Thune is the Ward 2 City Council member and Chair of the HRA. The original St. Paul Living Wage Ordinance can be found at stpaul.gov/DocumentView.aspx?DID=5191
.by Dave Thune
Cossetta’s, a restaurant operating at Upper Landing and West Seventh Street for 100 years, will more than double in size with the help of city financing. This project is valuable for a variety of reasons, not the least of which is that currently over 70% of Cossetta’s employees live in St. Paul and West St. Paul and are part of our community. Cossetta’s exceeds most common industry standards in its rate of pay and benefits (providing health care benefits, vacation and 401(k) contributions). The HRA vote did not exempt them from the Living Wage Ordinance (LWO). It provided a waiver based on Dave Cossetta’s testimony and commitment to pay the mandated wages to 75% of his full-time workforce.
At the Council hearing, Cossetta committed to continue all benefits and increase all his workers’ salaries by 3%. Now, 81% of full-time jobs will earn a living wage. Once construction is completed, 75-100 new employees will be hired — 75% of them at LWO wages.
Some have contended that the waivers are a loophole that “one could drive a truck through.” However, there have only been three waivers granted in 14 years. We have successfully avoided funding mini-malls and fast food restaurants that pay minimum wage. As the author of the Living Wage Ordinance, I am quite familiar with its provisions. We always anticipated that the hospitality industry might need waivers, so this option was included from the very beginning. Even without waivers, not every compliant business pays 100% of its employees a living wage. That is because the ordinance says that all recipients of city financing must pay their employees a living wage OR be unionized. There are part-time employees in both union groceries and union restaurants who do not earn living wages, but their employers would meet the requirements of the living wage law simply by virtue of being unionized.
The City’s financing for Cossetta’s is $2 million of a total $10.5 million project, so the City’s investment will be more than quadrupled by a private investment of $8.5 million:
• $1.17 million is a grant that is called a forgivable loan made possible by the state legislature consolidating money left over from other Tax Incentive Fund (TIF) districts around the city.
• $437,000 is a market rate loan that must be repaid, at whatever our standard lending rate is, but with a three-year delay. The three-year delay is very common to allow for completion of construction and time to get a new venture running at full tilt.
• $388,000 will be issued as a new TIF district, which must be paid back through real estate taxes.
This project develops Cossetta’s into a regional destination, which will be a benefit to the city by attracting “new” money. Visit St. Paul, our convention and visitors bureau, cites Cossetta’s as a regional draw with the expansion already touted as an enticement for convention planners. From an economic viewpoint, “new” money is always better than a project that simply circulates existing money through the economy.
We also considered our funding source. The 2010 State Legislature passed an economic stimulus package intended to invest in shovel-ready projects to create construction jobs by July 2011. During construction, 200-250 union construction workers will be employed. McGough, the union construction contractor hired for this job, estimates the contract will require 50,000 worker hours of labor (25 full-time equivalent jobs) at more than living wage.
I feel strongly that in addition to highly paid employees in high tech industries, St. Paul residents need well-paid blue collar job opportunities. When the Living Wage Ordinance was first adopted, we had numerous competing real estate deals. Now we are recovering from a deep recession and high unemployment.
I am a strong union supporter. I would support a union in any St. Paul restaurant. However, I also know that Cossetta’s current wages compare very favorably to union shop wages. The pay and benefit structure rivals that of any restaurant in the Twin Cities. It would be difficult to find a restaurant that has more good will among its neighbors.
Cossetta’s expansion will be a regional draw bringing precious new dollars into St. Paul, will be a beautiful amenity for West 7th Street residents, will leverage four times its value in private investment, and will provide 75 new jobs to West Enders who have been unemployed for far too long in our jobless recovery. It’s all good for Ward 2.