[E-minutes] August 19, 2003 City Commission minutes
Lisa Patterson
lpatterson@ci.lawrence.ks.us
Fri, 29 Aug 2003 12:38:20 -0500
August 19, 2003
The Board of Commissioners of the City of Lawrence met in regular
session at 6:35 p.m., in the City Commission Chambers in City Hall with
Mayor Dunfield presiding and members Hack, Highberger, Rundle and Schauner
present.
CONSENT AGENDA
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to approve City Commission meeting minutes of August 8th and
August 12th, 2003. Motion carried unanimously.
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to approve the Parks & Recreation Advisory Board meeting minutes
of July 15, 2003; the Board of Electrical Examiners and Appeals meeting
minutes of May 7, 2003; and the Sister Cities Advisory Board meeting minutes
of July 9, 2003. Motion carried unanimously.
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to approve claims to 281 vendors in the amount of $1,497,582.72.
Motion carried unanimously.
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to approve the Drinking Establishment Licenses for Cadillac
Ranch, 2515 West 6th Street; Henry T's Bar & Grill, 3520 West 6th Street,
Eight One Five (Formerly Raoul's), 815 New Hampshire; the Retail Liquor
Licenses for Wehner Retail Liquor, 945 East 23rd Street; and Cork & Barrel,
2000 West 23rd Street. Motion carried unanimously.
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to set a bid date of September 9, 2003 for the Riverside
Industrial Park sanitary sewer project. Motion carried unanimously.
(1)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to place on first reading, Ordinance No. 7682, establishing "no
parking" along the west side of Legend Trail Drive from 15th Street
southerly, westerly, northerly, and easterly to its end. Motion carried
unanimously. (2)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to place on first reading, Ordinance No. 7684, establishing
"stop signs" on Perry Street at 5th Street. Motion carried unanimously.
(3)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to place on first reading, Ordinance No. 7685, establishing an
"all-way stop" at Naismith Drive and Allen Field House Drive/Schwegler
Drive. Motion carried unanimously.
(4)
Ordinance No. 7677, amending Section III of Ordinance No. 7515,
pertaining to Phase II of a 50% exemption from ad valorem taxation on the
appraised value of building expansion improvements and machinery and
equipment used by Allen Press, Inc., to read as follows: "The exemption
from ad valorem taxation hereby granted shall begin with the taxes levied in
the calendar year 2003," was read a second time. As part of the consent
agenda, it was moved by Rundle, seconded by Highberger, to adopt the
ordinance. Aye: Dunfield, Hack, Highberger, Rundle, and Schauner. Nay:
None. Motion carried unanimously.
(5)
Ordinance No. 7676, levying a special assessment for the construction
of sanitary sewer improvements in and near the intersection of 23rd Street
and Louisiana Street, was read a second time. As part of the consent
agenda, it was moved by Rundle, seconded by Highberger, to adopt the
ordinance. Aye: Dunfield, Hack, Highberger, Rundle, and Schauner. Nay:
None. Motion carried unanimously.
(6)
Ordinance No. 7679, adopting the 2004 City Budget, was read a second
time. As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to adopt the ordinance. Aye: Dunfield, Hack, Highberger,
Rundle, and Schauner. Nay: None. Motion carried unanimously.
(7)
Ordinance No. 7680, determining the appropriateness of the 2004
Budget property tax revenues in an amount which exceeds the revenues
budgeted and expended for budget year 2003, was read a second time. As part
of the consent agenda, it was moved by Rundle, seconded by Highberger, to
adopt the ordinance. Aye: Dunfield, Hack, Highberger, Rundle, and
Schauner. Nay: None. Motion carried unanimously. (8)
Ordinance No. 7683, establishing water and sanitary sewer rates for
2004, was read a second time. As part of the consent agenda, it was moved
by Rundle, seconded by Highberger, to adopt the ordinance. Aye: Dunfield,
Hack, Highberger, Rundle, and Schauner. Nay: None. Motion carried
unanimously. (9)
Ordinance No. 7678, establishing sanitation rates for 2004, was read
a second time. As part of the consent agenda, it was moved by Rundle,
seconded by Highberger, to adopt the ordinance. Aye: Dunfield, Hack,
Highberger, Rundle, and Schauner. Nay: None. Motion carried unanimously.
(10)
Charter Ordinance No. 36, establishing a five percent Guest Tax, was
read a second time. As part of the consent agenda, it was moved by Rundle,
seconded by Highberger, to adopt the ordinance. Aye: Dunfield, Hack,
Highberger, Rundle, and Schauner. Nay: None. Motion carried unanimously.
(11)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to adopt Resolution No. 6474, directing and ordering a public
hearing on September 23, 2003 on the advisability of the construction of
Monterey Way from the intersection of Peterson Road south approximately 2700
feet to the existing northern terminus of Monterey Way. Motion carried
unanimously. (12)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to adopt Resolution No. 6482, amending Resolution No. 6469,
establishing the Speed Hump/Speed Cushion Policy adopted May 13, 2003.
Motion carried unanimously.
(13)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to approve the site plan (SP-06-38-03) for Moon Sports Bar and
Apartment Complex, a site plan for the addition of an 8-unit apartment
building and parking lot improvements located at 821 Iowa Street west of
Moon Sports Bar, subject to the following conditions:
1. Recording of the final plat prior to the release of the site plan for
issuance of a building permit;
2. Provision of a revised site plan to reduce the size of the building from
an 8 plex to a 6 plex;
3. Provision of a revised site plan to include the following changes:
a. Provision of a dense landscape screen along the south property line to
prevent pedestrian cut through, per staff approval;
b. Provision of a note on the face of the site plan to state: "All roof
mounted and ground mounted equipment shall be screen in accordance with
Section 14A04 of the City Code";
c. Provision of a note on the face of the site plan that states the number
of bedrooms;
d. Provision of a revised site plan to correct general note number 5 to
state: "Proposed Land use: Licensed Premise and Apartment Building";
e. Provision of a note on the face of the site plan: "All traffic control
signs placed on private property open to the general public shall comply
with the "Manual on Uniform Traffic Control Devices" and "Standard Highway
Signs," published by the Federal Highway Administration, with respect to
size, shape, color, retroreflectivity, and position" per Ordinance No. 7542;
4. Provision of a revised site plan that shows the boundary of the
construction area and a fence that protects the existing vegetation along
the adjacent west property line (park property);
5. Provision of a revised site plan that shows the boundary of the
construction area and a fence that maintains the required off-street parking
for the Moon Sports Bar if it is to remain open during construction;
6. Provision of a photometric plan prior to release of the site plan for
issuance of a building permit; and,
7. Execution of a site plan performance agreement.
Motion carried unanimously.
(14)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to approve the site plan (SP-07-54-03) for a deck addition and
sidewalk dining for Roly Ploy, a site plan for a rear deck and sidewalk
dining at Roly Poly, located at 818 Massachusetts, subject to the following
conditions:
1. Provision of a revised site plan to include the following changes:
a. Provision of a revised site plan to include a note stating there shall be
no permitted parking or storage under the deck;
2. Execution of a site plan performance agreement;
3. Applicant shall obtain a sidewalk dining license from the City prior to
occupying the public right-of-way per article 6-12; and,
4. Execution of an agreement with the City of Lawrence for the use of the
right-of-way per article 6-12.
Motion carried unanimously.
(15)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to receive a request from Eastside Acquisitions LLC for
annexation of approximately 60 acres generally located at the southwest
corner of 23rd Street and O'Connell Road; and refer the request to the
Planning Commission for recommendation. Motion carried unanimously.
(16)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to authorize the Mayor to sign a Statement of Intent with KDHE
to mitigate an illegal dump site on North Maine Street. Motion carried
unanimously. (17)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to authorize the Mayor to sign a Subordination Agreement for
David Blair, 1412 Brook Street. Motion carried unanimously.
(18)
As part of the consent agenda, it was moved by Rundle, seconded by
Highberger, to authorize the Mayor to sign a Subordination Agreement for
William Rich, 1512 East 13th Street. Motion carried unanimously.
(19)
CITY MANAGER'S REPORT
During the City Manager's Report, Mike Wildgen said city's water
usage set an all time record for raw water pumped which was 27,716,000
gallons in one day. The old record was 27,433,000 on August 28, 2000.
(20)
REGULAR AGENDA
Discussion of proposed draft living wage ordinance.
David Smith, Kaw Valley Living Wage Alliance, said he spoke to the
Commission on November 13, 2001 which was when they first proposed a living
wage for the City of Lawrence. Over100 friends and allies attended that
meeting.
He said the living wage issue was remarkably simple. Since early
2001 the Kaw Valley Living Wage Alliance had argued one point which was that
companies receiving tax abatements should pay their workers a living wage.
They defined a living wage as enough to keep a family of three 30% above the
poverty line which was $9.53 an hour in 2003, plus benefits, a modest wage,
but enough to keep food on the table. With a living wage in effect,
taxpayers would not pay twice for each tax break, once for the abatement and
once for services to cover underpaid works.
They thought that city tax policy should elevate poverty, not worsen
it. Companies that receive tax breaks should guarantee they would pay their
workers enough to keep them out of poverty and off the welfare roles.
In Douglas County the typical low wage worker was a single mother
with two children. Companies that received tax breaks had an economic and
moral obligation to keep those workers above the poverty line. Not everyone
agreed, just last month the Kansas Chamber of Commerce and Industry issued a
press release attacking their living wage proposal and accusing them of
trying to "to force local employers to pay for welfare mentality in the work
place." He said living wages were not welfare, they were simply fair. He
said they were talking about people with jobs receiving enough income to get
by. They were talking about workers getting paid enough for their work,
that way, taxpayers would not need to dig them out of poverty.
In Lawrence, the standard tax abatement was a 50% tax cut. He asked
why a company, receiving a big tax break, would refuse to pay its workers a
living wage. Only a handful of big companies were eligible for abatements,
not downtown merchants, not local retailers, and not non-profits. Mainly
they were talking about manufacturing, transportation, and agri-business
companies. If those major corporations would not pay living wages, he asked
why they wanted to give them tax breaks. The idea of tax abatement policy
was to encourage job creation. Companies that created good jobs should be
encouraged, but not every job was a good job. They wanted to create living
wage jobs, not poverty wage jobs.
Tax abatements were constructive when they serve that purpose.
Otherwise, they were counter productive. He said no company was required to
seek a tax break, but if they do, they should be asked to pay a living wage.
He said that was fair and good economic sense because living wage laws had
been shown to work. They were economic sound policy.
He said some critics say or fear that they would suffer as a
community if they passed a living wage ordinance, but that was not so. A
great deal of research had been conducted on the economic impact of living
wages and all the news was good news.
He said the first major living wage ordinance passed in Baltimore in
1994 and within just a few years it became clear that the City of Baltimore
had gained across the board. He said poverty rates fell and wages rose and
even tax abated firms agreed that they were better off. Employee turnover
had fallen dramatically and productivity increased. He said this same story
could be told about many different communities. There were over 100
jurisdictions, many cities and counties, but also a few school districts,
ports and airports with living wage ordinances on the books. Many of those
cities were similar to Lawrence. The research carried out so far including
19 impact studies in cities with actual experience implementing living wage
ordinances was encouraging. Many of those cities were similar to Lawrence.
The results were in from those 19 cities and they had experience in over 100
jurisdictions. The sky did not fall with a living wage as critics warned,
but rather, poverty rates fell, employee turnover fell, and workers,
taxpayers and businesses gained.
He presented a list of cities that had conducted impact studies which
were big, medium, and small cities.
