NEW YORK CITY COUNCIL UNANIMOUSLY ADOPTS RESOLUTION TO PROVIDE HIGH-SPEED INTERNET ACCESS TO AFFORDABLE HOUSING RESIDENTS

The New York City Council unanimously adopted a resolution to provide low- or no-cost high-speed Internet access to affordable housing residents.

Res. No. 669, introduced by Council Member Gale A. Brewer, the Chair of the New York City Council's Committee on Technology in Government, calls upon City agencies to use their funding and regulatory power to support and encourage the provision of affordable high-speed Internet service and computer purchases for the benefit of residents of affordable housing.

"This resolution will help us bridge the digital divide -- lack of access to the economic, educational and financial tools that the Internet provides," said Council Member Gale Brewer (D-Manhattan). "By encouraging new affordable housing developments to be built with high-speed Internet access, we can accelerate the entry of low-income people into the economic mainstream. At a cost as low as $175 a unit, this is an investment New York can't afford not to make."

DAVE'S SUPERMARKETS VP SAYS: "STEELYARD PLAN IS SHORTSIGHTED AND PERILOUS"

If you didn't see this op-ed in today's Plain Dealer, read it. If you've already read it, here are some other things you should know:

The author, Dan Saltzman, is listed as vice-president of Dave's Supermarkets, but that understates his stake in the business by several miles. Dan is a third-generation owner of Dave's, along with his father (the CEO) and some siblings. Burt Saltzman, the company's CEO/father, can be seen every day bagging groceries at their original store on Payne Ave., where the chain's general offices are also located.

I met both men in 1991, when I was director of a CDC in the Stockyards neighborhood and they came to a neighborhood meeting to tell us about plans to open a full-service supermarket in a big vacant store at Ridge and Denison. They weren't hustling support for a tax abatement or city loan... they just wanted to meet the neighbors.

And Dave's turned out to be a very, very good neighbor. They hired dozens of local residents, brought in a badly needed commercial bank branch, created space for a local family practice clinic, supported community activities. And they ran -- still run -- a very classy mid-sized store that pays attention to its poor and blue-collar customers.

That was Dave's fourth store in the city. Since then they've built new stores in Ohio City and Central, replaced their old Slavic Village store with a brand new one, and begun construction on another in Shaker Square. In each case, the Dave's branch has been designed to fit a larger community retail vision. In the case of the new Arbor Park store -- in the old drug-ridden Longwood Plaza on East 40th near Woodland -- that vision was largely Frank Jackson's.

Dave's is the kind of business that's supposed to be impossible nowadays. It's a local family firm that's made a niche in a tough competitive market, approaches its urban customer base with imagination and respect, gets along fine with its unionized workforce, and makes a good living for its community-minded owners.

In other words, it's a sitting duck for Wal-Mart.

It's not at all hyperbolic to say that Cleveland's neighborhood development groups love these guys. Up to a few weeks ago, the Saltzmans had every reason to think that City Hall -- especially the Council President -- loved them, too.

But as you can tell from the op-ed, recent events have raised serious doubts in their minds. The key line is this one:

A Wal-Mart in Steelyard Commons will force neighborhood food and drug retailers to scurry to consolidate their existing locations in order to survive.

This is a thinly veiled reference to the Saltzmans' ownership of two near East Side stores -- the original Dave's at 33rd and Payne and the new one just a mile south at Arbor Park. And it's a message to Council President Jackson, at whose behest the Arbor Park store was opened. Unveiled, it goes something like this: "Councilman, do you really expect us to stay personally invested in a store we don't need, in a poor and dangerous neighborhood that's also in the direct blast zone of the likely Wal-Mart supercenter that you're not willing to oppose?"

