Council Delays Living Wage Decision

By Jorge Casuso

The City Council Thursday night voted to continue studying a pioneering living wage proposal that covers businesses along the coast with no City contracts or grants, virtually guaranteeing that a final decision will not be made until after the Nov. 7 elections.

The decision came under the watchful eyes of half a dozen attorneys for sponsors of the nation's first business-backed living wage initiative, which is on the November ballot. If successful, Proposition KK, which covers businesses with city contracts and grants, would erase any living wage measure the council might pass.

Defying a demand by attorneys that the initiative not be discussed by speakers, the council - which has the option of placing the ordinance it is studying, or any other measure, on a future ballot -- allowed speaker after speaker to blast Proposition KK.

"This is related to KK," Mayor Ken Genser said near the end of the meeting. "KK would make it impossible to enact a deliberate living wage measure."

"I think it's important for government to be very, very cautious about throttling people," said Councilman Paul Rosenstein. "I think there's a very strong connection" between the proposed ordinance and the ballot initiative. "If they (the speakers) want the council to follow this process, they have to urge people to oppose KK."

In the end, the Council opted to take more time to study some of the unresolved issues raised by the unprecedented proposal, which would make Santa Monica the first city in the nation to require businesses with no municipal contracts or grants to pay a living wage.

"The Chinese might refer to this as a dangerous opportunity," City Manager Susan McCarthy told the council at the start of the meeting. "We have an opportunity to do some good. We can also do some damage in the doing."

The impacts of requiring businesses in the Coastal Zone that gross more than $3 million to pay workers at least $10.75 an hour have been analyzed in a 370-page report by Prof. Robert Pollin, a leading advocate of the living wage. Two leading labor economists have reviewed Pollin's findings and the proposed ordinance also has been the subject of a study commissioned by sponsors of the initiative.

Despite the thorough input, the council wanted some issues studied further, including the possibility of gradually phasing in the measure, as well as exempting young employees who are not the main household wage earners and businesses that can show the measure would create hardship.

The council also directed staff to further study health care costs, the way the measure treats tipped employees and alternatives to the geographic area covered by the ordinance. (The Coastal Zone runs from Fourth Street to the coast north of Pico Boulevard and from Lincoln to the coast south of Pico.) Staff also will analyze the city employee/contractor model.

"This is an immensely complex and, in many ways, overwhelming topic," said Councilman Richard Bloom. "I'm glad it's going to take more time. I don't think it's ripened to the point we can make a determination.... This dialogue is going to continue in the community."

"We sat on it for a year with nothing to chew on but rhetoric," said Councilman Michael Feinstein. "Often the wrong thing to do is cheaper and the right thing to do is more expensive. Anytime we're supporting a process where people are underpaid and have to rely on public welfare, we are creating a drag on our economic system that is hurting us all."

"I've always seen the proposal as a springboard," said Mayor Pro Tem Pam O'Connor. "You have to have some place to start. I knew from the beginning there was no single answer. You can't predict the future, but we're trying to use good tools."

"The key thing is to go slowly," said Councilman Robert Holbrook. "Economics is not a precise science by any means. I want to be very, very careful. Ask a lot of questions, and then we need to move forward very carefully, very deliberately and cautiously."

For the second time in a month, the council heard testimony from supporters who hope the economic plight of some 2,400 low-wage workers would be bettered by the proposed ordinance.

"I haven't been able to retire because I don't have enough savings," said Miguel Marquez, who has worked for 30 years at the Miramar Fairmont, the city's only unionized hotel. "I don't have enough money."

"I don't even make $7 and I get no benefits," said Maria Peralta, who has worked at Ocean House, a retirement home on the beach, for three years. "I support five. What happens if one of my children gets sick? I'd have to rely on the government."

The council also heard from opponents who fear the proposed ordinance - which was crafted by Santa Monicans Allied for Responsible Tourism (SMART) -- might force businesses to move or shut down.

"I don't need an economic study to tell me what this would do to my business," said Patty Phillips, who owns Patty's Pizza on Montana Avenue. "I would close. I would just close."

"It would increase my payroll by $2 million," said Mary Anne Powell, the general manager of Pacific Park, the fun zone on the pier. "It's an increase we cannot afford."

"Don't use the Robin Hood approach," said Anne Greenspun a business and civic leader and member of the Bayside District board. "Robin Hood was an outlaw."

Attorneys testifying on behalf of Shutters on the Beach Hotel and Casa del Mar, two of the luxury beachfront hotels covered by the proposed measure, warned the council that the measure it is contemplating is illegal.

The proposed ordinance, said Robert Lon of the law firm of Latham & Watkins, will have a "financial impact that will run into the millions of dollars. We will have to seek legal recourse to recover the damages we've incurred.... It would impact the value of the business, the value of the property."

Richard Bress, a partner at Latham & Watkins, warned that the proposed measure places the burden on a minority of businesses.

"The proposed ordinance violates corporate protections," Bress said. "It forces businesses to bear the burden. It takes private property without just compensation. This is not a law that seeks to raise the level of all workers in Santa Monica. It isn't fine to force a minority to pay for that statement."

Prof. Clayton Gillette, a law professor at New York University School of Law, argued that the proposed ordinance is "preempted by statewide minimum wages."

The start of the meeting was delayed after attorneys for the initiative sent a letter to the council contending that the events at the Sept. 12 meeting "at best create the appearance that City property was used to promote one side of a political campaign, and at worst violated the law."

"As you know, City property may not be used to make campaign speeches," wrote James R. Sutton, the treasurer and campaign counsel for the initiative. "As you also know, the public is only allowed to use the public comment period at Council meetings to discuss the particular agenda item."

"We demand," Sutton wrote, underlining the text, "that the Council take steps to ensure that Prop. KK opponents do not use the Council chambers, or any other space in City Hall, for campaign activities at tonight's meeting, and that it immediately stop any one who attempts to use the public comment period to speak against Prop. KK."

The council's response, which came after the Mayor huddled with the City Attorney before the meeting, quickly became apparent, as the first 15 speakers blasted the ballot measure with no warning from the dais.

"I'm opposed to KK. Boom," said Ann Hoffman.

"Prop. KK is not fair. It is cynical and deceptive," said Beth Leder-Pack.

"I'm here because I'm asking you not to vote for KK," said Myra Rodas, a housekeeper at the Loews Santa Monica Beach Hotel.

Some supporters of the ballot measure used the opportunity to push for Prop. KK.

"It does two things," said Tom Larmore, an attorney who chair's the Chamber of Commerce's task force on the proposed ordinance. "It adopts a conventional living wage. It let's the people decide on the issue."