Twitter To Lease San Francisco Site If Exempted From Payroll Tax

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.)

  • Scott

    I’d tell Twitter to go pound salt. They want an address with status, but at no cost. Go to Stockton and setup shop there. Twitter is just another fly by night, and won’t be around in another five years.

    • Betsy

      How many people could they possibly employ to make it worth to SF? Whereas I usually favor these ideas when they can bring significant employment but I have to agree with Scott. They just want a fancy address.

      • Ryan

        Fancy address? Address with status? Have you walked through the area they are planning to move to? Their current location is a MUCH nicer part of town. The reason the city is even considering the payroll break is because no businesses want to be there in it’s current state (prostitution, drugs, homelessness). The city needs an anchor business to make the area worth focusing on for a revitalization. And Twitter is considering it because I’m sure they will get a lower cost per sq ft, and a bigger space to accommodate their expected growth, than they could find in their current neighborhood. Sounds like a win/win to me.

  • Heidi

    Times are hard and its not fair for Twitter to dangle a carrot here in San Francisco for special tax privileges. Every business in San Francisco should pay their share of taxes no matter what or where they are located.

  • jon

    Count how many big businessess have already left SF the past 20 years, obviously the old way isn’t working. I’m surprised Twitter wants to stay in this business unfriendly city anyways.

  • Guest

    Fancy address for no coast, good luck they should know that nothing free in this world.

  • Steve

    This is a bad idea because other companies would think its not fair if twitter doesn’t have to pay. Then, those companies would be asking for payroll tax exemptions too.

  • Patric Cliff Wright Andorfer

    what gives them the right to make any exemptions to payroll tax. I dont want to pay payroll tax – my solution -I have no employees

  • Chris Hawkins

    I’ve seen many businesses either close their doors or move out of San Francisco because neighboring cities offer much better tax advantages. Less government is more in my opinion, and San Francisco should deal with their budget problems like every other person, family, business and organization by taking a good hard look at their overspending, and make the necessary cuts. Our city spending is ridiculously high in comparison to other similar size cities. Taxing businesses to the point where they simply leave the city is not a sustainable option.

  • canuck

    Twitter’s obligation is to provide the best service to its customers and to maximize the profits for its investors. It has no obligation to contribute to the institutionalized stupidity of SF City government. As far as the “fancy address” remarks go, for every one of you that feels this is a bonus, ten others ask what is wrong with their business plan that has them staying in an anti-business poorly managed city and state. Texas, Florida, Arizona await.

  • Phil Matier: More Business Tax Breaks May Be On The Way In San Francisco « CBS San Francisco

    […] legislation comes a week before his colleagues are scheduled to consider a 6-year payroll tax break for micro-blogging giant Twitter, if the company moves to San Francisco’s Mid-Market […]

  • San Francisco To Vote On Twitter-Inspired Payroll Tax Breaks « CBS San Francisco

    […] Last month, Twitter signed a letter of intent to move to the San Francisco Mart building on the southwest corner of Market and Ninth streets, contingent upon supervisors approving the tax break. […]

  • San Francisco To Vote On Twitter-Inspired Payroll Tax Breaks | All of California

    […] Last month, Twitter signed a letter of intent to move to the San Francisco Mart building on the southwest corner of Market and Ninth streets, contingent upon supervisors approving the tax break. […]

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