Nice guys sometimes turn out to be tougher than you think.
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SACRAMENTO CITY COUNCIL SHOWS THE COURAGE THAT CLEVELAND LACKS

From Friday's Sacramento Bee (full article here -- free registration required):

Wal-Mart's tactics don't deter council

Members of the Sacramento City Council said they anticipated a rough night Tuesday when they considered a controversial superstore ordinance. Still, no one was prepared for what they encountered when they walked into their chambers that evening.

Wal-Mart, leading the opposition against the proposal, had a court reporter stationed next to the dais to record every word. Each council member got a letter from the corporation's attorney, warning that the ordinance specifically targets Wal-Mart and "violates numerous federal, state and local laws, and is discriminatory and unfair."

Councilman Rob Fong, an attorney, said the corporation's message was clear.

"Those two things combined would indicate to me that one of the things coming down the pike is some sort of legal challenge," Fong said. "If that happens, it wouldn't surprise me."

Nevertheless, the council passed the ordinance unanimously, following in the footsteps of several cities across the country that have made it tougher to build superstores in their areas.

...The Sacramento ordinance requires an economic analysis of proposed superstores to include the impact on existing merchants, a wage survey and tax revenue projections.

Superstores are defined in the ordinance as larger than 90,000 square feet of space and using more than 20 percent of retail space for nontaxable items such as groceries. Membership or bulk stores are exempt.

FRANK JACKSON'S COLLAPSE on the "big box grocery ordinance" will cost inner-city neighborhoods several more closed supermarkets as other chains respond by disinvesting. You might see poetic justice in the fact that the new Dave's store at Arbor Park Place, which Jackson helped open so proudly in November, will be one of the most endangered.

The disinvestment won't happen overnight, because of the agreement to bar a Steelyard Commons Wal-Mart from opening a grocery section for seven years. But it will happen. Seven years will seem like a very short time once it's gone. (As John Ryan of the AFL-CIO says, "Seven years is a shorter stay of execution than the average murderer gets.")

For other Cleveland neighborhoods hoping to win new supermarkets as anchor stores for local plaza developments, it's back to the ol' drawing board. Both sides of City Hall, and both major candidates for Mayor (not to mention distant third-runner Zack Reed), are now competing to throw the keys to the city at Wal-Mart's feet. If you think Tops, Giant Eagle and Dave's will respond by throwing more money into risky plays in this market, I have an old blast furnace I'd like to sell you.

So now can we start calling it "Wal-Mart Commons"?
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OUR STEELYARD COMMONS LEARNING CURVE

Can we re-roll this tape, please?

Four months ago (PD story on final Planning Commission approval):

Schneider said he is negotiating with nine national retailers for Steelyard Commons, but he declined to name them.

"We believe the demand is there and retailers will do well," he said.

Tenants at First Interstate shopping centers elsewhere include Target, OfficeMax, BJ's Wholesale Club, Kohl's, Home Depot and Marshall's.

Two months ago:

Morris, spokesman for Wal-Mart's Midwest development, said the retailer is not pursuing plans inside the city "at this point," but he said there were "potentially developers that have submitted their plans to us."

Mitchell Schneider, president of Lyndhurst-based First Interstate Properties Ltd., could not be reached for comment on his $90 million Steelyard Commons.

Will Wal-Mart make its Cleveland landing there?

"It's all the buzz," Councilman Joe Cimperman said. "I'd give it 50-50 odds."

Four days ago:

Schneider argues convincingly that it [an ordinance limiting sales of groceries in big box stores] would doom Steelyard Commons. Wal-Mart rarely enters a market by building superstores. But it has told Schneider that it will not come if future expansion is impossible. And because Cleveland is considered such a weak market nationally, Schneider got Wal-Mart, Target and Home Depot to sign "letters of intent" only by promising each of them that the others would be at Steelyard Commons.

Two days ago:

Other prospective tenants, such as Target and Home Depot, have linked their leases to Wal-Mart being a tenant at Steelyard Commons, he said.

"I currently know of no 'Plan B' to go to," said Schneider, whose company developed Legacy Village in Lyndhurst.