He said they had begun making that argument in 2001. On June 10,
2001, they kicked off their petition drive. On June 19, 2001, they proposed
a pair of living wage amendments to the City's Tax Abatement Task Force. On
November 13th 2001, they proposed those same amendments to the City
Commission. At that point, they had 3,000 signatures on their petition.
They had lost that November 13th vote, it was a three to two count, but the
community wide living wage discussion had barely begun at that point. In
the 21 months since November 2001 they had been privileged to participate in
an extraordinary dialogue with and extraordinary number of groups and
individuals. They now had over 6,000 signatures on their living wage
petitions. He said they had also won the endorsements of 35 community
organization, many of which were among the biggest and most respected groups
in Lawrence. He said they had also been fortunate enough at different times
to have expressions of interest and support from most of the current City
Commissioners.
He said on the strength of that community wide dialogue, they had
been able to move forward as far as the formulation of an ordinance intended
to make the living wage principal a reality. He said turning that principal
into a reality was a challenge. When they first addressed this issue they
thought in terms of amending the City's Tax Abatement Policy and that was
what they proposed to the Commission on November 2001, but they had learned
a lot since 2001. Experience with living wages all over the country had
shown that to successfully implement and enforce the living wage principal
they had to make it specific, concrete, and operationally detailed.
He said if you look at the current City tax abatement policy you
would find that the section on wages was a few sentences long. A few
sentences or paragraphs, or even page or two in the current tax abatement
resolution would be less a real living wage policy, in their opinion, than a
symbolic gesture. He said it would be a step forward, but it would not be a
step all the way across the line to the living wage itself as an
operationally effective policy. He said they believed an ordinance was
needed with enough working detail and legal specificity to be clear,
implementable, and enforceable.
He said the ordinance was a long document to establish all the
provisions that they thought were important, but the issue was the same that
it had always been from the beginning of their campaign. They believed that
people who work for companies that receive tax abatements should be paid a
living wage and that should be 130% above the poverty line for a family of
three. That core concept was what their ordinance was seeking to translate
into legal language.
He said there was a total of 12 different sections in the ordinance.
He said the ordinance was compact and focused in that it translated the
living wage principal into something that could be operationally real. He
explained the principal of their proposed ordinance. He said it was not the
most interesting legalese in the world, but it was important. He said they
included the preliminary and auxiliary sections because they specify what
the ordinance meant in practical detail. He said they were fortunate that
there had been many talented attorneys who had worked on the living wage
issue. He said there were issues that were essential which were core
definitions and sections that were core issues. He said core issues were
wages and benefits plus monitoring, implementation and enforcement.
Core definitions covered the issue of who paid the living wage and
who gets paid the living wage. Section 4 was the definition of covered
employers which was an employer that received a tax abatement or an almost
identical subsidy. He said the covered employees were the people who worked
for companies that received tax abatements.
He said when they addressed the Tax Abatement Task Force on June 19,
2001, they were responding to their draft of the resolution and in their
draft they were encouraging employers to pay average wages per job
description. He said they regarded average wages per job description as
good in many cases, specifically, in cases where the average wage was above
the living wage. In cases when the average wage for a particular type of
job fell beneath the living wage, they said, pay a living wage instead. The
living wage was a wage floor. He said they were not saying pay everyone
$9.53 an hour. If someone was currently being paid $15.00 that as good, but
if someone was being paid $5.75 or $6.25 an hour that was way below the
living wage. He said workers who work for tax abated companies should
receive either the average wage for the job they did or if the average wage
for the job they did fell below the living wage, they should be paid the
living wage instead.
He said they thought health benefits were a good thing and people who
received a wage should get health benefits too. By federal law, they had to
give employers the option of either contributing health benefits on top of
the living wage or giving a cash substitute for those health benefits which
was $1.50. He said they were proposing a $9.53 an hour and health benefits
equal in value or greater to $1.50.
The sections on monitoring, implementation, and enforcement deserved
critical scrutiny and they invited that type of critical scrutiny. He said
their proposed ordinance was posted on their website at:
www.kawlivingwage.org.
He said the source of the counter proposal appeared to be the Chamber
of Commerce Board of Directors and they had many interesting ideas that
pertained to tax abatement policy. Some of those ideas were fairly
complicated and involved arithmetic, but leaving the tax abatement issues to
one side, he wanted to focus only on the aspects of what he had heard
proposed by Chamber Board Members that beard directly on the living wage
issue and their living wage ordinance in particular. He said two points
stood out in the counter proposals which were not to have an ordinance at
all, even though, the large majority of communities that had living wage
requirements, the ordinance was the forum that was taken by that
requirement. He said in the past people had written one or two page
ordinances or simply revised tax abatement policy, but those proved not to
be effective as implementation strategies and they were difficult to
interpret and enforce. He said the ordinance made sense.
The other issue that was brought forward in a form of a counter
proposal was even more important and that went right to the heart of what
differentiated a living wage proposal from some other kind of proposal. The
term "living wage" could be used by anyone, but they and others around the
country had proposed all along an ordinance that firms receiving tax
abatements must pay their workers a living wage. The counter proposal by
the Chamber wanted to exempt firms from paying part time and temporary
workers or workers who were subcontracted into a firm from some other firm.
Their concept of a living wage was that it was for everyone that worked for
one of those tax abatement companies.
Roger Pine, Pine Family Farms, presented a letter to the Commission
from representatives of the Lawrence/Douglas County Agribusiness community.
He said they raise corn, soybean, wheat, and turf grass on approximately
3,600 acres of land. They hired 11 full-time employees plus 2-4 seasonal
employees. The average full-time employee works approximately 2500 hours
each year and was considered an average of 56 1/2 hours per week.
Agriculture was not required to pay time and one-half, however, they did.
They carried workmen's compensation which was not required of agriculture
either plus they contributed monthly to health insurance carried by the
employee and they contributed money for medical expenses, not covered by
insurance.
He said last year Pine Family Farms paid out over $400,000 in wages.
The lowest paid employee earned $24,088 and worked 2,388 base hours plus 60
overtime hours and had paid vacation, holidays, and a bonus. For this
particular individual the living wage would add $2,622 for the year. For
the employee, that was good and bad. He would experience additional
spending money. However for the past 5 years the traditional crops for Pine
Family Farms had taken a loss. Each year they had analyzed and made
changes. All last fall and winter they made many adjustments and
corrections to their operations, planning for the growing year. One such
adjustment was reducing their staff by 3 people trying to reduce their labor
costs and they gave no pay raises. In addition, they changed their farming
practices and made equipment adjustments. They had absolutely "no" or
"little" wiggle room left.
He said they already knew, due to the drought they were experiencing,
they would take another loss this year. They were currently using up their
equity in the business and they knew they could not do that indefinitely.
They were constantly tightening their belt and finding everyway they could
to reduce cost. They had equally been creative on the income side. This
year they had added straw and top soil to their product line. They wanted
Pine Family Farm to survive and they wanted to retain the employees they
had, pay them well, and not work them too hard in the heat of the year. He
said Pine Family Farms had to show a profit for that to happen.
The living wage proposal that the Commission was considering would
affect Pine Family Farms significantly. Of the 14 business that were
currently receiving tax abatements they had sold sod to over half of them as
subcontractors. He said 29,500 employee hours, not owner hours, were put in
on the Farm last year. Living wage would increase their payroll by a least
$18,000. If they were not in compliance with health insurance requirements,
that would add another $44,250 to their payroll. If they were required to
pay living wage, they would have no choice, but to layoff additional staff.
This was bad news for the individual who just received an increase in pay
due to the living wage proposal because he had just lost his job. If Pine
Family Farms continued to experience the negative numbers, all of them would
lose their jobs in the end.
He said you wanted to support and encourage agricultural and
greenspace in Lawrence and Douglas County, but the proposal before the
Commission had far reaching effects. Many small businesses throughout
Douglas County had no idea what effect, this good idea proposal before the
Commission, had on them. That proposal did not support agriculture, did not
encourage entrepreneurship, nor did it create new jobs. He said surely that
was not what the Commission was striving to achieve. He asked the
Commission to seriously consider the negative impact of the living wage
proposal.
Larry McElwain, Chairman of the Lawrence Chamber of Commerce Board of
Directors, said they were present to discuss the topic of the "living wage"
in Lawrence and Douglas County and the merits of an amendment to the current
Tax Abatement Policy of the City of Lawrence versus an ordinance.
He thanked everyone for their personal time in the discussion of that
issue. He especially wanted to thank Commissioners Highberger and Hack who
had spent at least 8-10 hours in discussion with them along with their
sharing and framing of the germane issues. He said they knew the
Commissioners had spent additional hours with others representing many
different view points. He said they had been treated with respect and
courtesy by everyone and they were also grateful for discussions with
representatives of the Kaw Valley Living Wage Alliance. He said they
thanked everyone for assisting them in making this important issue a
respectfully debated issue. They would continue to do their part in
presenting a new model for civil public debate on controversial issues.
The Lawrence Chamber of Commerce had 1631 members, representing 1241
businesses, from across the area with diverse viewpoints. He said they had
in their mission statement and more importantly, as their Mission, "to work
to enhance the economic vitality of Lawrence and to be the leading advocate
of related issues." When they spoke of economic vitality of Lawrence, they
were pointing towards their members, non-members, businesses, governmental
entities, and the total workforce of Douglas County. It would take everyone
working together to make this community successful. He said they partner
with the City, County, and Chamber members to help create basic jobs which
injected new money into local economy. He said they were not involved in
the recruitment nor did they expend financial resources for the recruitment
of retail businesses. They were driven purely by free market and
demographic dynamics.
As all of us had learned that the living wage was emotionally
charged. The Board of Directors voted three months ago to commission a
professional survey of the issue that would have produced some data that
could be used specifically by everyone in Douglas County. The Policy
Research Institute at K.U. would have conducted the research project.
Because of the desire on the part of the Commission to move ahead with the
living wage issue prior to the completion of this survey, they had shelved
the survey proposal for now.
In their discussion with Commissioners and others, they had been told
that the central issue was the wages being paid to the entry-level employees
in the tax abated companies of Lawrence. It was illegal by state law to go
back and alter tax abatement agreements with companies receiving abatements.
So therefore, they were looking at wage levels of entry-level employees for
future tax abated companies. Although there were opponents to any use of
tax abatements, it was generally realized that they were necessary in the
world of economic development across America. The lack of tax abatements
was an immediate check-off for company site selectors. In Kansas, there
were communities that even issue 100% tax abatements. Lawrence had never
given more than a 10 year, 80 percent tax abatement, but the company had
been required to prove in the cost benefit analysis that they would produce
a 1.25 to 1 or better benefit to the City with the abatement. So, this made
them an immediate benefit to the taxpayers of Douglas County in each year
from year one. This was often overlooked and misunderstood.
He said they did not believe that developing a city ordinance to
correct and enforce this matter was necessary. It had been stated that the
ordinance was needed to "codify" that issue. To them, this could be likened
to fishing with dynamite. It created too much risk for collateral, long
lasting damage. It could end up damaging the very people that it was
intended to help by causing jobs to be eliminated. Others say that the
research said differently, but they had based most of their thoughts on the
51 basic job companies of all sizes that they had surveyed in Douglas
County. He said they believed that since the problem was with tax abated
companies, then it should be dealt with locally in the policy that already
governed and guided them. Creating a fifteen page proposed ordinance to
deal with those issues created an unnecessary new layer of expense and
bureaucracy for the City to oversee and created many unclear areas that
would emerge in the future. He asked the Commission to look at the
definitions in Section 2 and see the wording that caused the roots of future
conflict.
