The Fair Wages for New Yorkers Act

Picture via KimTheWolf (flickr), showing a protest sign at Georgetown University in Washington, D.C. (where the living wage is almost $15 per hour.

The Kingsbridge Armory CBA campaign may have tanked, but its supporters have not been deterred. They're hoping the city council will enact the Fair Wages for New Yorkers Act, which would mandate a $10 minimum wage for all projects receiving more than $100,000 in subsidies. As many people have argued of late (including myself), institutionalizing the living wage would be preferable to relying on CBAs and deal-by-deal negotiations. "[T]his debate is not just about one parochial section of the Bronx," explained Ruben Diaz, Bronx Borough President. "This is a citywide debate."

Some details about the bill:

• The law would apply to projects receiving all sorts of subsidies, not just direct cash payments. It would count indirect subsidies like bond financing, tax abatements or exemptions, tax increment financing, fee waivers, energy cost reductions, environmental remediation costs, property acquisition write-downs, and other discretionary assistance.
• Projects used exclusively for affordable housing, or to house social services, arts, or cultural organizations would be exempt from the wage requirement. (Okay, but what does "exclusive" mean?)
• Covered employers include the developer/subsidy recipient; subsequent owners of the property; tenants and subtenants; and contractors that work on the project for 30 days or more (including temp services, food service contractors, and on-site service providers). However, non-profits with annual budgets of less than $1 million would not be subject to the wage requirement.
• Employees would be entitled to a living wage, regardless of their part time, temporary, or seasonal status. Independent contractors would be covered too.
• The living wage would be $10, or $11.50 for employees not receiving health insurance. These rates would be adjusted annually, based on the local consumer price index.
• The living wage requirement lasts for the longer of 30 years or the duration of the subsidy.
• Employers have to post notice of the living wage rules, give a copy of the notice to each employee, and keep records of hours worked and wages paid. The city comptroller's office can inspect those records whenever it wants, either on its own initiative or after receiving a complaint. If an investigation uncovers evidence of a violation, the comptroller would hold a fact finding hearing, and then issue an order, disposition, or settlement. Remedies could include: requiring payment of back pay plus interest to the wronged employee; a fine, not to exceed 200% of the total amount due to the employee; requiring the disclosure of additional records; and/or requiring the reinstatement of any employee retaliated against for trying to enforce the wage requirement.
• If an employer receives two violations in any six year period, the employer would become ineligible for financial assistance for five years.
• Developers and employers would also have include clawback provisions in their financial assistance agreements with the city or city economic development agency, and if an employer failed to cure a violation, it could lose its financial assistance and even be required to pay back already received subsidies.

Well, Mayor Bloomberg has predictably opposed the bill. As explained at the Atlantic Yard Report, his reasoning is completely illogical:

Bloomberg's conclusion: "The free market works much better."

"Having the public subsidize some workers and not others is not fair," he added.

Um, couldn't the same be said about "some projects and not others"?

I would add, isn't it a little unfair when employers, but not employees, get subsidies? And c'mon, we're not really talking about socialism here, we're talking about $10 per hour in one of the most expensive cities in the world. We're talking about ensuring families a decent quality of life.

Bronx Borough President Ruben Diaz, Jr., is one of the bill's chief supporters. City Councilmembers Annabel Palma and G. Oliver Koppell sponsored the bill at his request, and it's received endorsements from about 20 other councilmembers. City comptroller John Liu and Public Advocate Bill DeBlasio are also on board. And about a dozen other community organizations have signed on to the Living Wage NYC campaign.

No doubt we'll be hearing more about this. For more to read:

• Sam Dolnick, Wage Proposal May Prompt Fight at City Hall, The New York Times, May 23, 2010
• Daniel Massey, Living-wage debate gets broader, louder, Crain's New York Business, May 23, 2010
• John Del Signore, Bloomberg Expected to Fight "Fair Wage" Bill, Gothamist, May 24, 2010
• Eliot Brown, Living Wage Bill Formally Introduced; Bloomberg Smirks, The New York Observer, May 25, 2010
• Molly Zelvonberg, Keep the working poor working, fair wages law is "Nice," but stupid says Bloomberg, NY Examiner, May 25, 2010
• Jeanmarie Evelly, Kingsbridge Armory Battle Inspires Citywide Living Wage Bill, Bronx News Network, May 26, 2010
• Michelle Chen, Living Wage Fight Revitalized in New York City, In These Times, May 28, 2010
• Juan DeJesus, Pols, Labor Leaders Launch Wage War Against Big Business, NBC New York, June 2, 2010

Dividing Retirement Assets: Who's Loss; Who's Gain?

