Showdown time for Twitter/Tenderloin tax break

The tax exclusion zone has grown huge with little explanation why.

After months of backroom deals to enlarge the tax giveaway zone – which I detail in this week's Guardian, based on my review of thousands of pages of public documents – the Board of Supervisors Budget and Finance Sub-Committee tomorrow (Wed/16) will finally consider the mid-Market and Tenderloin payroll tax exclusion zone.

There's been a flurry of last-minute activity on the proposed legislation, including the increasingly desperate and personal advocacy by Tenderloin power broker Randy Shaw, who has worked closely with Sup. Jane Kim and the Mayor's Office economic development status to craft a deal that has grown from focusing on keeping Twitter in town to encompassing all of the Tenderloin, a tax giveaway that the Budget and Legislative Analysts' Office says totals $22 million.

City Economist Ted Egan told the Guardian that he doesn't understand why the tax exclusion zone was expanded so far and he doesn't think inclusion of the Tenderloin properties or the big Market Street commercial properties (except for SF Mart, where Twitter is seeking to relocate) provides much economic stimulus. “If you take Twitter out of the equation, this thing doesn't make a lot of sense,” he told us.

Egan submitted his report on the project for the Office of Economic Analysis to Controller Ben Rosenfield at the end of the day on Friday, but it's still being tinkered with and has still yet to be released even though the hearing is tomorrow at 10 a.m. Egan said he recommended the area be reduced and that the city consider legislation aimed to lessening how much Twitter would pay on stock options as an alternative to the broader giveway.

As I write in this week's paper, the reasons why the area was expanded – it now reaches north to Geary, west to Van Ness, and east to Mason, rather than just being on Market between Sixth and 10th as originally proposed – is a bit of a mystery, although we know it was pushed by Shaw and Kim, as well as some members of the Office of Economic and Workforce Development staff.

Kim has decided to stop answering questions from the Guardian and Shaw also didn't answer our inquires, including whether he has any economic interest in any properties in the tax exclusion zone, a question that OEWD staff said they never looked into as well. So what exactly is going on here?

Perhaps we'll find out tomorrow, although Kim and co-sponsor David Chiu have decided to have the legislation heard by just the Budget Sub-Committee, which is chaired by fiscal conservative Sup. Carmen Chu, rounded out by Kim and Sup. Ross Mirkarimi. So this thing seems likely to be passed on to the full board as soon as Tuesday.

If Chiu and Kim continue their unquestioning support for legislation created by former Mayor Gavin Newsom they've chosen to champion and expand, this thing could be a done deal, although progressives (including Sup. Eric Mar, who endorsed Chiu for mayor but last week told the Guardian, “I'm voting with the progressives on this one”) are strongly opposing the deal and threatening a referendum on it.

So this will be the first big political fight of the new year, and the first big test of Chiu's stated belief that there's common ground to be found on all controversial issues.



Posted by Guest on Mar. 15, 2011 @ 3:43 pm

What exactly is going to move in there that is going to employ the locals? What us the dream business that will create jobs for the crack wrecks and also pay taxes to the city?

Posted by maltlock on Mar. 15, 2011 @ 4:30 pm


What's going on here is that they expanded the boundaries to include all of Shorenstein's properties in the area. Gotta admit that you got their attention though. You bitched about a couple of million in lost taxes and Kim tossed another 20 million on the table. Y'all still saying she's a Progressive?

Go Giants!


Posted by Guest h. brown on Mar. 15, 2011 @ 5:00 pm

You'll lose, like you lost Sit/Lie too. Like your endorsed candidates in the last election lost as well. Let's face it - a referendum, with business and wealthy money behind the tax break proposal, would be an unmitigated nightmare for the left.

One has to admire these puffed-chest pieces about the disaster progressives will bring down on the heads of those not in line with their agenda. They were aimed at Gavin Newsom for 8 years and resulted in him being overwhelmingly re-elected. While The Guardian's shrill screeching about Jane Kim has only convinced voters she's on the right track.

Posted by Lucretia Snapples on Mar. 15, 2011 @ 8:07 pm

This Controller's report makes it clear that there are main two drivers behind the 6 year payroll tax holiday for the affected properties around Market Street, Civic Center and the entire TL: #1) suspend the payroll tax so Twitter employees can cash in on their stock options which would be subject to the payroll tax. The average Twitter salary is estimated to be $100K per year. Why the City payroll tax has to be suspended for 6 years to accomplish this is worth more than a "same house, same call" BOS action; #2) Pumping up commercial office space rents in the target area by "15-25%" and solving the problem of leasing 3M square feet of soon to be vacant commercial office space.

Here is the report:

Saving "Twitter" is the marketing front to help commercial landlords who are the heavies behind this particular deal. There is a campaign money trail to investigate here. From a policy perspective should San Francisco help out the affluent who have the resources to take care of themselves? For the GOP and Arthur Laffer devotees the answer will always be a Yes because of ideology and these interests also tend to write big campaign checks but that is not the kind of local government any of us need more of today.

It's twisted to watch politicians campaign as liberal Democrats and then act like followers of the Club for Growth.

Posted by Guest on Mar. 15, 2011 @ 10:09 pm

the Guardian has no more influence, and this thin report is nothing compared to real reporting back in the 90s. Steve's out of his depth when he's not smoking pot or talking about boring Burning Man stuff, and he can't even spell.

2500 words? only a pussy would complain about that as "work". REAL reporters write 7500 words without crying.

Posted by Tsunami Surf on Mar. 16, 2011 @ 8:37 pm

Really proves how important the Guardian stories are that keep attracting all these pathetic Guardian attackers. You know your hitting the sweet spot when the trolls come out!
This proposal was not ready for prime time. Is Kim?

Posted by Guest on Mar. 16, 2011 @ 9:28 pm

I need attention.

Posted by Arthur Evans on Mar. 16, 2011 @ 11:19 pm