The other Twitter tax break — and how it cost the city $25 million

By Tim Redmond

Way back in 1969, when Sue Hestor was a young activist organizing a peace march, she asked the sympathetic owner of the Furniture Mart building on Market Street if he would let her group use a corner of his shop for office space. “He said he was sorry, but no,” Hestor, now a veteran land-use lawyer, recalled recently. “He said the legal use of the building was very clear: Just showroom space, no offices.”

That’s the position the city took in 2002, when the owners wanted to rent out the 1.2 million-square-foot space, which was used as a home furnishings showroom, as offices. The zoning administration, Larry Badiner, said that would require a change of use: Under city law, the property was never used for offices, and if the owners wanted to fill it with cublicles, they needed to apply under the city’s annual limit on new office space – and pay the fees that any other office developer would pay.

Now, of course, the building is home to Twitter, and has been renovated entirely for traditional office use. And there’s been considerable discussion around the payroll-tax break that Mayor Ed Lee used to entice the microblogging company to set up its headquarters, with several thousand employees, in the 1937-vintage mid-Market building.

But there’s been almost no discussion of the fact that the building owners never paid the $25 million in city fees for housing, Muni, and childcare that should have been required when the showroom became office space.(more after the jump)