Legislation aims to offer tax break to keep Twitter in San Francisco 

About a month after reports that San Francisco-based Twitter was exploring a move to Brisbane, city officials on Tuesday introduced legislation that would give the company a significant tax break.

As talks continue between city and Twitter officials, it is hoped the legislation will be enough to convince Twitter to remain in San Francisco, where it began and started the craze of tweeting. The company, which was founded in 2006, is said to have tripled its staff to 350 workers within one year and is looking to grow its work force into the thousands. 

“We are really excited that a business that has been grown here in San Francisco is willing to stay here and grow with The City,” said Supervisor Jane Kim, whose district includes the former San Francisco Mart location on Market and Ninth streets where Twitter is looking to make its new home.

The proposed legislation would exempt the tech company from paying The City’s 1.5 percent payroll tax on new hires for six years. Brisbane does not have a payroll tax.

The tax exemption would apply not just to Twitter, but to businesses that relocate to the a portion of the Tenderloin and the mid-Market Street area, which city officials hope to revitalize.

The proposal will not be heard by a board committee for at least 30 days. Amendments are possible as it wends through the legislative process.

But the legislation would need at least six votes by the Board of Supervisors to take effect. And Supervisor John Avalos blasted the tax break Tuesday.

“I’m concerned about it opening the floodgates for other corporations to extort tax breaks from the Board of Supervisors,” Avalos said. “Are we going to have Wells Fargo tell us they are going to leave if they don’t get a tax break? Are we going to have Bechtel do the same?”

Twitter representatives declined to comment.

The proposal was introduced by Kim and drafted in consultation with Mayor Ed Lee and Board of Supervisors President David Chiu.

It has sparked a return to a policy debate about whether The City should be offering tax breaks to businesses. Similar battles have been fought in the past over tax breaks to attract film productions to The City. 

The payroll tax break is not an unprecedented concept. A seven-year payroll tax exemption was established in 2004 for the Mission Bay area to stimulate a biotech industry there.

jsabatini@sfexaminer.com


Dangling a carrot

Advocates hope a payroll tax break will help revitalize the mid-Market Street area. These are “potential catalyst projects”:

Twitter: The social media darling has outgrown its offices on Folsom Street in SoMa and, city officials say, “is interested in the arts district amenities and the centrally located office space.”

Hotels: Two growing hotel chains that cater to the creative economy are contemplating space in the area.

Black Rock LLC.: The partnership that puts on Burning Man is looking to locate its headquarters in the area.

Local theater: A mixed-use theater project at 950 Market St. might be anchored by the American Conservatory Theater.

Full-service grocery store: The City has not been able to recruit one to the area in the past, but officials hope a payroll tax exemption will change their luck.

Source: Mayor’s Office of Economic and Workforce Development


Benefits package

The Mayor’s Office compiled the following estimates on how keeping Twitter in San Francisco will help the local economy:

  • Twitter’s location in the mid-Market Street area would support the creation of an additional 1,800 jobs in the first year and grow to 3,700 in six years.
  • Twitter’s cumulative direct tax revenue for The City could total $9.7 million, including $465,000 in property taxes in the first year from the reassessment of the building improvements.
  • In the seventh year, when the payroll tax exclusion would end, Twitter could generate more than $4 million in payroll tax alone.

Source: Mayor’s Office of Economic and Workforce Development

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Monday, Oct 20, 2014

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