Behind the tweets - Page 4

How the Twitter tax break grew into an expensive giveaway that involves police patrols, a new Muni line — and a lot of real estate

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In 2009, Twitter vowed to stay in SF, something it now says it won't do without a multimillion-dollar tax break

Yet the documents show that OEWD had been developing two options for the legislation, total jobs and "net new jobs," since well before Kim got involved.

The OEWD also sold the deal to supervisors and the public during the month of January with figures it couldn't support — such as repeatedly claiming that the creation of 300 jobs at Twitter would create 400 additional jobs and $174 million in economic activity. Yet when the OEWD finally checked those figures with Egan on Feb. 2, he wrote that "it is only 100 additional jobs" and "not sure where you get $290,000" as the economic value per job.

Yet for the OEWD and the other proponents of this deal, the record shows a determination to get the deal done — and then make it sound good. "Make the narrative as strong as possible," Cohen wrote to Matz on Feb. 1, passing on the concerns expressed by Kim's office. "Ultimately, we need to be able to show that this is not a net loss, it is a net gain."

But behind the scenes, the actual cost to taxpayers of retaining Twitter is being obscured by a variety of financial mechanisms and budget decisions by city departments.

Even Kim's shortening of the program brought new demands by Twitter. In a Feb. 9 e-mail from Matz to Chiu and Kim, she wrote, "Twitter told me that they agreed that the six-year time frame works only if 1) their short term cash flow issues are addressed and 2) the exemption for stock options is extended to eight years." So Matz said she would "noodle on other financial mechanisms, including Mills Act Historic Tax Credit and New Market Tax Credits."

The public won't get a chance to weigh in on these details. On Feb. 4, when an OEWD staffer wrote to Matz that the City Attorney's Office recommended the legislation call for another public hearing after OEWD develops rules and regulations for implementing the policy, Matz replied simply, "No!"

Comments

Motherfucker can't even choose the correct spelling of bear. Fruit is borne, douche, not... ursine. Prometheus in the dark he ain't.
Of course, if one still gives a shit, there are more substansive problems: The article neatly sidesteps issues of business retention and the mess of Market. Or where they are addressed, it is only addressed in hostile fashion. We can't unionize the homeless, and if we did, against whom would they strike?
SF needs more than nonprofit drains upon city coffers; some one must actually make, buy or sell things. I know, I know, highly distasteful. But the "progressive" alternative to a mid-Market tax break answer is currently Buck's Tavern. Boo. Alt.newsweeklies are supposed to be the bastions of hard-hitting, thoughtful journalism, not reflexive and frankly plain old lame-assed laziness. Boo! I submit a FOIA request on this asshole's ability to comb through thousands of pages of Harry Potter, much less actual civic documents.
In sum: Lazy! Poorly Written! Counterproductive!

Posted by Guest on Mar. 15, 2011 @ 9:26 pm

Wow, the supporters of this legislation seem to have one thing in common: they use personal attacks as a mechanism of distraction.
The problem they have is that the policy arguments are not on their side. Their Over and over again today, I have seen a variety of personal attacks all day long against any one who opposes the legislation in multiple forums. It shows weakness on many levels, and desperation that I am surprised to see.

Posted by Guest Gabriel on Mar. 16, 2011 @ 12:26 am

Your policy argument "I'm entitled."

You work for SEIU right? And your complaining about ad homonyms?

Put the bong down.

Posted by matlock on Mar. 16, 2011 @ 8:06 am

Judging from how they acted so far I'd say Twitter will be a bad corporate citizen and San Francisco should cut it lose before it causes more trouble.

If I were a supervisor I'd ask Twitter/JP Morgan how they could help during a time of desperate need, not talking dirty to them over the phone like one of Willie Brown's street walker mistresses.

A 'bad' corporation can cause a lot of damage that far outweighs any benefits. They have gone to the dark side.

Posted by Guest on Mar. 16, 2011 @ 1:11 am

Gosh I'm really beginning to understand why Randy Shaw was so into Jane Kim.

I bet Debora Walker didn't put up with his crap for one second, did she Randy?

