All right, it's two o'clock, so we'll get started with roll call.

Candeles absent.

Foley here, can we here?

Cohen?

Here.

Yeah, corn.

All right, thank you.

We are going to start by reviewing next week's agenda for the September 9th council meeting.

It starts at and there's an ad sheet to go along with it.

Starts at 9 30 closed session, 1 30 open session, and consent starts on page five.

Continues on pages six.

7, 8, 9, and 10.

And we have uh continues on page 11.

12, 13, 14, and 15.

And then section three, we have the procurement audit.

And the report on an RFP for banking, lockbox, and merchant card services.

Section four, we have the civil grand jury response.

Section five, uh 101 Zanker uh funding agreement amendment.

5.2, we have a um transportation development fund agreement.

And section six, elect the electrification workforce development program, single family building reach code update, and San Jose Muni Waters public health goals report.

No land use.

So let's see if we have any public comment.

No public comment.

Alright, back to the committee.

All right, we have a motion in a few seconds.

And we're voting and the passes five zero.

On to our first review of the agenda for Tuesday, September 16th.

9 30 closed session, 1 30 regular session, recommended cancellation of the evening session.

Consent starts on page four and ends on page five.

Section three, the summer IGR report.

Section four, a horse-mounted unit for SJPD.

Section eight, an agreement with the County Office of Support of Housing.

We have one item of land use consent.

And two other land use items.

Little Italy Way renaming and a planning director's approval.

Oh, administrative hearing, that's the appeal for 1301 West Card San Carlos Street.

Do we have any public comment?

No public comment.

All right.

Any questions, comments, or a motion?

Move for approval.

Second.

Well, either or.

Okay.

All right, it's removed and seconded.

We are voting.

Motion carries 5-0.

We have two items on consent.

Do we have any public comment and consent?

No public comment.

Alright, back to the committee for consent.

Move approval.

All right.

We have a motion and a second.

Let's vote on consent.

Okay.

Consent calendar passes five zero.

And that brings us to section C.

Our rules committee review.

This is vacant storefront incentive.

I will invite Councilmember Ortiz to come down and introduce it.

All right.

Thank you, colleagues.

I want to thank staff for their thorough analysis and as well as flagging that staff is currently at capacity and the challenges that they are facing.

I do want to acknowledge that we are asking a lot of our departments, and I truly appreciate the work that they're doing every day to support our businesses, as well as to enable development and economic development across uh the city.

Um I agree with staff's approach to consolidate, promote, and raise awareness of the city's many small business programs through OEDCA.

I think that's valuable work.

At the same time, I do want to stress that our intent is not just to uh elevate and um provide a direction to and support the existing programs, but also to explore uh new ones and to make sure that this incentive program, which has been successful in San Francisco, can be piloted here in the city of San Jose.

I think that, for example, as we just uh passed an increase for code enforcement fines for blighted properties, we also have to have positive levers and positive incentives for property owners to enter agreements with small businesses and open up opportunities in our corridors.

But that being said, my understanding is this is not killing the policy, but it is just essentially deferring it uh to the budget process, and so I will wait patiently um for that conversation.

I do I do I do have a few questions in regards to some of the things that were uh in included in the overall uh I guess uh feedback from from staff, and I guess I don't know if Chris can speak to speak to that.

I wanted to ask, and in the um in your text, you you cite that um there's an assumption that 245 businesses would be using this program in the first year.

So we'd like to ask what uh what data or information you're you're utilizing in order to cite that information.

Thank you, Councilmember Chris Rutten, director of planning building code enforcement.

Um understanding this was just the sort of workload assessment, we did try and take a quick pass at this to understand firstly, based on business tax information, how many small businesses we see starting within our urban areas within our uh growth areas.

Um, we looked at how many uh citywide, and then we looked at the percentage of commercial lands that were in those growth areas and kind of did a back of napkin to get to that sort of an assumption of how many new small businesses of this type we would likely see over the course of the year.

Okay, we would like to see.

Was there any outreach to San Francisco to get an understanding of how many businesses they've seen come through their pipeline?

There was no, um we did take uh a pretty good look at the San Francisco program.