In mid 2008, many divorce attorneys faced the problem of apportioning sudden significant losses in the stock and real estate markets.  Those cases depended on valuing IRAs and 401(k) plans to neutralize the risk for both parties.

The economy fell too fast and too far, however, for many sagging marriages.  During the first two quarters of 2008, many divorce litigants locked-in on values established over appreciable time.  Unless their divorce attorneys had the qualified domestic relations order (QDRO) ready at the trial date (a rare bit of forethought), significant value was lost each day of the delay.  In some cases, more than six-figures.

One such case decided during that era by Oakland County Family Court Judge Elizabeth Pezzetti, Skinner v Skinner, was upheld earlier this month in an opinion by the Michigan Court of Appeals.

Skinner is a guide for divorcing partners relative to what constitutes premarital or "separate" retirement property and defines "passsive income" relative to retirement assets.  The case also illustrates the consequences of stipulating to division dates for retirement assets, then suffering a long delay prior to full-resolution of the divorce litigation.

In Skinner, Husband stipulated to a date for purposes of valuation of the couple's retirement assets, including the pre-marital portion of his 401(k).  A two or three day trial and other dispositive court hearings were then spread over the next 3-months, during which time investment portfolios tanked, eroding nearly half the accrued value in retirement assets, across the board.

The issues in the case were: how to classify the significant interest income generated from Husband's pre-marital, and thus separate, retirement asset; and what date to use for division of the parties' IRA.

Coming into the marriage, Husband had invested approximately $15,000 in his Ford Motor Company 401(k) plan.  Over the course of the couple's 23-year marriage, more than $150,000 in marital earning contributions were made to the Ford plan.

As of the (pre-Great Recession) trial date, the value of the parties' other significant retirement asset, an IRA, was nearly $500,000.  By the time the judgment of divorce entered in mid-November, the IRA was only worth $330,000, and the Great Recession was upon us.

At trial, Husband presented a mathematically sound formula to calculate the interest generated from his pre-marital investment; these calculations were uncontested.  In her opinion dividing the marital estate, however, Judge Pezzetti ruled that 100% of the appreciation on the retirement plan was part of the marital estate.

The court of appeals affirmed Pezzetti's decision, including such gains as a component of the marital estate when a spouse, in this case the Wife, assists in the growth of the separate asset.  In the Skinner case, this assistance took the form of Wife's role as homemaker for the parents' four children.

Husband in Skinner took a double hit due to the losses incurred from the stipulated valuation date and the delay in getting the divorce judgment entered.  He cried "unfair" to the appellate court, to no avail.

In many of these cases, investor(s) nearing traditional retirement age were caught napping; some had a significant portion of their life-savings  invested in stock-based retirement assets rather than a more liquid, diversified portfolio.  Once the Great Recession took hold of the economy, divorce attorneys whose clients had already agreed to valuation dates for retirement assets lost significant value each and every day until their final judgment was entered.

Even when (painfully) aware of the issue, attorneys simply could not complete these divorces fast enough.  One of the parties, like in Skinner, usually came up short, suffering a complete loss of retirement value.

Once an agreement is reached, or when a divorce trial begins, it is crucial for the attorneys to work diligently in order to complete the often painful and emotional process of ending a long-term marriage.  Skinner tells us that no good can come from a delay.

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New Haven community group asks city to enforce CBA

Representatives from Communities Organized for Resonsible Development (CORD) brought a petition to the mayor's office this week asking the city to enforce the CBA involving Yale's Smilow Cancer Center. Specifically, CORD wants the city to confirm whether Yale has lived up to its local hiring promise. The group's leaders say that Yale representatives have refused to meet with them.

