PHED Item 3
September 10, 2012
Worksession 2
MEMORANDUM
TO:
FROM:
Planning, Housing and Economic Development Committee
Robert H. Drummer, Senior Legislative Atto:ney
Jacob Sesker, Sentor LegislatIve Analyst
(f?;r
fllcJ
fl~
SUBJECT:
Worksession 2:
Bill 4-12, Economic Development
Health Insurance Requirements
Urban Renewal- Wage and
Expected attendee:
DED Director Steve Silverman is expected to attend.
Bill 4-12, Economic Development - Urban Renewal
Wage and Health Insurance
Requirements, sponsored by Councilmembers Riemer, Ervin, Rice and Eirich, was introduced on
January 31, 2012. A public hearing was held on March 20 and a Planning, Housing and
Economic Development Committee worksession was held on March 26.
Background
Bill 5-02, Procurement - Service Contracts Wage Requirements, was enacted by the
Council on June 11, 2002 and signed into law by the County Executive on June 20, 2002. This
law is codified at § lIB-33A of the County Code. The Living Wage Law requires certain
businesses which provide services (but not goods) to the County to pay employees working on a
County contract a minimum living wage that was originally set at $10.50 per hour effective July
1, 2003. The law requires the Chief Administrative Officer to adjust this rate each July 1 by the
annual average increase, if any, in the Consumer Price Index for all urban consumers for the
Washington-Baltimore metropolitan area. The current living wage is $13.65 per hour. The
Living Wage Law does not require employers to provide health insurance, but employers are
given credit toward the wage rate for the cost of any health insurance provided.
Bill 4-12 would require a direct recipient or a third party beneficiary of grants in excess
of $100,000 from the Economic Development Fund who operates a large retail store to comply
with the County Living Wage Law. A large retail store means a business that derives more than
50% of its revenue from the sale of goods directly to the public in a single retail space of 75,000
square feet or more. The Bill would require these employers to offer their covered employees
health insurance that "includes coverage options that are reasonably comparable to the coverage
options then available to County employees." The Bill would also permit the Council to require
a large retail store located on property sold or leased by the County under an urban renewal plan
to comply with the Living Wage Law plus health insurance as a condition of the sale or lease.
Public Hearing
The testimony was mixed at the March 20 public hearing. Gigi Godwin, representing the
Montgomery County Chamber of Commerce (©17-18), Tom Zambetis, ZPROP Real Estate
(©19-20), Boris Lander, A
&
L Donuts d/b/a Dunkin Donuts (©21-24), and Jordan Harding,
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former Mayor of New Carrollton (©25-28), each opposed the Bill as an unnecessary burden on
new businesses that would discourage economic development in the County. Jim Humphrey,
representing the Montgomery County Civic Federation (©29) and Anthony Perez, representing
UFCW Local 400, supported the Bill as an appropriate condition on the receipt of EDF
assistance greater than $100,000. The Council also received written testimony from Ginanne
Italiano, representing the Greater Bethesda-Chevy Chase Chamber of Commerce (©30-31)
opposing the Bill as an unnecessary and counter-productive intrusion by the Council on the
Executive's authority to implement economic development policies.
March 26 PHED Worksession
Councilmembers Hans Riemer, Craig Rice, and Valerie Ervin joined the Committee for
the worksession on the Bill. DED Director Steve Silverman and Finance Director Joseph Beach
represented the Executive Branch.
The Committee discussed the legal and the policy issues presented in the staff packet.
The Committee also raised the following additional issues:
1.
2.
3.
4.
Would the Bill apply to the EDF agreement with Westfield for Costco in Wheaton
where the agreement has been approved and executed, but money has not yet been
paid?
Does the language requiring health insurance comparable to the insurance offered
to County employees need clarification?
Should the scope of the Bill be expanded to cover employers
in
other industries
who receive EDF assistance?
Should the 50% employee participation in employer-sponsored health insurance
requirement contain an exception for employees who receive coverage from other
sources?
The Committee did not make any decisions.
Issues
1.
Is the section of the Bill requiring health insurance for a covered employee
preempted by the Federal Employee Retirement Income Security Act?
The County Attorney's Bill review memorandum concludes that the section of the Bill
that requires health insurance for a covered employee is preempted by the Federal Employee
Retirement Income Security Act (ERISA). The County Attorney relies on
Retail Associates v.
Fielder,
475 F. 3d 180 (4th Cir. 2007), where the Court held that a law enacted by the Maryland
General Assembly requiring certain employers to spend at least 8% of total payroll on employee
health insurance was preempted by ERISA. The Court held that ERISA regulates the employee
benefits provided by an employer, but does not require any employer to provide a specific
benefit, such as health insurance. The law at issue in
Retail Associates
was preempted because it
was an exercise of the State's regulatory authority. The Court also stated that the law would not
have been preempted if the State was only providing an economic incentive to provide an ERISA
2
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benefit rather than mandating it. See,
California Div. of Labor Standards Enforcement v.
Dillingham Construction,
519 US 316 (1997).
The County Attorney acknowledged this distinction in footnote 1 and stated that the Bill
would not be preemp'ted if the wage and health insurance requirements apply only to direct
recipients of EDF assistance under the County's spending authority. The Bill is intended to only
apply to a direct recipient or an identified third party recipient of
assistance. However,
Council staff agrees that the Bill needs to be clarified to make this clear. Staff Amendment I at
©32 would clarify that the wage and health insurance requirements only apply to direct or
indirect recipients of assistance. Staff Amendment I would also make it clear that the wage
requirements only apply to a retail store employee for hours worked on the property and that the
employer would receive credit for providing health insurance as part of the wage requirement.
Council staff recommendation: amend the Bill with Staff Amendment 1.
2.
Does the Bill violate the Equal Protection Clause of the
14th
Amendment to
the United States Constitution because there is no rational basis for limiting
its application to large retail stores?
The County Attorney also questioned the rational basis for limiting the Bill to large retail
stores. As the County Attorney points out, unless a suspect class is involved or a fundamental
right, the equal protection clauses in the Federal and State Constitutions give the government
wide latitude to treat different groups differently.
Maryland Aggregates Association v. State of
Maryland,
337 Md. 658 (1995). The County Attorney does not opine that limiting the Bill to
large retail stores violates the Equal Protection Clause. Rather, the County Attorney suggests
that the legislative history should identify the rational basis for this limitation.
The County has a legitimate interest in ensuring that its economic development funds are
not used to bring new employers into the County who create low-paying jobs without adequate
health insurance. Large retail stores often provide low-paying jobs without adequate health
insurance despite being owned by large corporations with significant resources. The Bureau of
Labor Statistics of the US Department of Labor reported that as of December 2011 the retail
trade industry pays its non-supervisory employees less than all other industries except leisure and
hospitality. See ©33. The retail trade industry is low on both wages and benefits. One recent
study concluded that low wage Wal-Mart employees increase strain on social safety net
programs.
I
Although the retail industry produces these low-paying jobs overall without regard to
the size of the store, the corporations who own large retail stores create more of these jobs, have
more resources to break this cycle, and are more likely to seek economic development assistance.
These large retail stores are also market leaders in setting the wage and benefit market for retail
store employees. For these reasons, Council staff believes that limiting the application of the
Bill to large retail stores does not violate the equal protection clauses of the Federal and State
Constitutions.
I"Hidden Cost of Wal-Mart Jobs: Use of Safety Net Programs by Wal-Mart Workers in California," Dube and
Jacobs, 2004. One conclusion of the study was that if other large retailers adopted Wal-Mart's wage and benefits
standards the annual cost to California taxpayers would be an additional $410 million. http://laborcenter.berkele
y.edu/retail/walmart.pdf
3
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3.
Do the plain language amendments to the Urban Renewal Law
inappropriately assign executive functions to the Council in violation of the
County Charter?
The Bill does not change the existing division of duties between the Council and the
Executive in the Urban Renewal Law. As pointed out by the County Attorney, the Urban
Renewal Law was enacted before the Charter created the position of County Executive.
Therefore, the Urban Renewal Law currently authorizes the County Council to sell or lease
County-owned real property without mentioning the Executive. The Bill simply gives the
Council express authority to condition a sale or lease of real property under an urban renewal
plan on compliance with the wage and health requirements for covered retail store employees.
We agree that the Urban Renewal Law should be reviewed for comprehensive amendments to
properly assign duties between the Executive and the Council? However, these comprehensive
amendments would be beyond the scope of this Bill. Council staff recommends that these
comprehensive amendments to the Urban Renewal Law be made in a separate bill.
As pointed out by the letter from the Greater Bethesda-Chevy Chase Chamber of
Commerce (©30-31), the current Urban Renewal Law permits the Council to place conditions on
the sale or lease of real property under an urban renewal plan without listing all of the permitted
conditions. Therefore, the Council could place a retail store employee wage and health insurance
condition on a sale or lease of real property under the current Urban Renewal Law. The Bill
would simply codify this implied authority. Since the problems raised by the County Attorney
were not created by this Bill and the intent of the Bill can be satisfied without amending the
Urban Renewal Law, Council staffrecommends deleting the amendments to §56-10(s).
Council
staff recommendation:
delete lines 35 to
94
of the Bill.
4.
Does the Bill unfairly penalize an employer if a large group of covered
employees reject the offered health insurance?
Lines 28-30 of the Bill require the Director to find that "more than 50% of each major
category of employee has opted to obtain employer-provided health insurance in the current
benefit year." This is part of the analysis that the Director must do to certify that a covered
employer will meet the health insurance requirements of the BilL The Director must also find
that the health insurance offered includes coverage options reasonably comparable to options
available to County employees and is offered at a reasonable cost. If the covered employer
meets these two categories, it is likely that the employer will meet the third category requiring
50% of employees to accept the health insurance. To avoid the unlikely possibility that an
employer is offering reasonable health insurance at a reasonable price that most employees do
not accept, the Bill could be amended to permit the Director to waive this third requirement for
good cause. In addition, if the intent of the Bill is to make sure that these employees have the
opportunity to obtain health insurance at a reasonable cost, then there should be an exception for
employees who receive coverage from other sources, such as a spouse's employment.
Council staff recommendation:
amend the Bill to create this exception and permit a waiver of
this requirement as follows:
Council staff does not agree with the County Attorney's assertion that the approval of a sale of surplus property is
an executive function that cannot be retained by the Council in law. This issue was discussed in greater detail in the
packets discussing Bill 11-12, County Property - Disposition.
2
4
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Amend lines 28-30 as follows:
major category of employee has opteq
obtaiQ employer-provided health insurance in
year
Qr
the
has~l?tained
th~
current benefit
unless
health insurance Jrom
anothers9u~<::e,
employ~r
mean show gopg cause f()r failinz to meet this
5.
What is the fiscal and economic impact of the Bill?
OMB was unable to estimate a fiscal impact for the BilL See
11. Staff time
necessary to administer this requirement depends upon how many large retail employers request
economic development grants or loans over $100,000 over time and how many of those
applicants already meet the wage and health insurance requirements of the Bill.
