Saturday, March 19, 2011

The Twitter Tax Break and Randy Shaw

Before Gavin Newsom left his mayor's position earlier this year to became California's Lieutenant Governor, he made a number of promises concerning tax breaks and public land giveaways to the likes of Larry Ellison and the Web 2.0 company, Twitter. The latter is still trying to figure out how to make money off of its 140-character messaging service, but financiers are investing a lot of money into the company and for the moment it is expanding and thriving.

On Wednesday in City Hall at a Board of Supervisors Budget and Finance sub-committee meeting, there was discussion and public comment on the proposed exemption of Twitter from San Francisco's payroll tax if they would move their headquarters from their present South of Market location to the huge, 1937 Art Deco Furniture Mart building at 9th and Market Streets, which has lost most of its tenants in the last two years to Las Vegas.

There's a good case to be made for replacing San Francisco's payroll tax with a gross receipts tax, an idea put forth by Board President David Chiu which went nowhere, thanks to pushback by the San Francisco Chamber of Commerce and its allies. It also turns out that the main reason Twitter is looking for the exemption is that all employee stock options are taxed by the city as part of the payroll tax if and when the company goes public. Since going public will probably happen sooner rather than later for Twitter, that detail alone would provide a very good reason to move to the non-payroll-taxing suburbs rather than staying in San Francisco, where they would be employing union janitors like the group from Local 87 of the SEIU above.

The Twitter payroll tax exemption legislation is being carried through by new District 6 Supervisor Jane Kim, who gained election with the strong support of the Tenderloin Housing Clinic's Randy Shaw (above) and his legions of SRO (single-room occupancy) tenants in the Tenderloin. Mr. Shaw has been lecturing San Franciscans about housing justice for decades, while profiting off of government subsidies for poor people and living in the East Bay.

Somehow, while this legislation was percolating, the one-time payroll tax exemption for Twitter has mestastasized into a 30-block radius of tax exemptions that now includes a big chunk of mid-Market Street and most of the Tenderloin neighborhood. For a fairly comprehensive account of how that happened, click here for an account by Steven Jones (above right) at the SF Bay Guardian.

During public comment at Wednesday's meeting, Randy Shaw stepped to the podium for his two minutes of commentary, but instead of offering an explanation of the new payroll tax-exempt boundaries, he instead gave a testimonial to his own fabulousness. He explained how he personally stopped gentrification, commercial and tourist development in the Tenderloin while simultaneously whining that there was no investment in the neighborhood, and that "there's no level playing field," meaning he wanted even more government subsidies and special tax breaks.

Here are Mr. Shaw's comments verbatim, which are a bizarre mixture of the megalomaniacal and pugnacious:
"Thank you, Supervisor, Randy Shaw, director of the Tenderloin Housing Clinic. You know, I’ve been asked by people, “why are you so passionate about this legislation, why do you think it’s so vital?” And the reason is, you know I came to the Tenderloin in 1980, began working full-time at the Tenderloin Housing Clinic as the first employee in 1982. When I got there, there was no heat in residential hotels, I brought a Chronicle reporter around, ended up in nationwide press headlines, I wrote new heat and hot water laws. It used to be if you were a tenant in the Tenderloin and you didn’t pay the rent, the landlord didn’t bother with eviction procedures, he just literally locked your door, called the police and had you arrested or threw you down a flight of stairs and you were gone. So we did a big protest at the police station to change those policies. You don’t see lockouts in the Tenderloin anymore. We then stopped the hotline hotel program which had taken all of the SRO rooms in the Tenderloin, turned them into transient facilities instead of the permanent housing they historically were."

"Then when we elected Art Agnos mayor, he signed legislation on May 12th, 1990 that protected all of our residential hotels. I rewrote the entire ordinance and made it enforceable. In 1985, we also passed the rezoning of the Tenderloin to stop commercial development, to stop all tourist development, stop buildings over eight stories.

