Supervisors scale back Mid-Market tax break

Big commercial properties on Market were removed from the tax-free zone, but all of the Tenderloin remains for some reason.

In the face of testimony that the proposed Mid-Market/Tenderloin/Twitter payroll tax exemption zone included properties that don't need tax breaks to fill vacancies, sponsoring Sup. Jane Kim today amended the measure to exclude several large commercial properties along Market Street at the end of a long and heated hearing before the Board of Supervisors Budget & Finance Subcommittee, which then voted to continue the item for one week.

City Economist Ted Egan had recommended that change and others, including creation of a parcel tax on vacant commercial properties in order to encourage landlords to lower rents enough to attract tenants. That change would require voter approval and Kim told the Guardian that she supports the idea and has directed her staff to work on introducing that measure for the board's consideration this year.

Yet many critics of the proposal – particularly members of the city's biggest labor union, SEIU 1021, who criticized the city for giving millions of dollars to millionaire landlords and Twitter executives while asking low-paid city workers for salary and benefit givebacks – weren't satisfied with those changes. They say testimony from Egan and others made clear that the tax exemption should be narrowly tailored to keep Twitter in town rather than including the entire Tenderloin, which Kim and Tenderloin power broker Randy Shaw tacked onto the original proposal.

Kim, who ran for office as a progressive, tried to counter criticism from her political base that the proposal would gentrify the area and potentially drive out low-income renters, non-profits, and small businesses, specifically asking Egan whether the proposal would increase commercial rents. Egan said it probably would: “That will exert rent pressures on a lot of the small businesses,” Egan said, adding that it would also probably drive up rents for nonprofit groups in the area, costs that could be passed on to the city taxpayers that support them. Egan also said that the proposal probably wouldn't have any discernible economic development benefits for the Tenderloin.

But apparently Kim wasn't paying close attention to those answers because her closing statement cast the legislation as a progressive reform aimed at helping a blighted area and small businesses, rather than the boon to landlords that critics say it is. “This is a huge boon to many of the small businesses that are struggling in this area,” Kim said, adding that, “Our office is very concerned about gentrification.”

Several community and business groups whose support had been solicited by Shaw, Kim, and the Mayor's Office of Economic Development testified at the hearing, stating a belief that the legislation will revitalize the area and keep Twitter from leaving town. OEWD distributed a new letter from Twitter CFO Ali Rowghani stating, “I am happy to report that Twitter has signed a Letter of Intent with the Shorenstein group to lease a large block of space at the historic Furniture Mart building on Market and 9th Streets. This LOI is contingent on the Board of Supervisors' approval of the payroll tax exemption as part of the revitalization efforts, without which Twitter would not be able to justify the cost burden of staying in San Francisco.”

Critics called it a shakedown of city taxpayers. “We're talking about giving away $22 million to a corporation valued in the billions,” former Sup. Chris Daly said, later adding, “Someone needs to stand up to corporate threats and do the people's work.”

Yet even critics of the deal, such as Sup. Ross Mirkarimi said, “I don't think there's anyone in city government that wants to see Twitter leave San Francisco.” But he questioned the many hidden costs to taxpayers of the giveaway to Twitter, such as the Muni line and police foot patrols that have been promised, asking whether they have been calculated into the cost of this deal. “We do not have a cost for these things and you do have a valid question,” replied Budget Analyst Harvey Rose.

Other critics questioned the optimistic assumptions of how much Twitter will grow, how many businesses it will attract to the area, and whether that economic activity will continue after this tax holiday expires in six years – which is the basis for Egan's conclusion that the $22 million giveaway will eventually pay for itself.

As the board begins to weigh into its next big controversial issue, a pension reform proposal that cuts deeply into city workers' paychecks, the symbolism of corporate tax breaks weighed heavily on the proceedings.

“It's going to be very difficult to get our members to do anything if you do this,” Brenda Barros, an SF General worker and SEIU 1021 member told the committee. “Are you with the workers or are you with the millionaires?”

But proponents of the deal insist that it's simply about mid-Market blight and retaining Twitter. As Board President David Chiu, whose co-sponsorship with Kim means that this is likely a done deal, said, “It's about changing the status quo.”


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Posted by Bruce Wolfe on Mar. 16, 2011 @ 4:42 pm

Maybe it's time for folks like Twitter to make their payroll tax break contingent on creating a transportation district and getting enough buy-in from other Big-Corps of the same stature. MUNI really needs the help all over and this would provide FREE MUNI along that corridor relieving those funds for other places in the city that need the work badly including the workers.


Posted by Bruce Wolfe on Mar. 16, 2011 @ 4:47 pm

it's a good thing Jane Kim, Randy Shaw and the people pulling their strings have such a great PR person like the author.

