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SR-703-003 (2) REQUEST FOR PROPOSALS Economic Impact Study of a Living Wage Ordinance for the City of Santa Monica, California On September 7, 1999 the Santa Monica City Council considered a proposal for a Living Wage Ordinance. The proposal calls for a minimum wage of $10.69 per hour, plus benefits, to be applicable to businesses with more than 50 employees and located in the Coastal Zone, an area of approximately 1.5 square miles within the City. The City Council directed that the study evaluate the potential impacts of the proposal as submitted and any pertinent variations to the prescribed wage level, business size and area of applicability. Therefore, the City seeks a qualified firm, individual(s) or institution to conduct an economic impact study to determine the potential effects of the proposed ordinance, on employees and employers covered by its terms, employees and employers not covered, consumers and government agencies. Background The City of Santa Monica, population approximately 94,000, is an independent city of 8 square miles located within the Los Angeles metropolitan area. The beachside City is essentially fully developed. Approximately 72% of households reside in rental housing. As of January 1, 1999 California State Law eliminated control of rents upon vacancy and the cost of rental housing in Santa Monica is expected to increase significantly, potentially changing the current demographics of the City as fewer housing opportunities are available for the low income. Santa Monica enjoys a thriving economy including a significant visitor-serving industry with many hotels and restaurants. The City issued more than 19,300 licenses to businesses that generated more than $6.9 billion in gross receipts during Fiscal Year 1998-99. Additional information regarding the local economy and municipal budget is attached to this Request for Proposal (Fiscal Year 1997-98 City of Santa Monica Financial Highlights and the Fiscal Year 1998-99 City of Santa Monica Adopted Budget Summary). The Origins and Intent of the Ordinance and Local Response For the convenience of proposers, City staff have attempted to summarize here the origins and intent of the Living Wage proposal and the response of the local business community. Materials from proponents and opponents of the measure and media coverage of the issue are also enclosed. However, direct dialogue with proponents, opponents and other interested parties will be essential to an objective analysis and a public scoping meeting will be scheduled as an initial step in the research process. The working poor have recently received increasing attention across the nation and in the Los Angeles area. In 1998 Santa Monicans Allied for Responsible Tourism (SMART) a local coalition of labor unions, clergy and concerned residents emerged in the course of a labor dispute at a Santa Monica hotel to support the workers' right to organize. Mirroring the work of similar coalitions in other communities around the country, SMART also formulated a Living Wage Ordinance proposal to improve the situation of the working poor in the City. Essential provisions of the proposal, which are attached to this report in materials prepared by SMART, differ substantially from those passed in recent years by other municipalities. They include setting a minimum wage of $10.69 per hour (a wage at which a family of four no longer qualifies for food stamps), requiring provision of family health coverage and standard leave benefits, and applying the wage and benefit requirements not only to businesses receiving City contracts and/or direct subsidies but to all businesses located in the Coastal Zone with fifty or more employees. The Coastal Zone contains much of the visitor serving industry. Proponents of the Living Wage proposal argue that applying the ordinance to this limited area is warranted in that the City invests more heavily in safety and maintenance services in the crowded downtown and beach areas and has completed costly capital improvement projects to enhance the beachfront, parks and water quality of Santa Monica Bay. Proponents assert that these services and improvements are a hidden subsidy to businesses within the Coastal Zone. SMART estimates that the proposed ordinance would significantly improve the lives of three thousand workers and their families, removing them from poverty rolls and reducing the need for taxpayer supported services to the working poor. Two other elements of the proposed ordinance would give priority to the use of Santa Monica area hiring halls to fill jobs and create a Worker Protection Board to give workers local legal redress against harassment. The local business community is apprehensive about the proposed ordinance and has organized as the Committee for Job Opportunities and Business Solutions (JOBS) to advocate their position. They argue that the proposed approach will prove counterproductive, costing job opportunities for the workers the proposal is intended to benefit, jeopardizing businesses and negatively affecting residents and social service agencies through increasing prices and declining tax revenues. JOBS argues that public funds that have been expended in the Coastal Zone came entirely, either directly or indirectly, from businesses within the Coastal Zone. They cite sales tax, transient occupancy tax, utility users tax, property tax increases, property transfer fees, valet parking fees, license fees, assessments and other fees and taxes that flow to the City, dwarfing the amount spent by the City on Coastal Zone improvements. They argue that arbitrary distinctions between