Twitter To Lease San Francisco Site If Exempted From Payroll Tax

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SAN FRANCISCO (CBS SF) — Twitter officials told San Francisco city leaders on Tuesday that the company plans to lease offices in the city’s Mid-Market neighborhood if it receives a payroll tax exemption.

The exemption proposal was considered at a Board of Supervisors budget and finance subcommittee hearing Wednesday, and could be voted on by the full board as soon as March 29.

KCBS’ Barbara Taylor Reports:

Twitter’s letter, sent to Mayor Ed Lee, Board President David Chiu and Supervisor Jane Kim—three of the legislation’s sponsors—was sent by the microblogging company’s chief financial officer, Ali Rowghani.

The letter confirmed Twitter’s tentative plans to move to the San Francisco Mart building on the southwest corner of Market and Ninth streets, but said the move was “contingent on the Board of Supervisors’ approval of the payroll tax exemption … without which Twitter would not be able to justify the cost burden of staying in San Francisco.

Twitter estimates that staying in San Francisco would cost Twitter more than $30 million over five years in rent, taxes and other expenses.

The company, currently based at a smaller office in the city’s South of Market neighborhood, has considered moving down the Peninsula to a city that has no payroll taxes.

San Francisco levies payroll taxes on all companies with payrolls above $250,000.

At Wednesday’s subcommittee hearing, dozens of people spoke out in favor of and against the proposal, which would also extend to businesses in other parts of the Mid-Market neighborhood and is designed to revitalize a part of the city affected by blight and public safety issues.

Amy Cohen, of the Mayor’s Office of Economic and Workforce Development, said the proposal “is not a silver bullet” to address those problems, “but it is a game-changing tool.”

Former Supervisor Chris Daly spoke in opposition during the public comment period of the hearing.

“We’re talking about giving away $22 million,” the estimated amount of payroll taxes that would be lost in the proposal, “to a company valued in the billions,” Daly said.

Two current supervisors also expressed reservations about the proposal.
Supervisor John Avalos pointed out that “there are many businesses that are struggling that don’t get these advantages,” while Supervisor Ross Mirkarimi questioned why the proposal was expanded to include other nearby businesses.

“Why the orbit … when the impetus is Twitter alone?” Mirkarimi said.

Kim said amendments added to the proposal Wednesday will “ensure this tax exemption is as targeted as possible” by deleting buildings with historically low vacancy rates.

Because the proposal was amended, it will have to return to the subcommittee next Wednesday, where it could be sent to the full board to be voted on as soon as March 29.

Twitter’s letter said if the exemption is approved, the company is committed to signing a lease that will keep Twitter in San Francisco for six years and likely for a subsequent 10-year renewal term.

The letter said the company’s “roots are in San Francisco, and we are hopeful that we can continue to participate in the innovation and vibrancy that has characterized this city.”

The mayor issued a statement after receiving the letter, saying he will work closely with the board to ensure that the proposal passes.

“This is the moment we have been waiting for in our Mid-Market area,” Lee said. “The transformative nature of an anchor tenant like Twitter will revitalize this community, create jobs and stimulate our economy at a time when we need it most.”

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services may have contributed to this report.)

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