Blog: April, 2012
Big Wins, Big Questions as High-Speed Rail Moves Ahead
Earlier this spring, high-speed rail in California took two very significant steps. First Bay Area leaders announced a plan to electrify Caltrain, which would make it possible for Caltrain and high-speed rail to share the same tracks between San Jose and San Francisco. Second the California High-Speed Rail Authority released an updated business plan that cuts the cost of the train system by a third.
The new business plan (download the official summary here) still assumes an electrified train system that will travel between San Francisco and Los Angeles in 2 hours and 40 minutes (at 220 m.p.h.) and will operate without any ongoing subsidy.
There are four key changes in this updated business plan:
1. It lowers the cost of the high-speed rail system by $30 billion to $68.4 billion by adopting a “blended” approach. This focuses investment on upgrading existing regional and commuter rail systems, not building an entirely new statewide system. The blended approach is realistic and allows for the system to be built incrementally. In the 2011 business plan, the blended approach was estimated to cost $78 billion. It is now estimated to be $68.4 billion. The savings are primarily due to updated assumptions about inflation and faster construction time. This approach has greater political support in adjacent communities (namely on the Peninsula) and has successful precedents around the world, including France’s popular TGV.
2. While starting construction in the Central Valley, it includes early investments in the Bay Area and Los Angeles (the “bookends” of the system). This includes the decision to help fund the electrification of Caltrain with a $700 million statewide investment in addition to $800 million in local and regional funds to help electrify Caltrain by 2020. Electrifying Caltrain will speed service (since electric trains can stop and start faster than diesel ones) and will reduce emissions by 90 percent. The new business plan also includes investment in upgrading the rail systems in the Los Angeles area. Overall, $3.5 billion will go into the urban systems over the next eight years.
3. It proposes that the initial operating segment will connect from the Central Valley to Southern California.The 2011 business plan proposed that the initial construction section would run from Madera (south of Merced) to Bakersfield. This business plan assumes that the system will begin with passenger service from Merced to a station in the San Fernando Valley. To connect from the Central Valley to Southern California requires investment in building passenger rail tracks over the Tehachapi Mountains to connect Bakersfield and Palmdale. This business plan assumes that this segment will have sufficient ridership and revenue to exceed its cost and will be self-sustaining without need for operating subsidy.
4. It makes high-speed trains part of an integrated statewide transportation system in California, where each investment has immediate benefits to its respective region. While the initial construction and operating segments will be to the south, the California High-Speed Rail Authority is proposing improvements to the existing regional rail system between the Central Valley and the Bay Area, namely the Altamont Commuter Express from Stockton to San Jose and Amtrak’s San Joaquin line from the East Bay to Stockton or Sacramento via Contra Costa County.
While we commend Bay Area leaders and the California High-Speed Rail Authority for taking these important steps to move the project forward, SPUR remains concerned that high-speed rail’s initial operating segment runs from the Central Valley to Southern California and will not connect to the Bay Area. We are also concerned that there is not yet funding to extend Caltrain’s service from the current San Francisco station at 4th and King to the new Transbay Transit Center in downtown. This raises a few questions:
· When will be there be a one-seat ride from San Francisco to Los Angeles?
· If there is funding to upgrade the Altamont Commuter Express over the Altamont Pass, does this mean a rider from San Francisco would take Caltrain to San Jose and then ACE to Stockton before connecting to the trunk line to Los Angeles?
· Does this mean that we should rethink Dumbarton Rail as an electrified service that could bring upgrades and electrified ACE trains to meet up with Caltrain on the Peninsula?
· What will it take to fully fund high-speed service over the Pacheco Pass south of San Jose?
The new plan puts the onus on the Bay Area as a region — and SPUR as a civic voice — to find the money to both bring Caltrain and high-speed service to San Francisco’s key transit hub and connect that service to the initial high-speed operating segment in the Central Valley.
Despite our concerns about the initial focus on the connection to Southern California, we at SPUR (like the mayors of California’s major cities) remain strong supporters of high-speed rail. The blended approach takes a pragmatic tack — without sacrificing true high-speed service.