businesses based upon size and location are unfair, and would encourage businesses close to the threshold to restrict expansion, reduce staff or relocate. They anticipate that as the mandated price for labor rises, the labor pool will expand and employers will hire only those with more experience and education, effectively displacing low- skilled workers and eliminating entry level jobs. They suggest that those who will gain will be higher skilled workers, at the expense of those least able to compete. Sympathizing with the intent of the proposed ordinance and recognizing that an informed decision on the likely impacts of its provisions requires careful and timely analysis at a level that staff cannot provide, the City Council has called for the study described in this RFP. Scope of the Study The economic impact study must identify the costs and benefits of the Living Wage proposal. Likely impacts on covered and non-covered employees, covered and non-covered employers (including the City of Santa Monica, for-profit businesses, other public agencies and non-profit organizations), consumers and government agencies (other than as employers) and on the local economy must be identified. Alternative constructs that would better achieve the purposes of the proposed ordinance and/or mitigate potential negative effects on the local economy should be addressed. A review of the nature and impacts of living wage ordinances in other communities where post-implementation studies have been conducted must be conducted and documented. Among the essential questions to be addressed in the proposal are the following, but other important areas of inquiry may be raised in the public scoping meeting and/or by the successful proposer: What is the baseline status of the target workforce? 1) What are the demographics and other relevant characteristics of the target workforce, low income workers in Santa Monicas Coastal Zone? What proportion = are heads of household in single wage earner families? What is the average family size? How many live in Santa Monica? How many receive government aid to the poor such as food stamps, housing subsidies and health care? How many are assisted by private charities? How many work part time and of those how many would prefer full-time work? How do their characteristics differ, if at all, from the profile of other low income workers in Santa Monica and the region? What will be the effects on the target workforce? 2) How will a wage of $10.69/hour change the economic status of the target workforce and their families? Are current workers likely to be the beneficiaries of the effects of the ordinance or will its impacts change the nature of the workforce? How will a local hiring preference affect the target workforce? Will the number and nature of jobs available to low skilled workers be altered? What will be the other labor market effects of the ordinance? 3) Will the high minimum wage have a ripple effect upward, raising the wages of skilled employees with incomes well above the poverty level? What will be the effects, if any, on low income workers outside the Coastal Zone? What are other likely economic and human impacts of having a significantly higher minimum wage in a small geographic sector? What are likely employer responses to the ordinance? 4) Will Coastal Zone businesses reduce the number of employees or curtail expansion in order to avoid its applicability? What Coastal Zone businesses or categories of businesses, if any, are likely to fail if the ordinance is applied? What Coastal Zone businesses are likely to be able to absorb the higher costs imposed by the ordinance? Can Coastal Zone businesses turn to technology to supplant low- skilled workers? Will the number of low-skilled workers in the Coastal Zone be otherwise reduced? Will the availability of positions for students, interns, the developmentally disabled and the elderly be affected positively or negatively? Will employers use more part time employees to avoid payment of benefits? How will consumer costs be affected? Is customer service likely to be affected? What are the likely impacts on Santa Monica employers outside the Coastal Zone? Are effects likely to be different on non-profit organizations and/or government agencies as opposed to private employers? Are employer responses, within and outside the Coastal Zone, likely to be short or long term in nature? What are the methods and costs of enforcement? 5) What alternative methods of enforcement are available and what resources will the City need to devote to enforcement? What will be the effect on government subsidies and services? 6) Will the ordinance reduce City expenditures on housing subsidies, grants to social service agencies that serve the low income and other services to the target workforce? If so, by how much? What will be the impact on services and subsidies offered by other government agencies in the region? What is the likely impact on City revenues? 