He said Lavern Squier, the LCC CEO & President, would follow him and
outline their alternative proposal which had been crafted with the
assistance of others who were concerned about this issue. It would contain:
1. A "hard floor" of wages ($9.53) which tied to the Federal poverty level
calculation of 130% for a family of three;
2. Strong compliance features with heavily weighted penalties;
3. More creative and streamlined method for obtaining compliance facts from
abated companies;
4. Created a contractual agreement between the City and the abated company;
and,
5. Contained potential for a creative way of using the penalty money for the
workforce and/or our community.
In short, they along with others, had created with their proposal
a simple, straightforward way of dealing with issues that they all saw as
important. They did not think that they needed to create something that was
unclear, that contained too much room for interpretation, and would only add
to the difficulty in the relationship between the City and tax abated
companies.
Another area of concern was the not-for-profit organization and there
was an issue in that proposed ordinance that they felt was critical. He
said it dealt with the core issue of everyone including subcontractors,
temporary, and part-time employees all being paid at least $9.53/hour. The
issue that caused problems was the not-for-profit organization that had
contracts with tax abated companies for example, Cottonwood, to do specific
tasks. Those people from Cottonwood might be paid federal minimum wage at
this time, but by not defining who was covered could cause a problem for
those not-for-profits in retaining those contracts with those jobs for their
clients with tax abated companies. He said that was a real issue in the
ordinance that they were concerned about.
He said their organization was committed to creating basic jobs and
increasing the investment of local businesses. During the past 19+ months,
their Economic Development Department had worked with businesses and with
the Commission to create 425 new jobs and nearly $57 million in new
investment, which translated to new tax dollars for everyone. In a recent
business retention study conducted by Lynn Parman and her staff at the
Chamber, they interviewed 51 of the various sized businesses that provided
basic jobs in the area. Sixty-three percent of those companies stated that
they planned economic expansion of jobs and/or equipment in the next three
years. He asked did they really want to cloud their decision by taking away
the possibility that they could use tax abatement. He asked did they really
want to risk that they might not get those additional job and increased
investment. Finally, he asked did they want to take a chance that their
corporate headquarters would see the "living wage ordinance" designation as
a disqualifying factor for expansion. He said they thought it was not worth
the loss of one job to one person in Douglas County in the workforce. The
loss of industries and ensuing jobs was not a vague, imaginary concept.
They always had a face, a name, and people who depend on them. He said
everyone must continue to give workers the jobs and potential to grow and
prosper. He said they did not want existing companies in Lawrence to move
jobs to a sister plant because of the atmosphere that might be created here.
All of us know that everyone was living in difficult financial times.
The Commission especially recently had to make some difficult budget
decisions. Some recent information received from industry publications had
ominous ramifications. Here was what was said:
? Tax Foundation Study - Ranks Kansas as having the 36th worse tax
climate in the country;
? Site Selection Article - Doesn't even list Kansas in the top 25 for
the State Business Climate Rankings;
? Small Business Survival Study - Ranks Kansas 32nd in the Small
Business Survival Index;
? Site Selection Magazine - Survey lists the No. 2 reason for
companies locating in a state as labor costs. No. 1 was the availability of
skilled labor. No. 3 was tax exemptions and No. 4 was State and local
incentives;
? In a study conducted by the American City Business Journal for the
Wichita Business Journal of 226 American cities, Lawrence ranked (226) in
job growth, Topeka (223) and Wichita (221) in job growth during 2001 and
2002.
The Lawrence Chamber of Commerce was committed to the economic
vitality of the entire area and its workforce. There was a lot of work to
do and they had the leadership and staff to be successful. They asked the
Commission to continue their partnership with promoting an amendment to the
Tax Abatement Policy, which would ensure better wages for workers in abated
companies and not risk the loss of this as a tool for the Economic
Development community. There needed to be all the available tools to use.
Unfortunately, many workers in the area thought that this proposed
wage increase pertained to them. Right now, it only referred to future
employees of tax-abated companies. Some had committed to a Living Wage
concept and so did they. He asked did they really commit to an ordinance
they had not seen, or to the living wage principles that they had come to
agree upon. They hoped and sensed the latter. They might arrive at their
designation in a different vehicle than thought they were taking, but they
could arrive together.
He said they had talked to the Commission individually and they knew
they had come to the public with an alternative to the proposed ordinance.
Lavern Squier would give major points of what they saw as the solution to
this issue. Since they were not able to conduct their study and report the
fact they found, they had another individual (Terry Campbell) that they had
asked to look at the proposed ordinance from the legal point of view.
In closing, they believed it was simply not worth the risk to be
designated and/or labeled as a "Living Wage Ordinance" community when they
could deal with the issues another, better way.
Lavern Squier, Lawrence Chamber of Commerce, had a power point format
a compilation of comments and concerns and how they could address some of
those concerns in terms of initiatives and elements.
The local minimum wage initiative could be implemented in the form of
policy adaptation in conjunction with the current tax abatement program of
the City of Lawrence. Those added initiatives could be implemented on a
going forward basis and it would not be retro-active to any existing
abatement currently in place. To receive a tax abatement companies would
comply at a 100% of local minimum wage index of 130% of the federal poverty
level wage calculation for a family of three on any given year. This
requirement should apply to full-time equivalent positions only.
The tax abatement compliance and stipulation issues could be outlined
in a contract with performance agreements related to investments, jobs, and
wages on an annual basis. The City of Lawrence would grant the tax
abatement subject to the Board of Tax Appeals approval as was the current
standard or process on a "not to exceed basis" expressed as a percentage or
cap.
He said the performance agreements or contracts would utilize a
credit/penalty system to encourage or enforce performance and the categories
were investments, jobs, and wages. The policy should establish a weighting
system of importance related to each of those three categories. The wage
performance requirement would supercede the investment and job creation
credit structures if the wage compliance level was not met and was in the
penalty phase for any given year. The penalty associated with wage
non-compliance could be indexed on a ratio 5% deduction in tax abatement for
every 1% of wage non-compliance. This wage requirement should apply to
full-time equivalent hourly waged workers on an annual basis. Any penalty
payments due and payable as a result of non-performance in the areas of
those issues in wages paid, jobs created, or investments to be made, could
be paid in the form of payment in lieu of taxes to the City of Lawrence. He
presented a graph of the proposed Credit/Penalty System.
He said there was an issue of performance compliance. Instead of a
compliance officer position, they felt in the professional community in
Lawrence had the capabilities available to accomplish the issue of
compliance in terms of measuring performance by any given company related to
a tax abatement. Lawyers and accountants in our community who were members
and citizens of this community had professional standards to adhere to, but
in addition, they could be called upon to bridge that issue between the City
and the tax abated companies. This precluded the company from having to
pass personal records of employees into the public domain, in turn, it did
let the City have a reliable source to go and look within the company to
certify compliance.
He presented a chart to the Commission depicting the number of tax
abatement companies remaining by year. He said in the year 2003 there were
13 abatements tailing down to those expiring at the end of a ten year
period. That was assuming ProSoCo and Serologicals begin in the year 2004
and 2005. He pointed out the tapering number of tax abatements. He said
first of all not a large number of tax abatements overused, and secondly a
tapering number going forward within the given ten year period. The maximum
length of tenure on a tax abatement was ten years.
The anticipated results of those policy elements and changes would
result in a contracting system that would define the responsibilities of
both the City and the tax abated company as mutual parties to the contract.
This would tend to avoid overstatement of wages, jobs or investments by the
company. The more efficient compliance feature applied as well as it
related to the certification issue in utilizing our local professional base
that they currently had. This allowed for adjustments within the policy due
to economic times. A company might experience some fluctuation in a
promised investment. They might over invest one year, under invest another,
and this policy would allow for that evening out. Some had expressed
concern as they visited about issues of economic influence from outside as
well as possible catastrophic issues that would happen beyond control. In
the policy, if left in place, in this fashion would allow for that
fluctuation. He said ultimately it would be a better way to demonstrate a
desire to attract jobs to the community versus an out right ordinance while
also addressing a number of the other concerned points that they heard in
their visitations with the Commission, other officials, and members of the
community regarding this issue.
Vice Mayor Rundle said as proposed by Squier the credits did not
apply to the living wage. He asked if the tax abated companies would be
required to pay that living wage at all times in the abatement even in
economic down turns. He asked if it was the other two aspects such as the
number of jobs.
Squier said it would be the Commission's discretion on how they were
implemented. He said the tool could be used for any or all of those
categories. It would be the Commission's choice for implementation. The
absolute rule according to this as presented would be if the wage section
was in the penalty phase, it would override any outstanding credits built by
investment or job creation and demands payment or settlement for the wage
penalty portion.
Terry Campbell, Attorney, Barber, Emerson, Springer, Zinn and Murray,
was asked by the Lawrence Chamber of Commerce to perform a legal review of
what the ordinance actually said. They heard that the idea behind the
ordinance was that the Chamber generally supported any firm that received a
tax break to locate or expand in Lawrence must pay all of its employees at
least a living wage, which was defined as enough to keep a family of three
30% above the poverty line according to Graham Kreicker from an article in
the Journal World.
He said that was not what the ordinance did. He addressed that issue
in the way in which his review, lead him to believe that.
He said the ordinance did not appear to be limited to businesses that
received tax abatement. He said it appeared to apply to many entities that
did not receive tax abatements at all. The specific definition in the
ordinance said that any business with 10 or more employees which received
over $75,000 in "equivalent public incentive of economic value" from the
City "for the purpose of promoting economic development, job retention, or
job growth, in return for a pledge to create jobs by ... expanding in
Lawrence." He asked, what was included other than tax abated companies. He
said it could include companies like Sunflower Cablevision which was subject
to a Franchising Agreement with the City of Lawrence. He said Sunflower
Cablevision could fit into those definitions as a public incentive that had
economic value, a situation where it promoted economic development or job
growth, might qualify. Also, entities like Harris Construction Co., which
recently received a zoning variance for the project at 7th and New
Hampshire, might also qualify. Finally, one other entity that would fall
under a broad reading of that ordinance was the Boys and Girls Club, not
only as subcontractor, but also potentially directly. The Boys and Girls
Club received Alcohol Tax Grants, CDBG money, and other types of City public
incentives for the specific purpose of doing certain programs. One of the
implied effects of those programs was job retention or job growth in those
specific areas.
He said the ordinance would apply to the original people who received
tax abatement or other types of financial assistance, but also,
subcontractors of those businesses, no matter what the size of the
subcontractor. The way the ordinance was written was that the original
company receiving the tax abatement that ordinance only applied if the
company was 10 or more employees. As to subcontractors, it applied to any
size contractors. He said subcontractor work that was undertaken on the
property of the tax abated company was covered. He said that would include
under the actual definition, in that ordinance, a person who delivered
pizza. He said it would include architectural firms, for example, who
provided architectural services on the project, banks that provided
financing or withdrawal types of services for tax abated companies, and also
utility providers, including the City of Lawrence, were subcontractors for
tax abated companies. He said the City of Lawrence provided water services.
He asked if the City of Lawrence was prepared to comply with the living wage
ordinance as a subcontractor. The way the ordinance was written only
applied to those employees who actually working on the tax abated jobs. As
long as those people who go out to the job site or those people who were the
billing clerks, for example, in the City Utility Department, were being paid
that appropriate wage level under the ordinance, the City would be okay.
Mayor Dunfield asked Campbell to summarize his comments because legal
staff would address his report and the Commission was clear that there was a
concern that the definition of "subcontractors" and their work on the site
was broad.
