Buzz over Bay Area exodus likely to intensify in 2019 as higher tax bills arrive

Great news for Texas—the California legislature and Governor have put into place the highest taxes in the nation, along with the worst freeways, highest cost of living, failed government education and a legislature in 2019 that is even worse.  It is almost as if the Texas Chamber of Commerce were financing the California Democrat Party—to make sure the best and brightest leave our State.

“One of the biggest Bay Area losses for 2019 will be Core-Mark Holding Co. Inc. (NASDAQ: CORE), which will move to Dallas-Fort Worth next year. The Fortune 500 company is the second-largest distributor to the nation’s convenience store industry, with 100 of its 9,000 employees working at the corporate headquarters.

“While San Francisco is our long-time home, the business has expanded dramatically over the years,” said Scott McPherson, president and CEO of Core-Mark. “Being closer to our customers and more central to our divisions will create cost and logistical efficiency for us.”

Some expect the corporate relocations out of the Bay Area to escalate in 2019 as the region’s senior executives find themselves paying higher taxes following Trump’s tax overhaul that limits the federal tax deduction for state and local taxes to just $10,000.

Who is to blame?  Brown and his Democrat buddies—they created the economic conditions forcing productive people to leave the former Golden State.  Will the November 6 election results start the roll back of economic disaster for the State?

Tax

Buzz over Bay Area exodus likely to intensify in 2019 as higher tax bills arrive

By Mark Calvey,, San Francisco Business Times,   10/13/18

Companies large and small have captured headlines with expansions or headquarters relocations out of the Bay Area, but a growing number of startups say 2019 is when they’ll actually pack up and leave the region.

The Golden State has lost its shine for some individuals and companies, triggering debates in the Bay Area’s business community on whether an exodus is actually underway, and if so, how broad is the out-migration.

The Bay Area Council business advocacy group takes issue with talk of an exodus, while others are too busy trying to keep track of the dearly departed.

One of the biggest Bay Area losses for 2019 will be Core-Mark Holding Co. Inc. (NASDAQ: CORE), which will move to Dallas-Fort Worth next year. The Fortune 500 company is the second-largest distributor to the nation’s convenience store industry, with 100 of its 9,000 employees working at the corporate headquarters.

“While San Francisco is our long-time home, the business has expanded dramatically over the years,” said Scott McPherson, president and CEO of Core-Mark. “Being closer to our customers and more central to our divisions will create cost and logistical efficiency for us.”

Some expect the corporate relocations out of the Bay Area to escalate in 2019 as the region’s senior executives find themselves paying higher taxes following Trump’s tax overhaul that limits the federal tax deduction for state and local taxes to just $10,000.

The California Association of Realtors this week described “the substantial surge in homebuyers fleeing the state,” which has prompted some enterprising Bay Area real estate firms to create services to help residents leave.

Yesteryear’s strategy of luring a business owner to build a factory and hire locally is a distant memory. Today, companies set up shop where talent wants to live. Just look at Amazon’s (NASDAQ: AMZN) national search for a second headquarters, driven by a search for a city where the talent lives or will move to based on a city’s urban amenities, cost of living and other factors.

So it was no surprise this week when Oakland-based jobs site Localwise said it was soon heading to Denver. In discussing the move and big expansion plans for 2019, founder Ben Hamlin said: “The big thing was quality of life. It’s never an easy task to ask people in the company to relocate, but it definitely helps when it’s a place where people really want to go. Our team members prefer to live in Denver versus Oakland.”

Unfortunately, the Bay Area’s high housing costs, traffic congestion and rising cost of living aren’t challenges that will be resolved in the short-term.

Among the companies that have already told the San Francisco Business Times that they’re moving out of the Bay Area in 2019 is Varo Money. Varo, founded in 2015, plans to move its headquarters to the Salt Lake City area when it opens the nation’s first all-mobile national bank, Varo Bank, most likely next summer.

“Salt Lake City is a more sustainable place to do business,” Colin Walsh, co-founder and CEO of Varo Money, said last year in discussing with the Business Times why the company’s headquarters was heading to Utah.

The fintech will continue operating an “important office” in San Francisco, Walsh said, echoing what other startups have said about maintaining a Bay Area presence.

Last year, San Francisco-based Automattic, which is the company behind WordPress.com and other sites, took the unusual step of shuttering its office and having everyone work from home. That’s become a key selling point in the company’s recruiting pitch: “Automattic is a place like no other: our fast-growing team of 650-plus works from home — or any other location they choose — in one of 59 countries.”

Apparently the pitch is working. Elsewhere on the company’s website, the startup touts that it now has about 800 employees in 69 countries, speaking 84 different languages.

Others are opening offices outside the Bay Area. Bill.com CEO René Lacerte said his Palo Alto-based fintech plans to establish offices around the country in the year ahead to hire in those markets. He said it’s too soon to disclose those locations.

Leaders at some of the Bay Area’s most promising startups talk in furtive whispers about their plans to open offices in other parts of the country, but quickly add that they’re not ready to talk about it publicly, at least not yet. Maybe they’ll have more to say in 2019.

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.