CHAPTER 83:
FIRST SOURCE HIRING PROGRAM

Sec. 83.1.	Short Title.
Sec. 83.2.	Findings.
Sec. 83.3.	Purpose.
Sec. 83.4.	Definitions.
Sec. 83.5.	Scope.
Sec. 83.6.	First Source Hiring Administration.
Sec. 83.7.	Duties of City Departments.
Sec. 83.8.	Workforce Development Advisory Committee.
Sec. 83.9.	First Source Hiring Requirements for Contracts and Property Contracts, and Other Work Performed in the City by City Contractors.
Sec. 83.10.	Violation of First Source Hiring Requirements in Contracts and Property Contracts.
Sec. 83.11.	First Source Hiring Requirements for Permits for Commercial Development and Residential Projects.
Sec. 83.12.	Violation of First Source Hiring Requirements in Permits and in Work Performed by a City Contractor on Non-City Projects in the City.
Sec. 83.13.	Records.
Sec. 83.14.	General Exclusions and Limitations.
Sec. 83.15.	Collective Bargaining Agreements.
Sec. 83.16.	Severability.
Sec. 83.17.	Limited to Promotion of General Welfare.
Sec. 83.18.	Operative Date and Application.

 

SEC. 83.1. SHORT TITLE.

   This Chapter shall be known as the "First Source Hiring Program."

(Added by Ord. 264-98, App. 8/21/98)

SEC. 83.2. FINDINGS.

   (a)   In August 1996, a new Federal law, the Personal Responsibility and Work Opportunity Act, also known as "welfare reform," fundamentally changed the nature of public assistance programs in this country, shifting the focus from the receipt of benefits to procurement of employment within specified time limits. Approximately 17,350 of San Francisco's children and 7,330 of its adults (3.4 percent of the population) who currently receive Temporary Assistance to Needy Families (TANF), the program formerly known as Aid to Families with Dependent Children (AFDC), will be limited to five cumulative years of aid during their lifetime. This means that within five years, the adult members of these families, unless specifically exempted, must be employed at an economically self-sufficient level. Under the new Federal law, after two years on aid, most recipients must work in order to maintain eligibility for (TANF). As families reach their time limits, there will be no federal or State funding help to support them. Therefore, the creation and retention of adequate employment opportunities within the City is essential to prevent these families from falling into complete destitution.

   (b)   The Federal law will penalize states that fail to meet their assigned quotas for moving individuals from welfare to work by imposing monetary sanctions that will be passed on to the counties.

   (c)   Many people on welfare and other economically disadvantaged individuals do not have immediate access to employment opportunities that will bring economic self-sufficiency. Often, long-term recipients of public benefits are confronted with multiple barriers to full employment, including lack of education, job-readiness skills and work experience.

   (d)   In San Francisco, there are 9,000 single unemployed adults in the County Adult Assistance Program (CAAP) who are also in need of programs to move toward self-sufficiency. Many CAAP clients have chosen an employment track and are pursuing self-sufficiency through work. Unlike TANF, CAAP is funded solely by County dollars and is not subsidized by the State or Federal government. While the economy shows signs of improvement, unemployment rates in San Francisco remain at 5.8 percent.

   (e)   Since 2000, over 100,000 jobs have been lost, almost three times the job loss rate of the early 1990's.

   (f)   The welfare time limits imposed upon families place tremendous pressure on the City to find jobs, provide appropriate training opportunities, and assist economically disadvantaged individuals to find and retain adequate employment. The availability of sufficient employment opportunities is essential to the economic and social well-being of the City. This process of workforce development must be a component of the City's economic development planning.

   (g)   New development and construction of commercial projects tend to increase property values which in turn can displace low-income residents and put a greater burden on the City to assist economically disadvantaged individuals. Identifying jobs on these projects that pay wages that permit economic self-sufficiency, and in particular those that pay a Prevailing Wage, will allow the City to prioritize and allocate its training resources to foster permanent employment opportunities for qualified economically disadvantaged individuals that permit those individuals to achieve economic self-sufficiency.

   (h)   Additionally, business expansion places increased demand upon, and reduces the available pool, of qualified workers. The City's economic health depends upon the maintenance of that pool. Job training funds are a component of welfare reform and will result in an increase of available qualified workers. Thus, early identification of entry and apprentice level positions in new or growing commercial activity allows the City to plan training programs that will prepare economically disadvantaged individuals to be available for these new jobs. One of the goals of this Chapter is to create a seamless job referral system.

