SF Mayor Ed Lee: Our City’s Success Is Dependent On Engagement With Tech Companies

San Francisco Mayor Ed Lee, who had never run for office before his stint as San Francisco mayor, took the stage today at TechCrunch Disrupt in order to talk about how the city of San Francisco can further encourage startup growth.

Mayor Lee said that one of the first things he saw when he took office was a notice on his desk that Twitter was looking for space in South San Francisco because of San Francisco’s payroll tax structure.

Lee said he reached out to Twitter shortly thereafter in order to understand what exactly in the payroll tax was “job punishing.” He received the feedback that Twitter’s plans for growing from 400 to 3,000 employees in the next two years didn’t square well with the city’s current payroll tax structure.

“I didn’t want to punish companies for growth,” Lee said, explaining that this increased understanding of Twitter’s perspective led him and the San Francisco Board of Supervisors to create a payroll tax exemption on companies in the Mid-Market district, which stretches from 10th Street into parts of Tenderloin.

When asked by Mike Arrington if he believed Twitter would have left the city without that exemption, Lee said yes and went on to say that the exemption is “just the beginning” and that he was considering possibly getting rid of the payroll tax entirely.

The mayor also brought up the case of Zynga, and referred to our TechCrunch story about the stock option tax as something that opened his eyes to the way city policies impact tech companies. Through an ongoing conversation with Zynga, the mayor came up with a measure that gives another six-year exemption on the 1 1/2% tax on stock options for companies about to go public.

In addition Lee emphasized that encouraging startups to stay in San Francisco went beyond taxes and into quality of life elements like dedicated bike lanes.

In order to drive home how important the technology industry and startups are to SF, the mayor brought up the statistic that there are 1,503 tech companies in the city, with over 28,000 employees. At Twitter alone, for example, 35% of employees are SF residents he said. Of the 4.6 million sq. feet of office space leased this year in SF, according to the mayor, 1.6 million was leased by tech companies.

“What I like about the city is I like the excitement of success, and the technology companies are a huge part of what make this city successful,” Lee closed the talk saying. “Our city’s success will be dependent on our constant engagement with the technology companies … [and] If we don’t have our cities economically sound, then we’re a bad investment.”