Finance was similarly unable to estimate the economic impact of the Bill for the same
reasons. As pointed out by Finance, the Bureau of Labor Statistics, US Department of Labor,
reported a total of 44,080 retail store employees working in the County in 2010 with an average
wage of $601 per week. This would translate into an hourly wage of $15.02 per hour for a 40
hour work week, which exceeds the current County living wage of$13.65 per hour. However, it
is unclear if the average $601 weekly wage includes overtime.
3
We do not have information
about the number of retail employers in the County who offer health insurance comparable to
that offered to County employees. Therefore, it is difficult to predict if this requirement is likely
to raise wage rates for retail store employees in the County or eliminate requests for assistance
from these employers.
6.
Is the
Bill
a reasonable extension of the County Living Wage Law?
The County Living Wage Law was enacted in 2002 by Bill 5-02. Bill 19-99, Wage
Requirements Procurement, Taxes, Economic Development, introduced on June
1999,
contained similar living wage requirements. Bill 19-99 required any recipient of economic
development assistance of more than $100,000 to comply with the living wage law in addition to
County contractors. On July 19, 1999, then Council President Isiah Leggett recommended
amendments to Bill 19-99 to remove the wage requirements for recipients of economic
development assistance. See the Action packet for Bill 19-99 at ©34-46. The Council ultimately
failed to enact Bill 19-99 after a controversial public hearing and worksession. Three years later,
the Council enacted Bill 5-02, which required a living wage for workers on County service
contracts, but did not include a similar wage requirement for recipients of economic development
assistance.
Nationally, BLS statistics for December 2011 show an average hourly wage for non-supervisory retail employees
of$13.19.
It
should be noted that an average wage
of$13.19/hour
will not satisfy a minimum living wage of
$13 .19/hour unless everyone is paid the same rate.
3
5
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Requiring a living wage on County service contracts is conceptually different than
requiring the same for recipients of economic assistance in one important aspect. When the
County requires a living wage for workers on a competitively bid County service contract, the
bidders are free to include any extra employee cost in their bid. No bidder receives a competitive
advantage for paying low wages because everyone must include a living wage in their contract
bid. However, economic assistance is normally a one-time incentive to a company to move into
the County, expand its County presence, or remain in the County.
It
is not designed to
compensate the recipient for any increase in wage and benefits required by County law.
The County Living Wage Law does not require a County contractor to provide health
insurance. It gives a contractor a credit for the reasonable cost of any health insurance offered.
Bill 4-12 would remove the ability of a recipient to pay the living wage without health insurance.
Although employees without adequate health insurance are a significant drain on County
resources, compliance with this provision would be difficult for a large national retailer without
providing similar health insurance for all of its employees. A large retailer can pay a higher
wage rate for hours worked at a specific retail store located in the County without raising all
wage rates; it will be difficult to create a similar differential for health insurance. Therefore, the
result of this Bill could be to eliminate all future economic assistance agreements with large
retailers rather than raising wages and benefits paid to retail store employees.
7.
Would the Bill apply to the EDF agreement with Westfield for Costco in
Wheaton where the agreement has been approved and executed, but money
has not yet been paid?
The Bill would not amend the EDF agreement with Westfield for Costco in Wheaton.
This agreement has already been executed and partially completed. The funds have been
appropriated by the Council for this project. Council staff does not know of any other similar
agreements for a large retail store that is in progress. However, if the Committee wants to clarify
this issue, the Bill could be amended to add a transition clause that would make it clear that the
Bill would apply to an EDF agreement executed after a date certain.
8.
Does the language requiring health insurance comparable to the insurance
offered to County employees need clarification?
The Bill would require the Director to determine if the ofIered health insurance is
comparable to the insurance offered to County employees. The Committee discussed some of
the difficulties that could arise in making this decision. For example, the County currently offers
employees several choices of different types of health insurance plans at difIerent levels ranging
from a point of service plan to a health maintenance organization. Many private employers offer
their employees only one type of plan from one provider. The intent of the Bill would still be
satisfied by an employer who offers only one health plan as long as the coverage is comparable
to the County's coverage. The Bill would leave these issues to be resolved by Executive
regulation. The Bill could be amended to clarify the Council's intent, but the Director's decision
in an individual case would remain SUbjective and could result in litigation.
6
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9.
How does this
BilJ
relate to
Bill
14-12, Economic Development
Fund
­
Amendments?
Bill 14-12 would amend the EDF law to require the Executive to develop and update a
strategic economic development plan every 2 years and ensure that the incentives offered from
the EDF fund are consistent with the goals of the strategic plan. The Bill would require the
Executive and the Council to consider targeting certain industries in certain geographic areas that
would provide reasonable wages and benefits. This comprehensive approach should result in
EDF agreements that only assist employers who provide reasonable wages and benefits for most
of its employees. Bill 4-12 attempts to resolve only this
1
issue in only
1
industry. Council staff
believes that the comprehensive approach of Bill 14-12, if enacted, should eliminate the need for
Bill 4-12.
This packet contains:
Bill 4-12
Legislative Request Report
Fiscal and Economic Impact Statement
County Attorney Bill Review Memorandum
Testimony
Gigi Godwin
Tom Zambetis
Boris Lander
Jordan Harding
Jim Humphrey
Ginanne Italiano
Staff Amendment 1
December 2011 BLS Statistics for Employee Compensation
Bill 19-99 Action Packet
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Bill No. _ _ _......:-..:..:..._ _ _ _ __
Concerning: Economic Development ­
Urban Renewal - Wage and Health
Insurance Requirements
Revised: January 26,2012 Draft No.
L
Introduced:
January 31,2012
Expires:
July 31 .'--=2=0'-'1..:.3_ _ __
Enacted: _ _ _
,~
_ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
---'--'=:.:..:~
_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Riemer, Ervin, Rice and Eirich
AN
ACT to:
(1)
require payment of certain wages and benefits by an employer operating a large
retail store on property for which certain grants are received from the Economic
Development Fund;
require payment of certain wages and benefits by an employer operating a large
retail store located on property sold or leased by the County under an urban renewal
plan; and
generally require the payment of certain wages and benefits by certain employers
receiving direct or indirect financial assistance from the County_
(2)
(3)
By amending
Montgomery County Code
Chapter 20. Finance
Section 20-75
Chapter 56. Urban Renewal and Community Development
Section 56-10
Boldface
Underlining
[Single boldface brackets]
Double w1derliniqg
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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BILL
No.
4-12
1
Sec. 1. Sections 20-75 and 56-10 are amended as follows:
20-75.
Use of Fund.
2
...
.J
*
*
*
4
5
6
ill
ill
(A)
used
business that:
this subsection, a
large retail store
means any
derives more than 50% of its revenue from the sale of
goods directly to the public; and
7
8
9
LID
ill
uses at least 75,000 square feet of retail space in
location.
~
single
10
11
With respect to each employee of
~
large retail store (including an
employee of
~
contractor or subcontractor) whose primary
12
13
worksite is located on the property for which the assistance is
received, each recipient of assistance from the Fund, or of any
other economic development financial assistance offered
hy
the
County, that cumulatively exceeds $100,000, must:
14
15
16
.cAl
LID
ill
meet the wage requirements of Section IlB-33A, as if
it
were
~
covered employer under that Section; and
offer health insurance that the Director finds substantially
satisfies the criteria described in paragraph
ill
17
18
19
20
21
The Director, based upon information submitted
hy
the recipient
of assistance, must find that:
(A)
the health insurance offered includes coverage options that
are reasonably comparable to the coverage options then
available to County employees;
23
24
25
26
LID
the health insurance offered has
~
reasonable cost in light
of the compensation range for each major category of
employee; and
27
(j)­
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BILL No. 4-12
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
(Q)
more than 50% of each major category of employee has
opted to obtain employer-provided health insurance in the
current benefit year.
ill
In
~ddition
to any repayment requirements under this Section,
. the enforcement provisions of Section IlB-33A(h) apply to
noncompliance with this requirement
Qy
~
recipient of economic
development assistance.
56-10.
Powers and authority of Council generally.
*
(s)
*
*
Sale, lease, etc., ofproperty acquired.
ill
The Council may [To] sell, lease, convey, transfer or otherwise
dispose of or retain any [of such land or] property, [regardless of]
whether or not it has been developed, redeveloped, altered or
improved [and irrespective of the manner or means in or by
which] without regard to the way it [may have been] was
acquired, to any private, public or quasi-public corporation,
partnership, association, person or other legal entity.
ill
Any lease or rental agreement entered into [pursuant to) under
this Article, for any [of the purposes or objectives contemplated
by] purpose of this Article, [is hereby declared to] must be used
exclusively for business or commercial purposes:. [and the] Any
fee, interest, rent, or charge [reserved to be paid shall) payable as
~
result of the use of the property must not be [subject to
redemption) paid to [by] the lessee, tenant or their successors in
title, except [to the extent and in the manner set forth) as provided
in [such1 the lease agreement.
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BILL
No.
4-12
54
55
56
57
58
59
ill
[Such] The Council may place [property shall be subject to such]
covenants, conditions and restrictions, including covenants
running with the land, [as the county Council may deem to be
necessary or desirable] to [assist in preventing] prevent the
development or spread of future slums or blighted areas or to
otherwise carry out the purposes of this Article.
60
61
ill
The purchasers or lessees and their successors and assigns [shall
be obligated to] must devote such real property only to the uses
specified in the urban renewal planJ, and may be obligated to
comply with such] The Council may establish other requirements
on the use of the property, [as the county council may determine
to be in the public interest,] including.;.
62
63
64
65
66
®
[the obligation to begin within a reasonable time]
beginning any improvements on such real property
required by the urban renewal plan within
f!
reasonable
time; and
67
68
69
70
71
ill}
complying with the wage requirements of Section IlB­
33A and the health insurance requirements of Section
20­
72
73
na1
as if
i!
were
f!
covered employer under those
Sections, with respect to each employee of
f!
large retail
store, as defined in Section
20-75(£)(1),
(including an
employee of
f!
contractor or subcontractor) whose primary
worksite is located on the property purchased or leased.
(5)
Any sale or lease of [Such) real property [or interest therein shall
be retained, sold, leased, or otherwise transferred at not less than]
must be made at its fair value for uses in accordance with the
urban renewal plan. [In determining the] The fair value of real
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74
75
76
77
78
79
80
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BILL
No.
4-12
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
Approved:
property for uses in accordance with the urban renewal plan [,
consideration shall be given to] must consider:
(A) the uses provided in such plan;
ill}
the restrictions upon the use of
th~
property, [and]
including the covenants, conditions and obligations
assumed by the purchaser or lessee or by the County
[council] retaining property; and
(Q) [and] the [objectives of such plan for the prevention of]
need to prevent the recurrence of slum or blighted areas.
(6) The [conveyance to] Council may prohibit a private purchaser or
lessee [may provide that such purchaser or lessee shall be without
power to sell, or encumber, or lease, or otherwise transfer] from
selliI!& encumbering, or leasing the real property without the
prior written consent ofthe Icounty] Council.
*
*
*
Roger Berliner, President, County Council
Date
98
Approved:
99
Isiah Leggett, County Executive
Date
100
101
This is a correct copy ofCouncil action.
