San Francisco's mayor oversaw tax break that helped spark new tech boom in the city

Key Points
  • San Francisco Mayor Ed Lee, who died Tuesday morning, was a big advocate of the tech industry.
  • While Lee was mayor, the city implemented a temporary payroll tax break for companies willing to relocate to the city's troubled Mid-Market neighborhood.
  • Since 2011, many tech companies have built headquarters or expanded their presence in the city, moving the center of gravity of the tech industry northward from Silicon Valley.
San Francisco Mayor Ed Lee died December 12, 2017.

San Francisco Mayor Ed Lee, who had longstanding ties with the tech community, died unexpectedly early Tuesday morning.

During his tenure, which began in 2011, Lee brokered a temporary tax break to attract tech companies to the city over Silicon Valley, located to the south.

The payroll tax breaks, informally dubbed the "Twitter tax break," temporarily exempted companies from paying the city's 1.5 percent payroll tax for companies that moved into buildings in San Francisco's Mid-Market neighborhood. The tax break was particularly beneficial for companies going public, as the value of employee stock options and grants would have been included in the tax.

Companies that took advantage of the tax break to locate there included Twitter, Zendesk, Uber, Pinterest, Dropbox, Airbnb, Yelp, BitTorrent, Square, and Slack.

Square, Twitter and Zendesk have all gone public since the exemption went into effect in 2012.

While some new tech companies chose to build new headquarters in the city, some other tech giants expanded their footprint in San Francisco to capitalize on the growing talent pool in the city. Google, LinkedIn, Yahoo, and Cisco have opened big offices in San Francisco since 2011. Salesforce has expanded its presence in San Francisco and will be the main occupant of the Salesforce Tower, which will be the tallest building in the city at 1,070 feet when it's finished in 2018. 

The incentive and subsequent tech boom has been blamed for sparking the city's housing crisis, with higher tech salaries inflating housing costs and pricing out lower-wage workers from the city. While Lee tried to address the crisis through housing programs (most recently, an initiative to increase housing production by 160 percent), he was also an advocate for tech companies.

During 2014 protests directed at Google buses shuttling tech employees to work, Lee said during a Commonwealth Club event, "I understood what those protests are at Google buses and so forth, but it didn't make a lot of sense to me because all people were doing was trying to get to work."

Lee also forged partnerships with tech investor Ron Conway and told a TechCrunch Disrupt audience in 2012 that he visits tech companies once a week, dubbing those events "Tech Tuesday."

And in a rare public display of playfulness, former Yahoo CEO Marissa Mayer made an appearance in a rap video endorsing Lee's campaign in 2011.

Lee most recently attended a red-carpet event at NASA's Ames Research Center in Mountain View, a black-tie gala honoring the world's top physicists, biologists and mathematicians. Other names at the star-studded event included Ashton Kutcher, Mila Kunis, Sergey Brin and Arianna Huffington.

Prominent leaders tweeted their condolences. Among them was Salesforce CEO Marc Benioff, who wrote, "I'm so sad to hear of the passing of Mayor Ed Lee, one of the nicest & kindest leaders I've ever known."

Benioff tweet

YouTube CEO Susan Wojcicki tweeted, "So saddened to hear of the sudden passing of San Francisco Mayor Ed Lee."

Wojcicki tweet

London Breed, the president of the San Francisco Board of Supervisors, became acting mayor following Lee's death.