Now, Yale is supposed to provide annual reports on compliance with the CBA's jobs provisions. But the CBA is contained in the development agreement made between Yale and the city, and since CORD isn't a party it can't force Yale to comply directly. Or could it? The development agreement doesn't expressly disclaim the existence of third party beneficiaries, and it acknowledges that certain promises made by Yale and the city were intended to benefit the community.

The third party beneficiary issue is addressed in a recent law review article by Patience A. Crowder, More Than Merely Incidental: Third-Party Beneficiary Rights in Urban Redevelopment Contracts, 17 Geo. J. Poverty Law & Pol'y 287 (2010) (available to download here, for a small fee). Crowder contends that community residents are indeed third party beneficiaries to urban redevelopment contracts, and the article gives an excellent overview of the inconsistent and often complicated law of third party beneficiaries. While Crowder acknowledges that establishing third party beneficiary status for urban community members may be difficult, CORD's case is strengthened because the development agreement specifically states that Yale agreed to "certain commitments to the City and the community as requested by the City[.]"

Family Court's Custody Rulings Must Cite Findings

Last Thursday, the Michigan Court of Appeals reversed a custody ruling of the Eaton County Family Court.  The tortured case, Wilbur v Carter, arose from a paternity suit, not a divorce.

The couple in this case conducted a protracted custody battle over their now 11-year old child.  The case features just about every tool available to the family court judge: supervised parenting time; temporary orders; in camera interviews with the child (twice) and evidentiary hearings.

The family court made a series of custody rulings in Father's favor over the years, keeping Mother's custody hopes alive by scheduling review hearings.  Father had been awarded sole legal custody and the stated purpose of the review hearings were to determine whether joint legal custody could be reinstituted.

Although the unpublished decision does not contain the underlying facts, the family court judge apparently did not approve of Mother's life style, removing her as a joint legal custodian of her child, and ordering supervised parenting time with Mother.

Over the past seven years, the parents kept filing motions for custody.  The lower court flip-flopped on the issue, alternating between temporary orders of sole legal custody to Father; then switching back to joint custody.  What troubled the Court of Appeals was that none of the requirements contained in the Child Custody Act were followed.

Before a family court judge changes custody, it must first determine whether an "established custodial environment" exists with either, or both, parents.  This term is defined in the custody act to mean:

if over an appreciable time the child naturally looks to the custodian in that environment for guidance, discipline, the necessities of life, and parental comfort. The age of the child, the physical environment, and the inclination of the custodian and the child as to permanency of the relationship shall also be considered.

The Eaton County Family Court neglected to make this determination in the case.  This is important because a court's determination of an established custodial environment determines the burden of proof which the moving parent must satisfy before a change in custody can be made.

In addition, the Court of Appeals was also disturbed because the lower court failed to make any determination that a "change of circumstances" or "just cause" existed to justify the requested custody modification.  Finally, it also reversed the family court because it made no findings of fact based on the 11 statutory custody factors set forth in the custody act.

Often, family courts feel constrained by their crowded dockets and the sometimes "informal" nature of the family court.  Attorneys foster this environment by allowing decisions on custody matters without the requisite findings by the court.

This case stands for the proposition that a family court cannot properly change custody without first: determining whether an established custodial environment exists; then determining whether the requisite "change of circumstances" exists; and finally making a factual determination after an evidentiary hearing as to all 11-factors.

The case calls for good lawyering in each and every custody battle, regardless of the court's resources or the resources of the parties.

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Sustainability and the Columbia University expansion project

A new law review article critiques the Columbia University expansion project through a rubric of sustainability. This is sustainability in the broad sense--not just environmental sustainability, but economic and social sustainability too. The article puts the Columbia CBA into context, discussing how educational institutions interact with local communities and how "university creep" can impact neighborhoods. Regarding Columbia and West Harlem, the article looks at public participation and community engagement issues, including eminent domain, gentrification, and the CBA.

Can Urban University Expansion and Sustainable Development Co-Exist?: A Case Study in Progress on Columbia University was written by my Albany Law School colleagues Keith Hirokawa and Patricia Salkin.