The Guardian sucks. Can't even hire a decent copy editor. And the "City Editor" is a pissy little whiner who can't even spell. Go back to the hick state you came form and leave the reporting to the adults, losers!

Posted by Guest 2011 on Mar. 16, 2011 @ 8:33 pm

Well, the "hick state" I came from is California, my angry friend, so what do you advise now? This is also the very first time I've been accused of doing PR for Kim and Shaw, so congratulations on a truly unique interpretation of my work.

Posted by steven on Mar. 17, 2011 @ 10:04 am

...."It's going to be very difficult to get our members to do anything if you do this,” Brenda Barros, an SF General worker and SEIU 1021 member told the committee. “Are you with the workers or are you with the millionaires?”

Sometimes you just have to laugh.

Posted by Guest on Mar. 16, 2011 @ 10:36 pm

We need successful businesses investing in the city a lot more than we need unskilled workers with a sense of entitlement.

Kim sees that in a way that Daly's blinkers and brainwashing would never allow him to.

It's about what type of city we want. The Twitter issue is fairly minor by itself. But it's the symbolism that is significant. Which is presumably why the SFBG is devoting yards of bandwidth to something that routinely happens everywhere.

Posted by TonyW on Mar. 17, 2011 @ 8:00 am

Is this really Tony Winnicker? If so, apparently Newsom's corporate Democrat stink really rubbed off on you. Honestly, I preferred the SFPUC edition of TonyW. You were a lot less nasty then.

But I do agree with you that the symbolism of this issue is important. At a time when corporate greed is destroying this country and corrupting its political and economic systems, San Francisco should be the city that holds the line and tries to avoid demonizing public employees and prostrating ourselves before big corporations. Let's regain our sense of civic pride instead of joining the divisive race to the bottom.

Posted by steven on Mar. 17, 2011 @ 10:12 am

Let's negotiate like we've got something they want and that we have enough civic confidence to know that if they walk away from the table, others will take their place.

The boosters have a big hardon for big business, and are beside themselves at the fact that so few big tech companies locate in SF. In order to get that kind of money in town, read campaign contributors, the boosters will have us hike up our civic skirt for the first pimp to call us pretty.


Posted by marcos on Mar. 17, 2011 @ 11:51 am

I'm not the Tony you cite. If I were, it sounds like I'd probably be smarter than to use such a transparent handle. And who knows, I may be hearing from his lawyer soon.

In an odd sense, I agree with you. San Francisco can (and does) dare to be different. While so many cities are unabashedly pro-business and anti-union, San Francisco takes the European social-democratic high road.

It's good to have alternatives and, if I were the Twitter CEO, I'd see a very clear bright line between being somewhere like low-tax Brisbane (mostly built on toxic landfill - they have methane sensors in their office park) and high-tax but adorably quirky San Francisco.

WalMart.Com is based in Brisbane and Kink.Com is based in San Francisco. That says it all. So I guess the question is - in this bifurcated battle between polar opposites, who will prevail?

And can San Francisco flourish just by being a quirky theme park?

I don't know the answer, but I'm sure I'll read about it first right here.

Posted by TonyW on Mar. 17, 2011 @ 12:08 pm

It is a little ironic. The Twitter deal is being labeled as corporate blackmail--if they don't get the tax break, they threaten to leave. The SEIU's position is that if the tax break is given, they threaten not to support pension reform. That seems like "blackmail", too.

Posted by The Commish on Mar. 17, 2011 @ 11:55 am

Great irony and great comment!

Posted by Charley_sf on Mar. 18, 2011 @ 9:23 am

Given the fact that workers at DPH/SFGH have no legal right to strike, SEIU threats are pretty hollow. There will be support only for cuts and takeaways in the real world this budget cycle. Please do us a favor and spare us the lengthy testimony by members and clients, it just costs more money and is absolutely meaningless. I know -- I played your game for 25 years before getting out from under back-stabbing, corrupt leaders at SEIU 790/1021. Things are not better with Stern out and Henry in, except for the paid staff at their fancy Rhode Island St. HQ.

Posted by Guest on Mar. 17, 2011 @ 7:40 am

Jane Kim/Ronald Reagan connection,

This is 'trickle-down' economics and it didn't work under Reagan and it won't work under Kim. Except for Kim. Expensive (and, free) meals with the plutocrats.

And, I gotta save up to go to Daly's Dive.

It ain't fair.

It ain't fair.

Go Giants!

Keep Belt at first base and Torres in center and you have 30 million in left fielders


Posted by Guest h. brown on Mar. 17, 2011 @ 9:26 am

it's incredibly sad that this is happening here in SF and that jane kim is leading the charge with these neoliberal "shock doctrine" tactics. has kissing corporate ass been working for anyone, anywhere? wake the fuck up SF.

Posted by Guest on Mar. 22, 2011 @ 9:05 pm

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