We just got word that the San Francisco Board of Supervisors has voted 8-to-3 to approve the Mid-Market incentive plan that would give Twitter– and other companies– a six year payroll tax deferral for net new jobs if they move their headquarters into the city's most blighted area. The plan will require a second and final vote next Tuesday to be implemented. That looks likely now, but go here to sign the petition if you feel strongly about it, just in case. The area in question includes three million square feet of commercial space, most of which has been empty since the 1950s.
David Chiu, the President of the Board of Supervisors and co-sponsor of the legislation, said in a statement, “Today's vote is a vote to keep jobs in San Francisco. This policy is a crucial positive step in the ongoing effort to revitalize the Central Market and Tenderloin neighborhoods. Twitter's commitment to move to this challenged stretch of Market Street and stay in San Francisco shows that we are not content to simply become a bedroom community for Silicon Valley. The companies that are born here should grow here. Finally, I support the efforts of community members to craft community benefit agreements with Twitter and other companies that avail themselves of this payroll tax exclusion. I look forward to the final passage of this legislation next week."
No official word yet from Twitter on whether this satisfies its issues with the city's tax laws. It doesn't come close to solving the broader issues with San Francisco's payroll tax, but it is certainly a big step in the right direction to keep tech jobs in San Francisco. Said Supervisor Scott Wiener as he voted yes: “We in City Hall do a lot of talking about keeping jobs in San Francisco. Now we have an opportunity to actually take action.”
Expect the pressure to continue on supervisors to solve the problem broadly, which would eliminate the need for these company-by-company negotiations with the city in the future. There are already several other proposals on the table including Supervisor Ross Mirkarimi's legislation to exempt all San Francisco companies from paying payroll tax on stock options for two years, Supervisor Mark Farrell's plan for a permanent way to take stock options out of the payroll tax completely, and Supervisor David Chiu's broader efforts to get rid of the payroll tax entirely. As the San Francisco Planning and Urban Research Association noted today, we may need all of those to solve the broader problem for the next generation of Twitters, Zyngas and Yelps. As Supervisor Farrell said during the vote, “It is no secret that we all seem to realize that our payroll tax system is broken.”
It may take years to get some of these problems solved, and we'll see if the Board of Supervisors stays as committed without a headline-grabbing impending departure of a big name. Likewise some of the resolve could soften as Supervisors approach 2012 elections– union groups are among many who see this as nothing more than a wasteful corporate giveaway. Either way, we're going to stay on the story.