New York City Bar Association panel on CBAs

The New York City Bar Association last night held a panel on CBAs. Audio is available here, and you can read recaps at Atlantic Yards Report and Noticing New York.

The panelists generally agreed that the CBA process in New York would be improved if signatories didn't accept payments from developers and if CBAs included better enforcement provisions. Additionally, they agreed that some CBA provisions, like living wages and local hiring, should be enacted as city-wide policies, and that the city's land use review process should be changed to allow more meaningful public input. Some of these changes just might happen. Al Rodriguez, General Counsel to the Bronx Borough President, said that next week a living wage bill will be introduced in City Council, and there have been murmurs of late that the Charter Revision Commission might deal with land use and community planning (see, for instance, Manhattan Borough President Scott Stringer's Recommendations to the Charter Revision Commission, and recent news that the commission will hold a land use "issue forum").

Cincinnati School Construction CBA

Perhaps taking a cue from the Syracuse Schools Reconstruction Project CBA, the Cincinnati School Board earlier this week approved a set of community benefits goals to be met on school construction projects, including:

• 40% of workers at a given school site should be residents of the school district;
• 40% should be residents of the Cincinnati metropolitan area outside the school district;;
• 20% of labor and trade personnel should be minorities and women; and
• provisions to encourage more apprenticeships for local workers.

Somewhat akin to an RFP, the "CBA" is expected to be signed by the Greater Cincinnati Building Trades Council and other nonunion employers that might work on school construction jobs. Community groups will also be invited to sign on.

The CBA follows revelations earlier this year that the Cincinnati Public Schools had awarded $12 million in contracts to white-owned firms improperly classified as minority contractors.

Trouble with the Columbia CBA

The New York Post reported yesterday that the West Harlem Local Development Corporation--the quasi-private nonprofit set up to negotiate and implement the Columbia expansion CBA--hasn't exactly been keeping up with its responsibilities. Apparently, it has yet to come up with a mission statement, secure tax exempt status, or even set up a phone line. Nor has it created funding guidelines for the $76 million Columbia is supposed to invest into the community over the next 15 years, which means that it hasn't yet been able to disburse any of the $500,000 it's already gotten from the university. The Post makes it sound like the entire CBA is in jeopardy, but that's probably not the case, at least as long as Columbia keeps making its payments. What might jeopardize the CBA, however, is an upcoming court challenge to the state's use of eminent domain on Columbia's behalf.

Women To Constitute A Third of the SCOTUS Bench

For the first time in our nation's history, three women will be sitting together on the bench of the United States Supreme Court.  By the time you read this post, President Obama will have conducted his 7:15 am press conference on Monday, May 10, to officially announce that his Solicitor General, Elena Kagan, will be nominated to replace retiring Justice John Paul Stevens.

The nomination requires approval of the Senate, expected later this summer.

Ms. Kagan is used to being first when it comes to the law.  She was the first female dean of the Harvard Law School, where she graduated magna cum laude back in 1986.  During her tenure, however, Kagan sued to prohibit the U.S. Army from recruiting students from the law school to fill the Judge Advocate General Corps.

She also served as an Associate White House Counsel under President Clinton.  She was the first woman to serve in the post of Solicitor General of the United States; the federal government's litigator. In that capacity, she managed the government's SCOTUS docket.

Her judicial experience, however, is limited to a clerkship at the Court of Appeals for the D.C. Circuit, followed by a clerkship with Justice Thurgood Marshall.  Most of her legal career has been spent in private practice and academia.

Kagan was a tenured law professor at the University of Chicago in the mid-1990s and undoubtedly wound-up among President Obama's professional contacts from that era.

Since she has never been a judge, Dean Kagan does not have a long list of decisions for the Senate's Judiciary Committee to pour over.  All the more reason Senate Democrats will be pushing to approve her nomination prior to the summer recess. 

In an era where women now make up a majority of all college graduates and law students, it only seems natural that they should occupy a third of the seats on our nation's high court.  Never much of a "good old boys" club, the Court has always been a vital mix of contemporary politics and long-term principles.