SF Works to Reform Its Business Tax
For the last decade, businesses in San Francisco have been adamant that the city’s payroll tax is holding back job growth. First, companies must pay the tax when they reach $250,000 in payroll, which discourages new hiring. Second, they must pay it when employees exercise their stock options — a strong incentive for any company considering an IPO to leave the city. SPUR, along with much of the business community, has argued that we should restructure the city’s tax system to remove these disincentives to hiring. Following payroll tax exemptions in 2011 for stock compensation and for businesses locating in the Mid-Market neighborhood, the call for payroll tax reform has sounded again. The city is finally responding, but will this effort lead to real reform?
City Controller Ben Rosenfield and Chief Economist Ted Egan have for the last three months been hard at work designing a replacement for San Francisco’s payroll tax. That tax is currently 1.5 percent of total payroll for every company with at least $250,000 in payroll. This means most businesses pay nothing, because they're too small to qualify. The city has also had difficulty collecting from entities that don’t clearly have “payroll,” including some partnerships, sole proprietors and financial vehicles. As a result, only 7,500 of the city’s 80,000 registered businesses pay the tax. One of the goals of the reform effort is to reduce rates on growing companies by asking all companies to pay something.
San Francisco is the only city in California to levy a tax on payroll; most other cities have some form of gross receipts tax. For all of the complaints about the city’s payroll tax, though, at least it’s simple.
Rosenfield and Egan have developed alternatives and conducted dozens of industry workshops to explore their implications. All proposals at this stage are designed to be revenue neutral (meaning they would create the same amount of revenue as the current payroll tax), but they would broaden the base of payers. In other words, the city isn’t looking for more money, but it is trying to increase the percentage of businesses that contribute.
To make the San Francisco ballot in November, proposed measures must be submitted to the Board of Supervisors by the first week in June. As of this writing, the controller’s office is on schedule to send a final proposal to the mayor and board president by the first week in May. There are currently two distinct proposals: a new gross receipts tax and a revised payroll tax. Below we summarize the main features of each. (You can also download the latest presentation from the controller’s office.)
Option 1: Gross Receipts Tax
Gross receipts taxes are based on a company’s total earnings, as opposed to a percentage of a company’s payroll. Most major cities in California have a gross receipts tax, and no other cities have a payroll tax.
· Uses industry-based rate schedules. Separates the business tax base into six groups, based on industry sectors. This structure mirrors that used in many other California cities but simplifies the structure with fewer schedules.
· Sets progressive rates. Transitions tax rates to a structure in which rates increase as earnings increase. Companies pay a higher rate as they earn more. Conversely, companies pay a lower rate if they earn less.
· Sets marginal rates. Creates tiers of rates that apply only to the range of gross receipts, rather than the entire amount of gross receipts, similar to personal income taxes. For example, a company in schedule 1 would pay 0.1 percent tax on gross receipts from $1 million to $2.5 million and 0.2 percent on all gross receipts from $2.5 million to $25 million.
· Broadens the tax base. Increases the number of businesses paying the payroll tax to 33,500 from only 7,500 in 2010.
Option 2: Revised Payroll Tax
The revised payroll tax proposal retains the current business tax structure but lowers rates in all categories and significantly increases the cost of business licenses.
· Increases business license fees. Retains payroll tax but increases business license fees at all levels. In the current system these fees range from $25 to $500 based on payroll. New rates would range from $150 to $10,000.
· Lowers overall payroll tax rates. As a result of higher license fees and a greater number of payers, payroll tax rates would actually be reduced at all levels. Rates would progressively increase with payroll but top out at 1.2 percent for those with the biggest payrolls.
· Uses progressive rates.Transitions the current 1.5 percent tax rate to a structure in which companies pay a higher rate as they earn more. Conversely, companies pay a lower rate if they earn less.