FOLLOW THE MONEY: From REI's Ed Morrison, writing in his EDPro Weblog last Saturday...

Think of it in these terms. Economic development involves three types of money. "Good money" comes from businesses that trade outside your region. They generate wealth. (Michael Porter's work at Harvard suggests that wages for these traded businesses are about one-third higher than "sheltered" businesses.)

"Neutral money" comes from businesses that circulate revenues within an economy. You buy haircuts from me, and I buy lawn care from you.

"Bad money" comes from business transactions that export wealth from an economy. Many people think that Wal-Mart falls into this category. Except in relatively rare cases, casinos fall into this category as well.

STEELYARD COMMONS HYSTERIA... OR, ARE YOU EXPENDABLE?

My ZIP code, 44109 -- which includes my neighborhood of Brooklyn Centre, the Clark-Fulton neighborhood to the north, and a piece of Old Brooklyn to the south -- has more than 300 residents who are members of UFCW Local 880, the retail workers union, or BCTGM Local 19, the bakery workers union. Most of them earn their union wages and benefits at supermarkets (Tops, Giant Eagle, Dave's) or drugstores (CVS, RiteAid). All of them live within a mile or two of the proposed Steelyard Commons shopping mall, where the Plain Dealer and Channel 19 seem hysterically eager to see a new Wal-Mart put many of them out of work.

Is this too strong a characterization? Not on your life. The Plain Dealer's editorial yesterday, attacking as "appalling" the proposed ordinance to limit sales of food and other nontaxables in new big box stores in the city, makes clear that any attempt to mitigate the impact of Wal-Mart or Target on existing jobs and businesses -- or on traffic, for that matter -- will be denounced in the shrillest possible terms. 19 Action News took a short break last evening from its coverage of nude journalism and suburban sex to join the attack. Both outlets personally attacked Ward 13 Councilman Joe Cimperman, the ordinance's sponsor, who represents the Steelyard Commons site and the adjacent Tremont neighborhood.

When the PD editorial board and Channel 19 agree about an issue, sane citizens can usually just assume the other side is right, and move on. Unfortunately, both editorials are echoes of recent statements by Mayor Campbell, who should know better.

Here's the proposed ordinance, as introduced by Councilman Cimperman. It doesn't prevent the development of Steelyard Commons. It doesn't prevent the location of a Wal-Mart in Steelyard Commons or anywhere else in the city. It only creates a special category in the zoning code for big box stores ("large-scale retail"), and prohibits the use of more than 5% of such a store's interior sales area for selling nontaxable products.

Now here's a news flash: This ordinance wouldn't make it impossible for Wal-Mart or Target to open stores with grocery departments in the city. It would simply make big box grocery sales a non-conforming use, requiring a variance from the Board of Zoning Appeals. A variance request would entail the submission of detailed plans, public notice, public hearings, the airing of all relevant issues including job and neighborhood impacts, a showing by the developer that harm can be mitigated, etc.

In other words, Cimperman's ordinance creates a tool for regulatory review of proposed big box supercenters that the City now lacks -- especially in a case like Steelyard Commons, where "anything goes" zoning has made normal City review of issues like traffic impact, design, etc. just about worthless. (Did you know that Steelyard Commons will be open for a year before the developer completes any new road connections, so that shoppers will have to use Tremont streets to get to it? No, I bet you didn't.)

Why design this tool to deal specifically with grocery sales? Because food and pharmacy retail really is a special case. The studies constantly cited to show retail dollars "leaking" from the city don't mention it, but there are modern supermarkets and pharmacies in many city neighborhoods. Tops, Giant Eagle, and especially Dave's have all opened inner city stores in the last ten years, and there's getting to be a CVS, Rite Aid or Walgreen's on every corner. All these supermarkets and many of the drugstores pay union wages and benefits, and the majority of their employees are city residents. (UFCW Local 880 has nearly three thousand working members who live in the city.)

