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ISSUE 163 – February, 2016

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ISSUE 163 – February, 2016 NO. 163 PUBLISHED BY THE CENTRAL CITY Tax break SAN FRANCISCO STUDY CENTER February for Twitter 2 016 cost S.F. $40 million Latest City Hall report tallies first 3 san francisco years of giveaways TWIttER TAX BREAK BY M ARK HEDIN WITTer’s stock price is tumbling to new lows this year, but its tax savings T in San Francisco continue to grow. The Central Market Street and Ten- derloin Exclusion from the city’s payroll tax, the so-called Twitter tax break, saved Twitter and five other companies $33.6 million in 2014, the latest figures available, HEALTH according to a report by Tax Collector Da- vid Augustine. He puts the tax break’s cost OF KIDS' to the city at these many millions, plus an additional $6.1 million in previous years, TEETH for $39.8 million total since its March 2011 enactment. $100 per child The millions that the city didn’t get in 2014 derive from $2.5 billion in the total in dental care payrolls of Twitter, Ze- PAGE 2 ndesk, Microsoft’s Yam- mer, Spotify, Zoosk and “We can't reveal One Kings Lane. San Francisco taxed the amount of payrolls at 1.5%, a levy DARRELL the city is phasing out the tax break.” over five years in favor 'SCOOTER' of a gross receipts tax, as Colin Crowell per then-Supervisor Ross WILLIAMS TWITTER Mirkarimi’s 2012 Proposi- tion E. In the phaseout, the Also an obituary payroll tax rate decreases each year. Amanda Kahn Fried, policy and for Susan Imanian legislative manager in the tax collector’s office, said that in 2014 the rate was 1.35%. PAGE 7 The city’s loss in 2014 is eight times what it missed out on the year before, the October report points out. In 2013, the un- collected tax would have been $4.2 million. In 2012, the first year the tax exclusion was DIGITAL ILLUSTRATION: LISE STAMPFLI available, $1.9 million was forgone. Payroll taxes boomed in 2014 mainly Twitter alighted on Market Street in 2011, and brought immense change to the neighborhood. because Twitter went public in late 2013. Months later, its employees became eligi- ble to cash their stock options, considered compensation and thus previously subject to the payroll tax. The full cost of the Twitter tax break is a TL getting its due? moving target as staffing and share value at port to the Board of Supervisors on its financial the firm fluctuate. Documents Twitter made 5 years after passage, impact — $40 million as of 2014 and climbing public in advance of its IPO led to varied FOG CITY rapidly. guesses based on the number of stock op- Tenderloin’s old guard Given that this stretch of Market Street had tions reported at the time. MAGIC dozens of storefronts vacant before the tax The tax break represented a potential break passed, and the entire city has reaped an FESTIVAL evaluate law’s impact $130 million loss to the city, The Extra cal- economic bonanza — in that sense, the ransom EXT MONTH it will be five years since culated in December 2013, in consultation S.F. paid Twitter & Co. has been priceless. San Francisco passed its most power- with local CPA Jim McHale, who says he of- EXIT Theatre's On the other hand, the cost of gentrifying ful piece of legislation in decades, the ten represents businesses in their dealings N the central city and the shredding of its safety 1st: 7-show Twitter tax break. The Central Market and with City Hall. “I do a lot of controversy net, in human terms is incalculable. Tenderloin Payroll Expense Tax Exclusion or- work,” he said. Except for One Kings Lane and Zoosk, the premiere dinance is the catalyst that’s sparked the resur- The $130 million estimate was based tax break companies all have made significant PAGE 8 rection of seven blocks of Market Street, and is on a worst-case scenario but an unlikely oc- contributions to the area, with Twitter’s $3 mil- gentrifying the entire central city. currence, in which all Twitter’s outstanding lion NeighborNest the single costliest benefit. The ongoing transformation is far from com- stock options were cashed in at the price at Despite the enormity of the Twitter tax plete. The ordinance also accelerated Mission the time. (tinyurl.com/CCEDec2013.) That break — tens of millions of dollars in public District changes and has rippled throughout the was in December, when Twitter was trading giveaways and many millions more spent bene- city, touching every neighborhood. at $56 and climbing. Twitter’s stock price fiting the neighborhood — no news outlet but Supervisors Jane Kim, David Chiu and six quickly soared to $60 after it went public, The Extra regularly reports on how the legisla- colleagues — taking action after Twitter’s letter but in 2016, it’s fallen below $20. tion