Legal and Regulatory Challenges-San Francisco
The top legal and regulatory challenges firms are facing across industries in the San Francisco region include the expiration of the Twitter Tax Break, which requires firms to start paying a 1.5 % payroll tax. Additionally, the proposition C legislation requires big businesses to pay taxes for city homeless programs. Moreover, the validation of the Proposition G Parcel Tax that was approved by voters in the City is about to be approved by the court, which will raise the parcel taxes paid by property owners.
Top legal regulatory challenges for companies in the San Francisco region
1. Expiration of the Twitter Tax Break
- The legislation was sponsored by supervisor Jane Kim in 2011 to keep companies and jobs in San Francisco and revitalize the area after the recession.
- The Central Market Tax Exclusion deal was brokered by the late Mayor Ed Lee, which granted companies with more than $250,000 in payroll who moved into the mid-market buildings a temporary exemption to the city’s 1.5% payroll tax, and will expire on May 20.
- When the legislation expires, companies located in mid-market like Twitter, Uber, Zendesk, Airbnb, and Square and technology firms will be required to pay the city’s payroll taxes under the legislation.
2. Proposition C legislation
- In November 2018, the citizens of San Francisco voted for Proposition C, which is meant to raise millions of dollars by taxing big businesses more in order to fund city homeless programs.
- Two business interest groups from California and an anti-tax organization have joined together to oppose the San Francisco Proposition C legislation.
- Passing a new tax measure in San Fransisco usually requires a two-thirds majority. However, this was changed by the attorney’s office stating that the "proposed tax measures put on the ballot by citizens — and not government officials — required only a simple majority to pass."
- This legislation will affect all big businesses and firms including technology firms, health tech firms, energy, and environment space firms.
3. Doubling the pace of bike lane production and stepping-up the citation enforcement
- The mayor is bringing more bike lanes to San Francisco. Mayor Breed has tasked San Francisco’s transit agency to build 20 miles of protected bike lanes in the next two years.
- This is meant to deal with distracted motorists, hasty Uber and Lyft drivers, and traffic-snarled roadways that pose a threat to pedestrians and bicyclists in San Francisco.
- The mayor has also asked the city agencies to increase citations of bike lane-blocking drivers by 10%.
- This means more tickets for drivers who get into green lanes, a problem known to be caused by Uber and Lyft drivers trying to pick up passengers, and people delivering goods.
- This legislation will affect Uber, Lyft and delivering companies as it will increase expenditure and also inconvenience drivers who will not have anywhere to stop to pick up passengers and offload goods.
4. Validation of the Proposition G Parcel Tax
- The office of the Attorney for San Francisco City filed a preemptive lawsuit to ask the court to validate the passing of Proposition G.
- This is an annual parcel tax set to increase the salaries of San Francisco educators in the next two decades.
- The tax was put on the ballot in 2018 through a voter signature drive and authorizes the San Fransisco city to collect $298 in parcel tax from property owners in order to fund a 7 percent wage increase for San Francisco Unified School District educators.
- The tax vote passed with a majority of 60.76 percent.
5. New use for San Francisco garages in upscale apartments
- It is now easier for people in San Franciscans to turn garages or basements into housing.
- This is after the mayor and a multiagency effort streamlined the department's conflicting interpretations of what city regulations did or didn’t allow.
- This caused a backlog of roughly 900 accessory dwelling unit applications.
- This regulation mainly affected house owners who wanted to convert their garages to housing.