Bay Area Council Blog

taxreform

Tax Reform Proposal Misses the Mark

The Bay Area Council is a nonprofit nonpartisan public policy organization that represents many of the largest employers in the Silicon Valley/Bay Area region and advocates for a strong, growing and sustainable economy. Our member companies come from a wide range of industries, including technology, healthcare, transportation, energy and business services, among many others. The Bay Area is one of the most innovative and economically productive regions in the country, if not the world, and has been one of the nation’s leading job creators (both in our region and across the United States) over the past decade and a major contributor to the United States’ federal budget.

We are encouraged that Congress is taking on the much needed and long overdue work of reforming the U.S. tax code in an effort to spur economic growth and increase our competitiveness globally. Many aspects of current U.S. tax code put our employers at a disadvantage against competitors abroad and discourage greater investment domestically.  While there is still much uncertainty about what changes will ultimately be included in any final tax reform package, our initial analysis finds that there are elements that potentially will have positive effects on our region and also extremely negative impacts.

The current proposal to reduce the corporate tax rate from 35 percent to 20 percent could have important upsides for many of our employers that compete in a world economy where the trade-weighted average stands at 27.9 percent. Plans to lower the tax rate on repatriated corporate profits could also help bring a significant infusion of investment to the U.S. to expand manufacturing, increase capital equipment purchasing, and support important job training programs. However, we strongly recommend adding provisions on repatriation that will ensure these funds are directed to just those kinds of productive investments.

At the same time, a number of the proposed changes will have severely detrimental impacts on the employees of our member companies in our region and across California, which is arguably one of the nation’s most important economic and job engines.  Elimination of the property tax deduction and lowering of the mortgage interest deduction cap would dramatically exacerbate our region’s crisis-level housing affordability problem.  High housing costs already make it difficult for employers here and in many regions in California to attract and retain the top talent they need to compete and grow (especially middle-class workers).  The elimination of the state and local tax deduction would have a similarly negative effect.  And the proposed elimination of tax-exempt public activity bonds would hurt our ability to make critical investments in housing, transportation and other vital infrastructure. We also are very concerned about the last-minute proposal to include the elimination of the individual health insurance mandate, which we believe will result in increased premiums for employers.

As the debate over the tax reform package continues, the Bay Area Council asks you to change the package to eliminate the changes that will negatively impact California employees and our state’s ability to compete globally.  Any tax reform should strive to be fair to all Americans, and as currently constructed, this package misses the mark.

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California Businesses Launch Major New Climate Resilience Initiative

The Bay Area Council today launched the “California Climate Challenge,” a major new initiative to strengthen California’s resilience to climate change. The statewide challenge will attract resources from across the business community to support research, planning, and implementation of community-level resilience projects and policies focused on California’s water, energy and telecommunications infrastructure, as well as its natural ecosystems and the wildland-urban interface.

The effort is being jumpstarted with a $1 million contribution from PG&E Corporation to the Bay Area Council Foundation. The total amount raised through the challenge – and final details on its scope – will be announced in concert with the Global Climate Action Summit in San Francisco in September 2018. PG&E’s contribution will come from its shareholders, not its customers.

“California’s business climate is inseparable from its actual climate,” said Jim Wunderman, President and CEO of the Bay Area Council. “Much of California’s infrastructure was built under a colder, wetter, more predictable climate than we have today. Protecting our homes and employment centers from extreme weather events, such as droughts, floods and wildfires, requires a top-to-bottom assessment of our existing resilience, and fresh thinking on how to best adapt.”

“We are already experiencing the reality of climate change in California,” said Geisha Williams, CEO and President of PG&E Corporation. “PG&E is incorporating this ‘new normal’ into how we manage risks, plan, and invest our resources. But our collective response to extreme events such as the tragic North Bay firestorms must go beyond the immediate work of rebuilding what was lost. A focus on resilience will strengthen our communities for the future.”

“We applaud this initiative to fund a public-private partnership for climate resilience in California,” said Mindy Lubber, CEO of Ceres, a leading sustainability non-profit organization. “Businesses are concerned about climate risks, which have the potential to cause wide-ranging disruptions to their operations and supply chains. Corporate support for tackling climate change is only growing stronger, and companies clearly see the benefit of staying ahead of the game and doing their part.”

Need for Action

Climate change will push California’s already volatile weather system to further extremes, increasing the frequency and severity of droughts, heat waves, flooding, and wildfires, and drive longer-term changes such as rising sea levels. California’s recent drought included the driest three-year period in the state in 1,200 years, including the hottest year ever recorded. Conversely, Northern California just experienced the wettest “water year” in its recorded history, resulting in severe infrastructure damage at California’s largest reservoir. According to the U.S. Forest Service, more than 100 million trees have died in California since 2010 and Cal Fire’s budget has increased by 45 percent since 2014 to address successive record wildfire seasons.

