Tuesday, April 23, 2002

Text of development motion




        The following is the original text of the motion by Cincinnati City Council members John Cranley and David Pepper, as introduced in the Finance Committee Monday.

        City of Cincinnati Council

        April 22, 2002

        MOTION

        WE MOVE that the City Manager direct a panel comprised of private sector and other leaders appointed by the Mayor to reform economic development in the City. This panel shall make recommendations to the Mayor and Council on steps the City must take to spark economic growth in the city, including consideration of, but not limited to, full-scale regulatory reforms as well as the potential creation of an independent development authority that can issue bonds and utilize eminent domain powers;

        WE FURTHER MOVE that the City Administration conduct a strategic plan for downtown growth and development, which was agreed to and funded in the 2001-2002 biennial budget;

        WE FURTHER MOVE that for all construction projects that receive $250,000 or more of City funding where that City subsidy comprises at least 25% of the project's budget, prime bids for general trades, as well as for H.V.A.C., plumbing, electrical and fire protection, shall be competitively bid through public notification and opened in a public forum;

        WE FURTHER MOVE that the City Administration report in one month to City Council about steps it is taking to ensure effective execution of and compliance with construction project contracts, leading to a quicker release of city funding; public disclosure of contract information such as proposed wage schedule, the scope of work, and a list of all contractors and subcontractors; and accountable, ongoing compliance with project requirements;

        WE FURTHER MOVE that the meet and confer language in funding agreements be revised as follows:

        “The Developer and/or the agent of the City, prior to the commencement of construction and/or prior to any expenditure of City funds, and with the aim of reaching comprehensive and efficient project agreements covering all work down by the Developer to or on the property, shall meet and confer with: the trade unions representing all of the crafts included in this redevelopment; and minority, female, and locally owned contractors and suppliers potentially involved in this redevelopment. At this meeting, the developer shall make available copies of the scope of work and wage rates pertaining to all proposed work to or on the property. Not later than 10 days following the Developer's meet and confer activity, the Developer shall provide to the City, in writing, a summary of the Developer's meet and confer activity.”

        STATEMENT

        While cities across this country have rebounded economically in recent years-drawing in investment and new jobs and sparking broad economic opportunity-Cincinnati lags well behind. Indeed, whether measured by average salary, job creation, or new business creation, Cincinnati ranks in the lowest tier of cities economically. The downtown economy has been struggling in particular, even before the troubles of the past year. (See attached economic data). And when a city's economy struggles generally, those with the least suffer most. Dramatic change is called for, both to expand the size of Cincinnati's economic pie and to increase the slices of pie for all for our citizens. This legislation initiates such change.

        Economic Growth Panel

        First, we must focus on eliminating the hurdles to private development and introducing new tools that proactively advance economic and job growth. This legislation creates a high-profile economic growth panel, headed by the City Manager, to look into these questions and propose solutions. We ask that the Mayor appoint individuals, largely private sector leaders, to comprise the members of the commission. Based on experience working in the City for development and business growth, as well as best practices from around the country, the commission will propose a set of recommendations to spur economic growth for Council consideration.

        A key task of this commission will be comprehensive regulatory review, assessing regulations imposed by the City, analyzing their costs and benefits, and rooting out the regulations that no longer serve a useful purpose. Other cities (such as Chicago, San Diego and Dayton-under the leadership of our current city manager) have utilized such a comprehensive approach, lowering the cost of business by eliminating unnecessary red-tape. The commission should also consider outside-the-box options, such as an independent development authority with expanded powers-an approach that has driven economic growth in a number of successful cities.

        Downtown Strategic Plan

        Second, like any good business, the city must set out a long-term economic strategic plan and vision for downtown, the economic engine for the City. As opposed to a start-and-stop, piecemeal approach, a sophisticated downtown strategic plan will provide the proper framework to spark a consistent and directed downtown resurgence-including office, retail and residential growth. It will also allow businesses that reside here or that are considering moving here to know where they're investing, and what that investment will look like down the road.

