The Board of Supervisors has embarked on a contentious debate about granting a six-year payroll-tax holiday for new hires to fast-growing Twitter, the San Francisco-based online social network with millions of users worldwide. Opposition comes from the doctrinaire progressive board minority, which does not like giving tax breaks to successful businesses — even when it means creating a significant number of new jobs in The City and revitalizing an eyesore neighborhood.
To receive the multimillion-dollar tax break, Twitter must relocate its fast-growing company to mid-Market Street. The goal is to give Twitter an incentive to stay in The City while revitalizing a nearly abandoned strip of Market Street occupied by shuttered storefronts.
Last Wednesday’s hearing at the Budget and Finance Committee was supposed to be the preparatory step toward a full board vote. However, the legislation was bogged down in an acrimonious argument about how big the tax-relief zone on mid-Market should be. The reprieve of a payroll tax is not only for Twitter but any company within the identified mid-Market zone. Supervisor Jane Kim, who authored the bill and whose district includes mid-Market, intends to come back at the next meeting with a compromise plan to sharply reduce the zone’s coverage size.
If the proposed 1.5 percent payroll-tax break for new hires is passed, Twitter would move into the historic Furniture Mart building on Market and Ninth streets. The online company signed a letter of intent with the Shorenstein group for a six-year lease with 10-year renewal option.
But without the tax exemption, Twitter executives said they are “prepared” to migrate across the city line into Brisbane, which has no payroll tax. The move could save Twitter an estimated $22 million during the exemption’s six-year term.
The issue of whether or not Twitter remains in San Francisco is unusually important for The City’s economic well-being. Currently, Twitter has 350 employees. But it expects to nearly double its work force annually for the next three years — growing to 3,000 employees by July 2013. And when the tax holiday expires, Twitter would begin giving San Francisco $4.59 million in annual payroll revenues. Additionally, these employees will be spending their earned dollars in and around mid-Market Street — giving an additional economic boost.
But perhaps even more significant is that if a world-recognized high-tech company such as Twitter moves into a threadbare neighborhood such as mid-Market, numerous other high-tech companies are likely to relocate nearby. For decades, city leaders have unsuccessfully attempted to reverse the slide of this central strip of Market Street. They tried task forces, community hearings, a proposed conversion into a theater district and building a world-class art museum. Bond measures were placed on the ballot several times and soundly defeated.
Yet this might well be the first time that a company with an international brand name and a cool reputation is close to setting up shop on mid-Market. This could reasonably be a turning point powerful enough to finally spark positive energy back into the down-and-out neighborhood.
As Supervisor Kim said, “In some ways, this legislation is a leap of faith. But there have been so many attempts to revitalize mid-Market and none of them worked. We are going to give this one a shot.” The naysayers on the board need to take the leap of faith.