Posted by Guest on Mar. 16, 2011 @ 1:50 am

"It's giving taxes away to properties that are going to fill up anyway,"

I went into that building once a month at least all through the 90's, it was always 2/3rds full at best.

Now after a recession its going to fill right up?

As the establishment progressives make up things endlessly, there is even less reasons to care about their class ravings.

If you don't like what moves in, don't go there. I avoid 24th street and some of the TL. If mid Market isn't bum filled enough for you, go to the 200 block of Turk St.

Posted by matlock on Mar. 16, 2011 @ 2:37 am

Trolls apparently aren't diligent readers: that quote is from the city's economist, who is no progressive, and it doesn't refer to SF Mart as you seem to think. As for the first commenter: One "bare" typo in a 2500-word article based on reviewing thousands of documents, including hundreds withheld until a few hours before my deadline -- is that really the best ammo you've got? Apparently my article is even more solid than I thought.

Posted by steven on Mar. 16, 2011 @ 8:50 am

plural means more than one, the article is about Twitter.

You're quoting him to further your position.

Posted by matlock on Mar. 16, 2011 @ 10:27 am

Beautifully written,

What an edition y'all have today. Have to admit that I'm amused by 'Gabriel' (I'm assuming that's Haaland) waxing poetic against, "personal attacks". He's the biggest back stabber in SF and that ain't easy. Or, weren't your attacks on Adachi personal, Gabe? Pot ... kettle. Pot ... kettle.

Bulldog sees the big picture.

Our economy is anchored on two fragile legs sunk in quicksand. Tourism (one car bomb will destroy that) and, office rentals (they're always looking for a better deal and not reliable).

We should encourage growth of our schools and add more. Students don't run away because they have finals next week and mom and dad have paid their tuition and rent for the entire year. I managed property all over the East of Van Ness area covered in this deal and always had at least 10-15% students.

So, how's the City and the Bay Guardian react to a San Francisco institution like the Academy of Art University growing by leaps and bounds?

The City and Brad Paul and the Guardian and Calvin Welch try to extort 30 million out of AAu. While it offers to add an entire bus line (at our expense) for Twitter, the Guardian and Brad Paul complain about the free buses that AAU provides for their students.

We have over 100,000 students in SF (bet you didn't know that).

We should have 200,000 and more.

"How does a duck know which direction South is?"

"And, how to tell his wife from all the other ducks?"

Good questions, all.

Go Giants!

h.

Posted by Guest h. brown on Mar. 16, 2011 @ 4:53 am

"and now the next leg of our tour we go into an abandoned building, instead of productive employment this building is kept vacant so that ideological purity can be upheld.

Here are some hobo likenesses scrawled on pizza boxes of our cities secular welfare state saints;

Gabriel Haaland, this saint complains when SEIU doesn't get tax money to hire more SEIU employees

Chris Daly, this saint complains about Nimby's while beimng one

TIm Redmond, this saint supports classism while complaining about it

...now onto our next tour spot, a shooting gallery in the garage"

Posted by matlock on Mar. 16, 2011 @ 8:15 am

If you read this right any employees will be taxed in SF on their stock options but not in many other bay area cities like Brisbaine.

So to encourage start ups to stay in SF there is now an area (which were previously undisirable), where Start Ups can locate without this tax.

Surely it is a progressive policy to use the tax code to encourage behaviour, like locating to Mid Market?

Ofcourse if you don't like the idea of successful and not so successful start ups even existing in SF then you would oppose this tax break.

This has highlighted that the pay roll tax should be re-examined in SF, and how it does discourage employers loacating here.

And look I am in support this tax break, but have made no personal attacks.

Posted by Chris Pratt on Mar. 16, 2011 @ 8:42 am

Stated like a true Koch Brother, a "founders circle" member of the Club for Growth, mixed in with millennial Christians who "believe" in the second coming of greater tax revenues when you cut taxes.

-marc

Posted by marcos on Mar. 16, 2011 @ 9:25 am

Jane Kim ha ha ha!!

I like the lipstick on that slut's teeth.

Posted by Guest on Mar. 16, 2011 @ 10:12 am

This tax break and other favors shifts the tax burden to the rest of the tax base.
This socializes the business risk while privatizing the profits.
Subsidizing Twitter comes out of your wallet.

