Jobs. Tourism. Commercial office space. By almost any measure, San Francisco is outpacing much of the state and the nation when it comes to economic recovery. But our city’s economic turnaround is no accident. Key actions from our business community and elected officials have put our city on sound economic footing and a continued path for growth.
While there is no silver bullet in economic development, business incentives have been particularly successful in growing local businesses and employment. During the past two years, with support from the Chamber of Commerce, San Francisco has enacted payroll tax incentives for local small businesses that create new jobs, pre-IPO technology companies poised for immediate and rapid expansion, and all businesses expanding in or relocating to the long-blighted mid-Market Street area. These follow earlier incentives for the biotech and clean-tech industries, which have had positive impacts on the Mission Bay neighborhood.
Today, San Francisco’s economic incentives are keeping businesses and jobs within city limits. According to the chamber’s foundation partner, the San Francisco Center for Economic Development, 13,000 technology jobs have been added in The City over the past two years. Businesses such as Twitter, Pinterest, Square, Zendesk and many others have established a mid-Market presence. And the City Controller’s Office estimates that more than 2,200 life-science jobs citywide were created following the availability of the biotech incentive.
In November, The City took an even bigger step forward with the passage of Proposition E, the business tax-reform measure that will put an end to our city’s payroll tax — a direct tax on jobs — and replace it with a broader, more equitable gross-receipts tax system that incentivizes job and economic growth. While the full benefits of this reform won’t be apparent for at least six years, when the new system is completely in place, it should immediately help retain and attract new businesses to our city.
Development is another key ingredient to San Francisco’s economic success. In the past two years, The City has approved major projects including waterfront improvements for the America’s Cup, the redevelopment of Treasure Island and Parkmerced. Together, these projects will create nearly 50,000 construction jobs and 3,000 new permanent jobs. Other major projects still pending city approval will further boost employment and economic activity.
When it comes to San Francisco’s recovery, the numbers speak for themselves. As business and government have focused on growth, unemployment has fallen from 9.2 percent in December 2011 to 6.5 percent today.
Commercial office vacancy has declined from 15.2 to about 10 percent over the same period. Hotel occupancy recently topped 80 percent and is expected to remain at this level for the rest of the year. Other indicators also point to growth and recovery.
Come January, a new Board of Supervisors will take the reins in San Francisco. It will either continue to govern for economic growth, or risk slowing our city’s progress. Key decisions on the California Pacific Medical Center rebuild, the Warriors arena, transportation system expansion, California Environmental Quality Act reform and many others will set the pace of our continued recovery. As this phenomenal year of growth comes to an end, let’s all keep the focus on economic success.
Steve Falk is the president and CEO of the Chamber of Commerce.