Campbell said the wages and health benefits were broader than just
full-time employees. They applied to part-time, temporary, and seasonal
employees, contracted workers, contingent workers and any other workers made
available through temporary staffing services. The elevated minimum wage
might be greater than $9.53 an hour as to those employees that were in an
average wage category which permitted that and even those employees that
opted out of health insurance coverage or uninsurable it would require the
payments for the health benefits.
He said concerning costs necessary to enforcing the ordinance, it
called for a "City Compliance Officer (CCO)" to enforce that ordinance and
based on the general duties, it would be difficult to hire a person to do
that job for less than $40,000. By the time benefits were paid and taxes on
that person, it would cost approximately $50,000. He said $50,000 was
equivalent to the City portion of the abated ad valorem property tax for an
80% tax abatement on a $9,000,000 commercial project. Another example was
$50,000 that would be necessary to pay this person to enforce the ordinance
would require the reliance on an additional 104 homes, valued at $150,000 a
piece.
Compliance provisions raised significant concerns. The annual
reporting provisions in the ordinance as to those companies that would need
to comply implicated significant privacy concerns as to the employees. Any
employee who was a covered employee would need to have their employment and
wage information submitted to the City Compliance Officer for public review
and subject to retrieval under the Kansas Open Records Act, by the Lawrence
Journal World, and anyone else who had an interest.
Under the ordinance "covered employers" appeared to be strictly
liable for the Compliance of their subcontractors. For example, if a tax
abated company had a subcontractor that was not doing its fair share,
despite the abated companies best efforts to place on those provisions in
their contracts, sometimes people did not do what they were supposed to do
and the tax abated company could lose the abatement based on the misdeeds of
a subcontractor that it did everything to bring it into compliance. He said
there was not a "good faith" exception as to those abated companies.
The ordinance prohibits any form of retaliation by anyone against a
person who exercises "rights" under the ordinance. That would mean any
newspaper article or editorial criticizing someone for going to the City
Compliance Officer and making a wager for it against a company, exercising
the first amendment right to criticize a person for doing that, that person
would technically be in violation of the ordinance.
He said one of the key points was the ordinance, by its terms,
exempted union contractors. If you were subject to a collective bargaining
agreement, you do not need to comply with the elevated minimum wage
ordinance. There would appear to be no rational reason for doing something
like that because what it did was as to tax abated jobs, the only companies
that could compete fairly and reasonably were union subcontractors. If you
were not a union subcontractor you would need to pay your receptionist,
cleaning crew, and everyone the living wage assuming they touched upon the
tax abated project. Union shops did not need to do that because they were
covered by collective bargaining and the ordinance did not requirement them
to comply.
He said the ordinance also failed to exempt jobs that were exempt
under the state and federal minimum wage laws and that might be a problem
that could subject the ordinance to legal challenge. The ordinance might
run afoul of right-to-work laws to the extent that it forced tax abated
construction projects, essentially, to be contracted by union shops. He
said people would have difficulty working on abated project to the extent
that they were not working for a union shop. He said to the extent the
ordinance made its subcontractors out of other entities that might conflict
with other state laws. Finally, the ordinance might violate the equal
protection principles to the extent of arbitrarily selects 130% of the
federal poverty guidelines as the "living wage" and also to the extent of
treating union shops differently from non-union shops.
He said the Chamber of Commerce raised those issues in an effort to
show either the proposal at the Chamber set forth, would be one for
discussion or if the Commission was inclined to accept they had to have a
living wage proposal, more work needed to be done before adopting the
ordinance as presented.
Vice Mayor Rundle asked Campbell to clarify the interpretation of the
meaning "Union." He read that as meaning the business could pay below the
living wage, if through collective bargaining the employees agreed to it.
He said it did not seem to him that it spoke to the union paying their
staff.
Campbell said it certainly could, but why should it be allowed for
union employees to accept a lower wage when non-union employees could not
make that same agreement.
Dave Loch, representing the Manufacturer's Network of Douglas County,
which were 66 manufacturers with 4,000 employees in the Douglas County area.
Those manufacturers had invested $18,000,000 over the past 5 years of
unabated investments which equated to 1.3 million dollars in taxes which was
equivalent to 559 average homes in the Douglas County area. He said the
residential tax rate was 11.5 percent and the commercial rate was 25
percent.
The Manufacturer's Network was opposed to any local minimum wage
ordinance that included the "living wage." He said they would reduce
costs by reducing the entry-level workforce through automation or
elimination of job functions.
As manufacturers they went through a lot of different processes when
trying to become better businesses and one of the things they did was to
evaluate the problem at hand. He said if you looked at the living wage
issue, currently the tax abated companies there were 93% of the employees
that made above a the living wage and 7% that were not. He said something
they had not addressed was total compensation. Today, benefits become a
very important issue to employees. In fact, many times employees say they
were going to work for a certain company because they had a certain amount
of benefit in this area or that area. He said that was one thing that was
not covered in discussions when talking about the living wage issue.
Another issue that needed to be addressed was how big the problem
was. If looking at the last 5 years, the wages in Douglas County for
manufacturers had increased 16.7% while the Consumer Price Index was 12.1%.
He said some things were self correcting and the business environment was
looking at that situation and was correcting itself.
He said when looking at the issue of "living wage" it was addressing
a symptom. He said they needed to take a step back and look at what they
could do to help people earn more. There were tremendous opportunities in
training in education to help people earn more, not just issue a mandate
that said they would pay people more.
He briefly addressed the cost and benefit earlier and it was
something that manufacturers and businesses did. He said the benefit was
that someone who might not be making a living wage would make a living wage.
He said the cost needed to be looked at and some of those cost were healthy.
One of those costs was the risk of unemployment. If they mandated a
particular wage, they might be setting themselves up for unemployment. When
you get to the individual level, earlier he had said there were 93% that
worked for abated companies were above the proposed living wage. Those 7%
which represented approximately 150 people were excited about getting an
increase, but it also placed those people at risk. In regards to costs, the
City would need to invest funds to take care of those costs.
In conclusion, he said let's look at what needed to be done to fix
the problem and not use a sledge hammer to drive in a thumbtack. If they
did some changing to the current structure to get to where they needed to
be, he suggested that they needed to do that. The manufacturers to Douglas
County would grow, expand, and add jobs if they had an incentive based tax
abatement policy. If they had an ordinance that mandated a living wage, the
manufacturers of Douglas County would reduce investment and would try to
limit jobs.
Richard Bremer, one of the owners of AMARR Garage Door Group, living
in Winston Salem, North Carolina, had been traveling to Lawrence since 1988
when they began to do some site selection for their plant. He said Lawrence
was a great town and he loved visiting, the people, and the atmosphere.
He said they employed over 400 people at the Lawrence Plant and all
of those employees were making above the living wage with great benefits and
they were the second largest manufacturer in Lawrence. There was a payroll
of over $12,000,000 and they had invested millions in their people and the
community. In 1988 when they were scouting locations, they chose Lawrence
over Leavenworth and other locations because of the people, but mostly
because of the incentives that were offered. They promised at that time 50
jobs, but they were now at over 400 jobs. He said they continued to invest
in the community and the community, AMARR Garage, and the citizens who
worked for them repeated the rewards.
He said if they were offered an abatement with strings attached, they
would not be there and when contemplating an expansion, that proposal would
put serious doubt in his mind.
He said the Commission might ask that if AMARR was paying the living
wage, why would AMARR be opposed to this? He felt in the long run it would
be bad for Lawrence and its people. In might have the ripple effect of
increasing wages to non-tax abated companies that might cause other
companies wishing to relocate here or expand to cross Lawrence off its list.
The cost to the City for a company that did not locate there was extremely
high. It was hard for him to imagine Lawrence without AMARR and their 400
jobs, but this proposal would have the unintended negative consequences far
beyond what those well intentioned proponents said. He asked the Commission
not to adopt that proposal, but if they did, he urged the Commission to take
the time, on this important issue, and carefully consider the Chambers
balanced approach.
Frank Male, Co-Owner of Lawrence Landscape, addressed how the
proposal would affect his business. He said he began with 2 men and a truck
and they had grown in the last 16 years to 31 person team with 22 trucks,
various trailers, mowers, bobcats, trenchers, and tractors. He said they
were one industrial zoned shop, one holding yard, and a tree farm all of
which property taxes were paid. He said last year their payroll was over
$900,000. He said they did landscape design and installation, seeding,
sodding, retaining walls, turf and tree fertilization, irrigation systems,
and mowing for residential and commercial customers.
He said at the time when their business started to grow, East Hills
Business Park was getting started. The businesses that located out there,
most of which had tax abatement or taxpayer financial assistance, played an
important part of the growth of Lawrence Landscaped. Some of the companies
that they had worked for that have had tax abatements included, AMARR Garage
Door, API Foils, Golf Course Superintendents Association, Micro-Tech
Computers, Berry Plastics, Reuter Organ, Pro-Vanguard, Prosoco,
Sauer-Danfoss, and the new spec building at the East Hills Business Park.
He said with a mandated wage proposal in place, he doubted that they would
have been able to install those projects, mow, trim, and fertilize them once
they were up and going. The basis for this comment was in the proposal
where it talked about subcontractors. The coverage requirements stated that
a business with any number of employees that subcontracts with a covered
employer to assist the covered employer in performing tasks including, but
not limited to building service tasks as well as the initial construction,
that the covered employer undertook on the property for a project that was
subject to City financial assistance, then he would become a covered
employer as well. It was his understanding that Lawrence Landscape
subcontracts with a company and received financial assistance, they get
caught up in the web of regulations concerning the living wage.
If API Foils expanded their plant and received financial assistance
from the City, and also if he was lucky enough to get the bid, then he would
need to certify that all his employees made the mandated wage of $9.53 an
hour plus health benefits of $1.50 an hour. He said since he was now a
covered employer and if he subcontracted with Pine Family Farms, then as a
covered employer, he would need to certify that their payroll was compliant
with the mandatory wage and health insurance coverage. This process held
true even for maintenance work, such as the fertilizing and mowing of the
grass, until five years after the abatement ended.
He said those were a lot of hoops to jump through and the net affect
of that was that a tax abated project in Lawrence, if it made it through the
whole process, would cost the companies substantially more than the normal
market rate per subcontracted work. In effect the tax abated companies
would be paying a premium to do business in Lawrence, Kansas and in a real
way canceling the effect of the tax abatement. It was his belief that even
if the new abated company did not have a problem paying the mandated wage,
market forces would not let the company here or allow them to reasonably
maintain their properties. If they made it all through that process, the
only companies that would be able to provide support services would be big
firms out of Kansas City, because they already pay those wages or two men in
a truck that did not have a plan on with their growing. He said the living
wage proposal had serious flaws and needed full community review before
proceeding.
Bob Rhoton, Lawrence, was a loan officer that dealt with, and
specialized in, agri-business type companies. He said his primary focus was
specialty crops, nurseries, greenhouses, and landscaping services. He said
all of those industries and agriculture were heavy employers in seasonal and
part-time employees. He had a concern about the subcontractor section in
the ordinance. He said unless they could clarify that point and come up
with some type of consensus or get to the true intent, that subcontractor
section of the ordinance, as proposed, would totally put all the "mom and
pop" businesses out of work in Lawrence. He asked for clarification of
whether this ordinance was strictly for abated companies or other
incentives.
Bruce Boyer, Vice President of Prosoco Inc., said in 1998, they were
going through site selection to relocate their company. At that time, he
kept driving by East Hills Business Park and when they got into the formal
review status, as they looked at many communities, he became the base
advocate for the City of Lawrence. He said in those discussions, if the
proposed ordinance was in effect that would have raised questions and their
staff attorney would be called to review that ordinance. He said their
attorney would most likely inform them that they would be in a position to
commit to employment levels and be subject to substantial penalties. He
said additionally, the proposed ordinance also could subject them to
misdemeanor prosecution, civil action by the City and possibly by private
parties. He implored the Commission, not as a member of an organization
receiving tax abatement, but as a Lawrence resident who did not want this to
turn into a bedroom community.
