With our manufacturing sector gone decades ago, San Francisco’s office buildings have become the “vertical factories” of today, providing for a changing workforce, offering tremendous opportunities for raising productivity and innovative leadership in many fields.
We have been on the leading edge of a national shift away from heavy manufacturing to a service-based and information-oriented economy. Playing a crucial part in San Francisco’s vitality, the office building industry has accommodated substantial growth in professional, technology, life sciences, managerial and administrative jobs. And recent reports show that The City is rivaling Silicon Valley in venture capital-funded enterprises.
In 2009, office buildings represented a staggering $22,130,170,999 in assessed valuation — 31 percent of The City’s total valuation — and generated $2.5 billion for San Francisco’s economy.
Over the past decade, the owners of these buildings have paid nearly $2 billion in local property taxes and another $762,003,100 in real estate sales (transfer) taxes.
During the same period, city government doubled. A significant amount of this growth was funded by the office building industry — which is also helping to pay for the retrofitting of the Hetch Hetchy water system, the new General Hospital and the bonds that are restoring our parks.
The economic health of our city is directly tied to the office sector. Besides housing the new service-sector work force, the industry directly supports 14,370 jobs in San Francisco, spends $1.3 billion yearly in operational outlays for employees, goods and services, and generates $658,681,988 in wages every year.
But this crucial industry, this economic “engine” that helps fund local services, is at risk. Job flight has pushed office vacancy to 16 percent and it continues to climb.
Why should you care? Because at the same time that a weakened economy has seen employment shrink, office vacancies climb and building values drop, all equating to less money for improvements to city services and infrastructure, Proposition N appears on this November’s ballot. If passed, this property sales tax hike will further add to the cost of owning a building in San Francisco, raising rents and slowing economic recovery. After already being doubled in 2008, a yet higher real estate sales tax now will increase vacancies in buildings all over San Francisco.
Regular San Franciscans will end up paying for this tax in fewer jobs and less economic growth, along with fewer revenues for city services.
A strong and diverse economy isn’t important just as an end. It is what supports in large part the quality of life that San Franciscans want and expect. Our industry’s role is to house the jobs that enable people to support themselves and their families and partake of the joys our beautiful city offers. A healthy office sector means employees with income to spend in support of neighborhood businesses and services, and healthy contributions to the tax base that keeps San Francisco running. When short-sighted policies stunt employment growth, our industry suffers. And so does The City.
Protect San Francisco’s economy and vote no on Proposition N. For more information, visit www.economicrecoverysf.com.
Marc Intermaggio is executive vice president of the Building Owners and Managers Association of San Francisco.