Glendale Prop 499 Defeated By Save Glendale Jobs Coalition

Glendale Prop 499 Defeated By Save Glendale Jobs Coalition

by | Nov 9, 2024 | Economy, News

By Matthew Holloway |

The City of Glendale’s Proposition 499, the “Hotel and Event Center Minimum Wage and Wage Protection Act,” was soundly defeated on Election Day. The defeat was a rebuke to Worker Power, a California special interest group seeking “economic justice and the preservation of democracy.” Prop 499 was met with staunch opposition in Glendale from the coalition “Save Glendale Jobs,” funded by hospitality industry leaders and supported by three Glendale Councilmembers Lauren Tolmachoff, Joyce Clark, and Vice Mayor Ian Hugh.

The ballot measure would have mandated “hotel and event center workers receive a $20.00 per hour minimum wage (increases annually), service charge payments and premium pay to be enforced by a newly created city department of labor responsible for investigating employer violations involving payment of wages, reporting, recordkeeping, and overtime requirements.”

Hotel developer Chris DeRose, president of CivicGroup LLC, a firm seeking to bring a LivSmart by Hilton Hotel to downtown Glendale, was joined on a conference call prior to the vote by Clark, Hughe, Tolmachoff and Councilmember-elect Dianna Guzman. DeRose explained the serious problems that the proposition would cause for the burgeoning West Valley City, deep in an extended project of downtown revitalization as well as business owners.

“We’re in the process of taking that out to capital. Then we get a proposition that gets ballot access that threatens to upend all of our economic modeling and throw uncertainty into the whole project,” DeRose explained.

“Unfortunately, that’s frozen us in our tracks because whether you’re talking to a bank or you’re talking to investors, they want to know, ‘Hey, what’s the labor cost here?’ For a hotel, your number 1 expense, especially in a limited-service model where you don’t have F&B, it’s salary for staff. And so, this proposition has created uncertainty, and we’re not able to answer those very basic questions right now. And as a result, we’re not able to move the project forward.”

He added that the proposition appeared to be a “Trojan horse.”

“What’s really unusual about this, it’s a minimum wage that’s really – it’s a proposition that is disguised as a minimum wage. The minimum wage part is the Trojan horse.”

“The problem is that there’s actually a cap on productivity and that is unprecedented. I don’t know of another jurisdiction in America where you have a cap on productivity and in this case it’s 3,500 square feet, which is about 10 hotel rooms.”

Councilmember Clark noted the serious impact the proposal could have had on Glendale’s competitiveness in attracting businesses saying, “I think it’s important to note that Glendale will be the only city in the state to mandate $20 an hour. And overtime, it’s more than that. It’s $40 an hour, which people are not paying attention to. It puts Glendale at a competitive disadvantage with every city in the state and the Common Sense Institute says that it may cost Glendale anywhere from a million dollars on up annually just to regulate this and in lost revenue from other projects that may have considered locating in Glendale.”

Councilmember Tolmachoff expressed concerns about navigating the regulatory mandate the city would be required to assume saying, “To put the city in a position to be a regulatory authority and to have to intervene and interact between a civil disagreement between an employee and an employer is absolutely no place for a city to be.”

Save Glendale Jobs Chair Kim Grace Sabow said in a statement after the proposition’s defeat:

“I extend my sincere appreciation to Glendale voters, who chose to preserve and protect the jobs our industry creates. I want to thank the many supporters of our effort, without whom this result would not have been possible, including key business leaders, elected officials, and law enforcement. I also want to thank our dedicated campaign team, which expertly managed every aspect of this campaign, and our volunteers, who spread the word across the city about how damaging this measure would be. Together, we formed a mighty coalition.

“I am thrilled for Glendale, which I am certain will not only continue to grow and create more outstanding destinations, attractions, and experiences for visitors but will also continue to deliver more great jobs and career opportunities for Glendale residents.”

According to Maricopa County Elections, the proposition was defeated by 15.32 pts., or approximately 10,338 votes as of this report.

Matthew Holloway is a reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.

Glendale Prop 499 Defeated By Save Glendale Jobs Coalition

New Report Warns Of Job Losses, Massive Economic Costs With Glendale’s Prop 499

by | Sep 14, 2024 | Economy, News

By Matthew Holloway |

The Common Sense Institute of Arizona (CSI) released a report Wednesday which outlines the implications and economic impact of the City of Glendale’s far-reaching “Hotel and Event Center Minimum Wage Protection Act” (Prop 499). The act is set to be considered by voters on November 5.

The initiative, launched by the non-profit organization “Worker Power Political Action Committee,” has been challenged by the City of Glendale on the basis that it violates the State of Arizona’s “Single Subject Rule” limiting initiatives to act upon a single issue, The case is now headed to the State Supreme Court according to AZ Central.

The report from CSI Arizona details that the initiative, if it becomes law, would mandate that hotel and event center employers pay their staff a minimum of $20 per hour, and places narrow restrictions on the duties they may perform and the duration for which they may perform them. As Brunner explains, “For example, it prescribes how many square feet can be cleaned in a hotel before the employer is required to pay twice the room attendants’ regular rate of pay for each hour worked during that workday, and establishes new requirements on how Hotel and Accommodation firms treat certain revenues and records.”

The act would furthermore require the City of Glendale to create an entirely new enforcement division in order to enforce the mandate and hire staff to conduct investigations. It would also price non-union labor out of the market per the report.

The CSI found that the new law, if enacted, would, “reduce Gross Domestic Product (GDP) in Glendale by between $120 million and $1.9 billion.” Given that the city’s event and accommodation industries account for approximately 8.2% of Glendale’s entire economy, the blow to the city’s tax base could be severe.

“Depending on how the industry responds to the new policies, between 1,700 and 32,000 Glendale jobs could be impacted. Impacts will range from the elimination of existing jobs subject to the new rules, to reduced work hours, to the movement of jobs outside the city. How much of each and when will determine where things fall in this range.”

In a post to X, the CSI explained, “The Minimum Wage Act would impose significant costs on the city of Glendale, requiring the creation of a new Department of Labor Standards to enforce the Act’s provisions. CSI estimates the city would need to spend $995,000 to $1.9 million annually to manage these new requirements.”

Compellingly, the CSI report referecnces similar policies put in place around the country as “instructive examples,” of the likely ramifications of enacting the restrictive law.

“This year California instituted a $20 per hour minimum wage for fast food workers leading restaurant owners to reduce staff hours, lay off part-time staffers, and limit overtime pay. Also this year, Long Beach, CA passed a ballot initiative instituting a $23 per hour minimum wage for hotel workers. On the consideration of increasing hotel and airport workers’ minimum wage to $25 per hour, the President of the Valley Industry and Commerce Association said ‘increasing the hourly wage by $6 or $7 this year alone could cost an employer about $14,000 more per worker.’ For Arizona to pass a $20 minimum wage for hotel and event center workers in Glendale, it could cost employers up to $10,756 per affected worker -through a combination of either direct increased wage costs or efficiency losses as employers mitigate the impacts by reducing staff, cutting hours, or moving business activity. Much of this cost will likely be passed onto consumers in the form of higher prices and increased fees (as has been the case in California). This may further incentivize both customers and operators to seek alternatives outside the city.”

With Glendale and the city’s businesses banking heavily on the much ballyhooed Mattel Adventure Park at the VAI Resort set to open in late 2024, according to a park representative, and the growing impact of the Westgate Entertainment District and State Farm Arena on the local economy, the impacts of this measure could be devastating.

Matthew Holloway is a reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.