   (i)   The City, the business community, the service providers, organized labor, the schools, and the people who must personally meet the challenge of welfare reform are gathering at a unique historical moment. The time limits on public assistance are a matter of law, and the only choice is to organize the opportunities so as not to bypass these workers. The consequences of welfare reform are significant not just for the individuals who must find economic self-sufficiency, but for the whole economic well-being and commercial activity of the City and its constituents.

   (j)   The concept of "First Source Hiring" under this Chapter contains two essential components: (1) the identification of entry and apprentice level positions that pay wages that permit economic self-sufficiency, including in particular those positions that pay a Prevailing Wage, in order to properly allocate and prioritize training resources to prepare economically disadvantaged workers, and in particular those that are local residents, for those positions, and (2) the availability of the first opportunity for graduates of those training programs to be considered for employment. The City must work with the business community, the service providers, organized labor and schools in identifying workforce needs, developing job readiness standards, supporting training that creates a new pool of qualified workers, and providing a mechanism by which the business community can draw upon this pool; thereby facilitating and strengthening the relationship between the City, educational institutions, community-based job training, development and placement programs, and the private sector. While the City commits to providing the support services necessary to ensure the successful transition to economic self-sufficiency, the business community must be willing to offer these employment opportunities to qualified economically disadvantaged individuals.

      One of the best opportunities for economically disadvantaged workers to gain economic self-sufficiency is through enrollment in an apprenticeship program approved by the California Department of Industrial Relations. The City will seek to promote apprenticeship opportunities in both private and public construction programs by providing economically disadvantaged workers with the services needed to prepare to enter such programs. The construction trade unions must be willing to assist these workers, when qualified under the state-approved apprenticeship standards, to become enrolled in the construction trade union apprenticeship training programs.

   (k)   Participation in the City's First Source Hiring Program can be economically advantageous to employers. The Program provides a ready supply of qualified workers to employers with hiring needs. There are a variety of City, federal and State tax credits available for hiring qualified economically disadvantaged individuals. Within State-designated "Enterprise Zone" areas of San Francisco, the state offers a hiring tax credit for employers who hire job seekers from targeted groups. Employers can claim up to $31,605.00 in tax credits over a 5 year period when they hire qualified employees. The State of California also allows a hiring tax credit against wages paid qualified economically disadvantaged individuals, and a sales tax credit for equipment purchased for use in designated Enterprise Zones.

   (l)   In order to provide financial assistance to employers who hire qualified economically disadvantaged individuals, the federal government offers the Federal Welfare-to-Work Credit that provides up to $8,500 in tax credits per qualified employee and the Work Opportunity Tax Credit that provides up to $2,400 in tax credits per qualified employee.

   (m)   The City is committed, in partnership with the Private Industry Council, to facilitating employer access to tax credit and other financial incentive information regarding the hiring of qualified economically disadvantaged individuals who meet City, State or federal program criteria.

   (n)   The Board of Supervisors passed the FSHA before Congress passed the Workforce Investment Act of 1998 (WIA) (29 U.S.C.A. 2801 et seq.). The WIA mandates the creation of a Workforce Investment Board (WIB) that, in partnership with the Mayor, oversees the workforce development system for the City.

   (o)   The WIA also requires the implementation of a One-Stop delivery system that provides services to both job seekers and employers. It requires that the workforce development services in each locality be delivered through a single "One-Stop" delivery system. The WIA gives states and localities flexibility in deciding how to implement the One-Stop system with the condition that a "full service center" be formed in each locality, which provides full access to all services. The WIB, in partnership with the Mayor, agreed to have one full service center located on Mission Street, two affiliate centers located in the southeast sector and in the Civic Center area, and a multitude of access points. This structure makes up the foundation of the One-Stop system in San Francisco. The City chose a consortium of agencies to be responsible for the operation of these centers, including the San Francisco Human Services Agency (HSA), City College of San Francisco, the National Council on Aging, and the State of California Employment Development Department.

   (p)   With the passage of the WIA and the implementation of the One-Stop system, the FSHA has been fully integrated into the delivery of services.

   (q)   In 2003, the FSHA ordinance was extended for one year, during which time an independent evaluation was conducted on the effectiveness of the program. The final report indicates that the stakeholders view the ordinance as a tool to open doors to jobs for populations that have historically had difficulty gaining access to employment opportunities.