Posted by TCB on Mar. 16, 2011 @ 3:11 pm

The payroll tax applying to stock options is new info to me but can we get further explanation how that would work? When does the tax on stock options apply? When granted/given? Or when they're actually exercised? And not clear if this exemption applies to everyone or only new hires? So if only new hires doesn't that mean most of the stock options will go to existing employees and therefore be taxed?

Thanks for the coverage of this issue.

Posted by justin on Mar. 16, 2011 @ 3:27 pm

Egan told me that the stock options get taxed as part of the payroll when the company goes public because that's when they get their value. Twitter hasn't shared any financial data with the city, so Egan's estimates are based simply on news reports, but his estimate is that the IPO will be for about $12 billion, about half of which goes to the venture capitalists who now bankroll the company and a quarter each goes to employees and those who buy stock after the IPO. Subtracting out an estimated 10 percent of their value that Twitter employees paid for those options, that leaves $2.7 billion in compensation that is subject to the 1.5 percent payroll tax, leading to a one-time payroll tax obligation of about $40 million.
Now, the deal as it's now structured would exempt Twitter stock options from the payroll tax for eight years, for both new and existing employees. He also said it would be possible to just exempt Twitter stock options, which he said it preferable to the larger giveaway that has been crafted, but he couldn't say whether that would be enough to keep Twitter in town. In the letter Twitter wrote, the CFO claims it would cost the company $30 million over five years in "incremental rent, taxes, and other expenses compared to moving the company out to the peninsula," but he didn't provide any support for that figure.
I hope that helps clarify things.

Posted by steven on Mar. 17, 2011 @ 10:29 am

ISOs are liable for capital gains tax once exercised no matter if the company is public or not providing the employee's total liability is in AMT territory - the IRS calls it "phantom gain" i.e. capital gain on something that can't be sold on an open market but has a gain between the grant price and the FMV as judged by an accredited accountancy firm. That's why employees receiving ISOs would be well advised to exercise iteratively to avoid a large tax liability.

e.g. 10,000 ISOs puchased at $0.10 cost the employee $1000 dollars. If the current FMV is $5.00 then the employee is liable for capital gains tax on the difference i.e. $4.90x10,000 = $49,000. Of course this just an example.

Twitter employees may be able to sell their exercised options today on a private market as many Facebook employees are doing, providing their grants don't specifically forbid it, though I'm not certain an option grant can legally prevent that.

Posted by Guest on Mar. 17, 2011 @ 10:58 am

The reason people don't provide data is they have something to hide?

Posted by Guest on Mar. 17, 2011 @ 12:59 pm

Below is an similar explanation, apparently from a corporate attorney at Google.

Apparently the IPO can be expected to raise an estimated $100 million in cash, so $40 million is a lot to pay for a city payroll tax.

Serious flaw in the business model?

http://techcrunch.com/2011/02/18/san-francisco-wants-to-tax-your-stock-o...

"...Say a company like Twitter, valued at $3.4 billion in its last funding round, goes public at a $10 billion valuation and raises $100 million. There’s a good chance that most founder and employee equity would be tied up in ISOs, meaning as much as $3 billion – $6 billion of the $10 billion valuation could be tied up in stock that was originally an ISO. If it were half – $5 billion – then Twitter would get a tax bill from San Francisco for $75 million. 75% of the $100 million they just raised would be paid to San Francisco."

http://techcrunch.com/2011/02/18/san-francisco-wants-to-tax-your-stock-o...

Posted by Guest on Mar. 17, 2011 @ 1:19 pm

Something else kind of interesting -- apparently if Titter moved to avoid the payroll tax then San Francisco could sue and argue the value was created while Twitter was located in SF and charge the tax anyway.

To me this seems like a bargaining chip.

"...Is it possible that a company could move to San Mateo the year before an IPO? Yes. But could the city sue and allege that the value of those options was created in San Francisco? Yes, again. Because few other cities have local payroll taxes to begin with and the Federal government doesn’t subject these options to payroll taxes, there are almost no precedents here."

Posted by Guest on Mar. 17, 2011 @ 1:38 pm