Supporting long-standing sectors maintains the strength of San Francisco’s economic core, while attracting new businesses and industries increases our economic resilience.
The greater the range of industries and sectors in a city, the better able it is to withstand economic shifts and disruptions. A diverse economy supports a wider variety of jobs accessible to worker with a range of skills and experience. San Francisco’s economy already includes a broad array of industries including finance and real estate, information and technology, healthcare, hospitality and entertainment, education, transportation, and more. We will bolster our existing businesses to maintain the strength of our economic foundation. As business models continue to shift, creating unprecedented office availability Downtown, we have a once-in-a-generation opportunity to recruit new sectors and businesses that will position us competitively for the future and add to our resilience.
The City has begun to advance a series of initiatives and will launch additional programs that support this strategy:
- Support business recovery with ongoing tax relief and incentives in key sectors.
- Explore business tax reform to adapt to shifting work patterns and make our tax base more resilient and competitive.
- Ensure voters can evaluate the economic impact of future tax proposals with greater tax measure transparency.
- Complete a Competitive Industries Assessment to identify high-potential industries and supporting strategies.
- Launch a business attraction campaign to bring new ventures in high-potential industries to San Francisco.
- Continue attracting convention and business travel with the Moscone Recovery Fund.
- Increase filming in Downtown to promote San Francisco’s image and develop the local film industry.
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Tax relief and incentives
Downtown is grappling with high vacancy rates in its office market and ground floor storefronts as office tenant contract their physical footprints and the retail and service businesses that relied on office-generated foot traffic continue to struggle.
- To support existing businesses still struggling to recover from the pandemic and attract new businesses to locate in San Francisco, Mayor Breed is pursuing a legislative a package of tax relief and incentives.
- The package extends Gross Receipts Tax relief for businesses in industries that were most impacted by revenue losses during the pandemic, including Retail Trade, Food Services, Manufacturing, Accommodations, Arts, Entertainment, Recreation and others. These reductions, originally scheduled to expire in 2023 and 2024 will now go into effect in 2025 and 2026.
- The tax incentive package additionally establishes a discount for new office-based businesses in the Administrative and Support Services, Information, Insurance, and Professional, Scientific, and Technical Services industries on their Gross Receipts Tax for up to three years through 2028.
- The Mayor’s office is working to introduce legislation that would take effect in 2023.
Business tax reform
As Downtown evolves in the face of the shifting economic trends that have emerged following the pandemic, the City has an opportunity to adjust its tax structure in response.
In 2023, the Controller’s and Treasurer’s office will begin a stakeholder process to explore a broad package of tax amendments. These efforts will explore identifying tax adjustments that mitigate disincentives for in-person work, diversify the City’s tax base to reduce disproportionate dependence on a very small set of tax payers, stabilize the City’s finances, and allow San Francisco to better compete with its peer cities in attracting new businesses.
Adjustments identified through this process would be considered for inclusion on the 2024 ballot.
Tax measure transparency
San Francisco voters are often asked to consider tax initiatives aimed at changing business behavior or creating new revenue streams to fund specific programs, but these measures and their projected impacts are often highly complex and voters may struggle to understand the net effect of certain proposals.
To provide voters with a clear understanding of the fiscal impacts of proposed tax measures, the Mayor’s Office is currently developing legislation that would allow all signature-based tax initiatives to obtain a fiscal impact analysis from the Controller’s office early in the process, and require reporting of that analysis in the voter guide for measures that ultimately appear on the ballot.
This additional transparency will support voters’ ability to make an informed decision while also providing initiative proponents with a level of analysis that has not previously been available to them.
Competitive Industries Assessment
To prepare for the future, San Francisco must understand key trends and growth potential in various industries, what different industries might contribute to the city’s economy and range of job opportunities, and which sectors we are best positioned to attract. As we identify high potential industries that support the diversity and resilience of our economy, we must also know what aspects of San Francisco present advantages or challenges for these businesses.
The Office of Economic and Workforce Development has commissioned KPMG and the Bay Area Council Economic Institute to identify high-potential industries where San Francisco appears most competitive, and identity best practices and recommendations that the City can employ to proactively recruit and attract these sectors.
Recommendations from this analysis are expected in summer of 2023.
Business attraction campaign
Attracting new businesses and expanding the diversity of San Francisco’s economy will require proactive and coordinated efforts to recruit targeted businesses and sectors.
The Office of Economic and Workforce Development will develop sector-based business attraction campaigns to target new or expanding industry sectors with a high potential for growth in San Francisco.
The campaigns will be aimed at specific regions and entrepreneurs likely to start or expand their businesses to San Francisco through advertising within distinct markets that have strengths in our target sectors and activating influential channels and platforms to showcase San Francisco’s competitiveness to businesses in these sectors.
The campaign is expected to launch upon the completion of the Competitive Industries Assessment in summer 2023.
Moscone Recovery Fund
Conventions and the business travelers they bring to the city are a key part of San Francisco’s $10 billion tourism industry, and a boon to Downtown businesses - particularly the restaurants, bars and entertainment venues along with retail establishments that visitors support during their stay.
In 2021, Mayor Breed announced $4.6 million in funding to support a return of conventions, conferences, trade shows and other large events to Moscone Center, San Francisco’s world-class convention center and host to Dreamforce, the annual Salesforce convention that is the largest annual software event in the world.
The Moscone Recovery Fund covers the cost of reduced convention rates through 2024 to attract event organizers back to San Francisco, and is estimated to return up to 150,000 room nights of hotel stays to San Francisco, generating up to $173 million in direct convention spending and nearly $5 million in hotel tax revenue to the City.
Increase Downtown filming
San Francisco’s Downtown has historically been a favorite for film and commercial productions – bringing economic activity to the city during shooting as well as promoting widespread interest from film viewers across the world.
Film SF is developing new ways to market San Francisco and grow its brand. By activating local venues for film events and screenings, Film SF will invite more producers and others in the industry to San Francisco and generate increased interest.
It will make it easier for filmmakers to choose San Francisco by connecting scouts to available real estate and shooting locations along with offering enhanced support in facilitating production activity.
Film SF is also developing a strategy to help new film and media businesses make San Francisco their home to grow a locally-based film sector as part of the future for Downtown.
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