Development or gentrification? Burning Man HQ relocates to Mid-Market

Anonymous's picture


The Burning Man headquarters will relocate from Bayview-Hunter’s point to Sixth and Market streets. The official announcement coincided with the Board of Supervisors’ preliminary approval of legislation that will exempt businesses in the mid-Market area from paying payroll taxes on new hires, which would last 6 years. 

Last month, Larry Harvey, founder and CEO of BM, claimed that he has been contemplating the relocation to mid-Market with or without a tax break. The goal is to facilitate art and culture by infusing Burning Man’s creative energy in an area that desperately needs urban revitalization. Burning Man currently has 30 employees and plans to hire more in the near future.

The larger debate is whether this revitalization effort, despite its intention to spur long-term economic development in the depressed mid-Market district, will lead to externalities such as gentrification and further income inequality. According to Greg Leroy in his 2004 book The Great American Job Scam: Corporate Tax Dodging and the Myth of Job Creation, taxes are not the primary factor in investment decisions. In fact, cost of labor and transportation account for 75% of the factors that drive business location decisions, while taxes account for less than 4%. 

I think that this issue transcends the need for standard cost-benefit analysis, and is fundamentally a matter of fiscal priority and further discourse about what San Francisco's definition of "economic development" is. 

gcotter's picture

Payroll taxes ARE cost of labor; New jobs aren't Gentrification

Payroll taxes do drive off businesses.  As noted above, if Labor and Transportation account for 75% of the decision to locate, then a payroll tax is definately part of the cost of labor - especially since other cities do not have this tax.  So. if a business can choose a city based on employment costs, then the payroll tax is a big reason not to move to SF.  And for companies already here, many will consider moving to a blighted neighborhood if their payroll taxes are eliminated - even for 6 years.

As for "Gentrification," that term applies when a low or middle income area is changed by yuppies who replace mom and pop stores with trendy coffee shops and pricy restaurants, when long time neighborhood businesses can't compete with upscale boutiques, etc.  Changing a cesspool into a neighborhood that offers minimum quality of life standards is not gentrification.  Replacing empty storefronts with small businesses is not gentrification.  Making streets safe to walk at night is not gentrification.  Hint:  I'm really annoyed when every attempt to bring blighted areas up to just the minimum levels of acceptability is opposed on the grounds of "Gentrification."  Sigh....

Changing a neighborhood that has few if any places to be hired to a neighborhood where there will be jobs is exactly the opposite of promoting income inequality.  We should offer every possible incentive to any business wanting to move to any blighted area of SF.  Well, almost any business - most blighted areas don't need more liquor stores, for example.

SF needs to:  1. Get rid if the city imposed payroll tax. Period.  2. SF needs to offer incentives to businesses willing to relocate to blighted neighborhoods.

IMHO, of course.



Maria Balilo's picture

Maintaining a strong economic base in San Francisco

Indeed it is counterproductive to frame economic development in polarizing terms - "growth" or "gentrification" or worse, "class warfare" - because the issue just becomes politically charged. The goal is to prioritize the Common Good, i.e. create opportunities, expand opportunities, and sustain these opportunities.

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