· Creates special real estate license fees. New rates would be assigned by type of facility. Residential buildings of more than four units would pay per unit, commercial real estate would pay per square foot of space, and commercial parking with more than 100 spaces would pay a flat rate per facility.
· Creates incentives for new businesses. Includes a one-year payroll tax holiday for all new businesses.
· Encourages growing businesses. Multi-year stock option smoothing and a $100,000 annual deduction for all businesses could help businesses grow and thrive.
· Broadens the tax base. Increases the number of businesses paying the payroll tax to 33,000 payers from 7,500.
All of this begs a very important question: What is the best way to transition a tax system that generates $400 million per year? Very carefully. The city is considering a multi-year transition that phases in the new structure in a way that ensures that the city doesn’t lose revenue — or collect too much. Details are not yet finalized, but it could look something like this:
Year | Business Tax Phasing Plan Old Payroll Tax Rate |
New Tax Rate |
1 | 90% | 10% |
2 | 80% | 20% |
3 | 70% | 30% |
4 | 60% | 40% |
5 | 50% | 50% |
Of course, there is always a third option: do nothing. It is still unclear whether a consensus will be achieved in support of a new structure.
Further complicating the process are separate proposals from the Board of Supervisors, including a small business payroll tax exemption introduced by supervisors David Campos and Mark Farrell, and a persistent push to generate new revenues from Supervisor John Avalos and others.
Depending on which path the eventual tax reform proposal takes on its way to the ballot, there are a number of possible outcomes. The mayor could simply choose to put a payroll tax reform package on the ballot by his own signature, in which case the board would have no influence over the content. But what happens if a proposal is carried by the board? Will there be adjustments to specific rate categories? Integration of one or more proposals from the Board of Supervisors? Perhaps even a proposal that generates additional revenue? Of course the more layers of complexity, the lower the chance that the proposal will make it to the ballot.
SPUR has mixed feelings about these proposals. We do not want to drive away firms headquartered in San Francisco, which is a real risk of the gross receipts option. On the other hand, we believe the payroll tax is probably worse. Our hope is that the city can fine-tune the gross receipts option so that it succeeds in building the tax base while keeping San Francisco a viable location for many different kinds of firms.
Draft Ocean Beach Master Plan Document
The Ocean Beach Master Plan continues to be developed. Please check back here for the final document. In the meantime, you can download the draft version:
Draft Ocean Beach Master Plan Document >> [pdf download - warning: file is 75 MB]
Rethinking Oakland's School Food Program
Meals cooked from scratch. At least a quarter of the ingredients locally sourced. Fresh produce from the 1.5-acre farm adjacent to the new central kitchen. These are just a few of the goals in a new vision for Oakland’s school food program detailed in a recently released report.
The feasibility study, published by the non-profit Center for Ecoliteracy with the collaboration of the Oakland Unified School District (OUSD), looked at how Oakland’s school food program could be reformed to better serve the district’s goal of supporting the health and academic success of its students. The report found that the current infrastructure for the school meals program is stretched beyond its intended capacity and doesn’t have the space to efficiently produce high-quality, fresh-made food that can be distributed to the district’s 89 schools.
OUSD today serves nearly 30,000 meals a day to it students. With 70 percent of those students qualifying for free and reduced-priced meals, the bulk of the revenue that pays for the program's food, labor and overhead comes from federal and state reimbursements, which total less than $3.50 per meal. Despite the fiscal constraints, OUSD has a goal of improving the food it serves its students by overhauling its kitchen facilities and operations.
Specifically, the feasibility study recommends that OUSD dedicate $27 million for capital upgrades including:
- Redeveloping an existing OUSD property into a 44,000-square-foot commissary that would cook food for schools throughout the district
- Remodeling and upgrade nearly every school’s kitchen to either include the capacity for on-site cooking or reheating of meals from the central kitchen
- Creating a 1.5-acre farm adjacent to the new commissary that would provide ingredients for the meals
In addition to OUSD’s capital needs, the report also recommends increasing the school meal program’s operating budget by an average of $200,000 for the first five years and a long-term increase of 3.5 percent in staffing costs once all the new kitchens are opearational. To fund the capital changes, the report recommends that the district pursue local bond funding or parcel taxes, state and federal grants, philanthropic funding, and traditional bank loans. Funding to cover the increased operating costs for staff and overhead are projected to come from increased numbers of students opting for school meals, as well as greater program efficiency.