The California Department of Water Resources predicts the Sierra snowpack, which accounts for over a third of California’s total water supply, will decline by up to 65 percent by the end of this century, straining California’s farms, cities and ecosystems. On our coastlines, sea levels at the Golden Gate are projected to rise 6-13 inches by 2050, on top of the eight-inch rise measured in the 20th century. According to a study from the Bay Area Council Economic Institute, the Bay Area alone could suffer over $10 billion in damages (about the same as Loma Prieta earthquake) during an extreme storm under current sea levels.

These and other changes have the potential to negatively impact the health and safety of communities throughout the state, and undermine California’s economic prosperity. California companies are integral to the sustainability of the communities they serve — and have a unique responsibility to help them prepare for, withstand and recover from extreme events caused by climate change.

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Council Announces $3.3 Million for North Bay Fire Relief

The Bay Area Council raised more than $3.3 million for North Bay fire relief during its Annual Dinner and Bay Area Business Hall of Fame event on Nov. 9, including a $2 million contribution announced by Kaiser Permanente Chairman and CEO Bernard J. Tyson on behalf of the Oakland-based healthcare giant. Another $1.3 million, including a $500,000 matching grant by Verizon Wireless, was tallied during a live Raise a Paddle fundraising auction at the dinner, where Tyson was formally installed as new Chair of the Council. A gift package donated for the auction by the Golden State Warriors that included two courtside tickets, a pre-game dinner with owner Joe Lacob and a briefing with Coach Steve Kerr alone raised $65,000.

“The Bay Area is a close knit community that looks after its own and we’re proud of the generous response by our member companies to the awful tragedy in the North Bay,” said Jim Wunderman, President and CEO of the Bay Area Council. “Kaiser Permanente and Bernard Tyson set the tone for the amazing outpouring of support we have received. These contributions will go directly to community organizations in the North Bay that are working tirelessly to help thousands of residents, businesses and others recover from the horrific fires and rebuild their lives.”

The Council is partnering with non-profit Tipping Point on the Band Together Bay Area fire relief campaign along with Council members Salesforce, San Francisco Giants and Google, among others. The support raised at the Annual Dinner is part of an estimated almost $20 million in overall contributions and in-kind support donated by Council member companies to the fire relief effort so far, including groups not affiliated with Band Together.

List of Council members contributing to fire relief>>

As soon as Tipping Point announced several weeks ago that it would hold a Band Together benefit concert on the same night (Nov. 9) as the Council’s Annual Dinner, the Council quickly shifted the focus of its annual event to include a major fundraising push for fire relief.

In announcing Kaiser Permanente’s contribution, Tyson talked about the incredible bravery and sacrifice of the many first responders, residents and others in battling the historic blazes and working on the recovery. In a particularly moving story, Tyson told about a Kaiser Permanente doctor who continued to treat fire victims even as the flames demolished his own home.

The Council is working with local North Bay officials and legislators on ways to help speed the recovery and rebuilding. Council President and CEO Jim Wunderman is serving on the advisory board of Rebuilding North Bay, an organization established to lead long-term recovery efforts.

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BAY AREA BANDING TOGETHER FOR NORTH BAY FIRE RELIEF

The Bay Area Council this week announced it is partnering with a coalition of business and community leaders to promote Band Together Bay Area, a campaign led by nonprofit Tipping Point to support local relief and long-term recovery efforts for the thousands of residents, businesses and others who have been impacted by the devastating North Bay fires.

Council members Kaiser Permanente, Salesforce, San Francisco Giants and Google are among the founding sponsors of Band Together Bay Area, which will hold a benefit concert on Thursday, Nov. 9 at AT&T Park featuring Metallica, Dead & Company, Dave Matthews, G-Eazy, Rancid and others. Tickets for the Band Together Bay Area concert can be purchased at bandtogetherbayarea.org and Ticketmaster.com.

The Council is working to make Band Together Bay Area a focus of its Annual Dinner and Bay Area Business Hall of Fame event, which is also scheduled for Nov. 9. The Council, whose Chair is Kaiser Permanente CEO Bernard J. Tyson, is planning to devote part of its Annual Dinner event to raising contributions for Band Together Bay Area and will provide free shuttles to the concert after. To make a contribution to Band Together, please contact Policy Manager Rachele Trigueros.