   (r)   In March 2004, HSA began implementing a business service initiative designed to integrate job posting and placement activities within the One-Stop system. With this new referral system in place, a process exists to connect job seekers with the job opportunities that result from this ordinance.

   (s)   Also in 2004, HSA implemented a new data system that tracks the activities of the referral system. Information gathered includes the number of employers notified of first source requirements, the number that comply with first source requirements, the number of jobs posted, and the number of job seekers referred and placed in jobs.

   (t)   The proposed Market and Octavia Area Plan – consisting of general plan, planning code, and zoning map amendments – is a means for implementing an innovative set of land use controls, urban design guidelines, and public space and transportation system improvements to create a dense, vibrant and transit-oriented neighborhood. The plan rezones the commercial uses in the Plan Area; consequently more jobs will occur in the lower wage industries such as retail, food service, and personal services. Such industries offer employment opportunities to first time and entry level workers especially served by the City's First Source Hiring program and as such special efforts will be made to enlist lower income residents and job seekers in these new employment opportunities. Expanding the provisions of the First Source Hiring Ordinance to the Market and Octavia Area Plan will serve as a pilot project for other areas of the City and is in the best interest of the residents residing in this designated area.

(Added by Ord. 264-98, App. 8/21/98; amended by Ord. 250-04, File No. 041190, App. 10/14/2004; Ord. 76-06, File No. 060166, App. 4/20/2006; Ord. 214-08, File No. 080235, App. 9/19/2008; Ord. 47-14, File No. 140150, App. 4/18/2014, Eff. 5/18/2014)

SEC. 83.3. PURPOSE.

   The purpose of this Chapter is to establish a First Source Hiring Program for the City and County of San Francisco to foster construction and permanent employment opportunities for qualified economically disadvantaged individuals. Participation in this program shall be required in City contracts and City property contracts. In addition, participation in this program is required by City contractors for any and all work performed by the contractor in the City.

   This Chapter requires similar first source hiring obligations to be included in permits authorizing construction of certain commercial development and residential projects and requires that developers applying for those permits meet with the City before submitting a permit to disclose the estimated number of entry and apprentice level positions to be used on a project, the anticipated wages for those positions and, if known, the estimated number of local residents to be hired. The purpose of this disclosure is to allow the City sufficient time and information to identify those positions that will afford the best opportunity for economic self-sufficiency for economically disadvantaged individuals, and to prioritize, allocate, and if necessary, redirect its training resources to programs to maximize those opportunities.

   Because of the wide variety of contracts, property contracts, other work performed in the City by the City contractor, and permits issued by the City, there is no single first source hiring requirement that can be applied and enforced in all such situations. Therefore, specific first source hiring requirements must be tailored to individual contracts, property contracts, work performed in the City by City contractors, and permits for commercial activities and residential projects. An administrative body shall be established by the City to assist in the tailoring of these requirements, and shall be known as the "First Source Hiring Administration (FSHA)" for the purpose of implementing and overseeing the first source hiring requirements under this Chapter.

   This Chapter is intended to authorize and direct the First Source Hiring Administration, where consistent with the purpose of this Chapter and its assessment of feasibility, and in a manner that avoids conflicts with applicable federal and State law, to set hiring and retention goals for contracts, property contracts, other work performed in the City by City contractors, and permits.

   Nothing in this Chapter is intended to, nor shall it be interpreted or applied so to create delay to contractors or developers under permits subject to the requirements of first source hiring.

   Three years after the effective date of this Chapter, the Board of Supervisors shall review the First Source Hiring Program to determine: (1) the number of entry level positions identified and acquired by qualified economically disadvantaged individuals; (2) whether participants in the Workforce Development System received appropriate and sufficient training; (3) whether the requirements of this Chapter are adequate to achieve the goals of the program; and (4) whether amendments and/or revisions of this Chapter are needed.

(Added by Ord. 264-98, App. 8/21/98; amended by Ord. 250-04, File No. 041190, App. 10/14/2004; Ord. 47-14, File No. 140150, App. 4/18/2014, Eff. 5/18/2014)

SEC. 83.4. DEFINITIONS.

   When used in this Chapter 83, the following terms have the following meanings:

   "Apprentice level position" shall mean a position that requires a worker who is indentured in a construction apprenticeship program approved by the State of California's Department of Industrial Relations. "Apprentice level position" shall include temporary and permanent jobs that are construction jobs related to the development of a commercial activity or residential project.