Rich Caplan, serving on the Board of Directors for Lawrence
Technology Association (LTA), said the technology industry had a proud and
noteworthy history of producing high waged jobs as such could claim to be
truly supportive of the concept of paying employees well. However, the
Lawrence Technology Association was opposed to an ordinance that would
mandate minimum wage levels. That said, the Lawrence Technology Association
was supportive of the general concept of tying the receiving of tax
abatement benefits to positive performance in employee compensation. In
fact, the creation of incentive based tax abatement policy could be a useful
tool for recruiting new technology businesses in Lawrence as well as
encouraging the existing technology sector to expand. Such a policy would
grant the city a level of control to ensure the outcome of a higher wage and
salary base. The LTA was encouraged by the proposal put forth by the
Chamber of Commerce and believed that policy based proposals such as their
plan was preferable to ordinance. The LTA urged the City Commission to
think carefully about unintended consequences related to the use of an
ordinance as a means to encourage fair employee compensation and hoped the
Commission would strongly consider updating the City's Tax Abatement Policy
as the best means to achieve their mutual goal of creating desirable high
waged job.
Stuart Boley, Lawrence, supported the living wage ordinance. When
the City provided tax abatements to companies, it was reasonable to expect
that the City could set enforceable standards for those companies to meet.
The living wage ordinance provided enforceable standards and he urged the
City Commission to adopt that ordinance.
John Brewer, Chair of the Lawrence Unitarian Fellowship, said they
were proud that their denomination, on a national basis, was supporting the
living wage ordinance. After reviewing hundreds of grant request each year
the Unitarian Universal of Social Justice Community had chosen the Kaw
Valley Living Wage Alliance to receive on-going financial assistance. The
significance of this endorsement at the national level should not be
overlooked. He said this type of initiative placed Lawrence in a favorable
light on the national level and they hoped it would be a consideration in
the Commissioners deliberations.
Dennis Constance, speaking on behalf of K.U. Classified Staff Senate,
said establishment of a living wage ordinance did not directly impact them,
but they felt they were affected by the proposed ordinance positively. He
said many State Civil Service Workers were underpaid. He said approximately
10% of the workforce at K.U. was under the poverty guidelines for a family
of four. He said they believed that the passage of the ordinance would have
a positive secondary impact on their situation improving the context when
they tried to apply leverage to encourage better wages from the State
Legislature. He said they believed it would send an important message about
the need to recognize the moral and economic rightness of paying people
fairly. He thanked the City Commission for their actions on behalf of the
City employees because it set a good example.
He said economics, at times, seem to be complex. He personally felt
tax abatements were not a good game to play, but it was one that we were all
stuck in and had become dependent on trying to make the best of it they
could. He said they thought the passage of the living wage ordinance would
contribute to that. Economics was basically simple. Participants, which
all of us were, trade their labor for the means to buy what they could not
create for themselves. He said society, as a whole, benefit from this in
many ways. However, a key factor in the proper function of economics was
balance and that was what they thought the living wage supplied. It assured
that people could afford to fully participate in the economy. He said if
you contribute, you must get fair value for what you contribute.
Companies seeking abatement were in effect making the public a
partner. If the public were going to contribute to meeting the overhead
costs of a business, they had a right to expect a return on that investment.
If a business did not want that partner relationship, then they should not
seek an abatement.
The Kaw Valley Living Alliance statement had shown the ways in which
a living wage ordinance assured that they get the kind of return we need as
a community and they hoped that the Commission saw the validity and pass the
ordinance. One worker who could not live on what they earned for their hard
work was too many and it was a community shame.
Mohamed El-Hodiri, Lawrence, believed that the prime mover in the
United States economy was the businessperson. However, it should not be the
businessperson that made the rules of the game and changed them when they
saw fit. If you do that, then you insulate the decision maker from the
discipline of the market. He asked why a firm would want to change location
to Lawrence, Kansas or any other location. He said it was because they
expected to make money. He said if this firm so tight that two pennies
would make them go bankrupt, then he did not want that recruit that firm to
Lawrence because they would fail. He asked how much did a firm pay an
employee. He said it was the leanest that they could get away with. He
said if two people at both sides of the table had equal bargaining power
then that was a good game. However, if one of the parties were weaker then
you would not have a market solution, but an implausible solution in terms
of the wage determination. He supported the living wage because it
strengthened the bargaining position of the worker when bargaining with the
employer. If a firm did not expect to make money in Lawrence, Kansas, then
he did not want that firm here. If paying a reasonable wage would ruin
them, then that might not be the type of firm to select.
He said abatement was a sweetener. He said if a company was already
inclined to come to Lawrence and they received tax abatement, then that
company received something and they would incur an obligation.
Chuck Epp, Lawrence, said with the living wage initiative, people in
Lawrence had participated in one of the most widely popular and
participatory policy processes in our City's history. When being asked to
consider further all of the issues that this policy raised, he would say
they had considered a number of them in great detail and many of the most
important questions had already been addressed to great deal through
research and the discussion that they had to this point on this policy. The
process had taken almost three years. Over that time, thousands of Lawrence
citizens had registered their support for the living wage. In addition, the
policy had benefited immensely from the experience of many other cities and
counties that had adopted their own living wage policies. Throughout the
entire process of the last several years this policy had undergone quite a
number of revisions. He said this was a polished well-developed policy, but
there might be some details that needed to be addressed.
He was heartened to hear that many former opponents of the idea
endorsed it in principle. Nobody anymore, with a few exceptions, really
wanted to use our tax dollars to subsidize poverty level wages. The living
wage policy truly was an idea whose time has come.
He said on the matter of real world practicality and effectiveness,
the living wage policy looked better as time went on. A growing body of
very careful research by a number of very prominent scholars demonstrated
several positive affects from living wage policies. Those policies clearly
benefited low wageworkers. Economic research, including research that was
done by some conservative economist, clearly showed that living wage
policies really did reduce the level of poverty in the jurisdictions where
they had been enacted. Those policies also benefited employers. He said
there were a range of concerns based on a lack of information and a
speculation about what might be the worst sorts of outcomes that could
happen in Lawrence. In fact there was research that showed that those
policies where they had been enacted had positive benefits for employers.
He said when employees were paid a living wage as mandated by those
local policies, employees stay in the job longer, thus reducing hiring and
training costs and employees were absent less from work, so productivity
rose.
He discussed the costs. One cost that had been raised was that a
living wage policy would harm the business climate in this City. He said
what was heard was speculation and concern based on a lack of familiarity
with how those policies actually work in the cities where they had been
adopted. A careful study done by Andrew Elmore at New York University,
based on interviews with Economic Development officials, and other
stakeholders in the cities and counties where those policies had been
adopted, found two points. One point was that adoption of a tax abatement
policy did not harm the ability of a city to draw in business. The second
point was the adoption of a living wage policy improved the business climate
in one key way which was it lowered the level of ranker between opponents of
local economic development policies and proponents of them. In a sense it
brought on board, in support of an economic development policy, those folks
who in the past had said, "this policy did not help them or people like
them, it merely costs them additional tax dollars." He said those studies
had been done by very respected and prominent economists. He said the
living wage was a win/win policy. It had widespread support in Lawrence,
real world practicality and effectiveness because many of those who
initially opposed the policy in Lawrence now supported that policy.
He asked if the city should allow tax abated firms to pay temporary
or part-time workers less than a living wage. He said the answer was no.
He said there might need to be some detail in the language on how that could
be achieved, but in principle the answer should be no. If the city policy
exempted temporary or part-time works, then even well meaning managers of
tax abated firms would replace their low wage full time workers with
part-time or temporary workers to pay them less than the required living
wage. Such a living wage policy would contain within itself an escape
hatch.
He said the other issue of detail was how to address the issue of
subcontractors. He strongly suspected that the concerns that were raised
were concerns that would not be real concerns in a real implementation of
this policy. He thought it could be dealt with, but if not, the policy
could be revised in appropriate manner before it was passed to address those
concerns.
He said the City of Lawrence deserved a real living wage policy, one
that would guarantees that no workers in tax abated firms, at any time, were
paid less than a living wage. It was clear that most of the citizens of
Lawrence did not want to subsidize poverty.
Carl Kurt, member of the Board of Director of the Boys and Girls
Club, said one of his concerns was that the Boys and Girls Club did meet all
of the thresholds outlined in the proposed ordinance. Another concern was
if the club was interpreted as being under that proposal, it would cost the
club approximately $52,000 a year. He said that was approximately the costs
that it took to run one of their seven sites. He hoped as a board member
that he would not be put into a position of supporting the conditions of
that proposal in serving children in this community. He asked the
Commission to make sure to look at the fine print and that non-profit
agencies would not fall in any way, shape, or form, under this ordinance.
David Burress, Economist with the University of Kansas, spoke on the
ideology versus the reality that was going on and how to distinguish them.
He said people were coming into this issue, not so much on what they
concretely thought was going to be done, but in terms of their deep seeded
ideological notions, fears, and beliefs. He said it tied in with an
argument 2000 years or longer in western history, which had to do with
setting prices. The traditional theory that was dominate for a long time
was the "Just Price Theory," which said the worker was worthy of his hire
and a person should be paid enough to reproduce their normalcy of living.
He said then there was the "Market Theory," that said you should set prices
the way that market sets them. Both of those notions were ideological and
did not work if you just did them. The "Just Price Theory" never totally
worked because you would end up with shortages and prices would need to be
changed. The "Market Theory" never worked because you would end up with
unfairness and your government would get over thrown and someone would
replace them. In reality, you did not sell those things ideologically, but
pragmatically.
He said there were only a small number of workers that would be
affected by the ordinance. He said those tax abated companies were ten out
of 2,000 employers. He did not know why they were spending so much time on
this issue. He asked the Commission to adopt the ordinance because it was
the right thing to do and it was a small number of people.
He said there were some more pragmatic issues that should be looked
at. The enforcement question was a pragmatic issue and he thought the City
would not be to heavy handed on how to enforce that and it would give the
City a bad reputation.
He said the issue of subcontracting was a practical issue that should
be handled as a policy question. He said you would need a narrow definition
of subcontracting or if there was a broader policy goal which was moving to
a minimum wage you would want to pick out certain industries and those
industries that would be picked out would be able to come up with the funds
to support the minimum wage because they were subcontracting to fairly
well-off companies. He supported the narrower definition of subcontracting.
He talked about the ideology of industrial location. He studied this
issue and would discuss the academic approach to that and come back to the
"pop" economic version that was heard. In the academic approach the
assumption was that businesses were rational and they had a goal. That goal
was to maximize profits and if the goal was to maximize profits and they
were trying to decide where to locate, they would go to a place that had
characteristics and one of those was the least cost of production and the
second characteristic would be factors that were not covered in that cost
notion.
He talked about costs minimization. When talking about minimizing
cost, you need to look at all of the costs and compare cost across different
places. He said every two years he did a study comparing Kansas to six
surrounding states and they talk about what were the costs of doing business
and if depended upon the type of firm you were. He said what has been found
was that Kansas was an average cost state when taking everything into
account. He said once the cost of doing business in Kansas was looked at,
they look at who was succeeding and growing. He said traditionally the
highest costs state in the area was Colorado and it was also the fastest
growing. The lowest cost state was Oklahoma and it was also the slowest
growing. He said all those things that support growth end up increasing
costs.
