Genentech could buoy city’s budget 

Genentech’s proposal for massive expansion in South City’s industrial area is a positive economic step, officials say, as the city considers increasing business licensing taxes to help fill projected budget deficits.

Over the next 10 years, South San Francisco residents and workers are likely to see the city’s golden biotech ticket more than double in size, but one-time revenue sources are expected to leave the city in the red within five years if there are no changes to such revenues as the business licensing tax, said Jim Steele, the city’s finance director.

Current revenues are higher than expenses by about $2.4 million, he said. Except for professional offices, such as a law firm that pays slightly more because they pay per partner, the maximum tax for a business is $1,000 annually.

The City Council on Wednesday will vote on Genentech’s 10-year plan for expansion and discuss changing the city’s business license tax, which would require a vote in the November 2007 election.

"We have a balanced budget. Without either expenditure reductions or revenue increases, in 3-5 years we’ll go into deficit," Steelesaid, noting that increased building activity, among other things, has increased this year’s revenues over the current budget by $1.6 million.

Since 1995, the Genentech campus has grown from 72 acres to 124 acres with 2,827,000 square feet of research and development, office, employee amenities and manufacturing space. The new Master Plan would allow the company to grow to approximately 5,937,000 square feet on 163 acres, generating an additional 6,000 new jobs, according to staff reports. The assessed value of all private property in South San Francisco is $10.4 billion, and Genentech is $1.4 billion of that, netting the city an estimated $2 million in property taxes, Steele estimated.

"What would hurt us would be if somehow their property assessments went down," Steele said.

Portions of Genentech’s expansion are within redevelopment areas. Money generated through building in redevelopment areas is put back into the area and does not support the city’s General Fund.

Councilman Mark Addiego said the "real dilemma" for South San Francisco is how to bridge a growing divide between the redevelopment areas and the parts of the city outside of them.

He said that redevelopment areas in the city are generating increasing amounts of cash that the city can’t use for projects outside the area.

"It’s almost becoming two towns in one — where the redevelopment area is flush [with money] and the city has some problems," Addiego said. "We can’t figure out how to make [the money] real for City Hall."

dsmith@examiner.com

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