TO: Honorable Members of the Board of Supervisors
FROM: Gabriel Cabrera, Legislative Analyst
DATE: August 14, 2002
SUBJECT:San Francisco"s Flower Markets

SUMMARY OF REQUESTED ACTION

Motion (introduced by Supervisor Sandoval) requesting the Office of the Legislative Analyst to review the history of flower markets in San Francisco, and estimate the total revenue they bring in and total revenue that is paid to the City.

BACKGROUND

The City began issuing permits for flower-vending stands in 1904. Since then, the Department of Public Works (DPW) has issued permits on a case-by-case basis. Notably, in 1940, the Board of Supervisors passed an ordinance identifying the locations of the 12 flower-vending stands that were allowed to operate in the downtown area. Today, there are 18 locations citywide, as outlined in Section 155 of the City"s Public Works Code. Attachment 1 to this report contains a list of these locations.

Permit fees for flower stands were last increased about 21 years ago in 1981. That year, quarterly permit fees increased from $75 plus $20 per employee to $100 plus $30 per employee. According to DPW"s Bureau of Street Use & Mapping, the City collected approximately $4,350 in permit fees from flower stands in FY 00-01. Moreover, Attachment 2 shows total revenues (Gross Receipts or Payroll) generated by flower stands over a three-year period from 1999 to 2001. According to the City"s Treasurer & Tax Collector Office, all currently registered flower stands qualify for the City"s Small Business Tax Exemption and do not pay City business taxes because their tax liabilities do not exceed $2,500.¹ Thus, they do not generate tax revenues for the City.

CURRENT LAW

Article 5 of the City"s Public Works Code contains the rules and regulations governing street flower markets in San Francisco. According to this Article, only the Director of Public Works may issue permits for flower vending stands. As noted above, each permittee must pay $100 per quarter plus $30 per employee per quarter. The permittee must pay in advance and failure to do so may cause the Director of Public Works to revoke his/her permit. In addition, any assignment or sale of a flower stand permit requires prior approval from the Board of Supervisors. The exception to this rule occurs in the event of the permittee"s death. In which case, the permit is assigned to a member of the deceased permittee"s immediate family. Finally, any person, firm or corporation who violates any of the provisions of this Article is guilty of a misdemeanor.

ISSUES ANALYSIS

A.Permit Fees - According to the Bureau of Street Use & Mapping, permit fees for flower stands do not currently recover the cost of administering the permit program. As noted above, these fees were last amended 21 years ago, and have not kept up with inflation, according to the Bureau.

B.Delinquent Accounts - Of the 18 permitted vendors, 5 owe the Bureau for delinquent permit fees. Attachment 3 to this report, provided by DPW, contains a comprehensive list of flower stands, last payment amounts, date paid up to, and whether or not the accounts are delinquent. The Bureau advised our office that some vendors have not paid permit fees for several years, and that it lacks the resources to collect outstanding balances.

C.Business Taxes - The Treasurer & Tax Collector"s Office advised us that 3 of the 18 permitted vendors have not registered to pay City business taxes. As such, it is not possible to determine whether these stands would be required to pay taxes. However, at a minimum, these stands are liable to the City for tax registration fees ($25, $150, $250 or $500 per year). In this case, the stands would most likely pay $150 per year, according to the Treasurer & Tax Collector"s Office.

CONCLUSION

Our research shows that flower-vending stands have a long history in San Francisco. The number of stands has increased over time since 1904. The Director of Public Works has issued permits on a piecemeal basis, and added them to the City"s Public Works Code accordingly. We discovered that flower stands paid $4,350 in permit fees to the City in FY 00-01. This is about average, according to DPW. In addition, we found that all of the currently registered flower stands are exempt from City business taxes because their tax liabilities do not exceed $2,500. Finally, we discovered that (1) permit fees do not recover DPW"s costs of administering the permit program, (2) several flower vendors owe the Department for delinquent permit fees, and (3) some flower vendors have not registered to pay City business taxes. Based upon these findings, the Legislative Analyst offers the following recommendations for your consideration:

RECOMMENDATIONS

1. Urge the Department of Public Works to increase permit fees for flower stands. At a minimum, the Department should recover its costs for administering the permit program.

2. Require DPW to forward delinquent accounts to the City"s Bureau of Delinquent Revenue. In addition, the Board of Supervisors may consider charging interest on delinquent accounts.

3. Urge the City"s Tax Collector to register all flower stands to pay City business taxes. The City should at least collect registration fees, if not taxes, from all stands.

Footnotes:

¹ The last year that any flower stand generated tax revenues for the City was 1999. That year 2 stands paid City business taxes, according to the City"s Treasurer & Tax Collector.