He asked if people would stay away from this City based on the
reputation effect that the City would get because the Commission passed a
tiny change in tax abatement that affected a small number of people. He
asked if businesses were going to be so irrational as to base their decision
on that. He was an economist and thought companies would base their
decisions on profits.
John Hardman, Jayhawk Bowling, said his company received a tax
abatement several years ago. He said they were a small family company that
was started in his father's garage on Louisiana and they out grew that
location and other locations. He said several other communities asked them
to come to their community and they were on their way out until they found
out that they might be eligible for a tax abatement in Lawrence. He said as
abated company, they felt like a third rate citizen in this community.
There were a lot of people who felt like they were subsidizing and paying
their labor rate. He said they paid $800,000 in labor last year for their
fourteen full-time employees and a few part-time employees. He said from
day one it had to be proven that they had at least a 1.25 positive impact on
the City before they were able to get that abatement. He said as City
Commissioners, they did not need this ordinance, they had the right and
responsibility to look at every single company that applied for an abatement
and decide if it was a benefit to the majority of people in Lawrence or if
it was not good for the people of Lawrence. If the decision was to be made
by their company now, he was sure they would not stay in Lawrence. He asked
the Commission to look at this abatement ordinance and how it would affect
small family businesses that had grown and how it would affect them and give
future Lawrence people the same opportunity that they had. He said they had
been a good citizen of Lawrence and an important part of the lives of their
employees.
Kerry McGee, Lawrence, was in favor of the living wage ordinance. A
lot of the talk seemed to be about money. He said running a city took
money, but it needed to be about more than just money. He wanted to live in
a town where he felt like people could make a living wage on a city wide
level. He felt ashamed that a lot of the people that were concerned about
the subcontractors and they were implying that they wanted to be able to
continue to pay poverty wage for the price of doing business. He said there
was something wrong with that thinking. If he was not mistaken, this
country had the largest disparity between management and workers or laborers
and Lawrence was not immune to that. He said for the people who were
concerned about having to pay a living wage, they might just look at some of
their upper level management and give them a wage increase freeze because it
was not that much to pay for a living wage. He liked the ripple effect from
the subcontractors having to pay a living wage. He thought that would start
something that might eventually become a city wide ordinance with the
exceptions of non-profit organizations or restaurants whose employees
received tips as part of their wage. He wanted to see companies that had
the same type of ideology that wanted to treat their employees well because
there were socially responsible companies out there. If they were known as
a city that provided a living wage for its people, this City could attract
the right type of companies.
He said if a company came to Lawrence and all they thought of was the
bottom line and money, there was no guarantee that they would not use the
abatement for ten years and then leave. If it was just about bottom line,
then he would not like that company to settle here.
Graham Kreicker, Kaw Valley Living Wage Alliance, was against the
local minimum wage law, but what was being discussed was a living wage
ordinance. The City of Santa Fe, New Mexico had a minimum wage law which
could be a good or bad thing, but that was not being discussed and he wanted
to clarify the semantics because they were talking about a living wage
ordinance.
He said Mr. Pine's farm had been in the family for five generations
and he wanted to assure Mr. Pine that there was nothing in the ordinance
that was being proposed that would have any impact on his farm if their
ordinance was passed.
He said there had been some comments about the length of their
document. He did not know the length of the City of Lawrence traffic
ordinance, but if they took that down to one line which said, "That
ordinance was voluntary so everyone drive safe and obey the laws," he
thought that would not work well. He said their ordinance was eleven pages
and the proposal for the Chamber for a new tax abatement policy would be
eleven or twelve pages as well. The point was not the length of the
document, but the effectiveness and enforcement capabilities.
He said their ordinance was reviewed and passed by the New York
University Law Faculty and their interpretation of that ordinance was that
it was a very fine and enforceable ordinance and the interpretations that
had been attempted to be made, did not necessarily apply.
He said as a member of the Chamber of Commerce, he was not in favor
of anything other than an ordinance that would make it so any company that
came here and accepted a tax abatement, had to pay a living wage.
He said there was an article in the paper last week concerning
average salaries from abatements. He said two people had previously said
that only 7% of the people were making less than the living wage and that
was what their ordinance was about. He said any ordinance or tax abatement
policy that did not include full-time and temporary and part-time workers
would be unenforceable.
He said it was mentioned about a company coming to town and leaving
at the end of their abatement. He said that was exactly what happened with
Davol. Davol came to Lawrence in 1990 and asked for a tax abatement which
was granted in 1991, but only Vice Mayor Rundle had the foresight to say
that it would not work. The company stayed for 10 years and never met their
quota on the number of full-time employees and never paid the wages they
were supposed to. He said three months after their abatement ran out, they
closed the plant to move to Mexico. The taxpayers, retailers, and
homeowners in this city gave $890,000 to $1,000,000 in tax abatements to
Davol. The year they said they were leaving, the CEO made 2.4 million
dollars and had $657,000 in stock options. He said this was what they
wanted to prevent in the future and that was why they clearly stated that an
ordinance was needed that said, "Any tax abated firm must pay a living
wage." It was not the responsibility of the City to give subsidies to
companies that were creating poverty wage jobs.
Caleb Morse, Chair, Lawrence Association of Neighborhoods, supported
the living wage ordinance. The ordinance under consideration was quite
limited in its scope, affecting only business that accepted tax abatements
from the City. However, if our tax abatement policy was to have the desired
effect, businesses receiving abatements must be required to pay their
employees a living wage. The City awarded tax abatements with the
anticipation that a company would benefit Lawrence by creating good jobs for
its residents. If the City forgave taxes in this way without ensuring that
those jobs pay a living wage, then the City's tax abatement policy failed in
two ways. It failed the employees of those companies themselves, as it
enables creation of job that did not afford the workers a decent standard of
living. It also failed the taxpayers of Lawrence. Indeed, taxpayers who
supported low wage work through tax abatements pay twice: once when they
forgave corporate taxes and once when they subsidized that low wage work
through their support of social service agencies that made up for the
deficit.
Data showed that employees who earned a living wage were better
workers, both more reliable and more productive. Common sense said that
even with this modicum of financial security, they would be better parents,
better citizens, and, as they contributed more to the local economy, even
better consumers. Finally, a benefit that LAN held to be particularly
important was workers who earned a living wage were more likely to own their
own homes, and essential element in building strong stable neighborhoods
throughout the community. He urged the Commission to adopt the ordinance.
Greg Divilbiss, Lawrence, addressed Mr. Kreicker's comments regarding
Davol. It was his understanding that Davol received an abatement of 50% of
approximately $890,000 to a $1,000,000 that was robbed from the citizens of
Lawrence as they left town. He said Davol leaving was certainly an
unfortunate situation and was not something the City wanted. On the reverse
side of that coin, Davol brought $890,000 to a $1,000,000 in taxes over that
ten year period of time and he thought they should be commended even if they
did not meet their objectives on the abatement. He said what programs they
would need to cut if they had to cut $100,000 a year out of the budget. He
asked how many restaurants those employees ate at and how much shopping did
they do. He was emotional about Davol because they did bring something
positive to the community as well as they did something fairly despicable at
the same time.
He said it was admirable for the Living Wage Alliance to search and
try to find a way to hold those companies accountable. He said it was
important in terms of, not only the way that the policy was handled towards
abated companies, but the way the polices were handled towards any aspect of
the community. In the companies that did receive benefits should return
something to the community.
During the election campaign when he was running against the
Commission, he did not sign a pledge card or he did not say he was in favor,
but he said it was intriguing that companies should bring something back to
the community. He wished he would have had the foresight to come up with a
wonderful idea that created the opportunity for companies to have the
incentive to come to this community versus mandated to meet a minimum level
wage. He said his primary concern during the election was the recruiting of
companies to Lawrence and how could they bring those jobs that truly pay a
living wage to Lawrence. He encouraged the City Commission to seriously
consider the Chamber's proposal looking at the view point that it was much
better to attract a company with sugar. Some of the studies that were
talked about earlier might be valid.
He worked on a daily basis with site selectors and national realtors
and there was no question that Lawrence in the past has had a black eye
based on some of the activity that happened in regards to companies. What
this proposal did from the Chamber allowed the City to frame fair wages for
the employees in such a way that would allow the City to actually sell
Lawrence as a great place to come.
He said the Commission had heard from an overwhelming majority of the
business community that were opposed to the ordinance, but were in favor of
the living wage. He asked the Commission to take the Chamber's proposal
into consideration.
Commissioner Highberger asked Smith if it was his interpretation that
the living wage ordinance, the way that it was drafted, would apply to the
sod installation activities for Mr. Pine or Lawrence Landscaping.
Smith said the concerns mentioned about the School District, Boys and
Girls Club, sod contractors and others were not warranted. He said small
reforms took a lot of effort and part of the effort was replying to those
types of concerns which were valid concerns, but they were not warranted by
the language of the ordinance. This was language that had been tested in
other communities.
Commissioner Hack asked about the issue of part-time contract workers
such as Cottonwood. She would like clarification on how those types of
issues would be addressed. She asked Mr. Loch about the issue of permanent
part-time versus temporary part-time and what a typical company might do
with the issue of part-time people.
Loch said in addressing temporary or part-time workers, there were
different segments in that population that they needed to be concerned with.
He saw including a person who was a permanent part-time person who was there
everyday for four hours. He said that was much different from when you have
a part-time person working for a six week period or a two month period where
the majority of the time, in the beginning, they had spent learning the
operation.
He said concerning temporary contract employees and part-time
employees, he found that it was not beneficial to use those employees for a
long period of time because there was the risk to the employer as well, that
they would go away. He said if you press the issue to seasonal employees or
someone who did a specific task, that overtime you know it would go away so
you might not invest all of the training in that person that you would with
a permanent full-time employee.
Kreicker said regarding Cottonwood their present understanding of the
ordinance was that it would not apply to non-profit organizations and those
firms using the services of Cottonwood would contract with them and
Cottonwood would pay their employees in accordance with their abilities and
their capabilities to do various tasks and that would pay would be in
accordance with the internal mechanism of Cottonwood as a type of agency
that helped handicapped people. He said there were already state laws
covering wage manipulation for handicapped people.
Commissioner Hack asked if they would be considered subcontractors.
Kreicker said no. That was his present understanding, but they would
research that question and bring it back to the Commission for discussion
within a couple of weeks.
REVIEW STARTING HERE
Vice Mayor Rundle asked about the requirement of hiring a Chief
Compliance Officer and did that mean hiring or assigning those duties to a
designated staff person.
Smith said the exact language of the ordinance was assign an
individual or department to handle those responsibilities. Research showed
there was little cost associated with that assignment.
Mayor Dunfield called for a recess at 9:25 p.m., for five minutes.
Commissioner Schauner asked about the practical effect of the
difference between an ordinance and a policy.
David Corliss, Assistant City Manager/Legal Services Director, said
and ordinance was positive law and it was something that established
requirements on the City or private conduct. He said all of our ordinances
were codified in our City Code Book. Only city ordinances could be subject
to the prosecution in Municipal Court for those individuals who fail to meet
the standard of conduct in the ordinance.
He said our tax abatement policy was a resolution. A resolution was
also considered law under Kansas law, but it was not something you could
enforce in Municipal Court. He said there were a number of policies that
were established by resolution and it was not the type of thing where they
could prosecute and adjudicate in Municipal Court. It was possible to
establish policy documents by ordinance. Clearly tax abatement requirements
had the policy aspect, aspiring statements, or what you wanted to do and
also procedural requirements that could be part of a law. State law
required cities that were going to grant tax abatements both under the
Kansas Constitution and also tax abatement through Industrial Revenue Bonds
to have a policy on the granting of those abatements. He said it did not
speak to whether or not that policy had to be in ordinance form or in
resolution form.