Funds raised by Band Together Bay Area will go into an emergency relief fund established by Tipping Point Community and will be directed to the North Bay community foundations, service providers and government partners supporting the low-income communities hit hardest by the fires. The fund aims to address urgent needs, such as temporary housing, food, education and healthcare services, as well as rebuilding efforts. Beneficiaries to date include: Community Foundation Sonoma County, Napa Valley Community Foundation, the Redwood Credit Union Community Fund, Inc. as part of the North Bay Fire Relief Fund established by the Press Democrat and Senator Mike McGuire, Catholic Charities of Santa Rosa, among others.

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WHO ARE THE BAY AREA’S MOST ADMIRED CEOS?

The Bay Area Council is proud to partner with member San Francisco Business Times on one of the largest and most highly anticipated CEO award programs in the Bay Area. The San Francisco Business Times’ 2017 Most Admired CEO Awards, which will be held Wednesday, November 15 beginning at 5:30pm at The St. Regis San Francisco, will recognize outstanding CEOs at this prestigious event honoring great leadership, vision and values. Join us in celebrating some of our region’s most esteemed business leaders, including Bay Area Council Executive Committee members Benno Dorer, Chairman and CEO The Clorox Company; Jes Pedersen, President and CEO of Webcor Builders; Clint Reilly, President and Chairman of Clinton Reilly Holdings; and Anthony F. Earley Jr., Executive Chairman of PG&E Corporation, who will be honored with the Lifetime Achievement Award. Click here to see who are the Bay Area’s most-admired CEOs and to purchase tickets>>

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Regional Coalition Submits Bid for Amazon HQ2

Leveraging a highly skilled and educated talent pool, a renowned innovation culture unmatched in the world and a slew of large transit-rich development sites located near top universities and airports, a Bay Area Council-led coalition of cities including Concord, Fremont, Oakland, Richmond and San Francisco today (Oct. 19) submitted a proposal to bring Amazon’s second corporate headquarters to the Bay Area. The Bay Area Council worked with the cities and other partners to coordinate the development of the bid.

“The Bay Area offers the whole package and is a natural and perfect fit for an innovation leader like Amazon,” said Jim Wunderman, President and CEO of the Bay Area Council. “We are the world’s innovation capitol. We offer top talent, top universities and large development sites connected by a rich network of mass transit and other transportation systems. Our competitive advantages are unparalleled, including our strong connections to the huge Asia-Pacific region.”

The coalition of cities working with the Bay Area Council has identified numerous sites which together offer Amazon an unmatched level of flexibility to create a world-class headquarters that embraces new models of dispersed but highly connected workplaces.

Read the Bay Area Amazon HQ2 proposal>>

The proposal includes more than 60 million square feet of high-quality office and research and development space, far exceeding Amazon’s requirement for up to 8 million square feet needed to house 50,000 workers. All of the sites provide seamless connections to robust transportation and mass transit networks, including BART and a fast-growing ferry system, and easy access to both regional and international airports.

Among the sites featured in the proposal are the Concord Naval Weapons Station in Concord, Coliseum City and numerous downtown locations in Oakland, the Warm Springs Innovation District in Fremont, SF Shipyard in San Francisco and the Richmond Field Station and Hilltop Mall in Richmond. All the cities are served by BART, which is undergoing a massive upgrade to expand its capacity and speed in the coming years, as well as by nearby international and regional airports and freeways. The proposal includes a combined 45,000 units of new housing that cities envision being built in the coming years.

“We are extremely confident that steps we are taking now as a region to improve our housing and transportation infrastructure will address Amazon’s needs for its workforce and future growth,” Wunderman said. “Our housing production has increased three fold in just the past six years and numerous residential development sites throughout the region envision adding tens of thousands of more units in the next five to 10 years.”

Amazon already knows the value of being located in the Bay Area, with current operations occupying more than 3 million square feet around the region.

A major draw for tech employers like Amazon is the access to some of the world’s best talent. Not only does the Bay Area produce its own highly educated and highly skilled workforce from top tier universities and colleges like UC Berkeley, Stanford, UC Davis, UC San Francisco, California State University East Bay and St. Marys attracts the best and brightest workers from around the globe. More than 75 percent of the Bay Area population holds a bachelor’s degree or higher, with more than 40 percent of those coming from science and engineering-related fields.

The proposal also outlines a range of state and local tax credits and other incentives along with commitments to streamline permitting and environmental review and work with Amazon on various workforce training and similar programs.