Obviously, because they're a city and a county, um, there's a whole host of other fees that are sort of baked into that program related to the opening of restaurants, whether it's health permits, they have a whole different subset on um you know police permits and different things like that.

Um so we did sort of take an in-depth look.

We didn't look at the kind of volume of use they're getting uh at this moment.

I think it's a fairly recent addition, so um, but we will we can do additional follow-up with them to find out more information.

Alright, thank you, Chris.

I just uh just want to be mindful.

Let's not throw the baby out with the bathwater.

I think you know we don't have to necessarily replicate exactly what San Francisco's doing, especially if they're you know uh uh I guess avoiding multiple fees.

Well, maybe we're only voting one one type of fee or one type of permitting fee, or maybe we are defining the type of businesses that qualify um for this this sort of incentive program to areas you know that are located in areas of a lot of light or lower socioeconomic uh um uh districts.

And so I just want to make sure that we're continuing to advocate for innovative ways to uh increase investment in some of our more blighted and underdeveloped areas, and I ask for the rules committee to please keep an open mind to that.

Thank you.

All right.

Well, thank you, Councilmember, for bringing forward another uh innovative idea to the to the committee.

Do you have any public comment on this?

No public comment.

Okay, so back to our committee.

I'll start with Councilmember Kamei.

Thank you so much.

Um I'd like to thank you, Councilmember Ortiz for uh thinking about small businesses and how we can assist in any way.

I think that there are in fact a lot of programs out there.

It would be nice given that we have a new director uh of the Office of Economic Development and Cultural Affairs, that we take a look at uh all of these programs, um, look at their usabilities and what is working, what's not working.

I do understand that my staff looked into uh what San Francisco saw and um they defined it as being on the first floor, and uh this last year they saw uh 11, it looks like 11,000 is what we kind of came up with who use the the program.

So it can be very effective, but I think that given that we have so many programs, we ought to figure out, you know, what is the best way to assist small businesses, and how can we as a city incentivize uh the ability to have them thrive because we know how important small businesses are.

You and I sit as liaison to the small business advisory committee, and I think that there is something to be done there.

That you know what exactly that is, I think we need to uh take a look at it, revamp it if necessary, and you know, kind of refresh it in new ways uh to make it more effective.

So I just want to thank you so much for bringing this forward.

Councilmember Duan.

Thank you, Chair.

Thank you, Councilmember Ortiz for not this uh memorandum.

I just have a few questions.

My understanding is that in 2025, I believe there's three thousand businesses that use and it costs two point two million dollars.

Is that correct?

Thank you for your question, uh Councilmember DeWan.

So you said three thousand businesses that have used in San Francisco, yeah, in San Francisco, yes.

Okay, I I'm I don't have that information.

So if if you were to break down the cost, it's only about 750 dollars per businesses.

So if we were to waive all the fees, uh just for Chris, it would let's do an arbitrary number of three thousand.

How much would that cost the city as a whole, including maybe staff times and everything else?

So there's a number of different things that go into this.

Um just kind of give you a sense the business uh license tax is roughly uh I think it's two hundred and twenty dollars for the first two employees, then it's about um it's thirty-seven dollars per employee up to thirty-five employees.

So roughly let's say that's fifteen hundred dollars if you're up to um thirty-five employees just on the business license tags.

I think the bigger issue comes in when we talk about permitting costs.

Now, obviously, um this goes a number of different ways.

If you're an existing retail business going to an existing retail space and there's very limited scope of work, it could be that it's a relatively simple process.

On average, I'd say it's somewhere in the region of of probably around three to three and a half thousand dollars for a relatively small kind of retail space.

Now, if you add uh complexity, whether it's a restaurant, if you're sort of changing out equipment, then obviously that price will go up just on permitting costs alone.

And again, that includes not just the permit, but also um construction taxes that we charge against that.

So it's probably anywhere between for small business, we were just assuming small retail and restaurant in our growth areas.

It could be anywhere from sort of three to ten thousand dollars, you know, conservatively on just permitting costs.

Now obviously we're cost recovery.

Um so the way that we've done this in the past, um, through the Office of Economic Development and Cultural Affairs, is that they do have an existing storefronts grant program that offset that permitting cost, so it works with the business owner to sort of then uh sort of essentially pay the permitting costs because you know we're cost recovery, so we're directly using those funds to pay the staff.