is playing out since its inception. to the mayor threatening to move out of San With McHale, The Extra also deter- Five years is a long enough to put the tax Francisco — hastily drafted and passed the tax mined that each dollar of Twitter’s share break’s impacts into perspective. We asked Ten- break and related ordinances. Mayor Lee signed value represented $1.9 million of lost city derloin stakeholders, mostly the folks who were the key one into law the day after passage. revenue. here before the changes, whether they think Lee publicly counts the tax break among The Chronicle, also working with that the neighborhood has gotten its due. This his greatest achievements, though Kim, who McHale just prior to the November IPO, had report reveals mixed feelings and strong views. represents the area, seldom mentions her role pegged the tax break companies’ savings at These quotes are from phone interviews and and didn’t respond to repeated requests to add $56 million, an amount based on employees email answers to questions. The emails were her voice to that of some of her most respected cashing in their options at $18.50, midway edited to match The Extra’s style and for clarity constituents. in the expected IPO price range of $17 to — not for content. Their quotes start on page 4. How much the tax break cost the city cof- $20. fers had not been officially stated in substantive As the legislation was being drafted by — Geoff Link, Editor & Publisher ➤ C ONTINUED ON PAGE 3 form until the tax collector made his annual re- to some of the most common health mistakes. Each class focuses on one aspect of living a healthier life: alter- natives to soda and sugary beverages (Feb. 1), the dangers of fast food (Feb. GOOD 8), eating in moderation (Feb. 22), diet and exercise (Feb. 29). The Arc San Francisco, a nonprofit, serves people with developmental disabilities by promoting self-determination, dignity NEWS and quality of life. The classes, 11 a.m.– BY M ARJORIE BEGGS noon in the library’s fifth-floor Learn- ing Studio, are open to the public. kids’ TEETH The bad news is that by kindergarten more than half of SENIOR VITALITY Curry Senior California kids have decayed teeth, Center launched a one-year pilot, according to Children Now. Tooth Project Senior Vitality, in 2014 to test problems make kids of all ages miss whether low-income seniors living 874,000 days of school every year, and alone would benefit physically and those with tooth pain are four times reduce their isolation if they used per- more likely to do poorly in school. sonal wi-fi tracking devices to monitor Tooth decay is the most common their health and iPads to access the chronic illness among school-age Internet from their own apartments kids, four times more prevalent than (tinyurl.com/CCEOct2014). The pilot childhood asthma. The good news: thrust seven Curry residents into the University of the Pacific’s Arthur A. cyber age with equipment, technology Dugoni School of Dentistry is host- tutors and other supports. Among the ing its annual “Give Kids a Smile” fair, many evaluation findings: Participants Feb. 27, 10 a.m.-2 p.m., 155 Fifth St. would have benefited from more in- Youngsters may be drawn by the fair’s depth iPad training at the start; wom- games, prizes, entertainment, petting en experience social isolation more zoo, face painting and balloon art, but keenly than men; most valuable in the sweetener is free dental exams, reducing isolation was connecting cleaning, orthodontic evaluations and with family and friends through social fluoride treatments — services worth media; seniors are likely to have acute $100 per child. Kids up to 17, accom- or chronic medical problems that re- panied by a parent, are eligible, no duce their program participation sig- appointment needed. More info: Pedi- nificantly. “We learned so much,” says atric Clinic, (415) 929-6550. Curry Executive Director David Kne- go. “Now it’s clear which seniors are HEALTHY FOOD CHOICES Mak- ready for the training and how best to PHOTO: JON DRAPER ing better dietary choices every day train them.” Besides the original proj- can improve your health. That’s the ect members invited to participate message of four free classes beginning in Phase 2 of the program, beginning Volunteer dental student Ibrahim Sayeed demonstrates best brushing tech- Feb. 1 at the Main Library presented by now, Program Coordinator Angela De niques at the “Give Kids a Smile” 2015 fair. About 100 kids attend the annu- The Arc San Francisco. The one-hour Martino hopes to add 13 other Cur- al event, saving parents money in dental treatments and ensuring brighter classes, which can be taken individual- ry clients living in several Tenderloin smiles all around.
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