7) Will the ordinance affect property values and hence property taxes? Will the ordinance affect taxable sales, gross receipts and hence business license receipts? Will the ordinance affect the stock of hotel rooms, room rates or hotel occupancy and hence transient occupancy taxes? What other revenues may be affected? How large will these impacts be? Will impacts be short or long-term? Is the living wage proposal compatible with other adopted City policies and 8) plans? Are provisions of the living wage proposal and the likely effects of its adoption consistent with objectives of the Land Use Element, Bayside Specific Plan, HUD- required Consolidated Plan, and Sustainable City Program among other City policies and plans? What is the evidence on direct City intervention on setting private sector 9) wages? This proposal is different than other living wage proposals in that it targets employers who receive no direct financial benefit from the government entity in the form of contracts, leases, etc. The study should shed light on the potential implications of this sort of intervention both for the City government and for private sector investment in the City. What alternative approaches might better meet the objectives of the 10) proposed ordinance and/or mitigate negative effects on the local economy? The Study Process and Schedule A project team led by the City Managers Office which may include both City staff = and peer reviewers will assist with consultant selection and monitor the progress of the study throughout. A monthly status meeting or conference call will be scheduled with the consultant and the project team. The consultant will be required to conduct a professionally facilitated public workshop early in the process, during which the multiple perspectives on this issue (business owners, employees, business associations, and neighborhood groups among others) can be raised to inform the scope of the study. In addition to this public scoping meeting, the consultant should anticipate presenting the study methodology and outcomes during up to five (5) formal oral presentations. These presentations may be to the City Manager and staff, the general public and the City Council. The consultant must provide a comprehensive written report containing findings, conclusions and recommendations so that the rationale on which the recommendations are based is apparent. Eight copies of the draft and final reports must be submitted. All reports should be produced on recycled or white paper and should not include colored or plastic dividers. Copies of all final documents must be submitted on 3 " computer diskettes, including text and computerized graphics. 2 Microsoft Word 97 software should be used for all written text. The City anticipates selecting a consultant by the end of December 1999 and prefers that the project be completed and the final report accepted by April 1, 2000. Consultants proposing an extended schedule for the project must clearly specify the value added by additional time. Proposal Schedule and Contents Eight copies of your proposal are due to the City Managers Office no later than = 5:30 p.m. on Friday, December 10, 1999 . Proposals should be addressed to Susan McCarthy, Assistant City Manager, City of Santa Monica, 1685 Main Street, Room 209, Santa Monica California 90401. Proposals must include the following: 1. Statement of Qualifications ? Firm or Principal Investigator name, street address, telephone and fax numbers and e-mail address (es). Include contact information for the period December 15, 1999 through January 3, 2000 if different than above. ? Identification of Project Team with resumes/C.V.s and description of = responsibilities/assignments on this project. ? Identification of subcontractors, if any. ? Description of experience with projects of similar scope and nature and a copy of a recently completed study, monograph or article which would demonstrate the nature and quality of your work. ? References, including the organization and contact names, addresses and phone numbers of clients for whom research was performed. 2. Study Methodology and Approach Provide a detailed explanation of the approach you will take to this study and the methods you will employ. Identify topics to be addressed, tasks involved and staff who will carry out those tasks. 3. Description of Deliverables Describe the anticipated form and format of the final product to be delivered to the City. 4. Project Availability/Schedule/Time Line Indicate when you would be prepared to commence work on the project and provide a Time Line identifying the sequence of key tasks and the schedule for accomplishing them. 5. Fee Proposal Provide the total cost for performing the requested services, the basis for the fee and a proposed schedule of payments. The fee proposal should be broken out by task with the associated number of staff hours and the staff person(s) assigned to each task. Proposals should be produced on recycled or white paper and should not include colored or plastic dividers. Selection Process Review criteria will include but are not limited to: ? Nature of experience ? ? Understanding of project, adequacy of approach and suitability of methodology ? ? Appropriateness of staff assigned ? Ability to meet project schedule ? Reasonableness of fee proposal ? Record of accomplishments with other public sector clients Following a review of the written proposals, the review committee may create a short list of proposers to be interviewed. The successful proposer will be expected to enter into a contract with the City and to commence work in early January. Disclaimer By submitting a response to this RFP, proposers waive all rights to protest or seek any legal remedies whatsoever regarding any aspect of the proposal process. The City reserves the right to issue written notice to all proposers of any changes in the submission schedule and/or required proposal contents should the City determine in its sole and absolute discretion that such changes are necessary. Acceptance of proposals submitted pursuant to this RFP shall not constitute an intent to enter into a contract for consulting services. The City reserves the right to reject any and all proposals. For Further Information Questions regarding this RFP should be addressed to Susan McCarthy, Assistant City Manager, at (310) 458-8301.