Linda M. Lauer, Clerk of the Council
Date
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LEGISLATIVE REQUEST REPORT
Bill 4-12
Economic Development Urban Renewal
~
Wage and Health Insurance
DESCRIPTION:
This bill would require an employer operating a large retail store on
property for which a grant of more than
$lOO,OOO
is received from
the Economic Development Fund to comply with the County Living
Wage Law and offer reasonable health insurance. The Bill would
also permit the Council to place similar requirements on an employer
operating a large retail store located on property sold or leased by the
County under an urban renewal plan.
County economic development funding does not always result in new
jobs that provide an employee with a reasonable wage and benefits.
Ensure that County economic development funds are only used to
create jobs that provide an employee with a reasonable wage and
benefits.
DED Director, DOS Director
To be requested.
To be requested.
To be requested.
To be researched.
Robert H. Drummer, Senior Legislative Attorney, 240-777-7895
To be researched.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
Not applicable.
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\ L-L
L
ROCKV~LE,
MARYLAND
067129
MEMORANDUM
March 8,2012
TO:
FROM:
SUBJECT:
Roger Berliner, President, County Council
Jennifer
A.
Hughes,
Office of
Budge'
Joseph F. Beach, Direcror, Depar1ment
ofFinanc~~
Bill 4-12 - Economic Development - Urban Renewal
Requirements
Director~
Managem~~t~
if
M
lJ-.
v't
Wage and Health Insurance
Attached please find the fiscal and cconomic impact statements for the above-referenced
legislation.
JAH:nm
c: Kathleen Boucher, Assistant Chief Administrative Officer
Lisa Austin, Offices of the County Executive
Joy
Nurmi,
Special Assistant to the County Executive
Patrick Lacefield, Director, Public Infonnation Office
Alex Espinosa, Office ofManagement and Budget
Angela Dizelos, Office of Management and Budget
Mary Oneda-Brown. Office of Management and Budget
Naeem
Mia,
Office ofManagement and Budget
Peter Bang, Department ofEconomic Development
T.ina Benjamin, Depar1ment ofEconomic Development
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Fiscal Impact Statement
Bill 4-12 -
Economic Development - Urban Renewal­
Wage and Health Insurance Requirements
1. Legislative Summary.
Bill 4-12 would require an employer operating a large retail store on property for which
grants in excess of $100,000 are received from the Economic Development Fund (EDF)
to comply with the County Living Wage Law, and offer their employees
health
insurance
that "includes coverage options that are reasonably comparable to the coverage options
available to County employees."
The
Bill
would also require
a
large retail store located on property sold or leased by the
County under
an
urban renewal plan to comply with the County Living Wage Law plus
health insurance as a condition of the sale or lease.
2. An estimate of changes in County revenues and expenditures regardless of whether
the revenues or expenditures are assumed in the recommended or approved budget.
Includes source of information, assumptions, and methodologies used.
We are currently unable to estimate the revenue impact to the County associated with this
Bill,
since it is dependent on the decisions made by private-sector firms. There would not
be any increase in expenditures associated
with
this BilL
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
No expenditure increases over the next
6
fiscal years.
4.
An
actuarial analysis through the entire amortization period for each bill that would
af(ect retiree pension or group insurance costs.
Not applicable.
5. Later actions that may affect future revenue and expenditures
if
the bill authorizes
future spending.
Not available at this time.
6.
An
estimate of the staff time needed to implement the
bill
Since it
is
unknown how many large retail businesses would be affected by
this
Bill, we
cannot determine the required stafftime.
However,
if
the County Living Wage Law and the provision of health insurance becomes
a
mandatory requirement for EDF or County land salenease transactions that involves a
large retail business, then the Department of Economic Development can monitor/audit
with minimal staff time.
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7.
An
explanation of how the addition of new staff responsibilities would affect other
duties.
Inrletenninate because the total increase in staff time needed to implement this Bill is
currently unknown.
8.
An
estimate of costs when an additional appropriation
is
needed.
Not applicable.
9. A description of
any
variable that could affect revenue and cost estimates.
Not available at
this
time.
10. Ranges of revenue or expenditures that are uncertain or difficult to project.
All
revenues
and
expenditures are difficult
to
project at this time.
11.
If
a bill
is
likely to have no TlScal impact, why that is the case.
Not applicable.
12. Other fiscal impacts or comments.
None at this time.
13. The following contributed to and concurred with this analysis:
Peter Bang, Chief Operating Officer, Department of Economic Development
Tina
Benj~
Chief of
Special
Projects, Department of Economic Development
Mary
Oneda-Brown,
Office
of Management and Budget
Naeem
Mia,
Office ofManagement and Budget
Angela Dizelos, Office of Management and Budget
~A.
H
es, Director
Office ofManagement and Budget
~~
2
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Economic Impact Statement
Council Bill 4-12
Economic Development - Urban Renewal- Wage and Health Insurance Requirements
Background:
This proposed legislation would require an employer operating a large retail store on
property for which
grants
in excess of $100,000 are received from the Economic
Development Fund to comply '\\ith the County Living Wage Law. Bil14-12
(Bill)
would
also require these employers
to
offer their employees health insurance that is reasonably
comparable to coverage available to County employees. The Bill would also authorize
the Council to require a Jarge retail store located on property sold or leased by the County
under an urban renewal plan to comply with the Living Wage Law and health insurance
requirements prior to sale or lease
A large retail store is defined as one that derives more than 50 percent of its revenues
from the sale of goods directly to the public, and uses at least 75?OOO square feet ofretail
space in a single location.
L The sources of infonnation, assumptions, and methodologies used.
According to data from the Bureau of Labor Statistics, U.S. Department
ofLabor~
there
were a total 44,080 employees working at retail establishments
in
the County
in
calendar
year 2010, the latest date for which data are available. The average weekly wage
was
$601.which translates to an average hourly wage of$15.02 fur a forty (40) hour :vvork
week. Therefore, that average hourly wage rate is above the $13.20 per hour living wage.
However, data are not available on the number ofretail employees in the County who
eam below the living wage and whether they have health insurance that is comparable to
the County's coverage options. Therefore, because ofthe lack ofspecific information
regarding the compensation and benefits for employees
in
large retail stores the economic
impact of this legislation is difficult to detennine at
this
time.
According
to
information provided by the Department of Economic Development,
Economic Development Funds (BDF) have never been issued directly to large retail
store. Since retail
is
not one of the special focus areas of the EDF
it
is not likely that the
subject legislation would have any quantifiable economic impact.
2. A description of any variable that could affect the economic impact estimates.
As discussed under item #1, the number ofemployees working
in
large retail stores
earning less than $1320 is not available.
This
variable is relevant to determine the
economic impact. BeC!iuse such data are not available, an economic impact estimate
.cannot be calculated with any precision.
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3. The Bill's positive or negative effect,
if
any on employment, spending, saving,
investment, incomes, and property values in the County.
For reasons presented in
items 1
and
2, it is
not possible to determine either the
Bill's
positive or negative effect on employment and wage and salary income in the ComIty.
4. If a Bill
is
likely to have no economic impact, why
is
that
the case?
Ris
unknown
without specific data whether
the Bill
will have an economic impact.
5. The
following contributed to and concurred
with this
analysis: David Platt and 11ike
Coveyou, Finance
h F. each, Director
Department of Finance .
~~).....-
Date
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OFFICE OF THE COUNTY ATTORNEY
Isiab Leggett
County Executive
Marc P. Hansen
County Attorney
MEMORANDUM
TO:
Steven Silverman, Director
Department of Economic Development
MarcP. HansentrJ4-t.,,?
County Attorney
March 17,2012
Bill 4-12, Economic Development
Urban .Renewal
Wage and Health Insurance Requirements ­
FROM:
J.I~
DATE:
RE:
At the request of Assistant Chief Administrative Officer Kathleen Boucher, the
Office of the County Attorney has conducted a legal review ofBi1l4-12. As currently drafted,
we have concluded that Bi1l4-12 raises the following legal concerns:
1)
Because Bill 4-12 is a regulatory measure, certain provisions are
preempted by the Federal Employee Retirement Income Security Act; other provisions are
beyond the authority of the County to enact because they have extraterritorial impacts.
2)
Bi114-12 imposes obligations on a subset of employers, large retail stores,
but, at this stage of the process, the legislative history fails to advance a rational explanation to
justifY imposing requirements on this limited subset of employers.
3)
The "plain language" amendments to the Urban Renewal Law
inappropriately assign to the Council executive functions.
4)
Finally, there are certain provisions ofBi1l4-12 that are unclear and may
impose significant administrative challenges to implement.
These legal concerns can be resolved by amendments to the Bill.
101 Monroe Street, Third Floor, Rockville, Maryland 20850
240-777-6740'
(lax)
240-777-6705' marc.hansen@montgomerycountymd.gov
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Steven Silverman,
Director
March
17, 2012
Page
2
BILL 4-12 IS A REGULATORY MEASURE.
Bill
4-12
provides that "each employee of a large retail store (including an
employee of a contractor or subcontractor) whose primary worksite is located on the property for
which (County economic] ... assistance is received ... that cumulatively exceeds
$100,00~''
must be paid a certain level of wages and be offered certain health insurance benefits. (SectIon
20-75
(f)
(2),
lines
10-27).
The critical threshold issue is whether this wage and health benefit requirement
imposed on large retail stores is an exercise ofthe County's spending power (i.e., the power to
impose reasonable and lawful conditions on accepting financial assistance from the County) or is
predicated on the County's power to regulate for the general welfare of the
community-i.e.
an
exercise of the County's general police power. If this requirement is based on the County's
general police power, portions of
Bi114-12
are preempted under federal law, other portions are
invalid because they are not a local law.
I
Bi1l4-12,
as CUITeritly drafted, is most likely to be interpreted by the courts as an
attempt to exercise the County's gerleral police power, because the obligations imposed under
Bill
4-12
apply to any large retail store that occupies the "property for which assistance is
received." The wage and health requirements may apply, therefore, to an entity that did not
receive economic development fund assistance from the County. As drafted, the wage and
health benefit obligation applies
in
perpetuity to any large retail store that occupies "the
property for which assistance is received.',2
Moreover, the Bill applies to any contractor or subcontractor whose employees
have a primary work site on the property. Thus, this broad language would apply to a wide array
ofbusinesses from building service and construction contractors--entities that received no
financial assistance from the County.
IfBiU 4-12 is amended to provide that the wage and health benefit requirement imposed on large retail stores only
applies to a large retail store
that
directly receives County financial assistance, the legal concerns identified in this
memorandum regarding federal preemption and local law limitations are resolved .. Generally, the County can
impose reasonable requirements as a condition to accepting financial assistance from the County.
South Dakota
v.
Dole,
483 U.S. 203,208 (1987) (Acceptance offederal hlghway funds could be conditioned on requiring states to
increase drinking age to 21, because, among other reasons, the condition was "directly related
to
one of the main
purposes for which highway funds are
expended~safe
interstate travel");
Prince George's County v. Chillum­
Adelphi Volunteer Fire Department,
275 Md. 374, 382-83, (1975) (County may impose reasonable conditions on
volunteer fire department as a condition to acceptance of County funds). These cases make clear that there
ordinarily must be some reasonable nexus between the purpose for which the government
funds
are being expended
and the conditions imposed. Therefore, if Bill 4-12
is
amended, the legislative history should make clear the nexus
between the purpose of giving economic development grants and imposing requirements on the grant recipient to
pay certain wages and provide certain health benefits
to
its
employees.