So unlike most of the retail sector, food and drug store chains are in the city, providing living wage jobs for city residents. In many cases (the Daves's stores at Arbor Park and Ohio City come to mind) they're the anchor stores for new neighborhood retail districts. Why would the city want to accommodate a development strategy like Wal-Mart's, which is specifically designed to attack their market shares and displace their workforces?

But that's exactly what the Campbell Administration and the PD are doing with their uncritical support for Steelyard Commons and attacks on the Cimperman ordinance. Since the ordinance would only affect big box grocery sales, its opponents' hysterical responses can only mean one thing: Wal-Mart intends to sell groceries at Steelyard Commons and won't locate there otherwise... and the City and PD want Wal-Mart there, no matter what.

And this, in turn, "sends a signal" (in the PD's words) that they consider Cleveland's existing grocery stores and pharmacies expendable, along with the thousands of Cleveland residents who work for them... including my three hundred neighbors.

Now that, to borrow some more shrillness from the Plain Dealer, is truly appalling.

SPEAKING OF MARRIOTT: In an entry a couple of days ago, I named the Marriott Corporation as one of the companies that pay low wages to Cleveland-area employees, but take most of the benefits of profitability (investor return, high top management salaries) out of the region. Marriott manages (I said "owns") four downtown hotels with a total of 1,300 rooms.

In the comments to that entry, Jason Birchem, who works in management at the Renaissance, took exception. I'm going to reprint his comments below in full. Then I'm going to raise some questions, which Jason (in an email exchange last night) said he'll try to answer. Look in the comments section of this entry for our continued conversation.

Jason wrote:

I can tell you from first hand experience that your rational that wages are of subsistence level is quite wrong. While it is true that most entry level jobs only pay in the $8 - $12 dollar range, Marriott as a company also has great beneifts. These are a costly part of doing business and hiring people. When taking one of the entry level positions Marriott makes it clear that with a good work ethic, and a willingness to learn they can progress in their careers. Go to any Marriott hotel and you will find people like myself who started out parking cars at a hotel in high school, went to college and came back at much higher salaries. Tuition reimbursement really helps too - and Marriott provides that. I would suggest that before you start coloring Marriott with broad (and innacurrately) based terms you actually take the time to learn of what you speak because you are flat out wrong on this.

I replied:

Jason -- I have talked to people on the Ritz-Carlton (Marriott) housekeeping staff about their pay and benefits. My understanding is that people cleaning rooms there, as of five years ago, earned in the $7 to $9 an hour range based on production competition within the workforce. This is consistent with the ODJFS survey data that I quoted in my 1/29 entry, showing the 2002-03 median (not starting) wage for maids and housekeeping cleaners in Cuyahoga County at $8.25 an hour. I'd be delighted to hear more about this subject from your experience.

And Jason responded:

Bill - I am sure you are correct (and the numbers prove it) in stating that the median wage is $8.25. Here is what I know. Our entry level positions start at a minimum of $8 per hour. There is then a 90 day review (and correlating pay increase), a 180 day review, and then yearly reviews each year following. While the entry level pay ranges are lower - the opportunity to advance is extremely good. People that show a desire to take on more responsibility, cross train with other jobs will be moving up quite rapidly. One of the largest challenges in the Cleveland market is the education level (lack of) of a majority of the workforce. Reading, writing, communication skills, and general business accumen is sorely lacking in the general populace. Will organization help this - I do not think so. The individuals that work hard and *want* to get ahead will. I am on the management team and I feel our pay, benefits, and perks are very good. Medical, dental, vision, 401k, pto, sick time, great travel perks with free and significantly reduced rooms so that yes our employees can stay at our hotels anywhere in the world. My concern is that you had lumped Marriott in with the rest of the corporate world, in fact pointed them out specifically. I agree that many companies are lacking in their employee appreciation but Marriott is not one of them.