The report presents an ambitious vision — relevant not just to Oakland, but also to San Francisco Unified School District (SFUSD). The two school districts serve a similar number of meals per day and both have a similar number of students who qualify for free or reduced meals (more than 60 percent). Though the two districts have substantial differences — San Francisco no longer prepares meals from scratch in its school kitchens, for example — Oakland’s study offers one option for how a Bay Area school district could reform its school meals program. Other options the Oakland report did not explore include improving school meals by using an outside contractor or cooking from scratch in every school.
Whether Oakland embraces the recommendations or another path is to be seen, but the report offers a place to begin a conversation on both sides of the Bay.
Creating a Community Vision for Stockton Street
The Stockton Street Enhancement Project, spearheaded by Chinatown Community Development Center (CCDC) and SPUR, brought Chinatown and SPUR stakeholders together to discuss ways to preserve the economic and cultural vitality of Stockton Street while offering opportunity areas for improvement through the next decade. The project, made possible by a grant from the National Endowment for the Arts, included a walking tour and two workshops designed to address issues with the highly trafficked corridor.
Stockton Street has evolved over the years to become an example of true urbanization, replete with a strong transit network, multigenerational families living in tightly knit spaces, hundreds of mom-and-pop stores and a bustling streetlife. It has a dense immigrant population and plays an important role as a regional hub for both Asian Americans and tourists from around the world. Its success lies in its strong history of grassroots organizing to protect Chinatown’s affordability, culture and urban form.
Buildings along the corridor are typically mixed-use — with retail on the ground floor and housing above — and between three and four stories in height. In addition to storefronts, there are also many social services and institutions (i.e. health, education, religious and family associations) that line the busy blocks of Stockton Street.
The residential base, small businesses and marketplace feel are assets that should be preserved and enhanced as the neighborhood experiences change from major public projects such as the new Central Subway. Connecting Chinatown to Union Square and SoMa before fusing with the existing T-Third line as it extends to Visitacion Valley and the Bayview, the Central Subway could prove to be an catalyst for change along the Stockton Street corridor, reshaping the street’s usage patterns and drastically changing its character. The community planning process framed by CCDC and SPUR sets the overarching vision of how to preserve and enhance the neighborhood amid these oncoming changes.
With an estimated 20,000 people living in Chinatown’s 30 square blocks, many of whom are crowded into 8-by-10-foot single room occupancy units, Chinatown is the city’s most densely inhabited neighborhood. The average median income of these residents is $18,000 per year, with more than a third of the population being seniors who live on fixed incomes. The neighborhood is made up of 88 percent renters, and only 10 percent of households own private vehicles. Future plans for Stockton Street must take into account the needs of the people who live in Chinatown by focusing on the creation of safe streets, affordable housing, open space, timely and efficient transit and access to social services and educational and religious institutions.
Stockton Street is also an important cultural and social hub for Asian Americans from many of San Francisco’s immigrant neighborhoods, including Visitacion Valley, SoMa, Outer Mission and Excelsior, who take the 30, 45 and 8X buses that pass through the corridor. Other Asian Americans enclaves in the Sunset, Richmond, East Bay and South Bay depend similarly on Muni and BART as their connection to Chinatown. Regardless of their location, San Francisco’s Chinatown serves as the confluence for the Bay Area’s Asian Americans, with a large proportion of them attending school, worshipping, visiting friends or shopping in the neighborhood.
