City may add community benefits requirements to TIF projects

A proposed city of Milwaukee ordinance would require developers seeking $1 million or more in financial assistance from the city to provide community benefits including "prevailing wages" for construction workers. Prevailing wages are defined from surveys done by the state Department of Workforce Development.

The ordinance, called the MORE ordinance (Milwaukee Opportunities for Restoring Employment), by supporters is sponsored by Ald. Ashanti Hamilton, Ald. Willie Wade, Ald. Nic Kovac and Ald. Milele Coggs. It will be reviewed by the Common Council’s Community and Economic Development Committee on Monday, March 2.

The ordinance makes several changes related to the requirements for the participation of city residents in public works contracts, requirements for developers receiving direct financial assistance form the city and local business enterprise contracting standards.

The ordinance would apply to any developer of a project that receives $1 million or more in direct financial assistance form the city, such as tax incremental financing (TIF).

In addition to the prevailing wage requirement for construction workers, developers getting $1 million or more in financial assistance from the city would also be required to have "40 percent of worker hours…performed by unemployed residents or residents at a disadvantage with respect to employment."

The ordinance would also require projects receiving city assistance to employ apprentices for construction contracts and subcontracts "in accordance with the maximum ratio of apprentices to journeymen established by the Wisconsin Department of Workforce Development."

The ordinance also requires projects receiving city assistance to use the emerging business enterprise program as its "first-source employment program."

"If the city of Milwaukee taxpayers are paying for different projects, development, infrastructure or whatever, it seems that the city of Milwaukee citizens should benefit from that when it comes to the jobs that are provided," Wade said. "These things (community benefits) have been done in other municipalities in other parts of the country. We’re not re-inventing the wheel."

Kovac said the bill has been refined for months in order to improve it and make it acceptable for developers and beneficial to workers.

"A number of developers think these (requirements for TIF projects) are reasonable," Kovac said.

However, some developers and commercial real estate professionals have expressed concerns with the ordinance, saying it will discourage development in the city.

"While the goals and intentions of the MORE ordinance proposal are laudable, I fear the prevailing wage requirement may work counterproductively to those goals," said Dan Jessup, president of Brookfield-based Grubb & Ellis|Apex Commercial and co-chairman of the Commercial Association of Realtors Wisconsin (CARW) government affairs committee. "The prevailing wage requirement increases the overall cost of every project that they apply to, and in doing so, decreases the competitiveness of the finished development. It is estimated that the prevailing wage requirement will add 8 to 14 percent to the cost of commercial development. That may increase costs of a project to the point of eliminating the business case to be made to move forward, thereby eliminating any potential temporary and permanent job creations. In these uncertain economic times we should be doing all possible to encourage economic development in the City of Milwaukee. Perhaps some concepts that would accomplish the goals of the MORE ordinance include on site job training and workforce development to help unemployed city residents take advantage of development and growth. Adapting current TIF legislation to include reimbursement of costs associated with workforce development would help keep proposed developments economically viable."

The Good Jobs and Livable Neighborhoods Coalition is lobbying in support of the MORE ordinance, The coalition also lobbied for the Park East Redevelopment Compact (PERC), which requires community benefits for development of the land owned by Milwaukee County in the Park East Corridor. The county’s land in the corridor remains undeveloped, and Milwaukee County Executive Scott Walker recently proposed that the County Board repeal the PERC and sell the county’s land in the corridor to the city.

If developers can document that community benefits are adding costs to their projects, then the city should provide additional financial assistance to make the projects viable with community benefits, said Pamela Fendt, director of the Good Jobs and Livable Neighborhoods Coalition.

"(Community benefits) needs to be coupled with more aggressive use of TIF," Fendt said. "The (Department of City Development) is being too cautious (with TIF). Our argument is you create a value added component to the development using city resources. We’ve been accused of being anti-development. Nothing could be further from the truth. Without the development our goals can’t be met."

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