So I know that we have the storefront program that helps existing businesses, about $15,000 to replace the storefronts and so on.

What if we reduce that amount to 10,000 and use that the funding or the saving that we have and apply toward this program?

Is it possible?

That's what we got to do it in the budget.

Yeah, so so you absolutely could do that through the budget process.

Um that is something that we can look at.

Um, you know, San Francisco to compare us to San Francisco is a little bit hard.

I get we were trying to get at um a good portion of their permit structure actually does have general fund subsidies, so they have a little bit more flexibility on how they approach it.

I would say uh to your question and to just kind of go off what uh Councilmember Kamei is as part of this year's budget.

Uh the council did approve pr pretty major restructuring and modernization of the Office of Economic Development and Cultural Affairs.

And I do think, especially with the new director and and with those changes, the things that are mentioned here, you know, in the green light.

I think staff does need to be much more purposeful uh and partnering with the district five office and kind of offering these and streamlining and really pointing people to these tools, and then through the year, I would imagine not only staff but also council staff will have a much better idea next year of what those levers are.

Do we want to change the storefront grant, make it more flexible?

Is it looking at permitting?

So I think there's actual work we can do on the street with some of these businesses now between the Office of Economic Development and the District 5 office and some of these corridors, and that should really help inform future you know budget conversations or policy shifts that the council member or any of you may want to entertain next year.

Thank you.

Councilmember Watese.

The the program in San Francisco, is it not only in the underserved district, but is it citywide that the program they're putting in?

It's citywide, but I know that it would probably give Chris a heart attack if I tried to do that.

Uh that's why I I kept my comments that you know my my policy to be more focused in urban villages, and I know that we also have other like you know, quality of life indicators that we can use census tracks to even define that more.

You know, that's what I'm saying.

Like we could wiggle this policy.

What if it's more of a deferred fee?

What if they don't pay the fee into the the permitting fees until a year out or something like that?

I want to figure out a way to spur economic development to allow them to get up and running and then you know worry about the the second part afterwards.

And so I I think we can work with that.

But yeah, it would be the San Francisco citywide.

This one I'm looking at more urban village areas of growth.

That way we're we're spurring economic development and the areas in which the general plan has indicated it should be located.

Well, I was just thinking there there's a lot of small businesses and a lot of vacancy in in my district as your as well, and they're not in the urban villages, and I just want to make sure those folks get the same equal opportunities as the urban villages because businesses, small businesses pop up, doesn't matter which part of the city, they are small businesses where they don't have a whole lot of funding and they need that boost.

And I I think it's important that we look at um the picture, you know, larger picture to to spur the businesses right here in the city of San Jose.

Thank you.

Thank you.

Before I I go to the vice mayor, I just wanted to kind of think about it some of those questions.

I think we're onto something as far as making it simpler and streamlined.

Obviously, I also hear that time is just as much of an issue as cost, and so and I'm not, and I'd like to understand better um, you know, whether or not cost has been an impediment and to how many, and before we waive costs.

I mean, we if if in fact cost isn't the primary issue, then waiving the cost isn't necessarily going to improve things.

The other thing is if we waive cost in certain areas, it could incentivize businesses not to move into other areas and only to and to go to the places where the cost fees are waived.

And so I want to be really thoughtful about an approach, and I do like the idea of more of a holistic analysis with the new office of the new OED director and combined with PBC, how can we help businesses?

And perhaps there's in from a budgetary standpoint, providing incentives for people who have trouble affording fees might be go further than you know, just then the cutting of fees because there's some businesses need more help than others.

But I you know, we just we these are thought these are important things to think about, but I'm not sure yet that this is there, in my opinion, but um so that that's just some of the thoughts that I have.

Um, Vice Mayor Foley.

Thank you.

I thank you for introducing this again.

I I think it is important work, and I appreciate the workload analysis from staff.

Uh I the the p I like the two parts of this, the green light education, but it shouldn't stop there.

This really does need to be part of an informed budget and study priority study session process.

So I would move the uh I guess remove the workload analysis recommendation.

Is that how I do it?

Okay.

That's the question for so yeah, remove move forward the green lighted items in the work in the workload analysis.