Just another quick note on hotels. It is true that Marriott manages the hotels (Marriott Key Center, Renaissance, and Ritz-Carlton) but Marriott does not own the buildings. The Jacobs group owns the Marriott Key, Forest City owns the Ritz, and TCF Holdings owns the Renaissance. Marriott manages the hotels for a fee and the profit goes to the local owners.

See more by clicking "Comments" below.

VOINOVICH: COMMUNITY DEVELOPMENT BLOCK GRANT "THE GREATEST PROGRAM EVER"

From a U.S. Conference of Mayors press release, January 18 (just three weeks ago):

HUD Secretary Alphonso Jackson discussed issues related to housing and other community development programs. He also addressed the mayors' concerns about CDBG. "CDBG has worked and continues to work in our country. The '06 budget is fiscally conservative, but we will address the needs of your concerns." Jackson said.

Senator George Voinovich also addressed CDBG calling it the greatest program ever. "We shouldn't be talking about decreasing it. We should be talking about increasing it," Voinovich said.

WHY PEOPLE WORK: Weatherhead professor Sandy Piderit explains why it's bad management for Ohio to sit on $330 million in federal Temporary Assistance to Needy Family funds: expectancy theory.

(Bad permalink fixed... thanks, Sandy.)

BUSH BUDGET WOULD ELIMINATE COMMUNITY DEVELOPMENT BLOCK GRANT

The Bush Administration's 2006 budget proposal, sent to Congress today, calls for the complete elimination of the Community Development Block Grant program, which provides nearly $30 million a year to the City of Cleveland.

CBDG and seventeen smaller HUD community grant programs would be replaced by a new "Strengthening America's Communities Initiative" in the Department of Commerce.

The HUD appropriation for CDBG in 2005 was $4.618 billion. The Commerce Department "replacement" would get nearly a billion dollars less... $3.71 billion in 2006.

As a block grant program, CDBG has provided a predictable flow of funds for discretionary use by U.S. cities and smaller communities. Cleveland has used its allocations for a wide variety of community investments in housing, commercial revitalization, code enforcement, infrastructure improvements, and community services like crime prevention and senior transportation.

More details as I get them.

UNION WEEK: BUILDING WHOSE WEALTH, WHERE?

First off, I want to second John Etorre's recommendation (in the comments on my last entry) to read this article in Sunday's New York Times Magazine.

Now for the question: Why does it matter that so many Cuyahoga County jobs pay too little to support a family, with some money left over for savings?

The conventional answer is that it's not fair. People who work full time should be able to get ahead. Hard work should earn a piece of the American Dream -- a house, a vacation, a step up the ladder for the kids. Wal-Mart wages foster inequality and violate our sense of equity.

Of course I agree with this answer. Maybe you do, too. But let's be frank: "fairness" has a pretty small constituency among Cleveland's movers, shakers and talkers -- even those proud liberal Dems who make a point of visiting a union hall every year or two. "Fairness" sounds so... redistributionist. And we all know that creating wealth, not redistributing it, is where it's at.

So let's talk about low wage jobs and community wealth building.

In general, a community gains wealth to the extent that a) its members create economic value, and b) the economic value created by its members becomes their income. The fact that it's made here is no reason to assume it stays here. Money that's made by business activity in northeast Ohio, but ends up in accounts in Texas, London, or Shanghai, is not "Cleveland wealth".

But money that flows from local business activity to local workers is Cleveland wealth. It circulates back into local stores, pays local rents and mortgages, supports local churches. Most important -- if there's enough of it, it enables the earners' families to save and invest. It allows them to build retirement accounts, acquire home equity, start small enterprises, pay tuitions. It takes earners' families beyond subsistence and empowers them to start creating new value on their own... if there's enough of it.

From an economic development standpoint, the worst part of Cleveland's increasing dependence on low-wage occupations is that we get the poverty, while the profits -- the asset additions of shareholders and top managers -- mostly go elsewhere.