Through a walking tour and two workshops, one held in Chinatown and one held at the SPUR Urban Center, Chinatown CDC and SPUR implemented a rigorous community engagement process to better understand the needs along Stockton Street. These public discussions brought together a diverse group of stakeholders — including monolingual residents living along the corridor, local merchants, property owners, architects and planners — to talk about potential opportunities for change. Bilingual and bicultural, the workshops were conducted to be participatory and engaging for all groups involved.
At the start of each workshop, SPUR and CCDC staff analyzed the current state of the Stockton Street corridor and shared case studies, both local and international, as possible models for its future, after whichparticipants divided into smaller groups to run through three different brainstorming exercises: 1) current strengths and challenges of Stockton Street, 2) priority areas to focus on for its future and 3) the connection of the future Chinatown Central Subway Station to Stockton Street.
Participants quickly discovered that there is no single solution for Chinatown’s Stockton Street. On the contrary, there are many elements that work well, but have also proven to be challenges for functionality. For example, retail displays encroaching on to the sidewalk may initially seem innocuous and complementary to the street’s character, but when combined with open basement trapdoors, parking meters, unloading trucks and a multitude of newspaper stands these components quickly narrow the navigable sidewalk space.
Participants noted a similar dichotomy with the corridor’s transportation options. While the continuous flow of Muni buses provides near-seamless transit connections, their frequent stops also create traffic congestion. With pedestrians often forced into the street due to sidewalk obstructions, this congestion brings with it very real danger. Compounding this is the lack of open space along Stockton Street, with only Willie “Woo Woo” Wong Playground providing an oasis from the activity of the street.
In the second exercise the workshop groups identified many of the same priorities and solutions for the corridor. Short-term proposals included restricting loading and unloading during peak pedestrian hours, consolidating sidewalk stands and beautifying the street through painting, cleanup and improved lighting. Participants looked to similar streets around the world for ideas, taking inspiration from flexible parking options and sidewalk bulbouts, high-volume bus stops and pedestrian-scale full-spectrum lighting. Long-term ideas posed included eliminating a south-bound travel lane to free up transit and pedestrian flow, creating “flex delivery zones” dependent on the time of day and prioritizing travel lanes through traffic pattern analysis. Also proposed was the idea of “shoplets,” compact retail spaces that take over on-street parking in a similar manner to a parklet.
The final brainstorming exercise focused on the role of Stockton Street as the future terminus for the Central Subway. Participants immediately identified the opportunities in crafting the station as a hub of activity, art, business and culture while suggesting plaza space and rooftop decks as a respite from the street, along with improved signage and wayfinding for visitors. Finally, participants felt that the subway station’s construction could prove to be the impetus for the evolution of the Stockton Street corridor and the grand catalyst for lighting, transportation and façade improvements along its extent.
The feedback from the Chinatown workshop resulted in pragmatic ideas for positive and lasting change for the corridor, while the SPUR workshop, comprised mostly of working professionals, came up with more technical and creative thoughts on possible changes. SPUR and CCDC hope the City of San Francisco will prioritize these ideas in their plans as they pursue opportunities within the corridor.
SF Approves First "Neighborhood Urban Agriculture" Permit
On March 9, 2012, San Francisco issued its first zoning permit for “neighborhood urban agriculture.” The change of use permit, given to Little City Gardens, allows the small urban farming business to grow produce for sale at its three-quarter-acre market garden in the Mission Terrace neighborhood. It is the first permit issued under San Francisco’s pioneering urban agriculture zoning guidelines, which Mayor Lee signed into law in April 2011.
The permit is both a victory for Little City Gardens and the culmination of a multi-year effort to legalize commercial urban farming in residential neighborhoods in San Francisco. The permit, is, at its core, a simple recognition that the previously vacant lot is now being used to grow food according to basic guidelines. Securing the permit, however, was not simple. The process involved:
- four visits to the permitting office
- plan review by the Planning Department, Department of Building Inspection, Public Utilities Commission and Central Permit Bureau
- a $300 fee
- hours of conversation between the applicants and the various agencies about the new zoning law and the practice of urban farming
Little City Gardens has been at the forefront of trying to find a legal path to sell what it grows in the city. Now, having set the precedent of successfully securing a change of use permit, the path ahead for other aspiring urban farmers in San Francisco will be a little smoother.