So that's your motion.

Is there a second?

Yes.

Move forward and yeah.

I don't need to do anything with the yellow there.

Well, I mean the yellow light can be brought forward as part of a budget, or I mean uh it's not automatically moved to the budget.

I mean, somebody brings it forward as a as a request during the budget process.

Is that the way we would agree?

We can track it.

Um and move it forward if you would like.

We typically do those with um a lot of yellow lights.

I would think um through this year and kind of through the renewed effort of small business and the district five office and the council member and Jen working together that this proposal may shift a little bit as the council member and staff learn more as well.

So something new could be introduced.

But I'll I'll have Jen um and the council member talk about that as they start working on implementation and kind of lessons learned.

Okay.

And happy to work with any of you as well.

Great, thank you.

All right.

Oh, can't we want to see your hand went back up?

Yeah, I think.

Oh, Councilman Rick and Dallas.

No, thank you, Chair.

Uh no, I I again just wanted to thank the author of this uh of this memo, uh, Councilmember Ortiz for uh bringing this conversation forward.

I think ultimately um you know the the focus and uh the uh being intentional about wanting to invest in areas that have historically been disenfranchised is an important conversation, especially for us as a committee uh uh as a committee um as a whole to be able to discuss and and so while while you know um the the uh there are some yellow-lit items.

I think it's important that we have this conversation, especially you know, how as Council Member Duan mentioned, you know, seeing seeing a uh uh incentive or a fee reduction program to be implemented citywide, you know, that conversation needs to happen in the budget.

I hope to have a conversation of of how we can be purposeful in our in where our values are, aka the budget, uh, next year.

And so um I, you know, I appreciate your efforts, Councilmember Ortiz, and and look forward to tracking this as as well.

And and ultimately, you know, the the focus that you're bringing to E San Jose is is something that I I want to commend you for and and appreciate my colleagues for the conversation and contributions to this.

Thank you.

All right, back to Councilmember Duane.

Thank you, Chair Collin.

Um, I appreciate your thought about time, time is money in the business world.

And this goes to Chris because if a constituent, for example, procure a building that costs around $10,000 a month of rent, and if it's our process for permitting take 24 months, they're out of business before they even start it.

And I would hope that we as a city find ways to reduce that timeline to six months where businesses can start and survive in this difficult economic uh time.

And I think it's important that not only small businesses, large businesses, including investor who willing to build housing, the the you know, we're in the housing crisis, and we need to make sure we move forward.

Thank you.

Yeah, and I'm I'm I'm sure it obviously depends on the complexity of projects on these timelines, and that for the most part standard permitting process is pretty short, but it's a lot of the other things that happen the construction permits, the inspections, and all those things that often take a while, and we should always be looking for efficiencies in our in our process, but it's not always I I know Chris is sitting in that box, and I could see he's a little nervous about being held held to blame for every delay that happens in our in our process, but uh it's not always on you.

Not nervous at all.

Um I will just say there's multiple parties involved in the permitting process.

Um we do have a number of programs that are aligned at expediting these processes.

Um we do try and work with the Office of Economic Development and Cultural Affairs to do a lot of outreach to small business and brokers to ensure that they understand the requirements of any building that they are leasing.

Unfortunately, it does happen where people lease a property before doing that due diligence, you know, and there is a lengthy permitting process, or there is a land use challenge for the most part.

Most folks are looking at existing spaces that have already held businesses of a similar type.

Um and as a result, we have very expedited programs to support that.

Now we rely on the information that we're given by our development partners.

Um I like to say that if people would give us perfect applications, we'd happily approve them first time.

You know, but a lot of that time and uh quite honestly, a lot of that expense is actually outside of our control.

The permitting cost is a relatively small amount of the total cost of build out.

Um a lot more of that is on the construction side, the sort of design side, as you said, the lease side.

Um so there's a lot more that goes into it.

We're certainly doing everything we can to align our process and make sure that we're not creating additional roadblocks or impediments to small business.

Great.

Thank you so much.

Um I think we've exhausted conversations, so let's vote on the motion.

And the motion carries five zero.

Thank you so much.

And we are going to open forum.

No public comment.

All right.

We are adjourned at 223 PM.

Um, we have a little bit more.