   "Approved plan" shall mean a first source hiring implementation and monitoring plan developed by a City department and approved by the FSHA.

   "Biotechnology business" shall mean conducting biotechnology research and experimental development, and operating laboratories for biotechnology research and experimental development, using recombinant DNA, cell fusion, and bioprocessing techniques, as well as the application thereof to the development of diagnostic products and/or devices to improve human health, animal health, and agriculture.

   "City" shall mean the City and County of San Francisco.

   "Commercial activity" shall include but not be limited to, for purposes of this Chapter only, retail sales and services, restaurant, hotel, education, hospital, and office uses, biotechnology business, and any other non-profit or for-profit commercial uses.

   "Contract" shall mean an agreement for public works or improvements to be performed, or for goods or services to be purchased, or grants to be provided, at the expense of the City, or to be paid out of moneys deposited in the Treasury of the City, or out of trust moneys under the control of, or collected by, the City involving an expenditure in excess of $350,000 for construction contracts, in excess of $50,000 for goods, or in excess of $50,000 for services. Contract shall also mean loans or grants in excess of $50,000 which are awarded by the Mayor's Office of Housing, the Mayor's Office of Community Development, the Mayor's Office of Children, Youth and their Families, or by any other City department for work covered under this Chapter.

   The requirements of this Chapter shall apply to: (1) entry level positions for work performed by a contractor in the City; (2) entry level positions for work performed on the contract in counties contiguous to the City; (3) entry level positions for work performed on the contract on property owned by the City; and (4) positions for work performed on Development Projects as defined by this Chapter.

   For purposes of this Chapter, "contract" shall include subcontracts under the contract subject to first source hiring, unless otherwise exempted under this Chapter.

   For purposes of this Chapter, "contract" shall not include contracts for urgent litigation expenses as determined by the City Attorney, emergency contracts under San Francisco Administrative Code Section 6.30, or Section 21.25, tolling agreements, cooperative purchasing agreements with other governmental entities or contracts with other governmental entities.

   "Contractor" shall mean any person(s), firm, partnership, corporation, or combination thereof, who enters into a contract or property contract with a department head or officer empowered by law to enter into contracts or property contracts on the part of the City.

   "Developer" shall mean the property owner, agents of the property owner, including but not limited to management companies, person or persons, firm, partnership, corporation, or combination thereof, having the right under the San Francisco Planning Code and/or the San Francisco Building Code to make an application for approval of a commercial activity or residential project.

   "Development project" shall mean commercial activity(ies) or a residential project that require a permit that is subject to the requirements of this Chapter, including applicable permits related to biotechnology business.

   "Economically disadvantaged individual" shall mean an individual who is either: (1) eligible for services under the Workforce Investment Act of 1988 (WIA) (29 U.S.C.A. 2801 et seq.), as determined by the San Francisco Private Industry Council, or any successor agency; or (2) designated "economically disadvantaged" by the First Source Hiring Administration, as an individual who is at risk of relying upon, or returning to, public assistance, including unemployment benefits. Examples of "economically disadvantaged individuals," for purposes of this subsection, may include, but not be limited to, the following individuals: individuals existing the criminal justice system; individuals participating in or completing substance abuse treatment; individuals who receive financial aid for the purpose of obtaining an education or other vocational training program; survivors of domestic violence seeking employment; people with disabilities seeking employment; and veterans seeking employment.

   "Employer" shall mean a contractor, sub-contractor, developer, agents of the developer, tenants or other occupants, or person(s), firm, partnership, corporation, or combination thereof engaged in work performed under a contract, lease, loan, grant, or permit, or engaged in work performed in the City, subject to the requirements of this Chapter.

   "Entry level position" shall mean a position that requires any of the following: (1) no education above a high school diploma or certified equivalency; (2) less than two years of training or specific preparation; (3) a college and/or post graduate degree; or (4) a license or a permit. "Entry level position" shall include temporary and permanent jobs, and construction jobs related to the development of a commercial activity or residential project.

   "First source hiring agreement" shall mean the written agreement entered into by the employer with the City which details the particular first source hiring requirements with which an employer must comply, as further defined in Sections 83.9 and 83.11 of this Chapter.

   "FSHA" shall mean the First Source Hiring Administration.

   "Local resident" shall mean an individual who is domiciled, as defined by Section 349(b) of the California Election Code, within the City at least seven (7) days prior to commencing work on a project.

