Posted by: BayAreaComRE | March 17, 2011

Tax Incentives proposed to keep Twitter (and their followers) in San Francisco

All the cards are all showing, Twitter’s bluff to exit SF has been revealed and they soon will be collecting their chips. Their “chips” will come in the form of tax breaks from the city of San Francisco for every new employee they hire for the next 6 years.

I added an excerpt from the Economic Impact Report for the proposed tax incentives for the Mid-Market.

“San Francisco levies a 1.5% payroll expense tax (or “payroll tax”) on all businesses that operate in the city and whose annual payroll expense exceeds $250,000. The proposed legislation would establish a zone, south and west of the financial district, within which businesses could exclude new payroll from the payroll tax for up to six years. In other words, businesses with premises in the area would be responsible for paying only their base year payroll tax, and could increase their payroll without additional tax for up to six years.”

The map identities the area and buildings within this proposed zone. San Francisco already offers Enterprise Tax Zones for companies which many of our clients capitalize on, but this new plan has been enacted specifically for Twitter, begging the question if this will breed pride or resentment. And will it work?

Will this plan be the catalyst to bring economic vitality to the Central Market Tenderloin Area?

I was concerned with one aspect of this plan in particular. The panel proposed an idea to structure a parcel tax on vacant commercial property, which would not apply to occupied commercial property, so-in encouraging Landlords to lease space faster and ostensibly accept lower rent rather than get hit with more taxes if they sit vacant. This may be the government over reaching…

The good part about this deal is that Twitter will be staying in San Francisco, Shorenstein, one of San Francisco’s oldest landlords, played a big part to make the deal happen, and the Civic Center and Tenderloin may be get a much-needed economic shot of life.

While this could create animosity for the many startups who won’t benefit directly from these tax incentives, Twitter is a good tenant to have around and grow their roots. This deal is far from being signed on the dotted line, but now that the cards are shown on both sides and no jokers were played, the city will most likely concede.

The full report is Scribd below.

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Responses

  1. Great information. Very valuable information BayAreaComRE.

  2. good article…it would be awful if San Francisco lost Twitter from its tenant pool, thanks


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