Any tech startups or other businesses planning to relocate to the Market Street Bank of America building — with its one million square feet of space — in order to take advantage of a tax break had best make other plans.
The old BOA building at 1455 Market and four others — with a grand total of 1.8 million square feet of office space, 1.5 million of which is expected to become vacant within two years — will be excluded from the Central Market Street/Tenderloin payroll tax exclusion zone, under amendments announced by legislation sponsor Supervisor Jane Kim on Tuesday.
The tax break scheme, scheduled to be voted on by a Board of Supervisors committee on Wednesday, promises six years of no increases on payroll taxes by any firm relocating to a select area in Mid-Market. San Francisco businesses with a payroll bigger than $250,000 annually currently pay a 1.5 percent tax.
The tax break deal is said to be crucial in convincing social media firm Twitter, which had eyed property in Brisbane, to keep its headquarters in San Francisco. A deal between Twitter and real estate magnate Walter Shorenstein, whose firm recently purchased the Art Deco-flavored SF Mart building, is rumored to be very close to completion.
Kim’s amendment follows a recommendation made in a city financial report released Tuesday, in which the City Controller advised excluding the five buildings — all of which have an historic low vacancy rate — from the tax break zone.
Excluding the five buildings could add as much as $5.5 million to San Francisco’s total annual $345 million payroll tax haul, according to the report.
How done is this deal? City officials are at this moment negotiating with Twitter on its community benefits package, which could include such shiny moving parts as pledges by Twitter to use local businesses to cater its lunches every day, to take on local interns and to build a local free WiFi network.
Yet that hasn’t swayed opponents to the plan, which include former supervisor Chris Daly and labor leader Gabriel Haaland, who have been on record dismissing the tax break scheme as a giveaway to big business, ill-timed as it is in the middle of a recession.
“If I said I was going to kill 99 of your friends as opposed to 100,” Daly asked, waxing rhetorical, “does that mean you’d be any less opposed to the slaughter?”
The tax break plan is on agenda for the Budget and Finance Committee, which is scheduled to begin at 11 a.m. Wednesday.