1355 Market Street

With chants of “Twitter you’re no good, pay your taxes like you should” emanating from the lips of protesters in front of San Francisco’s City Hall this week, Supervisor David Campos has requested a formal hearing to review the impact that the 2011 legislation which created the Mid-Market tax break, commonly known as the “Twitter Tax Break,” has had on the city.

The focus of the proposed hearing includes “a discussion on the amount of the tax break, its impact on commercial rents, including rents for non-profit tenants, as well as its impact on residential housing prices and tenant displacement in San Francisco, and a discussion on the impacts of the City’s decision not to collect Stock Based Compensation.”

Originally estimated to cost the city an estimated $22 million in foregone payroll tax revenue, recent estimates put the cost at closer to $55 million. But those “costs” don’t account for any of the benefits associated with having kept Twitter and other companies in the city.

Twitter had 350 employees at the time the tax break was passed, a tax break which Supervisor Campos opposed. Twitter now employs closer to 2,500.

And since April of 2011 when the Central Market/Tenderloin Payroll Expense Tax Exclusion became effective, investment in San Francisco’s Mid-Market area has exploded and overall employment in San Francisco has increased by 52,800.

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Comments from “Plugged-In” Readers

  1. Posted by onslow

    Oh, how I wish Campos would just crawl back under whatever rock he came from. Hardly a week goes by that he’s not on the steps of City Hall with a small band of knuckleheads blathering about some “injustice” or other.
    This town is BOOMING (no thanks to the [BOS], rather in IN SPITE of them), Campos and his ilk should worry about things like filling the potholes and fixing Muni and give all of this silly crusading a rest.

  2. Posted by Keepitup

    Compos the commie…again rises to the occasion by pandering to his base. Political theater takes center stage once again in his battle to take Ammaino’s tush in the assembly race.
    Come’on if Twitter had not been enticed to stay in SF with tax breaks they could have…would have opened up shop anywhere they wanted too.
    Now Mid Market is beginning to show signs of life…and it’s not the typical street urchant life that inhabited Mid Market two years ago.
    Compos and his ilk can’t stand it when success shows it’s head in SF.
    It’s a fact that Twitter has created jobs in SF and induced sorely needed invested to a run down..blighted stretch of Market street. Too bad it doesn’t sit well with the “disenfranchised” whiners who can’t seem to figure out how to take advantage of success.
    To those protesting the tax breaks, their success seems only comes in the form of cheap subsidized rents and public handouts paid for off the backs of working people. They can’t seem to figure out it’s private enterprise that pay their freight.
    It’ll be interesting to see how much money Twitter actually contributes to the city in the way of grants to the neighborhoods, grants that the political whores at city hall can’t seem to get their grips on or their heads around.
    Nothing to see here folks… keep moving along now…

  3. Posted by parklife

    David Campos is seriously making me consider donating a large sum to David Chiu in his Assembly campaign. And I’m not fond of Chiu!

  4. Posted by Stucco_Sux

    If I ran the hearing these would be my findings:
    1) Tax breaks for helping us revitalize and long submerged area — great idea. Should have a shelf life. Maybe shelf life over?
    2) City should actually mitigate effect of this revitalization — i.e. really bad news street people now swarming other areas having been chase out of mid-Market.
    3) Campos needs to stop posturing. Our city has changed and the Chris Daly approach is out of date. Those who ignore that simple fact do so at their own risk.

  5. Posted by MSTBLD

    No tax break was afforded to Twitter per se. It went to anyone who took space in that large empty building. Like lots of other growing firms, Twitter could have taken space in an Downtown or SOMA building not gotten a tax break. However, Twitter was willing to take the risk in a problematic area. As a result the property taxes in the building have increased many times over. If any one came out fantastically, it is the Shorenstein Co. However, no politician ever mentions them. All posturing.
    [Editor's Note: The exclusion zone is much larger than simply Shorenstein's 1355 Market Street building, but the credit was created with Twitter specifically in mind.]

  6. Posted by kbbl

    I really, really, really hope the protesters were chanting to the tune of “Hey Mickey.”

