reducing the time from 30 days to 15 days and raising the fee amount on owners who do not remove the graffiti within the specified amount of time after being cited. DPW's Graffiti Abatement Unit removes the graffiti from all public buildings, but not private buildings, unless the building owner does not remove it. To report graffiti, people should call 28-CLEAN and give an exact address as possible. When DPW gets a call about graffiti on private property, they send a notice by certified mail to the property and business owner informing them that they have 30 days to remove the graffiti. DPW returns in 30 days for permission to go on the property and paint over the graffiti for a fee of $500 and up. (The cost is based on the time it takes to remove the graffiti.)

The City also has a Graffiti Watch Program, which is a partnership between DPW and local residents. DPW empowers neighborhoods to remove graffiti from public property. DPW staff will train and supply residents with materials to remove graffiti. Residents then remove graffiti weekly on their own schedule. Any neighborhood group or merchant association should be aware that it is a 2 year commitment If interested, contact Merle Goldstone at merle.goldstone@sfdpw.org, call 28-CLEAN, or e-mail 28clean@sfdpw.org to join a program in your neighborhood.


Resources for Recycling in San Mateo County

Want to save money on your garbage bill and help the environment? Consider implementing a recycling program for your apartment or office building today. San Mateo County RecycleWorks has resources available to help you start up an easy and successful program. To learn more, call 1-888-442-2666 and ask for Danielle Lee, Recycling Coordinator for San Mateo County RecycleWorks.

San Francisco Building Department News

At a December 15th meeting of the San Francisco Building Department's Public Advisory Committee, several items of interest to BOMA members were discussed.

- Amy Lee, the Director for DBI, stated the department's computer system will be completely updated and modernized by June 2006. She also said a new fee study (cost to administer the various permits) was recently completed and will be issued in the next two months for review. State law requires that local permit fees be consistent with the cost to provide the plan review and inspection services. She also stated that the department is considering opening a downtown permit center in 2007, but needs BOMA to support the idea and funding for it.

-Laurence Kornfield stated that the small project exemption threshold for disabled access will rise to approximately $125,000 in 2006 but the exact figure is still to be determined.

- The high-rise sprinkler retrofit ordinance, which becomes effective February 15, 2006, will require all such buildings to have letters on file stating the building is either in full compliance, or is exempt from the ordinance or has an approved plan for reaching compliance in the near future.

- Three new people were appointed to the city's Building Inspection Commission this month: Mel Murphy, a real estate developer and contractor in San Francisco and Arizona, Michael Theriault, an organizer with the Ironworkers Union, and Joe Grubb, former chief of housing inspection at DBI and Executive Director of the city's Rent Board. Local community activist Debra Walker was re-appointed to the commission.

Supervisor Ross Mirkarimi Meets With BOMA

Intelligent, witty, and green to the core, co-founder of the California Green Party, and the newest member of the San Francisco Board of Supervisors, Ross Mirkarimi, met with BOMA members on December 2, 2005, as part of BOMA's "Coffee and Conversation" series with elected leaders. Ross describes himself as a pragmatic progressive. Mirkarimi stated his most pressing concern at the moment was the quality of life in the Western Addition (part of his District 5 area) and the need to implement programs to alleviate poverty, joblessness, low educational levels, displacement, and distrust of the police, which he said were just some of the reasons underlying the area's high crime and murder rates. The supervisor also called upon the Police Department to implement more foot patrols to better establish positive contact with the many diverse communities of the City, and the Parks and Recreation Department to add more, not fewer, programs geared to local at-risk youth to help "break the cycle of crime" many of them fall victim to. Supervisor Mirkarimi said crime disproportionately impacts the residents and businesses in the Haight, Inner Sunset and Western Addition.

Mirkarimi is passionate about protecting the small businesses and merchants in his district, and is a firm supporter of so-called anti-chain store laws that prohibit or restrict their entry into the local market. He supports revitalization of the Divisadero Street corridor, with new streetscaping, and traffic calming improvements, but expressed concerns that such revitalization may end up pushing out the few remaining minority businesses in the area. .

The Supervisor stated that homelessness continues to be a problem in his district, and that he would like to see more done to provide supportive housing for these folks. He still questions the success of Mayor Newsom's Care Not Cash program and stated he would like to see the Board of Supervisors be given more oversight of the city's homeless assistance programs, as the Mayor is not currently required to provide accountability for their effectiveness to the Board of Supervisors.

He outlined the details of his recent "Pot Club" legislation, which would, for the first time, regulate the way in which local medical marijuana clubs could be set up and operated. His legislation puts the "Department of Public Health" in the "driver's seat" in overseeing these establishments, currently numbering 33 throughout the city. He did not know what number of clubs was actually needed to service the approximately 8,000 card-carrying medical marijuana users, but hoped that information would be forthcoming in time. Mirkarimi's legislation would restrict users from buying more than one ounce at any one time, and of possessing more than 8 ounces at any one time (the so-called "caregiver" provision).