A policy document that was not adopted by resolution was an
aspiration statement of the city, it was not something, for various reasons,
they decided not to put into a resolution format.
Schauner asked if the living wage ordinance was passed would it also
require an amendment to the tax abatement policy.
Corliss said yes. He said it did by its very language. He said in
Section 11, Subsection 1, there was a mandate in that ordinance that the
ordinance shall augment and in some instances supersede the City's existing
procedures for the administration of the City financial assistance.
Amendment approved by the City Commission would be made to City Resolution
6343 which was the tax abatement policy. There was that positive
requirement in that ordinance to make that change and from a practical
working standpoint change needed to be made to that tax abatement resolution
so that they could be able to have all the documents make coherent sense.
Mayor Dunfield asked about the question of resolution versus and
ordinance. When the current tax abatement policy was adopted one of the
major changes was the requirement of a performance agreement that would be a
signed contract between the City and the company receiving the abatement.
He asked if the performance agreement was affected or was its significance
changed in anyway by the fact that this was part of a resolution and not
incorporated into an ordinance.
Corliss said no. The performance agreement was a contract between
the City and the business that had successfully obtained a tax abatement and
would provide stipulations of conduct upon the part of that business as to
how they would retain that tax abatement. It was a contract, but it could
only be changed by the consent of both parties and there would be
enforcement provisions in the agreement that stated what would happen in
case of a default under that agreement.
Vice Mayor Rundle asked if a resolution was not enforceable through
Municipal Court, how a resolution was enforced.
Corliss said a resolution did not typically contain prohibited
conduct type of language. A resolution typically contained language that
sets out the procedures for a city to do certain things. For example was
the City's resolution that sets out the procedures for negotiating with
employee groups. It set out the discussion parameters between city
employees and the City administration and it sets out the roles for the City
Commission. That actually was litigated to the Kansas Appellate Courts and
that was where their learning was strengthened by what the court said the
law was and that there was really not that much of a distinction between the
resolution and an ordinance as far as what was required of the City. Both
require certain things of the City.
Vice Mayor Rundle said if a person thought a resolution had not been
followed, where would that be redressed.
Corliss said the resolution would be redressed in the courts. He
said that was exactly what happened in the case where the Firefighters took
the City to court saying that the City was not following the requirements of
the resolution.
Commissioner Schauner asked if the City's response was that the
resolution was not binding?
Corliss said that was the City's argument, but that was not what the
court eventually accepted.
Mayor Dunfield said in the case of a tax abatement where a company
failed, under the new policy that contained the performance agreement
essentially there would be language in that performance agreement that said
if you fail to meet the standard, the City could take away part or all of
your tax abatement. He asked if that was unaffected by whether they were
talking about a resolution or an ordinance.
Corliss said yes.
Mayor Dunfield asked if the Commission was to make the current tax
abatement policy an ordinance, but did not include any specific language
about fines in Municipal Court, then essentially they would still be relying
on that performance agreement as the contract between the City and the
company.
Corliss said that was a fair analysis.
Vice Mayor Rundle asked if the City would need to file a suit to
enforce it.
Corliss said the Commission would rely on the performance agreement.
The performance agreement with a tax abated company would state that those
were the requirements for performance in order to continue to retain the tax
abatement that they had been granted by ordinance. If the company fails,
there would be consequences. The consequences would be a reduction in the
tax abatement. It could be at the Commission's discretion, the repeal of
the tax abatement by another ordinance.
Commissioner Schauner asked if Corliss meant another resolution.
Corliss said Prosoco was in the final stages of completed their
construction work for their approved tax abatement. Once that work was
finalized, they would then work with the Administrative Services to send
information to the Board of Tax Appeals. In order for them to get that
Board of Tax Appeals order that would give them a tax abatement, they would
need an ordinance from the City that would state that the City was granting
the tax abatement based on earlier promises. Those companies would provide
the City with a list of personal property pursuant to the tax abatement.
Staff would then present to the Commission an abatement ordinance that would
abate that property. The abatement ordinance would be taken to the Board
of Tax Appeals and the Board of Tax Appeals, pursuant to that ordinance
would grant the tax abatement. Essentially there would be a performance
agreement that would state if the companied failed to meet those
requirements for which the company pledged in their application, the City
would reduce that company's tax abatement accordingly.
Commissioner Hack wanted to address the subcontractor's issue. She
said the Kaw Valley Living Wage Alliance's ordinance talked about
subcontractors and the issue of coverage or no coverage of companies like
Cottonwood. She asked for Corliss' interpretation of that issue.
Corliss said in Section 4 of the proposed ordinance, under Covered
Employers it stated:
Any Business that meets any of the following criteria as a Covered
Employer:
1. Businesses Benefiting from City Financial Assistance;
2. Subcontractors; and
3. City Contractors.
He said under subcontractors it stated: "A Business with any number
of employees that Subcontracts with a Covered Employer to assist the Covered
Employer in performing tasks (including but not limited to Building Service
tasks) which the Covered Employer undertakes on property or for a project
that is the subject of City Financial Assistance is Covered Employer as
well. He said the attempt was to narrow the scope of that definition so
that it only applied to business that were essentially performing tasks that
were related to the reason for the City financial assistance. He was
getting that intent, but he did not disagree with those who would interpret
it more broadly as it would possibly include anyone that had a subcontract.
He said you go to someone who delivers a pizza to a company that had
a tax abatement, their providing a service, but you don't really think of
that as a subcontract. He thought the intent was to get more at the tasks
for which the business received the assistance, but that was not what it
said. There was also an argument that there was a safe harbor. If you
contract with the City which said, "Nothing in the language of this
ordinance shall be construed as applying to business that provide a good or
service to the city without receiving City Financial Assistance. He said
someone could argue that Lawrence Landscape puts in irrigation at Prosoco
and they were covered, but they also sell goods and services to the City so
their not covered.
Mayor Dunfield wanted to focus on the intent because he thought there
was a win/win solution and there was far more common ground among the
parties then there was difference in that the City might be able to resolve
that issue at least in spirit, if not in the finite language.
Moved by Rundle, seconded by Schauner, to extend the meeting until
10:30 p.m. Motion carried unanimously.
Commissioner Schauner said there was common ground with respect to
everyone wanting what was best for the City, but there was a substantial
disagreement with what he read as the Living Wage Ordinance proposal and
what he saw as the Tax Abatement Policy elements document that the Chamber
presented. He thought those two documents were different both from a
pragmatic as well as from an ideological standpoint. He was not sure he
shared the same optimism as the Mayor.
Vice Mayor Rundle thanked the Chamber of Commerce, especially Larry
McElwain for the extra time spent on this issue and Lavern Squier for his
new ideas that might help the City write the first two performance
agreements. He said obviously this issue was going to take a lot of staff
review. He thought the Commission needed to address a lot of the issue
raised such as exempting not-for-profit organization, confidentiality of
records and clarifying subcontractors. He said from his understanding it did
relate to the purpose for which the abatement was given. If they were going
to abate a manufacturing firm, it would be subcontracting for someone to do
part of the manufacturing process. If it was a warehouse, it was a
subcontractor who was doing some of the distribution when it could not be
handled by the existing firm which he hoped they would come to an agreement.
In terms of the living wage policy, it had been argued that this was
an artificial minimum wage or somehow they were interfering with the market.
He acknowledged that tax abatements did that with the City's tax structure.
He said if the City wanted to attract someone with "sugar", they were doing
that with the abatement. This seemed that this was one more addition to the
ways that the City set parameters on how they were going to allow
abatements. He said there was state law that precluded retail and
warehousing and distributing that was located entirely within the state. He
said they put all those proposals through that computer model which assessed
the impact on the community. He said our tax abatement policy sets out in a
general manner the kinds of businesses that they hoped to apply it to and
some of those that they did not such as companies that would have an adverse
impact on the environment. He said those were all appropriate and this was
another appropriate way to set those parameters.
He said the City's current fiscal year 2004 Budget process made it
clear how tax generation was not unlimited and they needed to make some hard
choices so they needed to be careful where tax abatements were awarded to
have a positive effect on the community. Industrial land was a key issue in
the community in terms of it being short supply. It was one of the top
reasons that had been identified recently for a challenge to be met in terms
of expansion and relocation. He said they needed to abate firms that were
going to give the City the biggest "bang for the buck."
He agreed with Burress in that they were agonizing too long over this
issue. He pulled together some information on the wage differential that
Lawrence enjoyed with the state. He said they were lagging behind on the
average of approximately $4,000 a year in wage rates. That translated from
1996 to 2001 to $2,000,000 a year that could be in our economy if those
wages were being earned at the state average. He assumed it would continue
for 2002 and 2003. That was based on how people spent their money, 40%
would be spent on retail or $80,000,000 in our economy which meant $800,000
more in sales tax coming to the City to finance some of those things that
were cut this year. It meant 30% money by renters was spent on rental
income. He said 20% of homeowners was spent on home so that was another
$50,000,000 combined that would be put into rental and homeownership
markets. He said if this had a positive impact on the small number of wages
then it was a good thing. He was not ready to pass a minimum wage
ordinance, but certainly we would all benefit as a community if wages went
up.
He said the flip side of low wages was the cost. He said people
talked about a cost benefit analysis. He said when people earn low wages
there was a direct costs in terms of social services that were referred to.
If you compare Lawrence to Blue Valley, pay was relatively high amount of
cost such as subsidized school lunch programs and other expenses which were
paid by taxpayers. In the current budget year, it was that issue along with
other issues that caused educational programs to be cut. If base wages were
up, they would be far ahead of the game.
He said public subsidizes should go to firms that did pay a living
wage and that was not to denigrate entry level jobs because we needed those
jobs, but we should reserve tax abatements for firms that would pay higher
wages. He said it was a matter of fairness to other companies that were
paying those wage levels without an abatement.
He said in regards to whether this issue should fall under an
ordinance or a resolution, he was leaning toward an ordinance because the
state policies were state law and an ordinance was clear and firm.
Commissioner Highberger thanked everyone for the calm and civil
debate on the issue that was being discussed. He thanked the Living Wage
Alliance for keeping this issue alive and bringing it to the Commission. He
also thanked the Camber of Commerce for their creative effort. He liked the
proposal that the Chamber had brought forward, but there were a few details
that needed to be addressed. He thanked Mr. Campbell for his analysis in
pointing out some of the language that needed changing. He said it was not
his intent to pass any ordinance or policy that would impede the ability to
retain or attract business to this community. He greatly appreciated the
contributions that manufacturers had made to this community, but he was also
concerned about people who were struggling on $8.00 an hour. He said not
all of those employees from those companies could afford to live in
Lawrence. He said it was not a crisis yet, but he thought we were getting
there. He said affordable housing was becoming a big issue for companies
seeking to relocate. He wanted to continue to work with the Chamber, the
business community, and everyone to assure there was affordable housing.
He was not convinced that there was a big difference in
enforceability between a policy and an ordinance. He was firmly committed
to instituting a requirement for this community that companies receiving tax
abatements pay minimum of $9.53 an hour or 130% of the poverty level
adjusting for inflation to all of their workers. He understood the
arguments that applied to temporary and part-time workers. He was not
willing to concede that exemption. He said the Commission needed to decide
what forum whether it was polishing up the ordinance or going for
modifications of the tax abatement policy.