I
As a practical matter, it is hard to visualize how a large retail store would be put on notice before acquiring an
interest in property that would trigger the wage and health benefit requirements ofBill 4-12.
2
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Steven Silvennan, Director
March 17,2012
Page 3
Federal Preemption.
In
Retail Associates
v.
Fielder,
475 F.3d 180 (2007), the Fourth Circuit held that
legislation enacted by the Maryland General Assembly requiring certain employers to spend at
least
8%
of their total payroll on employee health insurance was preempted by the Employee
Retirement Income Security Act (ERISA). The Fourth Circuit held that "the vast majority of
health care benefits that an employer extends to an employee qualifies as an 'employee welfare
benefit plan' and is therefore subject to regulation under ERISA."
ld.
at 190. The Court further
noted that ERISA " ... does not mandate that employers provide specific employee benefits but
leaves them free 'for any reason at any time, to adopt, modify, or terminate welfare plans. ",
ld.
Bill 4-12 requires private employees to provide certain benefits to its employees ,and, therefore,
conflicts with the provisions of ERISA allowing an employer to adopt, modify, or terminate its
employee benefit plan. As the Fourth Circuit noted in
Fielder,
"...
the Maryland Act [like Bill
4-12]
provides the employer with no choice but to structure their ERISA health care benefit
plans as specified by the Act", and thus falls squarely under the prohibitions on mandates on how
3
employers structure their ERISA plans.
ld.
at 193.
Local
Law.
As a charter county, Montgomery County is empowered to enact legislation to
promote the general welfare of the community. This authority is limited to the enactment of
"local" laws. A local law must be limited to the territorial boundaries ofthe County.
Holiday
Universal. Inc.
v.
Montgomery County,
377 Md. 305 (2003).
Bill 4-12, with respect to the wage requirement, does not Hmit the wage
obligation imposed on large retail employers to hours worked at large retail stores within the
County. This problem can be easily accommodated by an amendment. With respect to health
care benefits, however, the local law problem cannot be easily resolved by way of an
amendment. Health care benefits would obviously be applicable to an employee even as to that
portion of the employee's work performed outside of the County.
Equal
Protection.
The requirements imposed under Bill 4-12 are limited to a subset of employers
large retail stores. Neither the background nor the legislation, itself, sets forth a reason for
applying the minimum wage and health insurance requirements to a limited subset of employers.
Generally, when social or economic legislation is at issue, the equaJ protection
clauses
in
the federal and state constitutions allow government wide latitude.
Maryland
Aggregates Association
v.
State ofMaryland,
337 Md. 658 (1995). Unless a suspect class is
involved or a fundamental right at stake, courts will not overturn a classification scheme created
3
As to the minimum wage requirements, no similar preemption issue exists.
See, City
0/
Baltimore v. Sitnick
&
Fiery,
254 Md. 303 (1969) (City of Baltimore could impose higher minimum wage requirements on select business
than required under the Maryland Minimum Wage Law).
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Steven Silverman, Director
March 17,2012
Page 4
by a legislature unless the varying treatment of different groups is so unrelated to the
achievement of any combination of legitimate purposes that one can only conclude that the
government action is irrational.
Kirsch v. Prince George's County,
331 Md. 89 (1993).
Nevertheless, the Council should have some reason in mind for singling out large retail stores to
receive the imposition of this requirement. Therefore, we would recommend that the legislative
history demonstrate a reason why Bill 4-12 only applies to large retail stores.
THE CHARTER ISSUE-SEPARATION OF POWERS
Bill 4-12 makes a number of "plain language" amendments to the County's
existing Urban Renewal Law. These plain language amendments assign certain executive
4
functions to the Council in violation of the Charter.
The County's Urban Renewal Law was enacted by the General Assembly in
1961. In 1961, the County's Charter vested the County's legislative and executive functions in
the Council.
In
1968, the Charter was amended to provide for an elected County Executive and
vested in that Executive the executive power of the County.
See
Charter Section 201. Thus, it is
not legally appropriate for Bill 4-12 to vest executive functions in the CounciL
Bill 4-12 makes a "plain language" amendment that explicitly provides that the
Council may "sell, lease, convey, transfer, or otherwise dispose of' property in the Urban
Renewal area. (Section 56-10
(s)
(1), lines 38-43). The act of selecting a specific grantee to
receive government property and executing a legal instrument to transfer that property is an
executive function.
In a case involving the Prince George's County Council's disapproval of a
proposed sale of land to Marc Silverman, the Court of Special Appeals concluded that the
disapproval is beyond the Council's power and ordered the property conveyed to
Mr.
Silverman.
Although the Court held that the Council could appropriately determine that specific property
was "surplus" (because such a determination is legislative in nature and an appropriate check and
balance to executive power), the Court stated that "it is important to note that the [Prince
George's
J
code requires Council approval only of the County Executive's determination that the
property is surplus; not approval of the ,Prospective grantee."
Prince George's County v.
Silverman,
58
Md. App.
4],54 (1984).
.
The conveyance of County property is an executive function, and so the plain
language amendment made by Bill 4-12 to Section 56-10 (s)
(1)
providing that the Council may
It
is
clear that these amendments were intended to be technical "plain language" updates to the already existing
provisions of the Urban Renewal Law, and so the import of these amendments are almost cefUiinly inadvertent in
nature. The plain language amendments should be altered
to
clarify that the executive functions of the urban
renewal law are carried out by the County Executive.
S
A more thorough discussion of the issue of the appropriate roles of the Council and Executive
in
the disposition of
property may be found in this Office's legal analysis of Bill 11-12.
4
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Steven Silvennan,
Director
March 17,2012
Page 5
convey County property is not appropriate--although it was certainly appropriate for the 1961
Urban Renewal Law to provide that the Council may convey property in an urban renewal area
because, at that time, the Council was authorized to exercise executive functions.
Generally, government action that establishes a new plan or policy that is one of
general application or imposes some permanent code of conduct must be adopted by a legislative
act (i.e., by enacting a law).
Inlet Associates
v.
Assateague House,
313 Md. 413 (1988). An
executive act "merely looks to or facilitates the administration, execution or implementation of a
law already in force."
Silverman
at 50. Other plain language amendments to Section 56-10
appear to put into the Council's hands the implementation of the Urban Renewal Law. For
example, Bill 4-12 states that the Council may place covenants and restrictions on the
conveyance of property "to prevent the development or spread of future slums." (Section 56-10
(s) (3), lines 54-59). The Council could more specifically define in the law what those
conditions might be or require the executive
to
adopt regulations to implement this provision, but
the Council, itself, cannot exercise this function on a case-by-case basis. For the same reason,
the amendments made by Bill 4-12 to paragraphs (4) and (6) of Section 56-10 also
inappropriately vest the Council with executive functions.
AMBIGUITYIIMPLEMENTATION
CONCERNS.
Bill 4-12 defines, in part, a large retail store as any business that "derives more
than 50% of its revenue from the sale of goods directly
to
the public." (Section 20-75 (f) (1) (A),
lines 4-7). The term revenue does not specify whether the revenue is gross or net revenue.
Moreover, it is unclear whether the 50% revenue test is limited to the sales from the store at the
single location for which economic assistance was received. Finally, it is not entirely clear how
the County wil1 obtain information regarding the store's revenue for purposes of verification-­
especially over a long period of time.
If you have any questions or concerns regarding this Bill analysis, please do not
hesitate to contact this office.
cc:
Kathleen Boucher, Assistant Chief Administrative Officer
Robert Drummer, Sr. Legislative Attorney
Clifford Royalty, Chief, Division of Zoning, Land Use
&
Economic Development
John Fisher, Associate County Attorney
MPH:tjs
I:\GJ\HANSEM\Bill4-12=m=s. silverman.doc
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The Voice of Montgomery County
'='..
""'~".".
TOM McELROY, CHAIRMAN
ORI REISS, CHAIR-ELECT
GEORGETTE "GIGI" GODWIN, PRESIDENT
&
CEO
MONTGOMERY COUNTY COUNCIL
BILL 4-12, ECONOMIC DEVELOPMENT - URBAN RENEWAL - WAGE AND HEALTH INSURANCE
REQUIREIVIENTS
ZTA 12-01, COMMERCIAL ZONES - LARGE RETAIL USES
ZTA 12-02, COMMERCIAL ZONES - COMBINATION RETAIL STORES
MARCH 20, 2012
TESTIMONY BY GIGI GODWIN
MONTGOMERY COUNTY CHAMBER OF COMMERCE
Good Afternoon.
My name is Gigi Godwin and I am the President
&
CEO of the Montgomery County Chamber of
Commerce. The Chamber opposes Bill 4-12 and Zoning Text Amendment 12-02 for two
reasons:
• First, they add extra restrictions to our land use policy that will make Montgomery
County less competitive in attracting and retaining employers compared to neighboring
jurisdictions, and;
• Second, because the Chamber does not support the use of land use legislation or ZTA's
to address non-land use issues.
Montgomery County already has highly detailed Master Plans and Sector Plans for every area
of the County, as well as voluminous Zoning restrictions, and Subdivision requirements. Taken
together, our current zoning requirements direct in extremely specific ways the precise use of
every piece of land in the County.
Further regarding Bill 4-12; the Chamber opposes this bill because the goals of this legislation
reach beyond land use in that it mandates that large retail stores, which receive incentives
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from the County, abide by the living wage requirement and provide healthcare for their
employees. Instead, we suggest that you negotiate, not legislate, the many different kinds of
benefits that support the strategic job growth you are trying to achieve and preserve your
flexibility in the future.
Further Regarding ZTA 12-02: This proposal takes the current large retail store restriction from
forcing a special exception at 120,000 square feet to 50,000 square feet, which is currently
smaller than the size of the majority of combination grocery stores and pharmacy's in the
County. The County's special exception process is complicated, expensive, and unpredictable
because the end result can be ignored or overturned. The restriction set forth in this ZTA is far
too small to even be considered a reasonable proposal for change if we are ever looking to
build another grocery store in Montgomery County. We firmly believe that the current law of
seeking a special exception at 120,000 square feet should not be changed.
While the Chamber does not, as a rule, support land use legislation driven by non-land use
concerns, we do applaud Council President Berliner for working with the interested parties to
find a workable solution. ZTA 12-01, Commercial Zones - Large Retail Uses presents a scenario
with little opposition because the Council worked through their objections with the
stakeholders and found a mutually beneficial solution.
Finally, the Chamber understands and recognizes this Council's commitment to the
stewardship of our community. However, The Chamber opposes changes to the land use
policy of our County to address non-land use issues. We encourage members of the Council to
negotiate with companies who will bring jobs to our County.
For these reasons, we respectfully request a "no" voteon Bill 4-12 and ZTA 12-02.
Thank you.
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· Testimony of Tom Zambetis
Opposed to ZTA 12-02 and Bill 4-12
March 20, 2012 Hearing
Good afternoon President Berliner and Members of the County Council. My name is
Tom Zambetis. I own
M&Z
Investments, Zambetis Properties, and I own property on
Rockville Pike across from Pike Center.
