Supervisors advance amendments to narrow payroll-tax exclusion tied to Twitter; hearing continued for a week

Supervisor Carmen Hsu, chair of the Board of Supervisors— Budget & Finance Subcommittee, presided over a lengthy hearing on legislation that would create a limited payroll-expense tax exclusion for net new jobs in a narrowly defined Central Market and Tenderloin zone. Supervisor Kim, a prime sponsor, described the proposal as a six-year, targeted incentive aimed at filling vacant office space and spurring neighborhood retail and arts activity.

Jennifer Matz, director of the Office of Economic and Workforce Development, and Amy Cohen (neighborhood economic development) framed the measure as one tool in a broader Central Market Partnership strategy to fill storefronts, support arts groups and catalyze private investment. They said vacancy rates in parts of Central Market exceed 30 percent and that conventional tools (loan funds, tax credits, redevelopment) have not been sufficient to fill large blocks of vacant office space.

Controller—s Office economic analyst Ted Egan told the panel his office—s report projects the move could be decisive in Twitter—s location calculus. "We believe that they will bring 1,300 jobs to central market and then grow to more than 2,600 jobs over 6 years," Egan said, and staff—s multipliers produced higher long-run revenue projections if the clustering effect occurs.

The city—s budget analyst, Harvey Rose, warned of near-term foregone payroll revenue. His office—s memo estimated foregone payroll-expense taxes of roughly $1.76 million in 2012 and about $4.05 million in 2013 if a major employer relocated and took the exclusion; his six-year back-of-envelope showed total foregone payroll taxes could be roughly $22 million over the exemption period.

Public comment filled much of the record. Supporters included small-business and arts organizations, hospitality interests and neighborhood business-improvement districts who argued the measure could spur foot traffic and jobs. Opponents— remarks focused on displacement and fiscal fairness: multiple speakers for SEIU Local 1021, housing-rights groups and residents said the exemption would unduly favor large corporations and risk gentrification and loss of general-fund revenue that supports city services.

Supervisor Kim brought a package of amendments aimed at tightening the district, clarifying administrative rules and adding accountability measures. The amendments remove several block/lots from the zone that staff and the controller identified as having historically low vacancy, strike the 90-percent-in-district work-time threshold that the tax-collector said created administrative burden, clarify how a base payroll year is established for companies that relocate into the district, require an annual first-source/workforce affidavit documenting hires and referrals, and mandate binding community-benefit agreements for companies with payroll expense above $1,000,000.

The committee accepted the amendment package without objection and continued the item for one week to circulate revised language and allow further public comment. The continuation means final vote and any ordinance referral to the full Board of Supervisors will come after the amended text is posted and the committee reconvenes.

What happens next: the item was continued one week so supervisors and the public can review the amended ordinance language, and the committee will reconvene for additional public comment and a potential vote. If approved, the Board of Supervisors will take the final vote at a later date.