San Francisco supervisors are lamenting the city’s decision in 2011 to give companies in the Mid-Market neighborhood a tax break, just weeks after the policy ended. They are also rethinking how the city approaches the tech sector as a result of what they see as the broken promises of the so-called Twitter tax break.

On Thursday, Supervisor Matt Haney held a committee hearing to assess the policy, which gave a 1.5% payroll tax holiday to companies that moved to certain buildings in Mid-Market. The committee’s main takeaway? San Francisco should never offer a similar hand-out to the tech sector again.

“This was a terrible piece of public policy that should have never been passed,” said Supervisor Aaron Peskin. “I don’t think there are any lessons .. other than we should just not do this going forward.”

While the tax holiday helped inject billions of dollars of investment into Mid-Market, it didn’t bring all the promised benefits — such as a reduction in homelessness, crime and empty storefronts.

City officials cooked up the tax break, officially called the Central Market Street and Tenderloin Area Payroll Expense Tax Exclusion, in 2011 when San Francisco-based Twitter threatened to move to Brisbane. At the time, San Francisco was crawling out of the Great Recession and suffering from dramatic budget cuts. The city’s unemployment rate was at 9% and Market Street was rife with vacancies, homeless people and crime.

The Board of Supervisors at the time hoped the tax break would not only keep Twitter in the city, but also bring more jobs, retail and prosperity to the struggling Mid-Market district. Those benefits, they said, would then trickle out to the rest of the city.

The result was a mixed bag.

Eight years later, San Francisco left $70 million in tax revenue on the table due to the tax break — a small amount compared to today’s $11 billion budget. The city’s unemployment rate dropped dramatically to 2.5%, and the city budget nearly doubled from $6.8 billion. Meanwhile, Mid-Market generated $6 million more in payroll and gross receipts taxes and $750,000 more in sales taxes to the city’s general fund than it would have without the tax break, said Ted Egan, chief economist for the city. While the development in Mid-Market also boosted the city’s property tax rolls, it’s not clear by how much.

“It’s not easy to directly tease out the effect of the” tax break, Egan said at the hearing. “But I would note that area was not known as a location for large tech companies before, and now it is.”

But Mid-Market remains riddled with problems. Many business owners in the area complain of crime, drugs, vacant storefronts and stalled development projects. The homeless population grew by 1,600 people between 2011 and 2017, while the median monthly residential rent grew by about 44% in areas that include the tax zone.

In the years since the tax break, city leaders have increasingly blamed the tech sector for the city’s most stubborn problems, from homelessness to inflated property values. The current Board of Supervisors — the most progressive in recent history — has supported and proposed a number of measures in the past year alone that would tax the industry to help offset some of those problems.

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Now that the Mid-Market tax break has ended, Supervisor Gordon Mar, who recently proposed a tax on stock-based compensation for the November ballot, said it is important for the city to “reset our policies, expectations and relationship with people in the tech sector.”

“It’s important to really reflect on what played out here during the tech boom, and how that was driven by policy decisions,” Mar said.

The committee also sharply criticized the community benefits required of companies with payrolls of $1 million or more in exchange for the tax break. While companies like Twitter and ZenDesk donated thousands of volunteer hours to nonprofits and millions of dollars in cash grants, the supervisors and members of the committee said the benefits were unenforceable and didn’t help mitigate the growing disparity between the rich and the poor.

Bill Barnes, spokesman for the city administrator, which oversaw the community benefits, said even though the benefit agreements weren’t as strong as they could have been — they still encouraged a number of companies to contribute to the local community that may not have otherwise.

Karl Robillard, head of corporate philanthropy and community outreach for Twitter, previously told The Chronicle that the company plans on “deepening” its commitment to the city. The company’s most prominent investment was the $3 million community center it created near its headquarters called NeighborNest, where homeless families can access services like computers and child care.

“San Francisco is seen as home and this is the neighborhood that we’re really rooted in,” he said. “We would like to expand and imagine ways that we could scale this to other programs in the Mission. The conversations are just getting started, and the investment is only going to grow.”

Moving forward, Haney said San Francisco must have clearer expectations for how much companies should contribute to the local community.

“You can’t just assume things are going to be worked out without being clear and concrete,” he said. “The scale of expectations needs to be much higher in terms of what these companies can contribute.”

Trisha Thadani is a San Francisco Chronicle staff writer. Email: tthadani@sfchronicle.com Twitter: @TrishaThadani