I am here this afternoon to respectfully request that you vote no on Bill 4-12 and no on
zoning text amendment 12-02. Both bills would be bad for business as a whole in
Montgomery County and could directly impact me, the merchants who lease space from
me and my employees.
As I lifelong resident of Montgomery County for 51 years and a long-time small business
owner here in Montgomery County for 26 years, I have watched our county go through
major changes. I have had great success and I have also struggled along with the best
of them at times to keep up in a sagging economy.
It would seem that with today's economic realities, we should be doing everything we
can to encourage job growth and to increase our tax base. I just heard last week on the
news that the last Fortune 500 Company left our State. Instead, it seems to me that the
council both back in November with the CBA legislation and now with Bill 4-12 and ZTA
12-02 is working against good economic development that makes sense for our
businesses and our communities.
The properties that I own include The Original Pancake House a restaurant, The Men's
Warehouse, a hairdresser, Sleepys, a tailor, Right-time medical clinic, and a
chiropractor. They all welcome the prospect of a large retailer coming in across the
street and 3 of them have exercised their option to rent for another 5 years. Last week, I
met with a number of small business owners including local real estate agents, small
merchants in centers surrounding mine, restaurateurs and banks, and they all
understand the positive effects of the proposed Wal-Mart in particular on their
businesses.
The real purpose of these bills is unclear to me. Are you trying to protect me and the
small businesses in my shopping center from competition? I think competition is healthy
and I welcome the added consumer traffic that comes with larger retailers. Are you
trying to keep specific stores out of this county? I welcome the affordable shopping and
retail choice that many of these larger retailers offer.
As a member of this community and as an employer, I see a serious need in
Montgomery County today for more jobs and affordable shopping that the affected
combination retail stores would bring here. As a business person, I don't understand
why we would legislative redundant and overbearing restrictions that make it hard for
companies to do business here?
I thank you
~or
you.r time and for allowing me this opportunity to address these bills I
.
hope you
Will
consider my thoughts and vote no on ZTA 12-02 and 8iIl4-12.
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· Testimony of Tom Zambetis
Opposed to ZTA 12-02 and Bill 4-12
March 20, 2012 Hearing
Good afternoon President Berliner and Members of the County Council. My name is
Tom Zambetis. I own
M&Z
Investments, Zambetis Properties, and I own property on
Rockville Pike across from Pike Center.
I am here this afternoon to respectfully request that you vote no on Bill 4-12 and no on
zoning text amendment 12-02. Both bills would be bad for business as a whole in
Montgomery County and could directly impact me, the merchants who lease space from
me and my employees.
As I lifelong resident of Montgomery County for 51 years and a long-time small business
owner here in Montgomery County for 26 years, I have watched our county go through
major changes. I have had great success and I have also struggled along with the best
of them at times to keep up in a sagging economy.
It would seem that with today's economic realities, we should be doing everything we
can to encourage job growth and to increase our tax base. I just heard last week on the
news that the last Fortune 500 Company left our State. Instead, it seems to me that the
council both back in November with the CBA legislation and now with Bill 4-12 and ZTA
12-02 is working against good economic development that makes sense for our
businesses and our communities.
The properties that I own include The Original Pancake House a restaurant, The Men's
Warehouse, a hairdresser, Sleepys, a tailor, Right-time medical clinic, and a
chiropractor. They all welcome the prospect of a large retailer coming in across the
street and 3 of them have exercised their option to rent for another 5 years. Last week, I
met with a number of small business owners including local real estate agents, small
merchants in centers surrounding mine, restaurateurs and banks, and they all
understand the positive effects of the proposed Wal-Mart in particular on their
businesses.
The real purpose of these bills is unclear to me. Are you trying to protect me and the
small businesses in my shopping center from competition? I think competition is healthy
and I welcome the added consumer traffic that comes with larger retailers. Are you
trying to keep specific stores out of this county? I welcome the affordable shopping and
retail choice that many of these larger retailers offer.
As a member of this community and as an employer, I see a serious need in
Montgomery County today for more jobs and affordable shopping that the affected
combination retail stores would bring here. As a business person, I don't understand
why we would legislative redundant and overbearing restrictions that make it hard for
companies to do business here?
I thank you
~or
yoU! time and for allowing me this opportunity to address these bills I
.
hope you
Will
conSIder my thoughts and vote no on ZTA 12-02 and Bill 4-12.
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Testimony of Boris Lander
Zoning Text Amendment No. 12-02
and
Bill No. 4-12
(Public Hearing, March 20, 2012)
Good afternoon, President Berliner and members of the Council, and thank you for this
opportunity today. My name is Boris Lander and I am the Director of Operations for A&L
Donuts, Inc, an independently owned and operated franchise of Dunkin Donuts, we own the two
Dunkin' Donut stores in Aspen Ifill as well as 5 other locations in Olney, Bethesda, Wheaton,
and Silver Spring. The original Aspen Hill location opened 13 years ago and housed two brands,
Dunkin Donuts and its sister company, Togo's Deli sandwiches. In 2009, we opened a second
location across the street in the Northgate Shopping Center.
I have come here today to tell you that as a businessman, I am opposed to both Bill 4-12 and
ZTA 12-02. I do not think it's government's role to interfere with market forces to an extent that
it amounts to micromanaging the local economy. These bills would in effect chill any possible
conversations about bringing a number of different types of stores to Aspen Hill. Those could
include Target, Lowe's, Dick's Sporting Goods and many others that would exceed the 50,000­
square-foot limit you'd like to impose.
And what ifSafeway or Shop-Rite decided to come to compete with the sole remaining grocery
store in the area? Any negotiations with those companies that might be had about locating here
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would be over as soon as they saw the stringent requirements this council is considering passing.
How can this be good for competition and consumer choice in Aspen Hill?
The departure of BAE Systems in 2010 has significantly and negatively affected our bottom line.
Because we are located in such close proximity to that building, we drew much of our business
from employees and visitors. When BAE left, we were forced to layoff a number of employees,
as much as we hated to do it. Half a dozen full time and part time jobs were eliminated and those
jobs have not come back to this day. Due to the vanished customer base that BAE Systems had
once provided, our lunch platform, Togo's Sandwiches began to suffer and by December of2011
we extracted the entire concept from the store.
In many ways, the BAE closing is indicative of how this area's economy has been in a long slide,
regardless of the recession's impact. We have lost a number of good stores over the years, and I
don't see that trend reversing itself. Our businesses don't need protection, because if things don't
change, there will be nothing left to protect. What we do need is the help of a significant shot in
the economic arm. Please note that unlike some other parts of the county, we in Aspen Hill are
not asking for county money to affect this change. This grovvth will all be powered by the private
sector, if only the council will permit it to happen.
We are very excited at the thought of new development and increased traffic for my stores and
for the entire community. In addition, the business community as a whole is excited with the
possibilities and believes that we all will benefit from the additional traffic that Walmart will
generate. Walmart is an attractive place for many people to shop for various reasons such as
2
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price, quality and convenience. A new store in Aspen Hill will help to tum the area into a
destination for many shoppers who now go elsewhere, including to other counties. Ifwe can
make our area into a viable shopping option, people will stay here to shop, and others who now
see no reason to visit Aspen Hill will how find a compelling venue that attracts them. These new
visitors in tum will lift all the commercial boats here in Aspen Hill, and we expect a significant
period of growth that these new customers will provide. I recently met with a number of area
merchants to discuss the proposed changes to the BAE site. During this meeting, someone asked
the group collectively if anyone would be negatively impacted by a Walmart, or any such store
for that matter, coming to Aspen Hill. Not one person raised their hand.
1'd like to expand on what I mentioned earlier about jobs and job loss. Clearly, a Walmart will
bring new jobs here. And they do, contrary to popular belief, provide associates with affordable
benefit packages. The company's wage and benefit program is similar to other retailers such as
Home Depot, to which the council did not object when the company wanted to come to Aspen
Hill. Walmart pays on a similar scale to Costco--to which the county not only does not object,
but in which it has invested millions of dollars to attract a store to Wheaton. The list could go on
to include other examples, but I think you get my point. In fact, I may have to compete with
Walmart for good workers, but I am not concerned about that. In the business world, competition
is good and sharpens everyone. And if more people see Aspen Hill as an attractive place to work,
more will be willing to look for work here. That's certainly not happening now.
Please keep in mind that companies other than Walmart will be generating new jobs. As business
improves, I'll be able add more workers to replace the ones I laid off earlier. The same will be
3
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true for other businesses in the area. More sales will also contribute to more tax revenue for the
county, as will income taxes from the new workers.
I repeat: New economic development leads to more business, more jobs and more revenue for
everyone. But that should be a familiar story to the council. It's exactly the same argument made
for revitalizing communities like Silver Spring and Wheaton. I want to emphasize that the
difference here is that we're not asking for public money, only public approval.
In my opinion, passing Bill 4-12 and ZTA 12-02 would be giant steps backwards for the business
community in Montgomery County. If you think you're doing this to help me and my business,
let me disabuse you of that notion. It's time for the Council to think outside the box and take
another step to help, not hinder, an area that badly needs redevelopment and revitalization.
Thank you again for this opportunity to share my views with you. I will be happy to answer any
questions about this issue.
4
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(v
Testimony of Jordan Harding
Zoning Text Amendment No. 12-02 and
Bill
No. 4-12
(Public Hearing, March 20,2012)
Good afternoon, President Berliner and members of the Council, and thank you for this
opportunity today. I am Jay Harding and I live in Leisure World. By way of background, I have
worked extensively in economic development. I am a former seven-term mayor of New
Carrollton in Prince George's County, former President of the Prince George's County
Municipal Association which represented 28 cities and towns in Prince George's County and
Town Manager of Crofton in Anne Arundel County. I chaired the Prince George's County
Progress and Publicity Committee, a coalition of business and civic leaders supporting and
promoting economic development and was municipal advisor to the County Executive. I worked
in both elected and appointed office very closely with the Chamber of Commerce and the
Southern Prince George's County Business and Professional Women's Association.
I am here this afternoon to oppose Zoning Text Amendment 12-02 and Bill number 4-12. Both
are significant impediments to supporting a thriving business climate that inspires economic
growth.
In the main, my testimony today is not intended to go into the details and technicalities of the
legislation, but rather to focus on what I consider to be the adverse impact of this bill and zoning
text amendment. Instead of welcoming businesses to our County and promoting increased tax
revenues and job opportunity, these two measures will create still more bureaucracy and
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burdensome, redundant restrictions that will no doubt further inhibit our ability to compete with
surrounding jurisdictions, to whom we continue to lose businesses and jobs. I have said before,
and I will say it again: Montgomery County desperately needs to stay competitive - to welcome,
encourage and support large and small businesses.
Business is the lifeblood of our communities. As a former elected and appointed official, I
suggest that it is incumbent upon you to help our businesses in this county and encourage new
businesses to locate here. We frequently hear council members express concern over losing
businesses and jobs to northern Virginia, while with the other hand, they continue to propose
legislation that engenders pessimism, hesitancy and added costs. That is the effect of these two
bills.