Lastly, Supervisor Mirkarimi said the MUNI was a "disaster", and that he receives more complaints about that than anything else. He was disappointed that a recent proposition was defeated that would have given the Board of Supervisors more control over the city's transportation agency, and urged BOMA, SPUR and others who had opposed the measure to now create a comprehensive "visionary" document that would outline how the system could be better funded, and improved. Mirkarimi also stated he felt that "downtown" benefited disproportionately from MUNI service and should bear a greater responsibility for funding it.

Community Choice Aggregation Workshop Set for January 27th @ 8:30 a.m.

Members of the city's Community Choice Aggregation Task Force will meet with BOMA on Friday morning, January 27th, to discuss the city's upcoming effort to create a power pool for its residents and businesses. The ability to aggregate power needs and for local governments to purchase power for all of their residents and businesses was granted under a state law proposed by then-Assembly Member Carole Migden and passed into law in 2002. The city established a Community Choice Aggregation Task Force shortly thereafter to begin drafting a plan to set up and administer a citywide power pool. While the aim of the city is to "buy power in bulk" and be able to lower prices to consumers as a consequence, it is not the goal of the CCA program to take over PG & E's transmission and distribution systems or its meter-reading and billing functions. As currently envisioned, property owners will have three opportunities to opt out of the future power pool, so the proponents of the CCA are keen on convincing BOMA's membership to participate. 2003 energy consumption data shows that although residential users account for 91% of the customers in San Francisco, they only constitute 35% of total electricity sales, while commercial customers accounted for 52% of all electricity sales. Thus, having BOMA member properties involved will be critical to the success of the Community Choice Aggregation effort.

Come learn more about this city power pool. The workshop will be held at the BOMA Office, large conference room. Contact Ken Cleaveland to register for it at kenc@boma.com

2006 Mileage Rate

Beginning January 1, 2006, the amount employers may deduct for the reimbursement of employees who use their own cars for company business, will be 44.5 cents per business mile driven. This is the standard mileage rate approved by the Internal Revenue Service (IRS) to calculate the deductible costs of operating an automobile for business.

This is a decrease from the temporary rate of 48.5 cents per mile approved in September by the IRS for the last four months of 2005 in response to the sharp increase in gas prices during that period. The rate was 40.5 cents per mile for the first eight months of 2005.

City Contacts You Need To Have

- Street cleaning, tree service, garbage can replacement, illegal dumping: 415-28-CLEAN or 28clean@sfgov.org.

- Graffiti hotline: 415-241-WASH.

- Defective Streetlights: 415-554-0730 (holidays/after hours use 415-558-3265)

- Pothole hotline: 415-695-2100 or potholes@ci.sf.ca.us

- Aggressive Panhandling hotline: 415-553-0123.

Special "Building Oddities in San Francisco" Presentation at SPUR January 10th!
Laurence Kornfield, Chief Building Inspector for San Francisco, and Pat Buscovich, a well-known local structural engineer, will present an interesting talk on some of the city's strangest buildings, and how they came to be that way. The talk will begin at 12:30 p.m. at SPUR's offices, 312 Sutter Street, 5th Floor. The event is free to members; $5 for non-members.

Upcoming Events of Interest to BOMA Members

- January 10, 2006, 4:30 p.m., Special Hearing on BOMA/Union Square/SFSOS Appeal of Planning Commission Decision that new Parking Restrictions do not impact the environment or local economy, City Hall, 2nd Floor, Legislative Chambers

-January 10, 2006, 6:00 p.m., World Trade Club. Annual dinner for Power Association of Northern California with special guest speaker, Joe Desmond, Chairman, California Energy Commission. Reserve at www.panc.org.

- January 13, 2006, 7:00 a.m., Annual Mayors' Breakfast and Economic Forecast with Jerry Brown/Gavin Newsom at SF Marriott, sponsored by the San Francisco Business Times. Log onto www.bizjournals.com/sanfrancioco/events to register for this event.

- January 26, 2006, 1st BOMA San Francisco Luncheon of the Year! Palace Hotel, 11:30 a.m. Register at www.bomasf.org.

- January 27, 2006, 8:30 - 10:00 a.m., BOMA Office. Special BOMA Workshop on San Francisco's Community Choice Aggregation Plan with Cal Broomhead, SF Department of the Environment and other members of the CCA Task Force.

- February 8, 2006, 12 noon (lunch provided), Michela Alioto-Pier, SF Supervisor, at the BOMA Office.

Ken Cleaveland is Director of Government and Public Affairs for
BOMA San Francisco. Email Ken Cleaveland at kenc@boma.com.

Editor's Note: Views expressed by columnists published on FogCityJournal.com are not necessarily the views or beliefs of Fog City Journal. Fog City Journal supports free speech in all its varied forms and provides a forum for a complete spectrum of viewpoints.

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