September 23, 1999

Minutes of Meeting
MEDOFAB Votes Down "Living Wage" Proposal

Manhattan Economic Development Opportunity Fund Advisory Board Minutes of
Meeting August 18, 1999 City Commission Room, City Hall
Chair Gene Klingler called the meeting to order at  8:40 a.m.
Members Present: A. Brightman, G. Klingler, B. Muir, D. Rathbone, B.Riley,
L. Stutzman, and R. Reitz, ex-officio member. Members Absent: C. Hughes, F.
Tillman, and B. Varney.  City Administration - Gary Greer, Ron Fehr, Gary
Fees, and Wendy Schomaker,. Chamber of Commerce - Dan Colantone, Ann Harts,
and Sarah Saueressig. Many interested citizens.
The agenda was approved by consensus.
A motion to approve the July 7, 1999, MEDOFAB meeting minutes with changes
was made by D. Rathbone and seconded by L. Stutzman. Motion was approved
REVIEW OF FINANCIAL REPORT: R. Fehr, Assistant City Manager, reviewed the
newly formatted financial status of MEDOFAB. In June, several payments made
to Western Wireless, GML, and Farrar Corporation. A recent payment of
$70,000 was a partial payment made to Paragon Technologies, in which a
portion went to Paragon Technologies and a portion went to ASHA
Distributing, Inc. The projected balance is $230,000, with payments to be
made to Paragon Technologies. There is a little over $1 million remaining
for investment purposes.
Paragon Technologies will have payments in the amount of $8,531 per month
are for rent through August of 1999. The small final payment of $5,566 will
be made in September of 2000.
B. Riley asked if the line item projected balance could be made to show
future loan payments currently committed, with appropriate labeling to show
a net number. R. Fehr said that a separate report could be created to show
a 10 year plan.
LIVING WAGE ISSUE: This is not an official standing on how the living wage
issue will be handled. This is just a hearing to answer questions in order
for the Board to forward its comments and recommendations to the City
Commission, which will be included in its deliberations.
John Exdell presented the Living Wage issue. He hopes to present the
Resolution to the City Commission some time in the future. The Policy
Resolution was read. The purpose of the Resolution is to explain poverty in
Manhattan today in terms of reality.
Mary Jo Murphy gave statistics on poverty in Manhattan and Riley County.
Riley County is the highest county in the state. The Flinthills Breadbasket
served 1/5 of the population in Manhattan in 1998. Those served were the
working poor. More people are working, but not able to make ends meet.
Poverty is growing and more people are unable to make their ends meet.
John Exdell gave background information on the Living Wage issue. They
began last year and have presented the issue to many groups. They feel that
the proposal for private firms was influential in the April election. Some
have argued there should be no government regulations on wages. Mr. Exdell
feels that this is not accepted by many people. They have heard from
business people who are worried about rising wages in Manhattan and what
this will do for them to receive adequate profits. Do not want to see a
rising market with rising wages. Cannot accept Manhattan as a low wage
community. Need to do a better job of having higher wages.
Bob Stalder, a business representative for unions, addressed several
points. Unions have taken a big interest in the living wage issue.
Principles that they believe in are 1. dignity in work - being able to pay
their bills and feed their family without standing in line at the food
bank; 2. research - they did a good, thorough job of researching the issue,
there have been questions about updating the research, they stand by their
figures, an upgrade will be coming out soon; and 3.  tipping of the scales
- this is an economic development board that deals with numbers, but
people's lives are affected directly. He urges the Board to search the
issues and make decisions.
John Exdell explained the language in the Resolution. Be it resolved items
were discussed. The Living Wage Coalition thinks that a Living Wage Policy
should set some very strict standards, not be advisory or rigid, yet have
room for exceptions. Case by case decisions should be set by the Policy to
eliminate haggling. The research referred to in issue 4 will be completed
in September.
COMMENTS BY THE PUBLIC: No public comments.
Q: First paragraph of Living Wage Policy Resolution - Whereas, the City of
Manhattan provides financial assistance to private businesses intended to
serve a public purpose by creating jobs, expanding the City's economic and
tax base, and promoting economic security for all citizens. I haven't found
anything that says that the City is responsible for promoting economic
security. What is the source of the economic security? A: You won't find it
in any established document. This is a laudable goal that would be widely
accepted in our community. Economic security is a very important condition
for adults and children in our community. Q: Isn't economic security an
oxymoron? A: Economic security is not something that enough people have.
Doesn't see it as an oxymoron.