It
would be questionable practice, particularly in light of our current economic difficulties,
to pass this legislation designed to defeat unwanted development.
Montgomery County has changed significantly over the last decade. According to demographic
studies by the County Planning Board, the number of people living here in poverty increased by
59 percent from 2000-2010. That is a dramatic rise, especially for a county like Montgomery.
This county has always prided itself on its innovative approaches to maintaining affordable
housing. But living here means more than just being able to afford housing. There is the overall
cost of living that must be taken into consideration as well. Not everyone who lives here can
afford to shop at higher-end stores. Many stores like the ones targeted by these bills provide
good quality merchandise at extremely competitive prices. They would be a boon to the less
affluent members of our communities in Aspen Hill and the surrounding area.
2
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As one of the county's major population centers with more than 50,000 residents, Aspen Hill can
support, and should have, a wide variety of shopping options. Instead, we have seen stores
closing and moving out of the area, and office vacancy at the present time in the double digits,
leaving residents with fewer choices and a less competitive shopping environment Bringing a
new store into the area will spur competition and allow people to freely choose where they wish
to shop for groceries, housewares, cleaning supplies and other needs.
New development brings much-needed jobs to the area. Again citing a Planning Board analysis,
unemployment among young people in the county increased from 14 percent to 24 percent from
2000 to 2011. These young residents need to find entry-level positions, in addition to
employment for more experienced workers. The retail industry is a competitive one, and
companies will pay competitive wages to hire good help.
I fear that we may be legislating to fix a problem that does not exist Are we working to increase
employment standards or to keep one store from coming to Aspen Hill? Is this political nuance?
I want to go back to my point about making
it
harder to do business in Montgomery County.
There are implications of passing these bills for current as well as future retailers in Montgomery
County. Many companies that have built popular retail anchors in current shopping centers also
construct stores large enough to be affected by this legislation. The list includes Walmart,
SuperGiant, Kohl's, Target, Best Buy, Bed, Bath and Beyond, Costco, and more. What kind of
message do you want to send to these companies? These stores anchor successful development
3
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and, perhaps even more important, redevelopment. So when the county goes looking for the next
anchor of some area they wish to redevelop, how do they think these entreaties will be accepted?
It
is simply bad public policy for government to meddle too closely in the internal management
of our businesses, as the consequences are impossible to predict and potentially far-reaching in
scope. Some time ago, in like venue,
The Washington Post
editorial board wrote about an earlier
attempt to tighten control over certain retailers:
For an array of reasons, Montgomery is rapidly developing a reputation as a poor
place to do business, at an enonnous cost to the county. In the decade ending in
2010, its job growth badly lagged Fairfax County's, as well as the region's. One
reason the county has fallen behind is that it has sent hostile signals to business,
developers and employers.
Those statements have relevancy today. An unwarranted intrusion into a process that is already
difficult for businesses to negotiate is not what this county, nor Aspen Hill, needs to grow and to
thrive. I urge you to reject these negative proposals.
Thank you for your time and consideration and
T
would be happy to answer questions.
4
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March 20,2012
5104 Elm St., Bethesda MD 20814
(301)652-6359
email-theelms518@earthlink.net
MCCF Testimony to Council on large retail store legislation - ZTAs 12-01 and 12-02,
and Bill 4-12
I am
Jim
Humphrey, Chair of the Planning and Land Use Committee of the Montgomery
County Civic Federation, testifYing on behalf ofthe Federation. At their March 12
meeting, MCCF delegates adopted the following resolution.
"The Federation would support Council approval ofZTA 12-01 and ZTA 12-02 ifall
large retail stores and combination retail stores addressed in the legislation required
Special Exception approval, regardless of their location."
We believe Special Exception approval would give community members and adjacent
neighbors the needed opportunities to seek legally enforceable conditions regarding such
issues as vehicular accesses to a site and vehicular and pedestrian circulation patterns on
the site, and on elements affecting compatibility (such as the location of buildings,
parking, loading bays and trash dumpsters on a site, setbacks, landscape buffering,
lighting, and hours of operation). Site Plan approval by the Planning Board does not
insure the same level of protection since it is possible for the Planning Director to
approve changes to the conditions and compatibility elements we noted above, under the
existing Limited Site Plan Amendment procedures. Such Amendments are approved by
the Board as part of the Consent Agenda, with no opportunity for public comment.
The Planning and Land Use Committee I chair made no recommendation to MCCF
delegates on Bill 4-12, deeming issues of pay and benefits offered by private employers
to be outside the purview of our committee. However, Federation delegates at the March
12 meeting introduced and adopted an emergency resolution urging Council approval of
Bill 4-12. The delegates' vote was based on their belief that it is appropriate for the
County to require minimum wage and health insurance for employees of large retail
stores if that store is located on property for which grants in excess of $1 00,000 are
received from the Economic Development Fund or on property sold or leased by the
county under an urban renewal plan.
I should note that there was some discussion of whether the term "reasonably
comparable" is a legally enforceable term, in the section of the bill calling for provisions
of health insurance coverage to be reasonably comparable to those offered County
employees. As always, we thank you for considering the views of the Civic Federation
on this matter.
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THE
GREATER
7910 Woodmont Avenw!, Suite 1204
Bethesda, MD 20814
T: (301)
552-4900
F: (301) 551-1973
stuff@bccchamber.org
www.bax/lomber:org
BETHESDA-CH:EVY CHASE
CHAMBER OF
COMMERCE
VIA EMAIL
March 20, 2012
The Honorable Roger Berliner, President
and Members of the Montgomery County Council
100 Maryland A venue, 6th Floor
Rockville, Maryland 20850
Re:
BiI14-l2, Economic Development-Urban Renewal-Wage and Health Insurance Requirements:
Oppose
Dear Council President Berliner and Members of the County Council:
On behalf of The Greater Bethesda-Chevy Chase Chamber of Commerce ("B-CC Chamber"), please accept this
letter expressing our strong opposition to Bill 4-12, Economic Development-Urban Renewal-Wage and
Health Insurance Requirements. In general terms, we understand that Bill 4-12 would require "large retail
stores" (those with at least 75,000 square feet of retail space, wherein more than 50 percent of revenues are
derived from the direct sale of goods to the public, that receive County economic development assistance in
excess of $1 00,000, or that are otherwise located on property that has been sold or leased by the County under an
urban renewal plan) to comply with the County Living Wage law and to offer health insurance coverage options
to employees and contractors which are reasonably comparable to those then available to County employees.
The B-CC Chamber views this legislation as an unreasonable interference with private enterprise and believes it
to be completely unnecessary. Pursuant to Section 20-75(e) of the Code, the County Executive, through the
Department of Economic Development ("DED"), is already authorized to require recipients of assistance from
the County Economic Development Fund ("Fund") to satisfy any performance criteria that may be specified in
the County's offer of assistance, such criteria being established at the Executive's discretion via the terms of such
offers of assistance to the extent permitted by federal, state or County laws. Because such authority already
exists, the legislative revisions proposed by Bill 4-12 appear to be designed with the sole intention of limiting
and constraining the Executive's discretion in administering the Fund. As a result, the legislation evidences a
fundamental lack of confidence by this Council of the Executive's and OED's ability to negotiate for and secure
favorable economic development outcomes. In today's business climate, where the County is truly perceived as
unfriendly to business and as losing opportunity after opportunity to more desirable neighboring jurisdictions,
such mistrust simply broadcasts the wrong message to the business community, both to large retailers and to
other employers who may be comparing the costs of doing business in the County to elsewhere.
The B-CC Chamber is also troubled by the proposed legislation's potential to serve as precedent for future
regulation of other types of private employers. For now, Bill 4-12 applies only to large retail stores (which,
since the fall of20]
1,
have been garnering disproportionate attention from this Council). However, it is
foreseeable that the legislation will simply be expanded over time to apply to each and every other type of
employer who may become politically disfavored. As a matter of policy, this is the beginning of a dangerous
and unacceptable slope.
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Council President Roger Berliner
March 20, 2012
Page Two
With specific regard to the proposed revisions to the Urban Renewal law, the B-CC Chamber would note that
Section 56-10 currently empowers the County Co unci I to require purchasers and lessees of designated County
urban renewal properties to comply with any such requirements that the Council may determine to be in the
public interest. Again, as with the proposed revisions to the Fund provisions of the Code, the County already has
the means to accomplish the general objectives of Bill 4-12. Without any obvious need for such legislative
revisions and without a valid and convincing public purpose, the B-CC Chamber is unable to view the proposed
legislation as anything more than a solution in search of a problem.
We thank you for the opportunity to comment on our opposition to Bill 4-12, Economic Development-Urban
Renewal-Wage and Health Insurance Requirements, and hope that you will include this correspondence in the
public record for this matter.
Sincerely,
~~/1&40
Ginanne
M.
Italiano,
10M
President
&
CEO
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Staff Amendment 1
Amend lines
4-19
as follows:
ill
ill
fA}
useg in this subsection,
9:
large retail store
means any business that:
derives more than 50% of its grosS revenue from the sale of goods
directly to the public; and
an
ill
uses at least 75,000 square feet
inlbe County.
retail space in
9:
single location
[(With respect to each employee of
9:
large retail store (including an
employee: of
9:
contractor or subcontractor) whose primary worksite is
located on the PLoperty for which the assistance
received, each recipienJ
oth~
om As a Gondition of receiYi.ng assistance from the Fund, or of any
economic deVelopment financial assistance offered
Qy
the County, that
cumulatively exceeds $100,000, [[must]]
a
direct
re~ipientor
an
identified
la~re.tail stQr~
third
l2ID:tx
benefi~
ofthe assistance who operates a
19cated
oD
the property for whiGh the assistance isreceived must
fA}
meet
th~
wage requirements of Section
llB-33A~
iIlch.lctiQg a
credit for the reasonable cost of the health insurance offered unQe.[
subj'llil1!g~ ~.ith re.~pect
to eacl1 retail
stor~ enJP~
for
hours work(!d ()n thellI.P...P(!I1L as
under that Section; ami
if
i!
were
9:
covered employer
an
offer health insurance that the Director finds substantially satisfies
the criteria described in paragraph
ill
10
e~fl1 cQ~ered e_rnl21o..Ye~.
@
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Table 10. Employer costs per hour worked for employee compensation and costs as a percent of total compensation: Private
industry workers, by industry group, December 2011
Benefit costs
Series
Total
compen­
sation
Wages
and
salaries
Retire-
t
Insurance
pay
.
savings
Legally
• required
benefits
Total
Paid
leave
~~~
Cost per hour worked
All workers, goods-producing industries 1 .
Construction
Manufacturing .
Aircraft manufactunng2 .....................
All workers, service-providing industries 3 .
Trade, transportation, and utilities.
Wholesale trade .....
~Retail
trade
Transportation and warehousing
Utilities
Information ...
Financial activities
Finance and insurance.
Credit intermediation and related activities
Insurance carriers and related activities ..
Real estate and rental and leasing ..
Professional
and
business services
Professional and technical services
Administrative and waste services ....
Education and health services.
Educational services ..
Junior colleges, colleges, and universities
Health care and social assistance
Leisure and hospitality ....
Accommodation and food services ..
