Zoom-In Webinar Recap: Save SF Jobs
NAIOP SFBA hosted another timely and relevant Zoom-In webinar on Thursday, August 13th titled: Save SF Jobs, a special program with the San Francisco Chamber of Commerce about the work of their new Save SF Jobs Coalition, which the Chapter recently signed on to support. Chapter Government Affairs Committee Co-Chairs, Tess Brandwein, Associate, Shartsis Freise and Justin Shapiro, Principal, Long Market Property Partners produced and moderated the eye-opening program and featured members of the SF Chamber’s leadership team, including Rodney Fong, President & CEO, Jay Cheng, Public Policy Director & Media Relations, and Amelia Linde, Manager, Small Business Initiatives and Engagement.
Here is a brief recap their remarks:
Fong
Current Board of Supervisors proposing tax measures
- CEO tax
- Gross receipts tax
- Real estate transfer tax
SF Chamber set up the coalition Save SF Jobs to educate voters
- Large, medium and small businesses in SF are tied tighter in symbiotic relationship
- It will be the people of SF that will rebuild the City
Cheng
Economic Data
- We have 153,000 San Franciscans out of work today
- 3 times more than during great recession in 08
- 2008 we knew what we needed to do to fix it
- Pandemic recession is unique
- Overnight vacancy rate climbed to just under 10%
- Means long and deep recession for SF
- 47% of all businesses have closed doors indefinitely
- Transaction volume for retail has dropped 91%
- Sales volume for restaurants has fallen by 95%
- 50% of restaurants will never reopen
Facing W-Shaped recession due to long pandemic
- More contagious than the flu
- Predicted to last 18 – 24 months
Impacts
- Major employers are leaving
- McKesson
- PG&E
- Macy’s.com
- Stripe
- Charles Schwab
- Restaurants and storefronts will carry increased taxes in triple-net leases
- COVID-19 sensitive industries will be hit
- Lower consumer confidence
- Tax structure against high volume, low margin
- Large employers will have resources to pivot
- Can expand in other cities
- Can work remotely
- SMALL LOCAL BUSINESSES WILL BE LEFT CARRYING THE BURDEN
City budget
- Mayor Breed in stand-off with unions over $250M for city worker pay raises
- With current budget deficit (approx. $1.7B) the budget is $12B
- Larger than 13 other states
- SF spends the most per resident than any other US city
- City needs to generate cash flow and is putting tax increases on ballot
Three Business Tax Proposals on the Ballot
- Transfer Tax
- Increases transfer tax from 2.75% to 5.5% on property valued $10 - $25M
- Increases tax rate from 3% to 6% on property valued over $25M
- Revenue will go to City’s general fund
- Compensation Ration Tax – (CEO tax)
- Increases gross receipts tax on businesses that have a 100:1 or more ratio between the highest paid employee (globally) and the median compensation paid to employees within SF
- Mostly impacts retail, hospitality and manufacturing companies
- Tech companies pay employees so much that compensation ratio is usually under 100:1
- Gross Receipts Tax Overhaul – Prop F
- Phases out payroll tax by increasing gross receipts tax by 40%
- Increases gross receipts tax exemption from $1.14M to $2M
- Extends Prop C taxes for 20 years
- Tax break for hospitality, retail, manufacturing, certain services, food services, arts, entertainment and recreation
- Increases taxes by 15-20%, staggered over four years based on economic triggers
COVID-19 Tax Breaks (SF Chamber Lobby Hard for it)
- 50% reduction for tax year 2021 and 2022
- Hospitality, retail, manufacturing, certain services, food service, arts, entertainment and recreation
- First $25M gross receipts
- For 2023
- Those industries receive 25% reduction for first $25M gross receipts
Staggered Business Tax Increase
- 15% increase for Real Estate Insurance, Private Ed & Health, Biotech, Admin & Support Services, Utilities
- 20% increase for Information Services, Financial Services, Professional/Technical/Scientific Services
- Kicks in 2022
- Increases 5% each year after
Economic Triggers (SF Chamber fought hard for them)
- First Trigger – Delay 2023 increases for one year if city-wide business gross receipts do not recover to 90% of 2019 levels.
- Second Trigger – Delay 2024 increases for one year if total city-wide business gross receipts do not recover to 95% of 2019 levels.
Linde
Impact of proposed tax increases on small business
- Before COVID SF had 95,000 registered – 90% were small business
- Many were shutting down due to paper thin margins
- SF policies made it nearly impossible to be a healthy business
- COVID-19 pandemic – extinction event for small businesses
- Number one contributor - losing the fully integrated business ecosystem
- Inflection points like new taxes will ripple through the economy
Not all doom and gloom
- Mayor introduced a ballot measure focused on zoning and permitting processes
- Other measures introduced removing burdens on fees and permitting expenses
Closing
What can NAIOP members do?
- Get involved with Save Our Jobs SF
- Coalition with over 60 businesses including NAIOP
- Public education campaign to educate voters
- Has website (savesfjobs.com) and social media pages
- Donate to the Campaign for Economic Recovery to fight the Transfer Tax
- Co-sign ballot arguments which go into the official voter handbook
- Suggest other speaking opportunities for the SF Chamber
- Make suggestions for policy changes you want the SF Chamber to take to the Board of Supervisors (they need education)
RESOURCES
Join the SF Jobs Coalition:
Follow on Twitter:
https://twitter.com/saveSFjobs
Follow on Facebook:
https://www.facebook.com/SaveSFJobs
Follow on Instagram:
https://www.instagram.com/savesfjobs/
Follow on LinkedIn:
https://www.linkedin.com/company/save-sf-jobs/
Contact the SF Chamber of Commerce:
- Jay Cheng, Public Policy Director & Media Relations -- jcheng@sfchamber.com
- Amelia Linde, Manager, Small Business Initiatives and Engagement -- alinde@sfchamber.com
- Rodney Fong, President & CEO -- rfong@sfchamber.com
Contribute to the Campaign for Economic Recovery
