Agenda Item 17

March 20, 2012

Public Hearing

MEMORANDUM

March 16,2012

TO:

FROM:

SUBJECT:

County Council

Robert H. Drummer, Senior Legislative Attorney

~"J

(\

Public Hearing:

Bill 4-12, Economic Development - Urban Renewal - Wage

and Health Insurance Requirements

Wage and Health Insurance

Bill 4-12, Economic Development - Urban Renewal

Requirements, sponsored by Councilmembers Riemer, Ervin, Rice and EIrich, was introduced on

January 31,2012. A Planning, Housing and Economic Development Committee worksession is

tentatively scheduled for March 26 at 2:00 p.m.

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 §l1B-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 $13.20 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.

This packet contains:

Bill 4-12

Legislative Request Report

Fiscal and Economic Impact Statement

F:\LA W\BILLS\1204 EDF Wage Requirements\PH Memo.Doc

Circle

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Bill No.

4-12

Concerning: Economic Development ­

Urban Renewal - Wage and Health

Insurance Requirements

Revised: January 26,2012 Draft No.

Introduced:

January 31, 2012

Expires:

July 31, 2013

Enacted: _ _ _ _ _ _ _ _ __

Executive: _ _ _ _ _ _

~

_ __

Effective: _ _ _ _ _ _ _ _ __

Sunset Date:

-!..!N.:::::!on:..:.::e~

_ _ _ _ __

Ch. _ _, Laws of Mont. Co. _ _ __

COUNTY COUNCIL

FOR MONTGOMERY COUNTY, MARYLAND

By: Councilmembers Riemer, Ervin, Rice and EIrich

AN

ACT to:

(1)

(2)

(3)

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.

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 underlining

[[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 zmqffected by bill.

The County Council for Montgomery County, Maryland approves the following Act;



BILL

No.

4-12

1

2

3

4

5

6

7

8

9

Sec. 1. Sections 20-75 and 56-10 are amended as follows:

20-75.

Use of Fund.

*

*

*

ill

ill

As used in this subsection, a

large retail store

means any

business that:

(A) derives more than 50% of its revenue from the sale of

goods directly to the public; and

ill.)

uses at least 75,000 square feet of retail space in

location.

~

single

10

11

ill

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

Qy

the

County, that cumulatively exceeds $100,000, must:

(A) meet the wage requirements of Section IIB-33A, as if

it

were

~

covered employer under that Section; and

ill.)

offer health insurance that the Director finds substantially

satisfies the criteria described in paragraph

ill

14

15

16

17

18

19

20

21

22

23

24

25

26

27

ill

The Director, based upon information submitted

Qy

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;

ill.) the health insurance offered has

~

reasonable cost in

l.!&h!

of the compensation range for each major category of

employee; and

@-

f:\law\bills\1204 edfwage requirements\bilI6.doc



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

(s)

56-10.

(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 addition to any repayment requirements under this Section,

. the enforcement provisions of Section IlB-33ACh) apply to

noncompliance with this requirement

Qy

~

recipient of economic

development assistance.

Powers and authority of Council generally.

*

*

*

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 [such] the lease agreement.

(j;

f:\Iaw\bills\1204 edfwage requirements\bill6.doc



BILL

No.

4-12

54

55

56

57

58

59

60

61

62

63

64

65

66

67

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 ofthis Article.

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;

CA)

[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

68

69

70

71

.an

complying with the wage requirements of Section IlB­

33A and the health insurance requirements of Section 20­

~

72

73

as if it were

f!

covered employer under those

Sections, with respect to each employee of

f!

large retail

store, as defined in Section 20-75(t)(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

74

75

76

77

78

79

80

0-

f:\Iaw\bil1s\1204 edfwage requirements\bill6.doc



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;

au

the restrictions upon the use of the 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

selling, encumbering, or leasing the real property without the

prior written consent ofthe [county] CounciL

*

*

*

Roger

Berliner~ President~

County Council

Date

98

Approved:

99

Isiah

Leggett~

County Executive

Date

100

This is a correct copy ofCouncil action.

