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NEWS | EDITORIAL


Neighbors Speak Out: Cossetta's Waiver Challenged
| 6.11



Cossetta's Waiver Challenged
| 6.11

Four years ago a coalition of faith, community, and labor organizations of this great city won a campaign to pass the Living Wage Ordinance of St. Paul. This ordinance says that any company receiving a large amount of public money should pay their workers a “living wage,” defined very simply, as paying a worker enough to meet basic needs. It was a concept made popular in the early 1900s by Father John A Ryan, alumnus of The University of St. Thomas and world-renowned scholar of economic justice. Today in our city, a living wage would be $11.82 per hour with decent health care benefits, or $13.98 per hour without.

Some of us depend on an hourly wage job to support our families, and all of us depend on hourly wage workers to help us get through our day. We don’t always see the people who are washing our dishes, cooking our food, stocking the shelves, and cleaning the bathrooms, but we certainly reap the benefits of their hard work.

Unfortunately, these same people have recently been sent a very clear message from six of our seven City Council members. “You are not all that important. We waive your right to a living wage.” All members but Ward 4’s Russ Stark voted to give Cossetta’s restaurant a $1.7 million forgivable loan while also exempting the business from the Living Wage Ordinance.

There are many reasons why this decision does not make sense, not the least of which is that citizens of our city value each other as human beings and want dignified wages for our neighbors. Of course, if you need financial motivation, then how about the fact that it actually harms St. Paul’s economy to give a business free money and then to have to support its workers with public assistance when they can’t provide basic needs to their families?

This is not a sustainable business model for our city’s subsidy monies. We should be strategic about the money that we are investing. Giving subsidies to businesses that pay a living wage means that the local economy is boosted by both the success of the business and by the lifting-up of the St. Paul residents who work there.

I am deeply disappointed in the decision of the City Council. St. Paul is currently suffering school and recreation center closings, record foreclosures, and rising debt. It is time that our City Council members commit to attaching standards to the public resources we give to for-profit businesses so that we are all working together to solve the critical problems of our city.

The living wage was the right idea in the early 1900s when Father Ryan campaigned to make it national law, it was the right thing to do in 2007 when St. Paul passed the Living Wage Ordinance, and it is the right thing to do today. We cannot just waive economic justice aside because of our selfish love of great mostaccioli and artisan breads.

Martha Skold
West End Resident, St. Paul

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Reflections on the Housing, Redevelopment Authority (HRA) Vote on Cossetta's Expansion
| 6.11
[IMAGE]
Editor’s Note: 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.
[IMAGE]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.

Minimum vs Living Wage
Minnesota’s minimum wage is $7.25 per hour. This is the same as the Federal minimum wage. Small employers (enterprise with annual receipts of less than $625,000) can pay a minimum wage of only $5.25. The idea of a living wage refers to the minimum hourly wage necessary for an individual to meet basic needs, including housing, food, utilities, transport, health care, and recreation. St. Paul’s Living Wage Ordinance, originally passed in 1997 and revised in 2007, defines a living wage as 130 percent of the federal poverty level for a family of four ($13.97 for 2011) or 110 percent ($11.82 for 2011) if the employer provides basic health insurance.




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