Tax-break sponsor denies review of Twitter's promises

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Twitter's big tax break is zipping toward approval before the company has agreed to a community benefits package,

The Board of Supervisors Budget and Finance Subcommittee today sent the controversial Twitter/Tenderloin tax exemption zone to the full board, scheduling it for April 5 and denying the requests of community groups and Sup. Ross Mirkarimi that the public be allowed to comment on Twitter's community benefits agreement (CBA), which city officials are still negotiating.

“There should be public comment on the CBA,” Mirkarimi said. “Don't shortchange the process. It undermines the integrity of the process.”

Yet Mirkarimi and others also say integrity has already been lacking from a process he called “sleazy,” with properties being added willy-nilly to the tax-exclusion zone by a private power broker with an apparent conflict of interest; no fiscal analysis given to the Muni line, police foot patrols, and other perks promised to Twitter; and little thought given to the bad precedent this sets for other businesses (a point given real resonance today when Bay Citizen reported that Zynga is also threatening to leave the city if it doesn't get a deal similar to Twitter's).

But the main issue at today's hearing was why city officials are moving forward the agreement – in which Twitter would forgo paying about $17 million in payroll taxes over six years and another $40 million in taxes on its stock options – before the company has agreed to provide any community benefits, despite the fact that proponents of the measure cite benefits to the community as the main reason for doing this deal.

Sponsoring Sup. Jane Kim said that she and co-sponsor David Chiu, the board president and a candidate for mayor, would continue the item if a community benefits agreement wasn't completed by the day before the full board meeting. Considering that the only leverage the city has to get a good community benefits package is a threat not to approve the legislation, opponents weren't won over by that gesture.

Mirkarimi said both the Controller's Office and Budget and Legislative Analyst's Office should be given the opportunity to review the agreement, or at the very least the public should be given a chance to weigh in, something that would only happen if the legislation remained in committee or if the committee agreed to let it be heard by the full board sitting as a “committee of the whole,” which is the the only time the full board hears public testimony.

Kim considered the request for a moment, then whispered to committee Chair Carmen Chu, who announced that they would come back to this item and deal with the rest of the agenda first. Then Kim walked over to have a private chat with Mirkarimi – an apparent violation of the Brown Act, which requires public business to be conducted in the open rather than through private conferences involving two of the three committee members.

Kim and her board aide April Veneracion also conferred with Deputy City Attorney Cheryl Adams while the committee worked through other business and those interested in this item waited for a resolution. When the item was taken up again, Adams responded to questions from Kim and Chu by reminding the committee that supervisors are barred from intervening in contracts negotiated by city departments that involve less than $10 million or a 10 year term.

And because the tax exclusion legislation doesn't include any community benefits for the Mid-Market area – it is written only to be a tax exclusion, with a vague requirement that large companies negotiate a CBA with the city – that negotiation is separate from this legislation, just like the safeguards against gentrification, consideration of neighborhood improvements, paying for Twitter's other perks, and the possibility of a parcel tax on vacant commercial property. Kim has pledged to pursue those ideas later.

Critics of the measure were incredulous, openly asking why city officials would push through such a large tax giveaway without asking for anything in return as part of that agreement. As Mirkarimi said, “The city is blinking and blinking too soon.”

Perhaps the denial of public comment has something to do with how the tenor of the public comments today were markedly more critical of the deal than those last week. While several members of the South of Market Community Action Network (SOMCAN) criticized the deal and called for a delay so it could be more carefully scrutinized, perhaps the most poignant moment came from someone unaffiliated with any organized groups at the hearing: Kayren Hudiburgh, co-owner of Good Life Grocery, which she said played an important role in revitalizing the Cortland Avenue corridor many years ago.

"I pay my payroll taxes and I'm proud to pay my payroll taxes to support this city," she said, appealing to the civic pride of others in the business community. "I think it's socially irresponsible for Twitter not to want to pay its taxes."