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SAN FRANCISCO STATE TO HONOR COUNCIL’S JIM WUNDERMAN

The Bay Area Council’s own Jim Wunderman will be honored as San Francisco State University Alumnus of the Year at the 2017 President’s Dinner & Alumni Hall of Fame Celebration on Friday, November 3 from 6-9 p.m. at the Ritz Carlton in San Francisco. To attend and help celebrate Jim’s many contributions to SFSU and our region, please reserve a table or seat today.

Wunderman graduated from SFSU in 1984 with a degree in political science and for the past 12 years has led the Council through an unprecedented period of expansion. Wunderman, named one of the Top 100 movers and shakers in California politics that past two years, has led the Council’s efforts to advocate for billions of dollars in federal, state and regional funding for major transportation projects, solve the state’s housing crisis and positioned the Council as a thought-leader by expanding to Sacramento, overseeing offices in China, and partnering with the state to reopen the California-China Trade Office.

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REGIONAL HOUSING, TRANSPORTATION PLAN STARTING IN THE RED

An update to the Bay Area’s long-range regional housing and transportation planning roadmap, Plan Bay Area 2040 (PBA), has been finalized and we’ve got a lot of catching up to do. Since the first plan was approved in 2013, the region has produced just under half of the housing that was called for to keep pace with a healthy, growing economy. The Council argued during the first go-around that the housing targets badly underestimated the region’s need, so it’s likely the gap is even wider based on job and population growth. In addition to creating a massive affordability crisis, the shortfall undercuts the goal of PBA to reduce greenhouse gas emissions from vehicles by forcing residents on longer and longer polluting commutes in search of housing they can afford.

The regional planning agencies responsible for PBA have little authority to create housing themselves, but the Council is working to toughen state laws that compel cities to meet their housing obligations under the plan. Gov. Brown last week signed two bills by Sen. Nancy Skinner and supported by the Council that aim to do this. And, the Council is also working to encourage cities to adopt streamlining measures for granny or in-law units, also known as accessory dwelling units (ADU), under legislation we sponsored last year. Cities that have embraced the ADU streamlining measures have seen a dramatic surge in applications.

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TAKING NEW APPROACHES TO ADDRESSING REGION’S WORKFORCE NEEDS

Joined by leaders from industry, academia and philanthropy, the Bay Area Council’s Workforce of the Future Committee on Monday (Oct. 2) explored new approaches to addressing the burgeoning skills and talent gaps affecting employers’ bottom lines and workers’ livelihoods. AT&T California President and Council Executive Committee member Ken McNeely joined Mitchell Stevens, Director of Stanford University’s Center for Advanced Research through Online Learning, Don Howard, President and CEO of the Irvine Foundation, and Felix Ortiz, Founder, Chairman and CEO of Viridis Learning, for a discussion on the roles of employers, educators and job seekers in keeping up with our changing economy. The discussion also emphasized the need for interconnectedness and alignment between these entities, expanded career pathways and work-based learning opportunities, and funding of innovative efforts. Our thanks to Council member Salesforce for hosting the event.

Those in the room agreed that our region urgently needs to collaboratively implement solutions, such as industry-led partnerships with school districts, community colleges, and four-year universities, in order to see long-lasting outcomes and systems change. With the guidance of Bay Area Council members and thought leaders like those that participated in Monday’s meeting, the Workforce of the Future Committee is pursuing efforts like the Occupational Councils and the Bay Area Young Men of Color Employment Partnership to support systems change by aligning hiring needs with educational offerings, and addressing barriers to entry faced by specific historically underrepresented populations, respectively. To participate in the Workforce of the Future Committee, please contact Senior Vice President Linda Bidrossian.

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FIRST IMPORTANT STEP IN ADDRESSING CA HOUSING CRISIS

California took an important first step today in addressing its massive housing crisis when Gov. Jerry Brown signed a package of legislation aimed at providing new funding, streamlined local approvals and stronger enforcement of existing housing laws. Bay Area Council CEO Jim Wunderman joined Gov. Brown, legislators and housing advocates from around the state at a signing ceremony in San Francisco’s Hunter’s Point for 15 bills that included a handful for which the Council had advocated. SB 2 (Atkins) creates a $75 real estate transaction fee that is estimated to generate $250 million annually for affordable housing and SB 3 (Beall) authorizes a statewide $4 billion bond measure for housing that is expected to appear on the ballot in 2018. In addition, SB 166 (Skinner) and SB 167 (Skinner) add teeth to existing laws requiring cities to approve new housing. Much more remains to be done to open the pipeline of new housing the state so badly needs and the Council is already turning its attention to the next legislative session. With an annual shortfall of about 80,000 housing units on top of an estimated 2 million unit deficit, California has a long way to go before it closes the gap and begins to make a dent in its affordability problem.