As glittering new buildings reshape San Francisco’s skyline, rising along with the value of fast-growing tech companies, wisps of concern hover overhead like the omnipresent fog: Could a new tax spur some employers to leave?

Proposition C, a November ballot measure that would tax San Francisco’s biggest companies to fund services for the homeless, has prompted the latest round of hand-wringing over whether the city is adequately business-friendly.

Jack Dorsey, head of Square and Twitter, has aired the idea of moving his companies out of San Francisco — in testimony before Congress and in a recent series of tweets about the tax measure. Mayor London Breed also fears that taxes, real estate prices and other concerns will force companies to pack up and leave.

The reality, though, is that few companies are leaving. In fact, says Steve Anderson, managing director of the JLL realty group, he has “seen the opposite” of an exodus from the city.

Under Mayor Ed Lee, the city added 63,000 tech jobs from 2010 to 2017, tripling the sector’s size. That wealth of job opportunities has drawn even more workers and more companies. Pinterest and DoorDash are among companies that have relocated to San Francisco from elsewhere in the Bay Area, and smaller startups continue to move here, drawn by the workforce, proximity to investors and experienced advisers.

Yet the idea of decamping for friendlier circumstances has found some resonance as the city feels the strain of growth.

If Square were to leave, I'd applaud Jack. San Francisco is bursting at the seams and it doesn't have the infrastructure or housing to support the rate of tech growth. It's unsustainable. The question is not if companies will leave, but who will be the first. — Scare-icaJoy (@EricaJoy) October 22, 2018

“If Square were to leave, I’d applaud Jack,” tweeted Erica Baker, an Oakland engineering manager who has worked at Google and Slack. “San Francisco is bursting at the seams and it doesn’t have the infrastructure or housing to support the rate of tech growth. It’s unquestionable.”

Wow, would really hate to leave SF. I’d like us to stay here and help fix the crisis. — jack (@jack) October 22, 2018

Dorsey tweeted in response to Baker, “Wow, would really hate to leave S.F. I’d like us to stay and help fix the crisis.”

Talk of leaving may be mostly political posturing provoked by Prop. C. Dorsey has said that the measure would cost Square $20 million a year. That would widen the unprofitable payment processor’s losses by a third.

Companies that have left or plan to leave the city are arguably those squeezed out by the tech boom or changing business conditions: nonprofits such as the Sierra Club, health insurer Blue Shield and construction firm Bechtel, whose historic ties to the Bay Area have dwindled as its government business grows (it is moving to a suburb of Washington). North Face moved its headquarters from Alameda to Denver amid a corporate consolidation.

No big tech employers have followed their lead, though some are seeking to grow elsewhere, where offices and salaries are cheaper. Others are contemplating using the very technologies they create to build “distributed workforces” connected by instant messages and video chat.

Back to Gallery Prop. C: Despite fears, few firms likely to flee SF if... 7 1 of 7 Photo: Newspix 2 of 7 Photo: Tom Williams / CQ Roll Call 3 of 7 Photo: Liz Hafalia / The Chronicle 2018 4 of 7 Photo: picture alliance, picture alliance via Getty Image 5 of 7 Photo: Lea Suzuki / The Chronicle 6 of 7 Photo: Lea Suzuki / The Chronicle 7 of 7 Photo: Lea Suzuki / The Chronicle













What is keeping them here are the bright engineers and designers who have flocked to the Bay Area in recent decades. Were companies to move away, they might well watch their competitors race to hire the workers they left behind. A mass departure, real estate experts and economists say, remains extremely unlikely.

Salesforce chief Marc Benioff, who supports Prop. C, has noted the high value of San Francisco companies — Square is worth $28 billion, Twitter $21 billion — and asked what’s to be gained by scrapping over a fraction of a percent tax.

“They’re in the innovation business,” said Colin Yasukochi, director of research and analysis at CBRE real estate firm. “Being able to attract the best and brightest minds is going to give them a competitive advantage when it comes to innovating new products and services.

“Saving money doesn’t necessarily further their ability to innovate,” he said.

Benioff argues that the problem of homelessness in the city, along with other quality-of-life issues, is a bigger threat to employers seeking to recruit and retain employees. Protesters marched Thursday from City Hall to Twitter headquarters, calling for Dorsey to drop his opposition to the measure and noting how valuable his companies have become. Benioff, who has previously pledged millions from his own fortune and Salesforce’s corporate coffers, announced an additional $1 million donation to the pro-Prop. C campaign Friday.

