Years ago, San Francisco made a big push to hold nonprofits that received city funds to provide services in The City more accountable for their work. The thinking was that the local government contracts with these nonprofits to create efficiencies, but there should not be a flow of money to a group that cannot prove it’s spending the money in an effective manner. This same thinking should now be applied to the mid-Market Street tax break.
In 2011, San Francisco officials created the mid-Market Street tax break, commonly referred to as the Twitter tax break, to entice tech companies to remain in or move to the area — an area that has been a thorn in the side of many politicians and mayors who sought to revitalize a stretch best known for its strip clubs and empty storefronts. The tax break was initially pitched as being for Twitter, to keep the company from moving out of The City.
Last year, 14 companies took advantage of the tax break, netting a total of $1.9 million in savings. For a company that has a payroll of $1 million or more to receive the tax break, it must negotiate a community benefit agreement. The agreement can vary by company, but it’s essentially a way for the companies to give back to the surrounding community. The companies must accomplish 80 percent or more of the agreed-upon terms in order to comply and receive the tax break.
The question: How do you measure that?
As the time comes for at least seven companies in the tax zone to create community benefit agreements, The City — under the direction of City Administrator Naomi Kelly — is rightly asking for revisions. The City wants the tech companies to do away with vague terms in the agreements. In one example, a company said it would “encourage” its employees to participate in events. Others said they would work to make sure their employees knew about events.
Outreach is a key component of working in the community — but so is the actual work. The companies have a limit of what they can tell their employees to do in off-hour activities, but that doesn’t mean the companies should be off the hook for measurable outcomes in projects that are meant to help the community, especially the low-income residents who are bearing the brunt of the gentrification of the neighborhoods as buildings go from vacant storefronts to booming tech offices.
There are tech companies working hard to connect with the communities around their offices, and others that are committed to charitable causes. Even for these, though, it is not too much to ask for a measurable way to ensure companies are fulfilling their end of the agreement before The City gives them a break on their taxes.
There was outrage years ago about how city funds were being spent by nonprofits. Now there should be just as much attention focused on the tax breaks companies are receiving and whether they are contractually fulfilling their end of the deal.Ed LeeeditorialsMid-Market StreetOpinionTwitter