When Ed Lee was appointed mayor of San Francisco in early 2011, he quickly spearheaded the passage of a Mid-Market neighborhood tax break. It was sold to the public as a way to keep high-profile startups like Twitter in town and revive the chronically-struggling neighborhood. But a report for the city's controller's office indicates the tax break hasn't been quite so successful.

It's hard not to see some of the benefits while walking along Market Street: a slew of construction projects and new businesses line the once-bleak thoroughfare. And those new businesses have paid more than $7.6 million in additional payroll taxes, which surpasses the $6.1 million in taxes saved by tech companies. However, this would have happened regardless of the tax break. The report notes these new taxes would have been collected elsewhere in the city had Mid-Market not become appealing.

The San Francisco Chronicle suggests City Hall is trumpeting favorable numbers in the report while ignoring details that make the success of the tax break seem murkier:

And while the tax break lured 61 businesses into the area, total sales taxes along Market Street — which reflects the health of shops in the area — rose by only 10 percent between 2010 and 2013, compared with 25 percent in the rest of the city.

While all eyes are on the tech boom, a second boom in the area — this one in housing — is also under way. That will bring in more real estate taxes, but the report notes that "we cannot exclude the possibility" that at least some of the money would have come in without the tech tax break.

Because tech companies operate as all-inclusive corporate resorts, employees at Mid-Market firms like Twitter, Square, and Uber aren't spending much money in the surrounding neighborhood, suppressing sales tax revenues.

So in spite of the thousands of well-paid workers flooding Mid-Market, the controller's report says "[the tax break's] impact on the overall city economy was likely quite limited."

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Photo: AP