So in 1990, I was asked by a committee putting out a document called “Tenderloin 2000” if I was concerned about gentrification in the future of the neighborhood, and I said in 1990, and it’s in the document, “Gentrification. We’ve stopped gentrification. Our problem is we can’t get any investment. We are a neighborhood starved for investment.” This was 1990. We then had the dot-com boom, the biggest economic explosion the city’s ever had, but it bypassed mid-Market and the Tenderloin. We then had the housing bubble which turned Fresno and Stockton into booming areas, but did not do so for the uptown Tenderloin or mid-Market."

"So when people say to me, “Why is it so important?” it’s because we cannot compete on a level playing field. Hasn’t history shown that? If you study the history of the mid-Market and the Tenderloin (GONG for two-minute time limit), they are combined, they are joined. (“thank you,” says a supervisor trying to get him to stop). The people coming to the theaters on mid-Market Street (“thank you”), patronize the restaurants in the Tenderloin (“thank you”), so I urge you to support this legislation (“thank you”)."

My friend h. brown, who is an alcoholic, former drug addict living in a Tenderloin SRO, was so appalled by Shaw's speech that he hoofed it three blocks to the Board chambers in City Hall to set the record straight, and delivered one of the more pointed and entertaining public eviscerations heard in that room. Here are excerpts:
"I’ve been in the Tenderloin between 30 and 40 years, and I can tell you exactly what happened there. When I moved in, mid-Market was booming, a lot of burlesque places and stuff like that, but it was all working class people living in these SROs. What happened? Two things happened. First, all of the working people moved out. The reason they moved out…is because a young man came to San Francisco with a business plan. He got control of the buildings through the city, and he filled the buildings full of drunks and drug addicts and insane people. And you know why? Because the government, all branches of government, send checks to him every month to take care of their rent. He doesn’t have to worry about a poor family that was going to move out.

That man’s name is Randy Shaw. The guy standing up here wanting to avoid gentrification, he did reverse gentrification. You have twelve to fifteen thousand drunks, drug addicts and insane people living in that area. In one building, the Seneca, he had 464 police calls in the last six months. This guy is going to be your saviour?"

After mentioning that the city missed its chance to warehouse the worst of the deadbeats at the newly decommissioned Presidio and Treasure Island sites, Brown concluded:
"Remember, the reason that neighborhood is holy hell is because of Randy Shaw’s business plan. All the drunks, insane people, and addicts who are there are his customers, and the drug dealers who come in from the East Bay come in to service them. That’s your problem."
Click here to see a YouTube clip of his entire commentary.


Your driver said...

This is great. Thank you for posting this. Thank you H. Brown. Thank you from a former resident of the TL.

Nancy Ewart said...

Ah, yes, Randy Shaw. The doctors and nurses that I used to work for at the AIDS program had some choice words for him.

But is this right? The city desperately needs tax revenue and they are going to give an exemption to Twitter? If they are going to exempt Twitter, why worry if it stays in the city or not? It won't do us (the working poor) any good.

Civic Center said...

Dear Jon: Thanks for the kind words, and I'll pass on the praise to Brown.

Dear Nancy: Supervisor Kim and the Mayor's Office of Economic Development are citing the positive economic trickle-down effects of having a full building at 9th and Market as an opposed to an empty one. There will still be taxes coming into the city, just not from the payroll tax. However, the many people who testified against this deal have good points about why it's such a bad deal for the city and its residents, and share your good riddance to Twitter attitude. I think this really is about the stock options at heart, so I'm wondering why they don't just change that part of the payroll tax law.

In any case, the whole thing has turned into a "let's give away more subsidies to Randy Shaw and the Shorenstein family."

auweia said...

Hi, I have both videos now clipped and up on youtube

Thanks for this post

The Tender said...

Thanks for the writeup, Mike. We really enjoyed your description of the hearing (and have re-blogged it here:

And long live H Brown.

Unknown said...

Thanks for the post.

It is interesting and probably a correct assumption about the exemption related to twitter stock offering to their employees. Will the existing payroll tax go up when current employees receive stock offerings, or will the tax rate be completely static at 350k/year?

Civic Center said...

Dear Tenderblog: Thanks for the post.

Dear Nicholas: Good question, and I have no idea what the answer might be.