  7. Posted by Louis

    A deal is a deal and there are no redos. I am not sure what this study is looking for other than quantify losses in tax revs that we’re never anticipated to be created.
    But for the rest of the crowd that thinks twitter at al is just an unmitigated good for the city, and forget about campos issues I don’t care about all that, I think you’re taking a very narrow view.
    Working people with real jobs and decent salaries , not the free loaders and commies you simpletons like to reduce everything to , are being gentrified out of this town, and eventually that will have a huge negative effect on the economic base of the city.
    Dot com 2.0 will pass.

  8. Posted by SF Citizen

    Louis – If we keep up the trend and the freeloaders, rent controlled tenants, and the simpletons (your words) are gentrified out of the City, then the Campos clan should be worried about their jobs. Property owners with wage earning jobs have very different political views from rent controlled tenants.

  9. Posted by Can't think of Cool Name

    Monday through Friday on one of the national cable business channels, I see an advertisement run that touts a 10 year tax break for any “qualifying” company/startup that wants to base themselves within the STATE of New York – not just the city.
    I can imagine these folks heads collectively exploding if they had to deal with business tax breaks that cover an entire state, not just a section of a particular city.
    A tax break is simply a broadly used, well known tool to be used to improve economic health of a geographic area. And its hardly an unheard of, untested, unique to SF device that only the city has implemented…

  10. Posted by onslow

    @Lous: Yes, Dot Com 2.0 will pass. So what? In the meantime it’s doing WONDERS for SF, scary, dangerous neighborhoods being cleaned up, beautiful historic buildings being refurbished (Twitter and Yelp anyone?), small businesses opening, tax dollars flooding in.
    You also naively miss what is REALLY keeping the “working people with real jobs and decent salaries” out of SF. The fact that a HUGE portion of an already severely limited housing stock is subsidized and set aside for people who really can’t afford to live here. Supply and demand, look it up sometime.

  11. Posted by zzzzzzzzzz

    As I understand it, SF was the only city in the state that taxed capital gains from IPO sales. So the “tax break” consisted in part of merely bringing SF policy in line with the rest of the state. Moreover, the payroll tax which prompted the tax break is in the process of being phased out. So the entire issue should be moot.

  12. Posted by Jackson

    David Campos is fighting for relevance and influence since he can see his constituent base in the Mission eroding with new growth and thought.
    I hope the San Francisco political pendulum is swinging back towards the center.

  13. Posted by Joseph A

    The TAX BREAK was one of the best things the city of San Francisco has done in decades , and it has helped generate 100’s of Millions in dollars via increased parcel taxes ,
    If anything this has shown that by making San Francisco for job location the city can generate cash hand over fist via increased real estate values

  14. Posted by Joseph A

    I would actually take what we have seen via the Payroll Tax that San Francisco should go about other Tax Breaks to increase city revenue
    I would suggest that San Francisco give a break on the Tax Rate for sales of CARS , and reduce it to 8.0% vs the current 8.75%

  15. Posted by Louis

    The political pendulum has already swung back to the center, mr campos is a vestige of an era that is passing. for better or worse, that is a fact. a few years of SF political history would provide you that view. the tipping point on this is whether or not “progressive” revenue measures can pass 2/3 on a ballot and that threshold appears to have largely passed a few years ago.
    gentrification debate is not about david campos, it will take place w/ or w/o him, just look at NYC. those of you who obsess over him either miss the point, or you just really do believe in let the good times roll and screw anyone who cant hang in there, and use him as a demon. youre entitled to that POV.

  16. Posted by Jill

    This guy is not smart. Talk about trying to kill the goose that laid the golden egg. He should move to China with his comrades

  17. Posted by two beers

    Right, Jill, because advocating for making billion-dollar businesses pay their fare share of taxes is exactly the same as the Maoism you ignorantly think prevails in China today.
    Yet you have the nerve to call Campos stupid!

  18. Posted by onslow

    @two beers: So tell me, who died and decreed you arbiter of what is a corporation’s “fair share” of taxes?
    It takes no “nerve” to call Campos stupid, all it takes is a shred of common sense. Tax break or no, Twitter and it’s employees pay massive amounts of taxes while the typical Campos supporter is a parasite who pays nothing, drains the government teat, then has the audacity to vilify those who work hard for a living and foot the bill for them.

  19. Posted by NoeValleyJim

    I want an assembly candidate with Chiu’s brain and Campos’ heart.