        Fiscally Responsible and Fair Public Investment

        Third, when the city is a major investor in a public-private project, we must ensure responsible and transparent investment of taxpayer dollars as well as require broad opportunities for our citizens to participate so that public subsidies also churn the local economy. This legislation accomplishes those goals by requiring that when $250,000 of taxpayer money is expended on a construction project, and when that subsidy comprises at least 25 percent of a project's budget, subcontracts emerging from such projects shall be publicly and competitively bid. Unlike other co-investors in projects, the city does not demand a return when it serves as a major investor-but the taxpayer can rightfully expect that the opportunity to participate in the project will be communicated and open to all.

        Fourth, we must inspire confidence that transparency is the hallmark when the city spends tax dollars. This legislation will simplify and clarify City employees' responsibilities to publicly report contract requirements regarding proposed wage schedules, the scope of work, and lists of contractors and subcontractors. The Community Development department has already initiated changes to effect such transparency and accountability and will report on those changes in one month.

        Fifth, we must enhance economic opportunity by ensuring compliance with the City's "meet and confer" contract requirement. In 1993, Council passed Resolution 93/1989 that requires developers who receive a City subsidy to meet and confer with minority, female and locally owned contractors, as well as the trade unions representing all of the crafts to be involved in a particular project. The intent of the meet and confer provision was to expand opportunities for those interested in participating in city-subsidized work. However, since meet and confer activity is not closely monitored nor regularly adhered to, its purpose is lost under current procedures. Our proposed legislation would achieve the original intent of the meet and confer provision by 1) Requiring written confirmation that meet and confer activity occurred; and 2) Providing copies of the project's scope of work and proposed wage rates at the meeting. These two requirements are easy to implement and will not cost the developer additional time or money. The new provisions will ensure the meet and confer activity occurs and also will give unsuccessful bidders a meaningful opportunity to review the project guidelines so they can better compete in the future.

        By streamlining the development process and introducing new tools to spark development, and by increasing transparency and economic opportunity, these changes will move the City forward.

        (Signed)

        John Cranley

        David Pepper

        ECONOMIC SITUATION IN CINCINNATI

        As the following numbers demonstrate, the City of Cincinnati has struggled to compete with other cities economically. Dramatic change is necessary.

        Job growth. While the average city (of the largest 114) gained jobs at a clip of 8.5% from 1992 to 1997, Cincinnati lost 6.3% of its jobs. This is the fifth worst performance of any city, placing us among the likes of Buffalo, Hartford, and Richmond as the worst performing cities in the country. We fell well behind our regional competitors-such as Cleveland (2.9% growth), Columbus (14.1% growth), Indianapolis (14%), Louisville (2.9%), Pittsburgh (3.1%), and Toledo (4.3%).

        Average Salary: While the average salary in cities rose 4.8% from 1992-1997, Cincinnati's average salary remained stagnant-edging up only .9%. We again trailed our regional competitors, such as Cleveland (5.8%), Columbus (8.8%), Pittsburgh (2.2%), Indianapolis (6.2%), Louisville (7.1%), Toledo (3.4%).

        New business establishments: While the average city gained 4.4% in business establishments from 1992-1997, Cincinnati lost 6.9% of its business establishments. This is the fifth worst (tied) figure in the nation, placing us with Buffalo, St. Louis, Richmond, Des Moines, and Stockton, CA as the country's worst performing cities. Yet again, we fell far behind our regional competitors (although others did lose businesses as well)-Cleveland (-3.1%), Columbus (10.8%), Pittsburgh (-1.8%), Indianapolis (12.5%), Louisville (-.1%), and Toledo (-3.8%). Other nearby competitors, such as Nashville (8.8%) and Knoxville (6.1%), prospered.

        Downtown situation: Particularly precarious is the current economic situation downtown, made worse by the April riots and their aftermath. The following statistics are all symptoms of a downtown that is failing to take advantage of the boom seen in other cities' downtowns:

        • Offices: lack of demand. There has been no new office construction in 10 years, and many major office buildings are now on the market. Our city's newest and premier office building, 312 Walnut, is achieving inflation adjusted rents of 25% less than it did when it opened ten years ago.

        • Hotel occupancy: occupancy under 45%, even at reduced room rates.

        • Retail: demand is down, and a number of retailers are struggling.

        • Restaurants/entertainment: business down 25% to 30% since April.

       



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