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San Francisco’s Business Climate

San Francisco’s Business Climate. Sasha Hauswald Jackie Tsou. Business Climate. A term used to describe the tax, regulatory structure, and other conditions as they impact entrepreneurialism and business growth in a given locality. Business climate is usually characterized by:.

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San Francisco’s Business Climate

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  1. San Francisco’s Business Climate Sasha Hauswald Jackie Tsou

  2. Business Climate A term used to describe the tax, regulatory structure, and other conditions as they impact entrepreneurialism and business growth in a given locality

  3. Business climate is usually characterized by: • Real estate prices • Wage rates • State & local taxes • Government services • Flavor of local politics toward business owners

  4. Business Climate & Economic Development • Business climate influences location decisions for businesses that are not dependent on the local consumer market. • Business climate influences firm growth and retention.

  5. Change in Total Business Establishments: California Peer MSAs 1998 - 2002 Source: County Business Patterns

  6. Change in Business Establishments by Size Class: San Francisco 1998 - 2002 Source: County Business Patterns

  7. Real Estate – Q1 2006 Industrial Lease Rate of California Peer Counties/Cities Source: NAI BT

  8. Real Estate – Q1 2006 Downtown Office Lease Rate of California Peer Cities Source: NAI BT

  9. Real Estate – Q1 2006 Office Lease Rate: Bay Area Cities Source: NAI BT

  10. Real Estate – Q1 2005 & Q1 2006 Office Vacancy Rate of Bay Area Cities Source: NAI BT & CB Richard Ellis

  11. Real Estate – San Francisco Office Absorption and Construction 2002 - 2005 Source: NAI BT

  12. Real Estate - Summary • Lease rates in San Francisco are high, compared with peer California cities. • Despite high lease rates, vacancy rates are low compared with peer Bay Area cities. • Positive absorption and new construction suggest businesses are locating to San Francisco.

  13. Wage Rates - Average Annual Salary 2004: San Francisco and Peer PMSA Source: Bureau of Labor Statistics, ^ = MSA

  14. Wage Rates - Top 5 Paying Occupations: San Francisco and California Peer Areas 2004 Source: Bureau of Labor Statistics

  15. Wage Rates - Bottom 5 Paying Occupations: San Francisco and California Peer Areas 2004 Source: Bureau of Labor Statistics

  16. Median Monthly Gross Rent: San Francisco and California Peer Cities Source: American Communities Survey 2004

  17. MedianOwner-occupied Monthly Costs:San Francisco and Peer Cities Source: American Communities Survey 2004

  18. Wage Rates - Summary • Wages in San Francisco are high, compared with peer cities. • High housing costs and living wage ordinance may account for the relatively high wages paid in San Francisco.

  19. California Taxes • California has one of the highest per capita tax rates Source: US Census Bureau

  20. California Corporation Tax Revenue Corporation taxes are a growing share of California tax revenues. Source: California State Controller. Financial Report Year End June 2004. * CPI Adjusted Dollars

  21. Business Taxes - San Francisco and Peer Cities Sources: County Assessor's Offices, City websites.

  22. San Francisco Taxes Paid by Local Businesses (2000) Source: King, P. (2001). San Francisco’s Economic Growth 1995-2000

  23. Business Taxes – Other Taxes Levied Sources: California Board of Equalization, California State Controller's Office, County Assessor's Offices, City websites. San Francisco - $$$$ Oakland - $$$ San Jose - $ Source: Kosmont Cost of Doing Business Survey

  24. Per Capita Expenditure for City/County Areas Source: King, P. (2001). San Francisco’s Economic Growth 1995-2000.

  25. Taxes - Summary • The tax burden on corporations in California is high and on the rise. • Tax-related costs associated with doing business in San Francisco may be higher than in peer cities. • San Francisco’s payroll tax could be particularly burdensome for start-ups and struggling industries.

  26. Government Services - Incentive Programs • Capital Expenditure-related • Location-related (special zones) • Green Business • Industry-specific • Other Support Services

  27. Interview Findings - Barriers for Businesses • Convoluted permitting process • High cost/ low availability of commercial space • High cost of living (employee salaries) • High taxes: • Payroll • Water • Licenses and Fees (Restaurants, Hotels, Parking)

  28. Interview Findings - Positive Factors in San Francisco’s Business Climate • Caché • Natural Beauty • Skilled Workforce • Diverse Consumer Market • Special Incentive Programs

  29. Interview Findings - What can San Francisco Government Do to Improve Business Climate? • Improve marketing • Personal outreach to businesses • Encourage tourism • Provide clarity in entitlement process • Improve public services • Public safety • Cleanliness and garbage collection • Dependable public transportation

  30. Conclusion • San Francisco is a costly place to do business, but indicators suggest its business climate is positive. • Transitions are still onerous due to permitting process and low real estate availability. • Traditional indicators of business climate are only half the story.

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