  20. Posted by Can't think of Cool Name

    I read through this: “SEC. 906.3. CENTRAL MARKET STREET AND TENDERLOIN AREA PAYROLL EXPENSE TAX EXCLUSION” (http://oewd.org/media/docs/Central%20Market/CentralMarketPayrollTaxExclusionLegislativeText.pdf).
    “(a) An exclusion from the payroll expense tax shall be allowed for each person who maintains a fixed place of business within the Central Market Street and Tenderloin Area for payroll expense attributable to that fixed location; provided, however, that in no event shall the tax exclusion reduce a person’s tax liability to less than the person’s Base Year payroll expense tax liability.”
    (1) …Outlines the borders of the Exclusion Zone…
    “(2) ‘Base Year’ means the 2010 tax year for a person who maintains a fixed place of business in the Central Market Street and Tenderloin Area on the effective date of this ordinance, provided that the person maintained a fixed place of business in the Area for the entirety of such tax year. If the person did not maintain a fixed place of business in the Area for the entirety of 2010, then the first full tax year that person maintains a fixed place of business in the Area shall be the Base Year. For a person who moves a business to the Central Market Street and Tenderloin Area from another part of San Francisco, Base Year means that person’s full tax year for the year prior to entering into a lease agreement or buying real property in the Area, provided that person was doing business in San Francisco for the entirety of such tax year. For a person who commences to maintain a fixed place of business in San Francisco after the effective date of this ordinance, Base Year means that person’s first full tax year in the Area.”
    So what’s confusing to me is:
    If these companies are actually paying a payroll tax, but locked at a rate of their first year in the building in the Exclusion Zone but not paying the delta between the locked rate amount and a future payroll tax increase rate amount at the location…
    Or, are they not paying their base payroll tax at all, but paying the delta between that calculated base rate amount and the new payroll tax rate amount from a future payroll tax increase.
    Anybody?

  21. Posted by AnnaNg

    Dvid Campos is completely ridiculous.
    REPEAL RENT CONTROL: Lets give the City back to hard working folks and common sense, make it a place for families and create policies that support good tenant and good landlords.
    David’s parasitic base can move if they don’t like success.
    WELCOME TWITTER!

  22. Posted by MarketSt

    The twitter tax breaks are a serious threat to progressives because they’re working. After just a couple years, they’ve contributed to revitalizing and cleaning up mid-market far more than 30 years of welfare and social services spending in the same area ever did. What does that say about progressive policies?

  23. Posted by Friscan

    The summary under the photo would be more enlightening and debate-settling if the value of the new jobs and increased property taxes in Mid Market were translated to City revenues that we could compare side-by-side with the estimated $55m “loss” of the payroll tax change. Quantifying the value of gain so it is obviously and objectively greater, is all that is needed to underscore the merit of this policy shift. As for the badly-needed affordable housing to stave off displacement: solutions are only easier when City agencies have more revenues to increase the inclusionary subsidies.

  24. Posted by Spencer

    This tech boom is nothing like dotcom bubble. Most of those companies had No revenue and few users
    Here’s a good article on insanity of dotcom bubble as compared to today
    http://www.businessinsider.com/number-ipos-with-100-first-day-returns-2014-3

  25. Posted by Moz

    ” The fact that a HUGE portion of an already severely limited housing stock is subsidized and set aside for people who really can’t afford to live here. Supply and demand, look it up sometime.”
    Shut up about rent control already. All property owners in this city get a huge tax cut thanks to Prop 13. If they didn’t, they wouldn’t be able to afford to live here

  26. Posted by james jr

    The Twitter tax break was the smartest thing the city has done in a long while. Mid-Market has taken off after decades of “fixes” that didn’t work. It should be extended to all businesses.
    I agree: Stick to your knitting, Mr. Campos. Fix Muni, fill the potholes and give us some value for the $165 million we spend annually on the homeless “problem”.

  27. Posted by sixtypercenttogether

    Please correct me if I’m wrong, but didn’t Proposition E from last year eliminate the payroll tax entirely? I remember it passing, but again I could be wrong.

  28. Posted by Mickey

    Maybe someone should look into the fact that the tax break area was expanded after it was introduced to cover a HUGE area of the Tenderloin (look at the map and you’ll see that 80% of the parcels are not in mid-Market, but the Tenderloin) at the behest of Randy Shaw, who runs a bunch of SRO hotels in that area. People forget that.