Look again at the list of low-wage occupations in Cuyahoga County. Where do these people work? Where are the new openings for unskilled and semi-skilled workers in the Cleveland job market?

Retail (cashiers, sales). The Cleveland Yellow Pages lists fifteen "department stores" with more than one location. For some reason they don't include Kaufmann's, Sears or Marc's, but add these in and you get about 110 stores under eighteen names. Of these only Marc's, with 24 locations, is owned and operated locally. Count the men's and women's apparel stores with four or more addresses, and you find another thirteen chains operating here, of which just two -- Dot's and Diamond -- are northeast Ohio companies. That's thirty-one significant chain retailers selling adult clothing (among other things) in Cleveland-area malls and strip centers -- and only three firms are controlled by local managers and investors.

Think about the rest of the familiar names at the mall -- shoe chains, toy chains, consumer electronics, office supplies, etc. -- and you'll see the same thing. In the convenience store niche, Dairy Mart of Hudson is now owned by a Canadian company and competes with 7-Eleven of Texas and Convenient Food Marts of Chicago. Our big two supermarkets, Tops and Giant Eagle, are now headquartered in New York and Pennsylvania, respectively -- leaving only Dave's and Heinen's here. Even the drugstore market, with two strong local players (Medic and Discount), is increasingly dominated by CVS (Rhode Island) and Walgreen's (Illinois).

Hospitality (housekeepers, counter clerks.) There are no locally owned downtown hotels, and few if any in the region. Marriott (Maryland) and Hilton (California) together own almost 2,000 of the 3,800 hotel rooms downtown. I could go on, but you know the other names as well as I do.

Restaurants (waiters, bartenders, dishwashers, etc.) Okay, this is more mixed and harder to track down, and there's more local franchising of national brands. But a quick tour of the malls and interchanges will confirm the increasing dominance of national chains in this market as well. And with fast food outlets, national brands are the whole ball game.

Well, I could go on, but you get the point. The companies that employ the largest number of Cuyahoga County's lowest-wage workers are not, for the most part, locally owned or managed. Their CEOs don't bring their seven- and eight-figure salaries home to Cleveland suburbs. Their investors are elsewhere -- in most cases, spread throughout the stock-owning world. The people who run their northeast Ohio operations are middle managers, not movers and shakers, and they bring the region neither wealth nor clout.

In other words, the only way these national retailers, hotels, restaurant and fast food chains (and movie chains, and food service companies, etc. etc.) are going to increase the wealth of this community is by leaving more money here. There's absolutely no regional logic to helping WalMart, Target or Marriott increase their Cleveland market shares, and send more money back to head offices elsewhere, by paying subsistence wages to local workers.

Which is why it's in the interest of the whole region to have more of those workers organized, and bargaining effectively (i.e., collectively) to keep a bigger share of the value they help to create.

That's what unions are for. Whatever you may think of specific unions, or the labor movement's role in politics or the community, there's no more effective way for wage workers to get bigger slices of the pies they help to bake. For undervalued workers, their families and immediate communities, union organization is one of the most effective economic development tools available.

In Cleveland's present circumstance -- needing to build wealth and jump-start enterprise at every level, but smothered in subsistence-wage chain outlets that generate profits everywhere but here -- the unionization of low-wage workers should be welcomed by virtually everybody. Yes, even the Greater Cleveland Partnership, the Convention and Visitors Bureau and the guys at Baker Hostetler.

I'm not saying that unionization is appropriate in every Cleveland workplace, or that there aren't rational reasons for some employers (and workers) to avoid it, or that unions aren't sometimes as dumb and backward-looking as the rest of us. Like many a union loyalist (see the NYT article linked at the top of this entry), I'm sure the labor movement needs to re-think its roles and strategies on many fronts.

But support for collective bargaining to get living wages for local residents at places like WalMart, Marriott, the national food and building service companies, the big restaurant chains? From the standpoint of building wealth and reducing poverty in greater Cleveland, this is just a no-brainer.