This Blog wonders how Kagan will be voting on the issue of same-sex marriage, likely to come up during her first year on the bench.  Until now, she has, by virtue of her brief tenure as Solicitor General, defended the constitutionality of California's referendum outlawing gay marriage in the Perry v Schwarzenneger case.

She really had no choice but to join that momentous fight on the side of upholding the California ban on gay marriage.  California's Attorney General, Jerry Brown, declined to defend the law, saying it was unconstitutional.  Governor Schwarzenneger likewise declined to wade directly into the legal fray, saying he approved of the litigation as it raised important constitutional legal issues that called for judicial resolution at the national level.

Update:  The official blog of the State Bar of Michigan has posted links to all the numerous blogs covering this nomination.

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CBAs and comprehensive planning

You can find a recently published law review article coauthored by myself and my colleague Patricia Salkin here. (You should also visit Patricia Salkin's excellent blog, Law of the Land.) The article is titled Community Benefits Agreements and Comprehensive Planning: Balancing Community Empowerment and the Police Power, and it's appearing in the current issue of the Brooklyn Law School Journal of Law and Policy.

Here's the abstract:

Traditionally, the states have empowered local governments to develop plans and implement regulations for neighborhood and community development. When accomplished at the local or regional level, the interests and benefits of the community as a whole are to be weighed against the detriments to individuals. Much has been studied and written about the lack of meaningful public participation in the planning and land use regulatory process, suggesting that often low-income and minority communities are not fully engaged in the process, even when it may result in decisions negatively impacting their neighborhoods. Case studies have also shown that governments are sometimes so eager to stimulate local economic development that they fail to fully engage communities in the project review process, both to expedite development and to avoid confronting local opposition. This emphasis on short-term economic growth, however, may obscure a local government’s perception of the social and environmental needs of particular communities. When this occurs, formal planning processes have failed to accomplish their goals of engaging community members and guiding future growth in a manner that maximizes long-term benefits for the common good.

New approaches to planning provide one response to systemic public participation problems. The environmental justice movement, for example, has sought to ensure a fair distribution of both environmental burdens and environmental goods by requiring local governments to make meaningful public participation available to all community members. Community based planning efforts have attempted to improve the planning process by focusing on small and distinct geographic areas and by developing collaborative and inclusive planning programs. Since the late 1990s, community benefits agreements (CBAs) have offered another method to increase community input in the development planning and review process. For communities that have historically been excluded from the planning process, CBAs can be a powerful tool to ensure that neighborhood interests are addressed as an integral component of development. The result, ideally, is growth and development that is accountable to the people it affects and equitable in its distribution of benefits and burdens. However, the people it affects are often a small subset of the municipal jurisdiction and the equitable distribution sought in the CBAs is limited to the proposed project area.

This article explores how the comprehensive planning process and CBAs complement and contradict each other, and how both could be improved by innovative and more inclusive planning techniques. Part II provides a brief historical background on comprehensive planning and community development, including issues relating to community planning and public participation. Part III examines CBAs and their role in community empowerment, community development and the promotion of social justice principles, including equitable development. This part also provides examples of typical land use related elements found in existing CBAs. Using these examples, Part IV segues into a discussion regarding whether private CBAs usurp the public planning process. The section explores whether CBAs are just another type of community based plan and whether CBAs advance narrow interests at the expense of the larger community. The question of what local governments should do when presented with a CBA that is inconsistent with the local comprehensive land use plan is examined to determine whether amending the plan to incorporate the community vision as articulated through the CBA is appropriate. The article concludes in Part V by pointing out that shortcomings of the current regulatory system allow local governments, intentionally or inadvertently, to exclude robust public participation from the development and implementation of comprehensive land use plans. This provides the impetus for privately negotiated CBAs, but these agreements may not always be ideal because not all parties to a CBA will have the best interests of the neighborhood or the community as a whole at the forefront of their agendas. While many CBAs have been successful, a number of case studies also reveal pitfalls in the process. The article concludes with the belief that local governments must be more inclusive and accountable in the public planning process to better meet the true goals of the community benefits movement.