Other services
$33.64
33.08
32.93
61.51
27.54
23.88
31.55
17.48
33.44
57.32
43.10
39.70
42.81
36.52
41.04
29.31
34.39
44.53
22.02
30.53
39.74
47.00
28.95
12.14
11.18
24.83
$22.40
23.04
21.59
39.38
19.68
16.94
22.30
13.19
21.74
35.14
29.16
26.68
28.37
24.31
27.49
21.01
24.85
32.09
16.47
21.82
29.03
33.80
20.58
9.65
8.97
18.30
$11.24
10.04
11.34
22.13
7.86
6.94
9.25
4.29
11.70
22.18
13.94
13.02
14.44
12.21
13.55
8.30
9.54
12.44
5.55
8.71
10.71
13.20
8.36
2.49
2.21
6.53
$2.19
1.37
2.44
5.88
1.92
1.42
2.14
0.79
2.38
5.03
3.92
3.27
3.66
3.15
3.52
1.97
2.55
3.70
1.11
2.36
2.91
3.74
2.26
0.39
0.31
1.53
$1.34
0.96
1.41
3.23
0.70
0.54
0.93
0.26
0.90
2.15
1.37
1.98
2.33
1.53
1.39
0.80
0.94
1.20
0.54
0.56
0.17
0.18
0.63
0.12
0.11
0.29
$3.15
2.50
3.38
6.13
2.14
2.05
2.52
1.28
3.82
5.37
4.13
3.42
3.74
3.42
3.84
2.34
2.36
2.98
1.39
2.46
3.10
3.71
2.35
0.56
0.46
1.72
$1.64
1.78
1.43
2.82
0.90
0.82
1.08
0.35
1.54
5.72
1.52
1.73
2.03
1.75
2.10
0.74
1.05
1.44
0.45
0.99
1.71
2.40
0.86
0.14
0.11
0.85
$2.92
3.43
2.68
4.07
2.21
2.10
2.58
1.62
3.06
3.90
3.00
2.63
2.68
2.37
2.71
2.45
2.64
3.12
2.06
2.34
2.82
3.17
2.26
1.28
1.21
2.14
Percent of total compensation
,
All workers, goods-producing industries 1 ...
Construction
...............................
Manufacturing.
Aircraft manufacturing2
All workers, service-providing industries 3
Trade, transportation, and utilities .
Wholesale trade .....
~
Retail trade
Transportation and warehousing
Utilities ........
Information .........
Financial activities
Finance and insurance ....
........................
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
1000
100.0
100.0
100.0
100.0
~OO.O
66.6
69.7
65.6
64.0
71.5
710
70.7
75.4
65.0
61.3
67.7
67.2
66.3
33.4
30.3
34.4
36.0
28.5
29.0
29.3
24.6
35.0
38.7
32.3
32.8
33.7
6.5
4.2
7.4
9.6
7.0
6.0
6.8
4.5
7.1
8.8
9.1
8.2
8.5
8.6
8.6
6.7
7.4
8.3
5.1
7.7
7.3
7.9
7.8
3.2
2.8
62
4.0
2.9
4.3
5.3
2.5
2.3
2.9
1.5
2.7
3.8
3.2
5.0
5.4
4.2
3.4
2.7
2.7
2.7
2.5
1.8
0.4
0.4
2.2
1.0
1.0
1.2
9.4
7.5
10.3
10.0
7.8
8.6
8.0
7.3
11.4
9.4
9.6
8.6
8.7
4.9
5.4
4.3
4.6
3.3
3.4
3.4
2.0
4.6
10.0
3.5
4.4
4.7
8.7
10.4
8.1
6.6
8.0
8.8
8.2
9.3
9.2
6.8
7.0
6.6
6.3
...................
Credit intermediation and related activities
Insurance carriers and related activities
Real estate and rental and leasing
..............................
Professional and business services
Professional and technical services
Administrative and waste services
Education and health services ................
Educational services
Junior colleges, colleges. and universities
Health care and social assistance.
Leisure and hospitality.
.....................
Accommodation and food services
.............................
Other services
100.0
100.0
100.0
~OO.O
66.6
67.0
71.7
72.3
72.1
74.8
71.5
73.0
71.9
71.1
79.5
80.3
73.7
33.4
33.0
28.3
277
27.9
25.2
28.5
27.0
28.1
28.9
20.5
19.7
26.3
9.4
9.3
8.0
6.8
6.7
6.3
8.1
7.8
7.9
8.1
4.6
4.1
6.9
4.8
5.1
2.5
3.1
3.2
2.0
3.2
4.3
5.1
3.0
1.1
1.0
3.4
6.5
6.6
8.3
7.7
7.0
9.3
7.7
7.1
6.7
7.8
10.6
10.8
8.6
1 Includes mining, construction, and manufacturing. The agriculture,
forestry, farming, and hunting sector is excluded.
2 Data are available beginning with December
2006.
3 Includes utilities; wholesale trade; retail trade; transportation and
warehousing; information; finance and insurance; real estate and rental and
leasing; professional and technical services; management of companies
and enterprises; administrative and waste services; educational services;
health care and social assistance; arts, entertainment and recreallon;
accommodation and food services; and other services, except public
administration.
Note. The sum of individual items may not equal totals due to rounding.
{)'"
(~c;~\\.)
cf'
t_..
\~~..-.;:.:. C.·~:r;+T\":;'
It
~S
- 19­
CI·'YJi)'-~iiq!...
C'c".;n
,-2'.. ..:.
i::"7.11f'.:<-."/~t::
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Agenda Item 7
August 3, 1999
Action
MEMORANDUM
TO:
FROM:
County Council
~
Michael Faden, Senior Legislative Attorney
Action:
Bill 19-99, Wage Requirements
Development
SUBJECT:
Procurement, Taxes, Economic
Economic Development,
Bill 19-99, Wage Requirements - Procurement,
sponsored by Councilmembers Andrews and Ewing, was introduced on June
22. A
public hearing was held on July
22.
This bill requires certain businesses that contract with the County, lease property
from the County, or receive certain tax credits or economic development assistance from
the County, to pay certain employees an hourly wage at least 130% of the federal poverty
standard for a family of
4
(112% if the employer pays at least 80% of the premium for
health benefits comparable to benefits offered by the County). Small employers (less
than five employees) and small contracts and leases (less than S50,000/year) and
economic development assistance (less than $100,000 cumulatively) are exempt.
At a worksession on July
27,
the Council voted (5-3) not to take further action on
Bill 19-99.
This packet contains:
Bill 19-99
Legislative Request Report
Enterprise zone amendments
Memo from Council President Leggett
Circle
#
1
8
9
I1
tfUv2-
<;
v!J5'-ll:flftJtI-
~*11j1l#4
jJO-
/WJve
rt1
c
e!tr1J
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19-99
Bill No.
Concerning:
Wage-m
Requirements
Procurement,
Taxes,
Economic
DElVelopment
Revised:
6-18-99
Draft No. 5
Introduced:
June 22,
1999
Expires:
December 22,2000
Enacted:
Executive:---------­
Effective:
Sunset Date: None
-~~~~-----
Ch.
, Laws of Mont. Co.
--~~-------
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Councilmembers Andrews and Ewing
AN
ACT
to:
(1)
(2)
(3)
(4)
(5)
require the payment of certain wages by certain contractors with the County and
lessees of property from the County;
specify the process for setting and enforcing contractual wage requirements;
require the payment of certain wages by recipients of certain business tax credits;
require the payment of certain wages by recipients of certain economic
development assistance; and
generally amend County law regarding wages paid by persons who do business
with the County.
By adding
Montgomery County Code
Chapter lIB, Contracts, Procurement Matters, and Public Ethics
Section 11 B-33A
By amending
Chapter 52,Taxation
Section 52-71
Chapter 20, Finance
Section 20-75
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Underlining
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Double underlining
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Heading or defined term.
Added to existing law by original bill.
Deleted from existing law by original bill.
Added by amendment.
Deleted from existing law or the bill by amendment.
Existing law unaffected by bill.
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The County Council for lvlontgomery County, Maryland approves the following Act:
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BILL
No. 19-99
1
Sec.
1.
Chapter lIB is amended by adding Section 11B-33A as follows:
11B-33A.
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Wage Requirements.
Scope.
Any
contract
for
procurement
of
services
or
construction,
and any lease of real property
Qy
the County to another party, must
require the
contractor
or lessee, and any subcontractor or sublessee,
to comply with the wage requirements of this Section. As used in this
Section, "covered employer" refers to any
contractor,
lessee,
subcontractor, or sublessee that is subject to the wage requirements of
this Section.
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°
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Exceptions to coverage.
This Section does not apply to:
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any covered eI)1ployer who employs fewer than
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employees;
any prime
contractor
who:
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has received less than $50,000 from the County in the
most recent 12-month period; or
{Q1
will be entitled to receive less than $50,000 from the
County in the next l2-month period;
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a~
lessee of County property if the value of the lease, on an
annual basis, is less than $50,000;
any
contract
or lease with a
public entity;
or
any covered employer to the extent that the employer is
expressly precluded fron:! complying with this Section
Qy
the
tenus of
a~
federal or state contract or grant.
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{s:1
Era~
requJrement.
Any covered employer must
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each covered employee at
least an hourly wage rate that, based on a 40-hour workweek
and
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52-week workyear, would provide the employee with an
annual income that is 130% of the current federal poverty
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Bill No" 19-99
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standard. However, if the covered employer offers each
covered employee family health benefits that are at least
comparable to the benefits the County offers its employees and
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at least 80% of the premium for those benefits, the
employer must
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each covered employee at least an hourly
wage rate that, based on a 40-hour workweek and a 52-week
workyear, would provide the employee with an annual income
that is 112% of the current federal poverty standard. As used in
this Section, "federal poverty standard" refers to the applicable
poverty level for
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family of four calculated in the most recently
available index from the U. S. Bureau of the Census, or any
successor index, that calculates poverty levels and is updated
annually.
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The Chief Administrative Officer must annually set
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regulation under method
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the wage rates required under this
subsection. Ifthe federal poverty standard is reduced from the
previous year's level, the wage rates set under this subsection
must not be less than the previous
year~s
rates.
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Exceptions to wage requirement.
The wage requirements of this
Section do not apply to any employee:
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who performs no measurable work related to any
contract
with
the County or, if the covered employer is
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lessee or sublessee
of property from the
~ounty~
whose primary worksite is not
located on
th~
property leased from the County;
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who performs seasonal or holiday duties on a short-term basis
(other than a day laborer);
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BILL
No. 19-99
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who participates in
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government-operated or -sponsored
program that restricts the earnings of or wages paid to
~!llployees
to a level below the wage required under this
Section;
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for whom
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lower wage rate is explicitly set in a bona fide
collective bargaining agreement; or
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whose primary worksite is located in an urban renewal area
designated under Chapter 56.
As used in this Section, "primary worksite" means a location where an
employee normally spends at least 20 hours in
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5-day workweek.
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Waivers.