   "Permit" shall mean, during Phase I, as defined in this Section 83.4 below, either or both of the following: (1) any building permit application for a commercial activity over 50,000 square feet in floor area and involving new construction, an addition, or alteration which results in the expansion of entry or apprentice level positions for a commercial activity; (2) any application which requires discretionary action by the City's Planning Commission relating to a commercial activity over 50,000 square feet including, but not limited to, a conditional use, project authorization under San Francisco Planning Code Section 309, and office development under San Francisco Planning Code Section 320, et seq. During Phase II, as defined in this Section 83.4, any or all of the following: (1) any building permit application for a commercial activity over 25,000 square feet in floor area and involving new construction, an addition, or alteration which results in the expansion of entry and apprentice level positions for a commercial activity; (2) any application which requires discretionary action by the City's Planning Commission relating to a commercial activity over 25,000 square feet including, but not limited to conditional use, project authorization under San Francisco Planning Code Section 309, and office development under San Francisco Planning Code Section 320, et seq., or (3) any building permit application for a residential project as defined herein.

   The requirements of this Chapter shall apply to entry and apprentice level positions for work done under a permit authorizing a development project or residential project in the City.

   "Phase I" shall refer to the first stage of implementation of this Article which became operative on October 20, 1998. Phase I applied to contracts for public works or improvements to be performed, property contracts, grants or loans issued by the Mayor's Office of Housing, or by the Mayor's Office of Community Development, and permits issued for commercial activity over 50,000 square feet.

   "Phase II" refers to the second stage of implementation of this Chapter which became operative on April 1, 2001, 24 months after the FSHA adopted a resolution stating that Phase I had been implemented. In addition to the contracts, property contracts, grants or loans referred to in the definition of Phase I, above, Phase II shall apply to contracts for goods in excess of $50,000, contracts for services in excess of $50,000, permits issued for commercial activity exceeding 25,000 square feet, grants and loans in excess of $50,000 issued by other City departments, and permits issued for residential projects as defined herein. In addition, Phase II shall apply to any and all work performed in the City by City contractors.

   “Prevailing Wage” shall mean “Prevailing Wage or Prevailing Rate of Wages” as defined in Labor and Employment Code Section 101.1.

   "Property contract" shall mean a written agreement, including leases, concessions, franchises and easements, between the City and a private party for the exclusive use of real property, owned or controlled by the City, for a term exceeding 29 days in any calendar year (whether by a singular instrument or by cumulative instruments) for the operation or use of such real property for the operation of a business establishment, that creates available entry or apprentice level positions. For purposes of this Chapter, "property contract" does not include an agreement for the City to use or occupy real property owned by others, or leases, easements or permits entered into by the Public Utilities Commission for pipeline rights-of-way property and watershed property.

   "Publicize" shall mean to advertise or post, and shall include participation in job fairs, or other forums in which employment information is available.

   "Qualified" with reference to an economically disadvantaged individual shall mean an individual who meets the minimum bona fide occupational qualifications provided by the prospective employer to the San Francisco Workforce Development System in the job availability notices required by this Chapter.

   "Residential project" shall mean a residential development involving new construction, an addition, a conversion, or substantial rehabilitation that results in the creation or addition of ten or more residential units.

   "Retention" shall, when used in this Chapter, be construed to apply to the entry or apprentice level position, not to any particular individual.

   "San Francisco Workforce Development System (System)" shall mean the system established by the City and County of San Francisco, and managed by the FSHA, for maintaining: (1) a pool of qualified individuals; and (2) the mechanism by which such individuals are certified and referred to prospective employers covered by the first source hiring requirements under this Chapter.

   "Substantial rehabilitation," when used in this Chapter, shall mean rehabilitation that involves costs in excess of 75 percent of the value of the building after rehabilitation.

(Added by Ord. 264-98, App. 8/21/98; amended by Ord. 207-04, File No. 040987, App. 8/5/2004; Ord. 250-04, File No. 041190, App. 10/14/2004; Ord. 76-06, File No. 060166, App. 4/20/2006; Ord. 214-08, File No. 080235, App. 9/19/2008; Ord. 149-09, File No. 090327, 7/10/2009; Ord. 47-14 , File No. 140150, App. 4/18/2014, Eff. 5/18/2014; Ord. 296-24, File No. 240985, App. 12/19/2024, Eff. 1/19/2025, Oper. 2/19/2025)