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Supervisors amend and pass biotech payroll tax exclusion; add First Source hiring checks
Summary
The Board agreed to amend a biotech payroll-tax exclusion ordinance to make the credit a rolling seven-and-a-half-year benefit, require public-health sign-off on applications and add a First Source hiring cross-reference and reporting steps. The ordinance passed its first reading as amended.
The San Francisco Board of Supervisors on Tuesday advanced an amendment to the city's biotech payroll-tax exclusion, changing how the credit's sunset operates and adding workforce provisions meant to direct hiring benefits to local residents.
What passed on first reading: The ordinance, sponsored in committee by Supervisor David Chiu, revises the city's biotechnology payroll-tax exclusion so that companies eligible for the exclusion receive the existing seven-and-a-half-year benefit on a rolling basis, eliminating the shortfall that would have applied to firms applying today under the prior sunset language. The board also accepted amendments requiring the Director of Public Health to sign off on biotech applications and adding a cross reference to the city's First Source hiring program (a local hiring preference), as well as a requirement that certain workforce reporting be filed with the Office of Economic and Workforce Development (OEWD).
Why it matters: Supporters said the measure helps retain and attract biotech employers to San Francisco, protecting higher-paying jobs and encouraging investment in local workforce pathways. Opponents warned about exemptions eroding the tax base at a time of fiscal strain and emphasized that First Source is a good-faith program rather than a binding hiring mandate.
What supervisors said: Sponsor Supervisor Chiu emphasized the city's biotech job creation since 2004 and argued that the ordinance levels the treatment of applicants while preserving the program's termination date. Supervisor Maxwell pushed to strengthen workforce linkages by making First Source participation a threshold element of the application review; Supervisor McCray proposed annual affidavits filed with OEWD to track who benefits from the exclusion. OEWD staff told the board they could report on hires and referrals and that the department and City Attorney would advise about the administrative mechanism (affidavit vs. application requirements).
Vote: The ordinance as amended passed on first reading by roll call (9 ayes, 2 noes). Supervisor Avalos voted no and Supervisor Daley also recorded a no vote; other board members voted in favor.
Implementation: The Board added language requiring health-department sign-off on applications and cross-referenced First Source hiring requirements; OEWD agreed to report on hires and referral counts. The ordinance's mechanics keep the overall program sunset date unchanged while allowing a rolling start of the seven-and-a-half-year credit for eligible firms.
Ending: The ordinance advanced on first reading with added workforce accountability measures; the city will monitor OEWD reporting and the application process under the amended rules.