  29. Posted by Hitman

    Comrade Campos at it again!

  30. Posted by onslow

    LOL@”Moz”, only a clueless Leftist like yourself would be confused enough to compare Prop. 13 to rent control. Prop. 13 or not, SF homeowners like myself who are by no means filthy rich spend thousands of dollars a year on property taxes (some of the highest in the country).
    You’re probably also clueless enough to not know that Prop. 13 was created primarily to solve the problem of retired people who had worked all their lives and managed to pay off their homes but couldn’t afford the property taxes (which NEVER go away). If that’s not a sign of onerous over-taxation I don’t know what is.

  31. Posted by Hitman

    Campos hates Twitter because progress means that there will be less simpletons around that will believe his BS.

  32. Posted by Dan

    I don’t understand. Wouldn’t it be good to have a study quantifying the various benefits of this tax break? If it is actually working as well as everyone here seems to think, it seems logical to see exactly how well it’s working, right?

  33. Posted by R

    @Dan: Sure, then let’s hire Price Waterhouse Coopers to do an audit. But having Campos run a circus show with the board of stupidvisors is a waste of time.

  34. Posted by parklife

    @Dan,
    In theory, yes, it would be appropriate to study the affect of the tax break. Unfortunately, I suspect that any “study” would be similar to the “analysis” that addressed the profits obtained by Ellis acting certain properties. Campos has very little interest in truly determining the pros and cons of the tax break, but instead has already reached a conclusion and now wants to justify this conclusion with a biased “study”.

  35. Posted by Boo

    @onslow The idea of the old folks losing their houses to property taxes was a red herring. There were many other ways to prevent that. Don’t pretend you don’t know that. Even folks who support prop 13 know that. Why did it cover commercial real estate taxes too? To protect the poor millionaire old ladies? It was an anti-tax issue supported and promoted by an anti-tax organization. It wasn’t hard to sell but it was a bad idea. The intention was never to protect anything but property owner’s wealth. At least the intent of rent control was to actually protect people from losing their apartments. And yeah, some well healed folks still live in rent controlled apartments and that owner is missing out on income. But there is no way that loss is remotely comparable to the loss of taxes due to prop 13 protecting rich people’s tax levels. All in the name of protecting the old ladies from losing their homes right?

  36. Posted by Dan

    Right on, everybody, but I think suggesting that Campos has his mind made up is ignoring the fact that everyone here has kind of done the same thing. Studying the impact of this just seems like it should be mandatory to future planning. Seems like a good idea, and a hearing at the BOS is the first step.

  37. Posted by EH

    onslow: how many potholes could be filled with the taxes being forfeited to Twitter? Because, you know, even though our current Mayor useta be chief pothole filler before this, there are a zillion potholes that have been there since he was responsible for fixing them. I don’t see that changing, Campos focus or no.

  38. Posted by Dan

    This is the original Dan, not the Dan posting above in this thread. (Sorry to have started using such a common name early in the life of this blog!). An impartial study of the effects of the tax changes of the last few years is necessary, but that’s not what Campos is after. He’s trying to assume leadership on the economic divide with a show trial, to help him win an seat in the California Assembly.

  39. Posted by c_q

    Basically the city didn’t have the guts to fix this part of town in any other way. They could have spent money clearing out homeless regularly, cracking down on crime, etc – but that was somehow deemed unacceptable (or too expensive). So the tax break approach was to ‘wish’ things to get better by attracting businesses to the area that would presumably revitalize (aka gentrify) the streets and businesses.

  40. Posted by MoneyMan

    Moz, I’m a property owner and I don’t get any break from Prop 13. Why? Because I recently purchased it and my taxes are 10 times higher than my neighbor, who is really getting the break. I’ll say this, both prop 13 and rent control are unfair, just unfair to different people.

  41. Posted by The Milkshake of Despair

    Give it a few years MoneyMan and you’ll start to reap some of that prop 13 manna from heaven.

  42. Posted by Jackson

    MoneyMan, When I purchased my condo back in 1999, I also felt slighted by my higher property taxes when compared to similar units in my building.
    With the appreciation of San Francisco real estate, let’s talk in twenty years and see how you feel then.
    I will bet your view moderates towards Proposition 13.

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