Commissioner Hack thanked Commissioner Highberger for his willingness
to work together. She said they had come an incredibly long way with this
issue. She was proud of the work that was done by people from Chamber, Kaw
Valley Living Wage Alliance, Manufacturers Network, AGRI-Business, and
Lawrence Technology Association, all of those people had been working hard
to keep this issue going that was of great importance. She said as
Commissioners, they received strong ideas in different areas. She said
their job as Commissioners was to look at the multiple areas and vote in way
that it did not compromise their core values and the strength of their
convictions.
She said the core values and core principles of the Living Wage
Alliance were the spirit of the ordinance. He said one of the core
principles of the Tax Abatement Policy had been the issue of enforcement and
it was something that was new with the contract between the business and the
City. All of those core principles could be covered with amendments to our
existing policy. She said that existing policy was a contractual
relationship between and the City and the existing companies and the policy
was specific in nature. According to our legal expert, it was enforceable.
She said two things needed to be addressed in the wage portion of the
company requirement and establish a wage floor and include incentives. She
said the wage floor needed to be $9.53 an hour, the 130% of the poverty
level. She said the Public Incentives Review Committee was work in progress
in that it was an area that the Commission could work on. She liked the
idea of an independent assessment of compliance. She said putting this in
as a wage provision verification to their existing policy did not run the
risk of losing one company or one job and it provided protection for
workers. She strongly hoped that they could work within their existing
policy and did not want to diminish the work of all those people that came
from such opposing views. She said they could fine tune the policy and make
it work meeting the needs of this community.
Mayor Dunfield acknowledged that they would not be having this
discussion with as much common ground if it was not for the very dedicated
and persistent efforts of the Living Wage Alliance. He also acknowledged
that the Chamber of Commerce had shown remarkable leadership over the last
few weeks in working seriously toward a real, genuine living wage for tax
abated companies and that was new.
He said one item previously mentioned was that there was a need for a
living wage policy or ordinance which was clear, implementable, and
enforceable. Those were the key elements. There were a number of specific
issues that the Commission would direct staff to address. He wanted to make
it clear that Lawrence would have a living wage as defined at 130% of
poverty level and benefits for employees of tax abated companies. He was
sure there were plenty of people in the community that disagreed with that
notion still, but he only heard a couple of argument so he would assume they
would proceed with that notion on that basis. He said the Commission had
seen two solid proposals that both include that notion as their central
goal.
He said the concern about implementation and enforceability were
where the major disagreements were and it seemed that the tax abatement
policy that was previously adopted had a good provision in the document
about enforceability and that was the performance agreement. He said the
Chambers proposal by assigning specific mathematical relationships between
performance and consequences was a good model to look at in going ahead
because it took the politics out of the decision. This was one of the
concerns that he had about the Living Wage Alliance proposal was that it did
not clearly specify exactly what the consequences would be and how they
would play out. He liked the idea of a performance agreement with specific
mathematical and clear relationship. He thought companies wanted that too
because again, it would take them out of the picture. He said the other
aspect was that because they were all in agreement or there was a strong
consensus that this living wage was to apply only to tax abated companies
and it seemed logical to make it part of the tax abatement policy. If there
was a reason that implementation and enforceability were strengthened by
having it in the form of an ordinance, then let's adopt the tax abatement
policy as an ordinance and solve that question in that way. It seemed that
the questions that were before the Commission were questions about part-time
and temporary workers, and non-for-profit organizations. He said the living
wage ordinance included exemptions for employees in training, summer student
employees, and others. Those questions, other than full-time employees,
required some serious thought.
The question of the CCO and the confidentiality of City records were
something he suggested that the City's legal staff comment on. The question
of subcontractors and when they were included and excluded was a difficult
and somehow staff needed to address that language so that it solved the
subcontractor question in way that was acceptable to everyone. He said with
all of those questions being addressed it seemed that the Commission could
go ahead with the living wage.
Commissioner Schauner discussed the comments made by Burress. He
said there was discussion about the ideology and the pragmatic view of wages
and setting prices in the market place, but he left out a third element
which was equally important and that was the emotional aspect of it. He
said Burress astutely identified this as not an issue that covered a huge
number of people in this community, but it did arouse emotions in
disproportionate numbers.
He said the comment made by the Mayor regarding ordinance versus
policy, he thought the intangible of this discussion was what was the right
thing to do which did the best job of minimize or mitigating the rank which
might exist in this community on this issue.
He said if the Commission adopted that ordinance, bringing in the tax
abatement policy as part of the ordinance and addressing the concerns
brought forward by the Mayor, it sent a message that they care about those
people. He said the City owed it to those people to say to them, with the
greatest dignity and authority, that they did value their work and believed
they were deserving of something that was at least 130% of the poverty level
for a family of three.
He said there were some issues with this proposed ordinance that
needed to be reviewed and clarified by City staff. He suggested that the
Commission look at an ordinance that would attempt to address those concerns
that were expressed and take this issue up for more discussion and
consideration by this Commission.
Commissioner Hack said a consideration needed to be made. The
Commission had heard concerns from people who were in the arena, in terms of
economic development, that this issue had potential of affecting future
workers and the City's future ability to attract businesses or expand
current businesses.
She said the questions the Mayor had addressed were legitimate
questions and she would like those questions addressed by staff. She also
would like the wage provision looked at within the tax abatement policy, add
that workers would receive 130% of the poverty level for a family of three,
and look at the enforceability of the policy. After that was completed and
the policy was amended, then the Commission could look at whether or not it
should become an ordinance.
Vice Mayor Rundle said when discussing policy versus ordinance, he
did not hear that as policy equaled resolution. He said the enforceability
in a resolution or an ordinance made him more comfortable than a stand alone
policy. He said there was a lot of grey area about what would be better.
He said a lot of the areas the Chamber addressed were fairly new and
the public did not have access to those issues. He thought those areas
could not be implemented until there was some type of process, but he did
not want those areas forgotten because there were many good ideas.
Commissioner Schauner said there was a teachable moment where a lot
of the stars were aligned on this issue and it was an opportunity that he
did not want the Commission to lose. With respect to the pledge card during
his campaign, his goal was to not lose sight of the fact that what they were
trying to do was provide a "living wage for every employee of an abated
company." He said when people would hear that this proposal was just a
policy. He thought it did not carry the significance for those who had
labored so hard on this issue.
Commissioner Hack said this was not a policy like the policy on
traffic calming devices, but a resolution which had different standards than
a policy.
Mayor Dunfield said the Commission should take up that issue after
staff had addressed it. He asked if the Commission had given staff
sufficient direction.
Wildgen said the timeframe would be important.
Vice Mayor Rundle suggested whatever time that staff needed to
address those issues.
Corliss said the Commission was expecting back a document that the
Commission would adopt that would reflect the primary policy issues that
they had set out which were staff's recommendations for clarifying language
on the issues of part-time, subcontractors, not-for-profit, enforcement, and
confidential records issues. He said the Commission also would want
companies that received tax abatement to pay 130% at least of the federal
poverty rate plus the issue of benefits. He would put in the Commission's
packet the Court of Appeals decision and more language on the issue about
the difference between a resolution and an ordinance.
Mayor Dunfield said one of the discussion items in addition to the
details of the policy proposal itself was whether that became an amendment
to the tax abatement policy, whether it became a standalone ordinance or
whether it became and amendment which was then incorporated into a tax
abatement policy that the Commission would adopt as an ordinance. He said
the Commission needed to assess what the differences were.
Corliss asked if the Commission wanted the issue of resolution versus
ordinance as a separate agenda item or did they want to see a document that
attempted to put all those issues together.
Mayor Dunfield suggested viewing all those issues together.
Commissioner Schauner asked that a tax abatement policy be placed in
their City Commission packets.
Corliss asked if the Commission wanted the information back in thirty
days.
Vice Mayor Rundle said yes, but that staff report back to the
Commission if they needed more time.
Mayor Dunfield said there was a lot of talk about the climate in
Lawrence and how they felt about business and various issues. He said this
had been a remarkable evening and a remarkable few weeks of process in
Lawrence, Kansas. He said it did send a message about this community and he
hoped the message gets out that this community was serious about economic
development, improving the quality of jobs, and hold companies to their
commitments that they make with the City. Moved by Rundle, seconded by
Hack, to extend the meeting until 10:40 p.m. Motion carried unanimously.
(21)
PUBLIC COMMENT
Mayor Dunfield called for public comment.
After hearing no public comment, Mayor Hack called for Commission
Items.
Wildgen said the City had been sued for the rental registration
issue. The Commission had the option of hiring their own attorney, but
staff assumed they would want the City Attorney, Jerry Cooley, to defend the
Commission individually as well as the City. He said if the Commission
desired the City Attorney to represent them, then the City Attorney would
like that placed on record.
Commissioner Schauner's concern was that would be an individual's
decision. He said it was not a group decision as to whether the City
Attorney represents him or not.
Mayor Dunfield requested that the City's Attorney represent him in
this manner.
Commissioners Schauner, Highberger, Hack, and Rundle also requested
that the City Attorney represent each of them.
Vice Mayor Rundle asked if this was setup as a specific
attorney-client relationship to the individual and or as a group.
Corliss said the individual Commissioners would each have
attorney-client relationship.
(22)
Moved by Schauner, seconded by Hack, to adjourn at 10:35 p.m. Motion
carried unanimously.
APPROVED:
_____________________________
David M Dunfield, Mayor
ATTEST:
___________________________________
Frank S. Reeb, City Clerk
CITY COMMISSION MEETING MINUTES - August 19, 2003
1. Bid Date Set - Sept 9 for Riverside Industrial Park sanitary sewer
project.
2. Ordinance No. 7682 - 1st Reading, "no parking" W side of Legend Trail
Dr., from 15th, S, W N, & E to its end.
3. Ordinance No. 7684 - 1st Reading, "stop signs", Perry at 5th.
4. Ordinance No. 7685 - 1st Reading, "all-way-stop" at Naismith & Allen
field House Dr/Schwegler Dr.
5. Ordinance No. 7677 - 1st Reading, amend Ord. 7515, Allen Press, exempt in
calendar year 2003.
6. Ordinance No. 7676 - 2nd Reading, Special assessment for 23rd &
Louisiana.
7. Ordinance No. 7679 - 2nd Reading, City Budget.
8. Ordinance No. 7680 - 2nd Reading, 2004 Budget property tax revenues.
9. Ordinance No. 7683 - 2nd Reading, Sanitary Sewer Rates for 2004.
10. Ordinance No. 7678 - 2nd Reading, 2004 Sanitation Rates.
11. Charter Ordinance No. 36 - 2nd Reading, 5% Guest Tax.
12. Resolution No. 6474 - Public Hearing, Sept 23, Monterey Way intersection
of Peterson S approx. 2700' to existing N terminus of Monterey Way.
13. Resolution No. 6482 - Amend Res. No. 6469, establish Speed Hump/Speed
Cushion Policy.
14. Site Plan - (SP-06-38-02) Moon Sports Bar, 821 Iowa.
15. Site Plan - (SP-07-54-03) Deck addition & sidewalk dining for Roly Poly,
818 Mass.
16. Annex request - Eastside Acquisition for 60 acres, SW corner of 23rd &
O'Connell Rd.
17. Statement of Intent - Illegal dump site on N Maine.
18. Subordination Agreement - David Blair, 1412 Brook.
19. Subordination Agreement - William Rich, 1512 East 13th.
20. City Manager's Report
21. Living Wage Ordinance.
August 19, 2003
City Commission Minutes
Page 59
_____________________________
Lisa K. Patterson
Communications Coordinator
City of Lawrence
PO Box 708
Lawrence, KS 66044
(785) 832-3406
fax (785) 832-3405
lpatterson@ci.lawrence.ks.us
http://www.lawrenceks.org