Some opponents of Prop. C say the proposed tax by itself won’t cause jobs to migrate from the city; rather, along with soaring home prices and office rents, it gives businesses weighing the decision one more reason to go.

In September, Dorsey told a House committee that Twitter needed “to decentralize our workforce out of San Francisco.” The context was whether Twitter’s Bay Area workers have a liberal bias, but Dorsey turned the discussion to economics, noting that “not everyone can afford to even come close to living in San Francisco, and it’s not fair.”

Twitter declined to comment on Dorsey’s remarks, which came before the controversy over Prop. C. A Square spokesman referred to Dorsey’s tweets.

Benioff’s Salesforce is contributing alongside its chief to a pro-Prop. C campaign; he and other executives have said San Francisco will remain the company’s headquarters. Lyft and Stripe have funded opposition to the measure; neither company responded to requests for comment on whether they would consider leaving the city. Uber said it is neutral on Prop. C and does not plan to leave.

In a post on Medium, Mayor Breed wrote of her fear that Prop. C would lead to an “inevitable flight of headquarter companies — and jobs — from San Francisco to other cities in the Bay Area, or other states.”

Square has recently leased space for hundreds of employees in St. Louis, Dorsey’s hometown. Salesforce, Lyft and others now have significant operating bases in other cities. Yet all are hiring in San Francisco as well.

Employers in San Francisco that would be affected by Prop. C pay an average of $2,500 per employee in yearly business taxes to the city, according to an analysis by the city’s chief economist. If the measure passes, that figure could rise to more than $3,700 a year. San Francisco employers already pay $4,000 more a year in average wages compared with businesses in the rest of the Bay Area.

“We’ve been fortunate that businesses are willing to pay a premium to have jobs in San Francisco,” said Jim Lazarus, senior vice president of public policy for the San Francisco Chamber of Commerce, which opposes Prop. C. “But at what price point does the benefit of being here get outweighed by the cost?”

Lazarus, whose group has given hundreds of thousands of dollars to the opposition effort, worries that Prop. C burdens companies already struggling to afford San Francisco. Office rents in the city’s central business district hit $81.25 per square foot in the third quarter, beating the previous peak reached during the dot-com boom in 2000 (though that record still stands if you account for inflation, and the rise in recent years has been more gradual).

For tech, though, San Francisco remains the place to be, JLL’s Anderson said.

The reason is simple: “The Bay Area is a hotbed for producing talent,” said Anderson, citing the region’s top universities. It is also awash in cash for startups. From July to September, $13.8 billion in venture capital flowed into the Bay Area — half of the total for the entire country, according to PricewaterhouseCoopers’ MoneyTree report. As a result, entrepreneurs build companies here, attracting droves of highly skilled workers to the area.

Reddit employees rebelled in 2014 when a former chief executive wanted to relocate from San Francisco to Daly City; its CEO left, citing “the office location issue” in a blog post about why he resigned. Reddit’s new headquarters is the historic NBC Radio City building on Taylor Street.

Dorsey would probably face similar pressure from his employees to stay in the city. Millennials are the largest generation in the U.S. labor force, and they tend to cluster in cities like San Francisco. In competing for the most talented employees, experts say, companies have to go where the workers are.

If an employer announced a move to, say, Milpitas, Anderson said, “half of your employees might just quit because they don’t want to go there. They have a lot of job mobility, because they know they can get another one a week later — maybe even a raise.”

Jesse Gundersheim, a market economist at CoStar Group, said employers are willing to “eat higher costs and higher taxes” to access San Francisco’s pool of workers.

“I don’t think these major tech companies are deciding to locate here because of our low cost basis.”

And those workers, in turn, are attracted to new opportunities — opportunities they would not have in cities without such a tight clustering of companies. Dorsey experienced this firsthand just weeks ago when his chief financial officer, Sarah Friar, announced she is leaving to become CEO of Nextdoor, the San Francisco company that operates local online discussion boards.

Square is hunting for a new finance chief. The position — like the 120 or so other currently open positions Square is hiring for — will presumably be in San Francisco.

Chronicle staff writer Carolyn Said contributed to this report.

Melia Russell is a San Francisco Chronicle staff writer. Email: melia.russell@sfchronicle.com Twitter: @meliarobin