Tax break incentive to keep Twitter in San Francisco up for key vote 

San Francisco’s best shot to prevent Twitter from migrating south faces a key vote Wednesday on whether to give the microblogging service a six-year tax break.

The growing San Francisco-based company has explored a move to Brisbane, where its business costs would be lower. San Francisco has a 1.5 percent payroll tax whereas Brisbane does not have one.

Supervisor Jane Kim, whose district includes the mid-Market Street area where Twitter would move, has broken from predecessor Chris Daly’s stance and is advocating for the passage of legislation that would give Twitter a six-year payroll tax break if it decides to move into the building at Market and Ninth streets. The tax break would apply to all qualifying businesses that relocate to the portion of the Tenderloin and the mid-Market Street area that city officials hope to revitalize

“I’m philosophically against cutting taxes,” Kim said Monday. “I’ve had to think about this long and hard. This is targeted enough. It’s specific enough. It’s short enough.”

Carrying this legislation through the board process is the first big political test for Kim, who came into office in January.

On Wednesday, the legislation, which has generated criticism from the more progressive political factions of San Francisco, is before the Board of Supervisors Budget and Finance Committee for its first hearing. If approved, the full board could take action as soon as next week.

Kim said she has been addressing the concerns of her colleagues.

Supervisor John Avalos said the proposal doesn’t seem fair given the financial struggles of residents in his district.

“Who are the [Twitter] investors?” he said. “Probably some of the wealthiest people in this country. And we are giving them more wealth.”

Kim said she plans to amend the legislation Wednesday to “shrink” the area of the tax exemption to ensure it applies only to parcels with a long history of vacancies.  

A report from budget analyst Harvey Rose raised some concerns about the possibility that Twitter’s job growth is less than projected. The City might have a difficult time delivering increased service levels “to meet the demands of a large company while potentially reducing payroll tax revenues.” The City and Twitter have negotiated increased services such as extending a foot-patrol police beat to the area and an express Muni line.

“In some ways, this legislation is a leap of faith,” Kim said. “But there have been so many attempts to revitalize mid-Market and none of them worked. We are going to give this one a shot.”

The City Controller’s Office is expected to release an economic impact report on the proposal today.


Preventing loss of Twitter

Here are some details and projections related to the proposed payroll-tax break:

$535,500 Twitter’s annual payroll tax payment
$0 Amount Twitter pays if it relocates to Brisbane
$22M Potential value of payroll tax break to Twitter over six years
350 Current Twitter employees
750 Work force projection by July 2011
1,500 Work force projection by July 2012
3,000 Work force projection by July 2013
$4.59M Annual payroll tax payment to city upon expiration of deal

Source: Budget analyst’s report

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