Selling the Tenderloin

Who really benefits from the Twitter tax-cut deal?

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steve@sfbg.com

Nobody wants Twitter to leave San Francisco, even if there is disagreement about whether it's a good idea to give the company an estimated $47 million tax break to stay. But the most unsettling aspects of this deal are the unexplained, dramatic expansion of the tax giveaway zone and the unsupported claims that it will "revitalize" the mid-Market and Tenderloin areas without gentrifying them.

Nonetheless, the legislation creating a six-year payroll tax holiday for new jobs is on the fast track for approval after the Board of Supervisors Budget & Finance Subcommittee sent it on to the full board for consideration on April 5, denying the request by Sup. Ross Mirkarimi and other critics of the deal that the public be allowed to comment on a community benefits agreement with Twitter that is still being negotiated.

The deal was crafted mostly by the Mayor's Office of Economic and Workforce Development, starting last year under Mayor Gavin Newsom (who has close ties to Twitter and its would-be landlord, Shorenstein Properties LLC) and seamlessly continuing under Mayor Ed Lee. For top OEWD staffers Jennifer Matz and Amy Cohen, keeping big businesses happy is a core mission, so their advocacy for this tax-cut package isn't really surprising. It's an article of faith with them.

David Chiu, the board president and mayoral candidate who is cosponsoring the measure, also professes a basic faith in the power of cutting business taxes and has a particular disdain for the payroll tax, which he calls a "job killer." Chiu, who supported extending the payroll tax holiday for biotech companies last year, says this deal is consistent with his fiscally conservative approach to economic development and has even suggested doing similar tax exclusions in other San Francisco neighborhoods.

But the motivations are less clear for two other key proponents of the measure: Sup. Jane Kim and Randy Shaw, the Tenderloin Housing Clinic director and self-styled power broker for a part of town that he's been seeking rebrand as Uptown.

Kim told us that she's a progressive who philosophically opposes these sorts of supply-side economic schemes, but that she decided to champion the measure to keep Twitter from leaving and address blight in the neighborhood. Yet that doesn't explain why she has drastically expanded the giveaway zone or made several public statements that aren't supported by the facts, and Kim has stopped answering questions from the Guardian.

City Economist Ted Egan testified that there are no discernible economic development benefits to including the entire Tenderloin, and that the Twitter-induced economic boost would increase commercial rents. In other words, the primary economic benefits would be to commercial landlords.

At the same March 16 hearing, Kim claimed the measure will revitalize the Tenderloin without gentrifying it, something she calls one of her top concerns.

Shaw strongly supported Kim's supervisorial campaign and is pushing this deal with almost messianic desire to call the shots in the neighborhood where he's been building an empire with public funds for 30 years.

 

POWER BROKER

A Guardian investigation (see "Behind the tweets," March 15) revealed that Shaw was a key architect of the deal: working closely with OEWD staff, adding properties into the tax exclusion zone, developing the talking points, rallying support for the legislation, and being given credit for the deal when city officials talked to landowners.

Comments

Good article Steve, keep asking questions. Look into the 900 Innes property while you're at it - transferred to THC by a Joe Cassidy company that took a $17M writeoff but left their broken-down tractors behind. It's worth $1M at best.

Posted by Guest on Mar. 30, 2011 @ 8:26 am

Last Friday I met Don Falk, Executive Director of the Tenderloin Neighborhood Development Corporation. I asked him why the TL has been included in this legislation if there are no apparent spaces capable of hosting a firm capable of paying the payroll tax.

He said it was largely a signal, and that if it had no effect, then what's the harm in passing it? That kind of response just invites speculation about what's really going on here.

-marc

Posted by marcos on Mar. 30, 2011 @ 8:42 am
Posted by Guest on Apr. 05, 2011 @ 4:35 pm