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HomeMy WebLinkAbout09-25-17 Community Investment o4SOU TH 4 � ti U d W rF.nce �' 1865 OFFICE OF THE CITY CLERK KAREEMAH FOWLER,CITY CLERK COMMUNITY INVESTMENT SEPTEMBER 25, 2017 3:50 P.M. Committee Members Present: Regina Williams-Preston, Randy Kelly, Paul Tipps (citizen member), Will Smith(citizen member) Committee Members Absent: Oliver Davis, Gavin Ferlic Other Council Present: Tim Scott, Jo M. Broden, John Voorde, Dr. David Varner, Karen White Other Council Absent: None Others Present: Kareemah Fowler, Graham Sparks, Bob Palmer Presenters: Regina Williams-Preston, Marty Wolfson, James Mueller Agenda: Substitute Bill No. 48-17-Tax Abatement Amendment Committee Vice Chair Regina Williams-Preston called to order the Community Investment Committee meeting at 3:50 p.m. She introduced members of the Committee and proceeded to give the floor to the presenters. Substitute Bill No. 48-17- Tax Abatement Amendment Committeemember Paul Tipps made a motion to accept the substitute for Bill No. 48-17. Committeemember Randy Kelly seconded this motion which carried unanimously by a voice vote of four(4) ayes. Regina Williams-Preston, 838 N. Elmer Street, stated, This bill is proposing changes to our Tax Abatement Ordinance. The main change would be to codify the expectation that businesses receiving tax abatements would have to pay their employees the same amount as the City's minimum wage. Since the original form of this ordinance, we have communicated with the Department of Community Investment and the City Administration to add some language they asked for. We included clarification about tip workers and set the start time as Januar"instead of immediately. It is important to look at ways of supporting residents of South Bend. Mayor Pete has enacted a City minimum wage of$10.10 and has also talked about being a model of equal opportunity. This is one (1)way the Council can help live out those directives. She passed out a handout to Committee and Councilmembers that depicted ALICE Report numbers and 455 County-City Building•227 W.Jefferson Boulevard•South Bend,Indiana 46601 Phone 574-235-9221 •Fax 574-235-9173•TDD 574-235-5567•www.SouthBendrN.gov JENNIFER M.COFFMAN ALKEYNA M.ALDRIDGE JOSEPH MOLNAR CHIEF DEPUTY/DIRECTOR OF DEPUTY/DIRECTOR OF POLICY ORDINANCE VIOLATION CLERK OPERATIONS figures. She stated,ALICE stands for Asset Limited Income Constrained Employees. In other words, the working poor. You'll notice that fifty-three percent(53%) of people in the City of South Bend are struggling to make ends-meet. Any opportunity we have to support residents of South Bend, I think we should take advantage of that opportunity. So in this case if we are going to save a business money, it stands clear we should expect those business to reciprocate that and offer their employees decent wages. Dr. Marty Wolfson, 809 Park Avenue, stated, On the other side of the handout it shows how much individuals need to make,per hour,to meet the basic needs. It is a called a Household Survival Budget. A single adult needs to make $9.07 an hour. Of course a family needs way more than that. I think we have a perception in our minds about who the minimum wage workers really are. We tend to think they are mostly teenagers. It turns out they are not mostly teenagers. More than eighty-eight percent (88%) of people who make between$7.25 and$10.10 an hour are at least twenty(20) years old. More than twenty-five percent(25%) are parents and also fifty- six percent(56%) are women and forty-four percent(44%)have at least some college education. There has been a lot of empirical research in recent years that has challenged the idea that if we raised the minimum wage the employment would go down. The vast majority of that research indicates that there is little effect on employment raising the wage. Committee Vice Chair Williams-Preston then opened the floor to questions and comments from Committee and Councilmembers. Committeemember Will Smith stated, The agenda I received last week didn't have an updated bill and I just now got a chance to look at the amendments. When I first received a copy of the bill it felt like a punch to the stomach and I would like to get some extra time to meet with the authors of this bill. Committeemember Paul Tipps asked, Were the only changes adding the language about the tip- workers? Ms. Williams-Preston replied, Those were the only changes, yes. Dr. Wolfson stated, There was another change that changed the starting date to the first of the year next ,year. Committeemember Tipps stated, These are fairly minimal changes. Has there been any discussion about what resources we have to control the audit and compliance of this? The auditing is necessary. But do we have the willingness to enforce this ordinance? Ms. Williams-Preston replied, I don't have a clear understanding of how that would work. James Mueller, Executive Director of Community Investment with offices on the 14th floor of the County-City Building, stated,As we shared last time, enforcement would be difficult in terms of the staffing and resources we currently have. We imagine there will be a self-reporting aspect to it where the business would list their wages. There could be a potential audit. We need more detail to it. 2 Committeemember Smith stated, I do have a concern with the tip wage. I want to take more time on this. I think the majority of people impacted by this will be restaurant workers. This seems to be excessive legislation. I think this is coming with great intentions but it is not getting us where we need to go. Ms. Williams-Preston stated, This is not exempting tip workers. Committeemember Smith stated, I would like to take some extra time to get a grasp on that. There is the supply and demand curve and other basics of economics but it can go on to the Efficiency Wage Theory and the Gain Theory. Ms. Williams-Preston stated, It is just not that serious to me. My bottom line is that, look, people are poor in South Bend. That