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rfmcdonaldThe title of the article by TechCrunch's Michael Arrington is a reliable guide to its subject matter.
A quick question to people with relevant information. Is there much space, as in actual real estate, for further densification and development in the IT world? Is, in other words, an impending corporate exodus to lower-tax, lower-cost suburbs inevitable? This is the problem of having a metropolitan area that extends far, far beyond your urban core: the Bay Area is not limited to San Francisco County, not nearly. Should the city try for as much of a one-time windfall as it can reasonable expect instead of aiming for unrealistically optimistic outcomes?
San Francisco, unlike most other cities in Silicon Valley, has a 1.5% payroll tax. And even more stunning is that they consider gains on stock options part of payroll, meaning that any San Francisco based company going public or being acquired could get hit with a massive tax bill in the tens of millions of dollars.
They’ve got Twitter jumping through hoops to avoid the tax. The company will be forced to move to a new location in order to get a six year payroll tax break. But only if the Board of Supervisors votes to approve the legislation on Wednesday. The upside is that Twitter employees will have immediate physical access to prostitutes, drugs and weapons – the qualifying area isn’t exactly an up and coming neighborhood.
The city isn’t thanking Twitter for bringing all these high paying jobs to San Francisco, either. Rather, some supervisors don’t want the tax break at all, and seem quite willing to see Twitter bail to tax-free Brisbane. Says Supervisor John Avalos: “Who are the [Twitter] investors? Probably some of the wealthiest people in this country. And we are giving them more wealth.”
The stupidity of that statement is self evident.
But the city has another potential disaster on its hands – Zynga. The company is already moving into its new 270,000 square foot headquarters on Townsend Street, which is outside of the proposed tax free/hooker area.
We heard Mayor Edwin Lee and Board of Supervisors President David Chu met with Zynga at their offices today to negotiate the issue. I contacted Zynga to ask about the meeting. They confirmed it happened, said it was “positive and productive,” and “they appreciated the city’s interest in Zynga’s future growth.” They wouldn’t comment further.
We have heard, however, that Zynga is already looking to expand beyond the city into other areas in Silicon Valley. They already have offices in Sunnyvale and Los Gatos, for example. Our sources say Zynga is prepared to drive future employee growth outside of San Francisco. They’ll always keep some presence in San Francisco, say our sources, but may even consider moving the corporate headquarters south.
A quick question to people with relevant information. Is there much space, as in actual real estate, for further densification and development in the IT world? Is, in other words, an impending corporate exodus to lower-tax, lower-cost suburbs inevitable? This is the problem of having a metropolitan area that extends far, far beyond your urban core: the Bay Area is not limited to San Francisco County, not nearly. Should the city try for as much of a one-time windfall as it can reasonable expect instead of aiming for unrealistically optimistic outcomes?
