Creative Commons/Adriel Hampton

Twitter is considering a move to the historic San Francisco Mart at 1355 Market St.

Alvin Dworman, the owner of a Market Street building proposed as the new headquarters for Twitter, gave sharply discounted office space in the same building to former Mayor Gavin Newsom’s campaign for lieutenant governor — a political contribution valued at more than $11,000, campaign finance records show.

Weeks after the gift last fall, Newsom officials aided negotiations between Twitter and Dworman by offering the Internet company a payroll tax freeze as an incentive to move into Dworman’s building, a 1 million-square-foot art deco structure at 1355 Market St. once known as the San Francisco Mart.

City officials say there is no connection between the tax deal and the contribution from Dworman.

The proposed tax deal, officials said, is part of a rare opportunity to spur growth in one of San Francisco’s most blighted neighborhoods, while preventing Twitter, which was recently valued at about $10 billion, from leaving the city. In meetings with Twitter last fall, city officials also said they could improve Muni service, add police patrols, and improve street-cleaning to make the area more attractive. The city has also been in active in brokering lease negotiations between Dworman and Twitter. 

Jennifer Entine Matz, the top economic development advisor under Newsom, said in an interview that the city encouraged Twitter to move into the SF Mart location — and offered the payroll tax freeze to sweeten the deal — because the city had long sought a prominent tenant to anchor development along central Market Street.

“Everything came together perfectly,” said Matz, who serves in the same position under new Mayor Edwin M. Lee. “We would not have run all over the city chasing Twitter. It’s because they’re putting their headquarters on central Market Street, which is the city central thoroughfare, and it’s derelict.” The payroll tax break would also be available to other companies locating in mid-Market.

But some have questioned the Newsom administration’s role in crafting tax legislation that would directly benefit Dworman.

“You have to wonder, is there a connection between the donation and efforts to bend the payroll tax to accommodate Twitter and bring a tenant to the building?” said Supervisor John Avalos, who has expressed reservations about the tax deal.

Dworman did not respond to requests for comment.

Matt Graves, a spokesman for Twitter, declined comment.

Dworman’s contribution, which has not been previously disclosed, occurred during months of negotiations involving the landlord, the city and Twitter.

According to state campaign filings and campaign staffers, Newsom paid about $4,800 between mid-July and November to maintain his campaign headquarters at the SF Mart. The rent was below the market rate by more than $10,000.

Dworman, a billionaire developer based in New York, and his wife wrote off the difference by giving Newsom a pair of in-kind, non-monetary contributions valued at $11,157, on Sept. 30, the filings show.

At the same time, the city was seeking creative solutions to revitalize mid-Market. For years, Randy Shaw, a housing activist in the Tenderloin, had pushed for a payroll tax break to encourage new businesses along central Market Street.

Meanwhile, city officials knew that Twitter, which is expected to grow from 300 employees to as many as 3,000 over the next decade, was looking to move out of its cramped Folsom Street offices.

By late last year, the company was considering up to five potential sites, including two outside the city. One leading contender, a tower complex in Brisbane, near San Francisco International Airport, would have been $30 million cheaper over an eight-year lease than the rent that Dworman wanted for the SF Mart location, city officials said.

But Twitter executives told city officials that their employees largely preferred to stay in San Francisco; 65 percent of the company’s employees live in the city and many bike to work.

In October, city officials made two separate trips to Twitter — including a visit by Newsom in mid-October — to persuade company executives to stay in San Francisco.

At an Oct. 29 meeting at Twitter, a group from the mayor’s office, including Matz; Steve Kawa, Newsom’s chief of staff; Amy Cohen of Newsom’s Office of Economic and Workforce Development; and Kelly Pretzer, the mayor’s liaison to the city’s tech companies, laid out the benefits of the SF Mart to company executives.

They told the executives that the city could increase Muni service, police foot patrols and street-cleaning services in the area to make the gritty neighborhood safer and more attractive, according to Matz. They brainstormed the potential to display interactive art in the lobby, and revealed that Black Rock City LLC, which organizes the Burning Man festival, was considering moving in nearby.

Twitter executives told the city that the $30 million difference between the Brisbane location and the SF Mart remained a stumbling block in their calculations.

Around the same time, city officials approached Dworman about lowering the price of the lease to help the two parties reach a deal. The developer balked, according to people with knowledge of the negotiations.

In November, talks between Dworman and Twitter stalled, Lee, who was then the city administrator, said in a recent interview. The city decided to offer the tax incentive as a potential solution.

“Twitter said, ‘We’ve got two problems: we’re not sure about staying in San Francisco, and we’ve got problems with the landlord.’ And Jen Matz went to work really hard,” Lee said.

The initial deal would have exempted Twitter and other businesses on central Market Street from payroll taxes altogether for eight years. Twitter currently pays roughly $1 million a year in payroll tax.

In January, Newsom left office, while his top advisors, including Kawa and Matz, transitioned into Lee’s administration and continued working to broker a deal between Twitter and Dworman.

But newly elected District 6 Supervisor Jane Kim was hesitant to offer Twitter a blanket payroll tax exemption. She persuaded Lee and Board of Supervisors President David Chiu to change the legislation to freeze Twitter’s payroll tax at its current level for six years.

Such a measure would mean that Twitter would continue to pay the same amount to the city each year — no matter how much its payroll grows over that period.

Lee said he was optimistic that Twitter would stay in San Francisco. But Twitter has not confirmed that it will accept the deal.

Another big winner, should the move go through, would be Dworman, who for years has reportedly tried — and failed — to convert his mid-Market properties into a residential hub, replete with eateries under a glass dome. The SF Mart, once a wholesale furniture showroom, has languished, largely neglected and vacant.

Dworman, one of the most influential developers in San Francisco, owns other properties in the city that have fared better. He is responsible for the luxury condominiums that sprouted atop Cathedral Hill — as well as the distinctive-looking Saint Mary’s Cathedral itself.

He has made political contributions to both Republicans and Democrats. He contributed almost $70,000 to Sen. John McCain when he ran for president in 2008. Around the time he offered Newsom office space last year, he wrote three checks totaling $7,500 to the campaign of Attorney General Kamala D. Harris, the former San Francisco district attorney.

In a newspaper article from 2007, former Mayor Willie L. Brown Jr., a longtime friend, was effusive in praise for the developer.

Dworman was, according to Brown, “a hot shot and a visionary and a risk taker of the highest order.”

Correction: A previous version of this story misstated the size of the San Francisco Mart. The building is 1 million square feet, not 10,000 square feet.