Selling What You Cook at Home
Let’s say you’ve got a great jam recipe. Or perhaps you make some mean pickles. Your friends keep telling you that you should quit your day job and follow your culinary passion. But unless you’ve got quite a bit of savings or other access to capital, following your friends’ advice is a pricey proposition.
That’s because in California, you can’t sell any food prepared in a home kitchen. And access to a licensed commercial kitchen costs money — usually starting at around $30 per hour in the Bay Area. Add your ingredient and labor costs, and it becomes a decent investment to test your business idea.
A proposed piece of state legislation, the California Homemade Food Act, would change all that. Called the “cottage food bill,” the legislation would allow Californians to sell certain items produced from their home kitchen. Similar to legislation already enacted in more than 30 other states, the bill comes with certain restrictions, including only allowing the sale of what the health department refers to as “non potentially hazardous” items, which basically means products that would not go bad sitting on a shelf for a few days.
On March 27, supporters of the law — including Christina Oatfield of the Sustainable Economies Law Center and Shakirah Simley, owner of Slow Jams — discussed the proposal alongside Richard Lee of the San Francisco Department of Public Health at an event co-sponsored by Kitchen Table Talks, 18 Reasons and SPUR. Lee raised a number of concerns that he and other public health officials statewide shared. The proposed legislation would give the health department much less authority to inspect home kitchens that sold goods to the public than what it has for inspecting licensed commercial kitchens. He expressed concerns about whether home producers would follow best practices regarding hand washing, sanitizing surfaces, pet contamination, vermin, appropriate labeling of allergens and distinguishing what is and is not potentially hazardous food. Oatfield responded by noting that that advocates were working with the health officials to add amendments to address some of their concerns.
She also discussed the issue of scale-appropriate regulation — the idea that the less risk an activity poses to society, the less regulation it requires (and vice-versa). Since home kitchens produce much less volume and serve fewer customers than commercial kitchens, the thinking goes, they should not be subject to the same inspections. One of the aspects of the legislation currently under negotiation is whether a cap, based on sales volume, should be added to prevent a home kitchen from producing at the scale of a commercial kitchen.
The legislation is just beginning to make its way through the California Assembly. It is almost certain to be amended as food-producing entrepreneurs push for lower barriers to entry and public health regulators push to ensure food safety. But, if it does become law, Californians would be able to both sell what they grow from their home garden and what they cook in their home kitchen.
SPUR Announces June 2012 Ballot Positions
This June’s primary election will bear little resemblance to the contentious ballot San Franciscans considered last November. Gone are the competing pension reform measures, sales taxes and bonds. We’re left with two measures, both placed on the ballot by voter petition.
While the June slate may be lean, voters should take the time to fully research the measures on the ballot this spring. They’re important not just to how the city operates but also to how we choose to fund city services.
Prop. A addresses how the city contracts for garbage-collection and recycling services; this measure would require the city to own all supporting facilities (it currently does not) and competitively bid the service. Prop. B limits how the Recreation and Parks Department funds Coit Tower, which could create a precedent for similar limitations at other facilities throughout the parks system. These measures could both have potentially expensive implications.
After hearing an in-depth report from our Ballot Analysis Committee, SPUR’s board of directors voted to take the following positions regarding the two propositions on the San Francisco ballot this June:
Proposition A: Competitive Bidding for Garbage Collection and Disposal
Ordinance that would require the city to use a competitive bidding process to award separate franchises or contracts for five distinct categories of waste collection and processing in San Francisco, and would require the city to own all processing and transfer facilities utilized as part of these contracts.
SPUR position: NO
Proposition B: Coit Tower Policy
Policy statement to protect and preserve the murals in Coit Tower and to strictly limit commercial activities in the tower.
SPUR position: NO
Stay tuned for our in-depth analysis of these measures at spur.org/voterguide as Election Day approaches.
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