is where I'm at. Committeemember Smith interjected, And the way to bring them out of poverty is by building up business. Ms. Williams-Preston stated, That is not the way for the employee to get out of poverty. The way the employee begins to pay their light bill, water bill and feed their families, is by increasing their wage. Their employer is getting a tax-break and it seems to me it would benefit the people of South Bend employed by that employer to get paid a decent wage. And the thing is this will affect only a small number of businesses. The businesses that come to us for tax abatements already pay their employees beyond$10.10. Dr. Wolfson stated, I see Committeemember Smith may have taken some advanced economic courses, and that could be dangerous. If this were a minimum wage ordinance for the City of South Bend,there would probably be a number of tip workers that would be subject to it. But this is only, of course, companies that are receiving a tax abatement and,to my knowledge,we don't give a whole lot of tax abatements to restaurants. The tip workers are important to clarify, but it is not a significant component. Committeemember Smith stated, I guess I come from the perspective of my own experience. We started a business here twelve (12) years ago and it was my father and 1. We went around to different auto dealerships, we did the work out in the parking lots, and now he employees up to fifteen(15)people in the City. He has dreams of expanding and something like this would hurt those dreams drastically. I'm deeply conflicted because I've helped build that business and get myself out of poverty. And individuals are stating this is the way out of poverty? I am deeply conflicted. Ms. Williams-Preston stated, For me, part of why I embrace this is because I'm not just concerned about the employer. I think it is important we are friendly to development and we are pro-business. I think it is time we start figuring out how to balance that with the needs of our residents. From what I understand, it may not be a whole lot of folks and businesses that this would apply to. Councilmember John Voorde asked Committeemember Smith, Has your business applied for an abatement? 3 Committeemember Smith replied,No, not yet. We will be, barring no conflict. Councilmember Dr. David Varner stated, I think this is well-intentioned. I applaud the Mayor for going to $10.10. I see two (2) flaws to this legislation. I agree that, if this is adopted, it should be tied to the time of when the abatement is signed. There is a fundamental reality that, I think, everyone would probably recognize. You cannot tax or regulate a community into prosperity. I think the City's leadership going to $10.10 set an example which was good. The uncertainty of knowing what the rate will be for the City next year is not good. A regulatory attempt to make this happen limits businesses' ability to make decisions. What happens when the City bumps their rate again? Dr. Wolfson stated, If we are talking about a ten(10)year abatement and the rate is flat during that time, that would benefit the employee. The Mayor raised the wages for City employees, rightfully so. And we are talking about sophisticated companies. Councilmember Jo M. Broden stated, We should probably make, in somehow or in some way, the burden of the compliance on the recipient of the abatement. There is the compliance issue and I know there are specific reports on wages and salaries. How can we put that in a policy format? I want to get to the policy and the meat behind this. And if this was in effect, what would be the net impact of turning people down or approving them?Another question I hear from other Councilmembers is whether or not we are tying this to the time of abatement. Is it fixed or are we indexing the rate? I'm looking for more information on that and, if we index it, what would be a reasonable thing to tie it to? I have many individuals in my district that are supportive of this and I am well aware of the need in the community. Other than complaint-driven compliance, can we have annual notice or hearings from these companies? Maybe we can look at a quarterly or a bi- annual process. Ms. Williams-Preston stated, I think it is really important to know how to enforce these things. However,that shouldn't stop us from doing what is right and what is needed. Councilmember Randy Kelly stated, I think there is a point to be made about whether the rate should be fixed at the time of the abatement. We don't know what the City will do in the coming years and it could place an undue burden on a business. To what extent might this have a negative impact on our community? If a company considers this a burden, might they decide to hire fewer full-time workers and instead hire more part-time workers? Dr. Wolfson replied, It is not likely that part-time workers would be affected. It is certainly something that could happen. I don't think businesses would go to any extraordinary lengths to get around this. This is not an unfair burden. Committee Vice Chair Williams-Preston opened the floor to members of the public wishing to speak in favor of or in opposition to the legislation. Sue Kesim, 4022 Kennedy Drive, stated, I would like to offer a suggestion. At the time of abatement you could fix it to the City amount but it would increase incrementally by the Cost of Living Index. 4 Murray Miller, 1201 Priscilla Drive, stated, I am in favor of this. I would like to see the wage a little higher, actually. Committee Vice Chair Williams-Preston turned the floor back to the Committee for further comment or main motion. Committeemember Smith made a motion to continue Bill No. 48-17 to the October 9th Council meeting. Committeemember Tipps seconded this motion which carried by a voice vote of three (3) ayes and one (1)nay (Committee Vice Chair Williams-Preston). With no further business, Committee Vice Chair adjourned the Community Investment Committee meeting at 4:26 p.m. Respectfully Submit�ed, Regi liams-Preston, Vice Chairperson