101

Linda M.

Lauer~

Clerk of the Council

Date

f:\law\bills\1204 edfwage requirements\bill6.doc



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 $100,000 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, DGS 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.

F:\LAW\BILLS\1204 EDF Wage Requirements\LEGISLATIVE REQUEST REPORT.Doc

f:\law\bills\1204 edf wage requirements\legislative request report.doc



ROCKVILLE, MARYLAND

MEMORANDUM

March

8,2012·

TO:

FROM:

Roger Berliner, President, County Council

Director, Office of

Jennifer

A.

Joseph

F.

Beach, DIrector, Department of

Hughes~

M~age~~~~~~udgeL

kf

JJ­

Fmanc~ ~

If

vq

SUBJECT:

Bill 4-12 -

Economic Development - Urban Renewal- Wage and Health Insurance

Requirements

Attached please find the fiscal and economic

impa~t

statements fOf 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 of Management and Budget

Angela Dizelos, Office ofManagement and Budget

Mary Oneda-Brown, Office of Management and Budget

Naeem

Mia,

Office of Management and Budget

Peter Bang, Department of Economic Development

Tina Benjamin, Department of Economic Development



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 expendifitres 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 througb the entire amortization period for each bill that would

affect retiree pension or group insurance costs.

Not applicable.

S. Later actions that may affect future revenue and expenditures

if

the bill authorizes

future spending.

Not available at this time.

6.

An

estimate of tbe staff time needed to implement the bill.

Since it is unlolOWll how many large retail businesses would be affected by this Bill, we

cannot detennine the required staff time.

However, lithe County Living Wage Law and the provision of health insurance becomes

a mandatory requirement for EDF or County land salellease transactions that involves a

large retail business, then the Department of Economic Development can monitor/audit

with

minimal staff time.

1



7.

An

explanation of how the addition of new

staff'

responsibilities would arcect other

duties.

Indeterminate because the total increase in staff time needed to implement this Bill is

currently

unkn()wn.

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 IlScal impact, why that

is

the case.

Not applicable.

12. Other fiseal impacts or comments.

None at

this

time.

13. The following contributed to and concurred with this analysis:

Peter Bang, CbiefOperating Officer, Department of Economic Development

Tina

Be~amin,

Chief of Special Projects, Department of Economic Development

Mary Oneda-Brown, Office ofManagement and Budget

Naeem Mia, Office of Management and Budget

Angela

Dizelos, Office

of

Management and Budget

1 .

er

A. H

es,

Director

Office of

Management

and

Budget

2

(j)



...

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

DevelQpment Fund to comply with the County Living Wage Law.

Bill

4-12 (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 large 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 ofits revenues

from

the sale of goods directly to the public, and

uses

at least 75,000 square feet ofretail

space

in

a

single location.

1. The sources ofinformation, assmnptions, and methodologies used.

According to data from the Bureau of Labor Statistics, U.S. Department of Labor. there

were a tota144,080 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

$601wbich translates to an average hourly wage of$15.02 for a forty (40) hour work

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 ofspeci:fic information

regardingthe compensation and benefits for employees in large retail stores the economic

impact ofthis legislation is difficult to detennine at this time.

According to information provided by the Department ofEconomic Development,

Economic Development Funds (EDF) 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 ofany variable that could affect the economic impact estimates.

As discussed under item #1, the number ofemployees working

in

large retail stores

earning less than $13.20

is

not available. This variable is relevant to determine the

economic impact Because such data are not available, an economic impact estimate

. cannot be calculated

with

any precision.



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 County.

4. If a Bill is likely to have no economic impact, why is that the case?

It'is 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 Mike

Coveyou, Finance

h F.

each,

Director

Department of Finance .

Date·

@