The Director may waive any wage requirement under this
Section, after offering all parties an opportunity for an informal
hearing under Chapter 2A, only if:
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covered employee, or the employee's certified representative
for collective bargaining, shows that the employee must receive
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lower wage to be eligible for substantial government benefits
and the employee has voluntarily decided to seek those benefits
and decline a higher wage; or
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covered employer shows that it will suffer serious financial
hardship if!! must
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all or some employees the wages
required under this Section. In deciding whether to approve a
waiver under this paragraph, the Director must consider:
.CAl
the employer's overall wage scale and the ratio of
salaries and wages paid to
level employees; and
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management and
lower
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any alternative actions the employer could reasonably
take to avoid serious financial hardship.
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BILL
No. 19-99
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If the ratio of the highest and lowest salaries and wages
(calculated on an hourly basis) paid
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the employer exceeds
8: 1 the Director must not waive any wage requirement under
this
~~agraph
unless the Director finds that extraordinary
circumstances justify
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waiver.
An aggrieved
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may appeal the grant or denial of
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waiver under
this subsection to the Circuit Court under the rules for appeal of
administrative decisions. The Director must promptly list each waiver
granted under this subsection in the County Register.
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Enforcement.
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The Director must require each covered employer to certify that
the employer is aware of and will comply with the applicable
wage requirements of this Section, to keep and submit any
records necessary to show c0Il'lpliance, and to post notices
informing employees of the requirements of this Section. The
Director must actively enforce this Section and investigate
complaints of violations.
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A covered employer must not retaliate against an employee for
asserting any right under this Section or filing
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complaint of a
violation. Any retaliation is subject to all sanctions for
noncompliance with this Section.
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The sanctions of Section
11
B-33(b) which apply to
noncompliance with nondiscrimination requirements apply with
equal force and scope to noncompliance with the wage
requirements of this Section. In addition, an aggrieved
eIl'lQLoyee may
Qy
civil action enforce the payment
ofw~ges
®
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BILL
No.
19-99
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III
due under this Section or recover any unpaid wages and a
reasonable attorney's fee.
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Conflicting requirements.
If any federal, state, or County law or
regulation requires payment of
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higher wage, that law or regulation
controls. Ifany applicable collective bargaining agreement requires
payment of
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higher wage, that agreement controls.
Sec. 2. Section 52-71 is amended as follows:
52-71.
Eligibility for tax credit.
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*
*
*
To qualify for a tax credit under this Article,
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business entity must
meet the wage requirements of Section 11B-33A, as ifi! were a
covered employer under that Section, with respect to each employee
(including an employee of
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contractor or subcontractor) whose
primary worksite is located on the property for which the credit is
received during each tax year that i! receives the credit. In addition to
the recapture provisions of Section
the enforcement provisions
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of Section 11B-33A(f)
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to noncompliance with this requirement
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recipient of a credit under this Article.
Sec. 3. Section 20-75 is amended as follows:
20-75.
Use of Fund.
*
*
*
or of any other economic
Each recipient of assistance from the
development financial assistance offered
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the County, that
cumulatively exceeds $100,000 must meet the wage requirements of
Section 11
as ifi! were
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covered employer under that Section,
with respect to each employee (including an employee of a contractor
or subcontractor) whose primary worksite is located on the property
®
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BILL
No.
19-99
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for which the assistance is received during the period when
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receives
assistance. In addition to any repayment requirements under this
Section, the enforcement provisions of Section llB-33A(f) apply to
noncompliance with this requirement
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recipient of economic
development assistance.
Sec. 4.
Effective Dates.
Section lIB-33A, inserted by Section 1 of this
Act, applies to any contract or lease that takes effect on or after July 1, 2000,
including any renewal or extension of a previously-effective contract or lease that
takes effect on or after July 1,2000. Section 52-71, as amended by Section 2 of
this Act, applies to any tax credit allowed under that Section in a tax year that
begins on or after July 1,2000. Section 20-75, as amended by Section 3 of this
Act, applies to any County financial assistance first provided on or after July 1,
2000.
Approved:
148
Isiah Leggett, President, County Council
Date
149
Approved:
150
Douglas M. Duncan, County
Date
151
This is a correct copy ofCouncil action.
152
Mary
A.
Edgar, CMC, Clerk of the Council
\\CounciJ-Fs2\Cstafi\LA W\BILLS\99191ivwagc\9919biLDoc
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LEGISLATIVE REQUEST REPORT
Bill 19-99
Wage Requirements - Procurement, Taxes, Economic Development
DESCRIPTION:
Requires certain businesses that contract with the County, lease
property from the County, or receive certain tax credits or economic
development assistance from the County, to pay certain employees an
hourly wage at least 130% ofthe federal poverty standard for a
family of 4 (112% if the employer pays at least 80% of the premium
for health benefits comparable to benefits offered by the County).
Small employers (less than 5 employees) and small contracts and
leases (less than $50,000/year) and economic development assistance
(less than $100,000 cumulatively) are exempt. Employees covered
are those who work on County contracts (wherever located) or in
buildings leased or assisted by the County. The Director of
Procurement would enforce the wage requirement, and could waive it
if a business shows that serious financial hardship would result.
Employees could also sue directly to recover unpaid wages.
The County does not require employers who benefit from County
contracts or subsidies to pay a "living wage" -- that is, a wage that
lets employees escape poverty.
To require employers that benefit from County funding to pay
employees funded (directly and indirectly) by the County a wage that
is higher than the eligibility level for food stamps.
Office of Procurement, Departments of Finance and Economic
Development
To be requested.
To be requested.
To be requested.
To be researched.
Michael Faden, Council staff, 217-7905
Applies only to County contracts, leases, tax credits, economic
development assistance. Does not require action by municipal
governments.
Contract sanctions (suspension, cancellation, debarment, other
sanctions listed in individual contracts). Repayment of tax credits,
economic development assistance.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITHIN
lVfUNICIPALITIES:
PENALTIES:
f:\law\biUs\9919Iivwage\9919Irr.doc
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AMENDMENT
To Bill 19-99
BY COUNCILMEMBERS LEGGETT, BERLAGE, SILVERMAN, AND
SUBIN
PURPOSE:
exempt workers at businesses located in enterprise zones from the "living wage"
requirements
On page
4,
line 60, insert before
an urban renewal area:
an enterprise zone designated under state law or
F:ILA WIBfLLS\9919livwagelEntzone AmendmenLDoc
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AMENDMENT To Bill 19-99
BY COUNCILMEMBERS BERLAGE, LEGGETT, EWING, PRAISNER,
SILVERlVIAN, AND SUBIN
PURPOSE:
(a)
exempt busInesses involved in developing urban renewal areas or enterprise zones
(including the Silver Spring Central Business District) from the "living wage"
requirements, even if the business is not located in an urban renewal area or
enterprise zone;
(b)
make clear that the urban renewal/enterprise zone exemption continues after the
area no longer is an urban renewal area or enterprise zone.
On page
2,
after line
18
insert the following and renumber later paragraphs:
(4)
subcontract, lease, or sublease relating to land or
fuo~y
In the SIlver iPrIng Central BUSIness DIstrict, an enterprise
zone, or an urban renewal area, or In an area that was deSIgnated as
the Silver Spnng Central BUSIness Dlstnct, an
ent~rprIse
zone, or an
urlJan renewal area on or before June 22, 1999;
any person or bUSIness entity that, directly or Indirectly, receives
economic development grants, loans, tax credIts, Incentives, or other
benefIts or mducements to develop, locate, remaIn, orexpand
Il1
the
SIlver SprIng Central BUSIness Dlstnct, an enterprise zone, or an
urban renewal area, or In an area that was designated as thesITVer
~g
Central BusIness DistrIct, an eflterpnse zone, or an urban
renewal area on or before] une 22, 1999;
~ontract,
(5)
On page 4,line 60, insert tlte following after "in":
the Silver
.
.. .
On page
4,
insert before period at end oflille 61:
or an area that
.
22
On page
6,
insert after "Section,
"
on line
118,
and after line
131:
unless an exception in Section 11
B~33A(b)
applies to
~he r~cipient,
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MONTGOMERY COUNTY COUNCil
ROCKVILLE. MARYLAND
OFFICE OF THE COUNCIL PRESIDENT
MEMORANDUM
July 19, 1999
TO:
FROM:
SUBJECT:
Council members
Isiah Leggett, Council
Living Wage Legislation Adjustments
Let there be no doubt in anyone's mind; poverty within the unskilled
and semi-skilled working community in Montgomery County is a reality.
There are approximately 34,000 people living in this County in households
earning less than
$15,000
a year.
The County owes a great deal to Council members Phil Andrews and
Blair Ewing for highlighting this very complex problem of poverty in our
community, and they are to be commended. The basic concepts of the
original Living Wage legislation have been instrumental in helping to stimulate
an otherwise dormant debate regarding the tribulations of the working poor
in our County. It is clear from the responses and counterproposals that have
come forward since the introduction of this legislation that the problems of
low-salaried employees are now fully in the spotlight and deserve to be
properly addressed. I believe that our county, in the long term/ will benefit
from having this dialogue brought to the forefront.
There have been positive responses to the issue of poverty and its
implications from the County Executive/ individual Councilmembers, and the
private sector. I know the Council will carefully and expeditiously review
all
of the proposals coming over from the Executive with the hope of adopting
as many of these initiatives as our resources will reasonably permit. I also
believe we can build on the County Executive's initiatives by passing an
amended Living Wage bill.
STELLA B, WERNER COUNCIL OFFICE BUILDING, 100 MARYLAND AVE,'JUE, ROCKVILLE, MARYI_AND 20850
2401777-7900
TTY
2401777-7914
FAX
290417
7-7989
www.co~o.~D.us/coUNC1L
n
...,
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With that
in
mind, I am proposing some significant changes to the
proposed Living Wage legislation. First I would retitle the Living Wage
legislation to "the contract equity" bill. Additional changes would include the
following:
Adopt in the legislation a provision to ensure that all County
1.
employees, full or part-time, receive no less than the living wage as
defined in the original bill
Apply the "contract equity" requirements only to those
2.
organizations that have contracts with Montgomery County
Exempt from contract equity all tax credits, grants, and/or
3.
economic development assistance
Strengthen the waiver provision for exemptions from the law for
4.
reasons of financial hardship
Raise the contract exemption from $50,000 to $100,000 for
5.
each contract
6.
Phase in over 3 years the contract wage increases, starting on
July 1, 2000
1. First Year - the employer must pay
112
% of current FPL ­
$9.00/hour which comes to $18,720/year
• if health benefits are given on 75-25% basis, employer
must pay 100% of current FPL $8.03/hour
$16,700/year
2. Second Year
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the employer must pay 124% of current FPL ­
$10.00/hour $20,800/year
• with health benefits 112% of FPL - $9.00/hour
$18,720/year
3. Third Year - the employer must pay 137% of current FPL ­
$11.00/hour
-
$22,800/year
• with health benefits -- 124 % of FPL - $1 O.OO/hour
$20,800/year
It is my intention that we conclude the work on the Living
Wage/Contract Equity legislative proposals prior to our August recess.
have scheduled a worksession of the Committee-As-A-Whole on Tuesday,
July 2Th. Final action is scheduled for August 3
rd •
I am also recommending
that we continue to maintain August 5 th as a "hold to resolve any
outstanding or last minute issues before we recess.
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