Q: Second paragraph of Living Wage Policy Resolution - Whereas, the City
has a responsibility when spending public money for such purposes to set a
community standard for wages that permits employees of such firms and their
dependents to meet their basic needs. Is this a philosophical philosophy or
is there a fact somewhere that says the City has this responsibility as
opposed to providing opportunity? A: Not that I know of. This is an new
idea that its time has come. Many communities have accepted this idea and
have passed the living wage ordinances precisely for this purpose. They
think that the local government has a role to play here.
Q: Third paragraph of Living Wage Policy Resolution - Whereas, in the
absence of such standards, the City places an undue burden on the community
and taxpayers, who must further subsidize employers paying sub-poverty
wages by providing their employees with health care, housing, nutrition,
energy assistance, and other services. Are you saying that no jobs would be
better than less than fully satisfying jobs? How do you apply that to what
we are trying to do? A: The point that we are making is that if the City
brings in low wage jobs, there are costs involved which have fallen on the
taxpayers and other citizens. We don't face a choice between no jobs or
good jobs, but to save the community a strain on its public assistance in
many areas.
Q: Fourth paragraph of Living Wage Policy Resolution - Whereas, even in
promising economic times, far too many working Manhattan residents and
their families struggle with poverty and incomes insufficient to meet their
basic needs. Is there some number that is not too many, if there are any at
all? A: Relative to what it is possible to reduce it to. We need to bring
it down.
Q: Is there some satisfactory number? A: No.
Q: Fifth paragraph of Living Wage Policy Resolution - Whereas, federal and
Kansas law now require single parents caring for young children to work
outside the home in order to receive public assistance. Is that what the
law says or is that the impact of the law? A: That is what the law is
pushing people to do.
Q: Sixth paragraph of Living Wage Policy Resolution - Whereas, the use of
taxpayer dollars to promote the sustenance and creation of living wage jobs
will increase consumer income, decrease levels of poverty, invigorate local
businesses, and reduce the need for taxpayer-funded social programs in
other areas. How is the proposed $8.11 wage going to invigorate local
businesses? A:  There are many small businesses in the community that are
worried that rising wages will hurt them. They also need to consider that
more money in the community will raise the demand for their services,
creating a higher volume of sales. We do not have any concrete analysis on
Q: Seventh paragraph of Living Wage Policy Resolution - Whereas, the
Flinthills Living Wage Coalition conducted competent research which found
that a living wage for Manhattan, Kansas, is $8.11/hour with health
insurance for the wage-earning employee, and $8.91/hour if such health
insurance is not provided. $8.11 is determined to be fairly sustaining for
a single parent, two children family. This is not necessarily giving them
discretionary spending. Does this imply that they are benefiting from all
of the available government support, assistance, and activities? A: Yes
this has taken into account that they would be taking advantage of all
available forms of support.
Q: Doesn't think that $8.11 is satisfactory. We are still not talking about
a living wage, but a highly fully subsidized existence just to get by.
Misrepresenting this for a solution to the problem. What would a person
have to make to be completely separate from government funding and
programs? A: We found that it would be approximately $12 - $13 per hour. We
have taken 80% of that. No community has been able to decrease poverty
without doing away with these services.
Bob Stalder when the Board is giving economic development assistance to a
company, the members are hoping that it will succeed. The company will be
paying the living wage and that the employees are going to spend their
money locally.
Mary Jo Murphy talked about subsidies regarding children and housing
assistance in which child health care is included, but housing subsidy is
not included.
Q: On the statistical analysis, have you compared us with other university
communities? A: We haven't compared those things. The information on the
21.2% poverty level is included in the 1999 census which does not include
college students. We have only looked at Manhattan.
Q: To get a true picture, we need additional information or comparative
information. Are there others in Kansas that have the living wage? A:   There
are living wage campaigns everywhere, but not in Kansas.
Q: Second paragraph of Be it Resolved - that exceptions to or
qualifications of this requirement be justified by some compelling purpose
and specified in the ordinance itself. Would  training courses for those
right out of high school who would begin with a lower wage be included in
this? A:        A probationary period is a reasonable possibility. Part-time would
also be included.
Q: Have other communities had any legal problems? A: We haven't heard of
any. We have worked with the national organization ACORN (Association of
Community Organizations for Reform Now) which is a clearing house for data.
There are no substantial problems that need to be resolved. The preliminary
results are positive. The ordinance would have to be written clearly to
eliminate problems.
Q: National Public Radio (NPR)  stated a shortage on employees and no
inflation last month. There is an increase in jobs that need to be filled.
Do you think that has any bearing on beginning wages that are going to be
paid? A: We hope so. A tight labor market means that higher wages will be
Q: How often will we revisit what this living wage is? Are we going to have
a different living wage for different makeups of households? A: It would be
an annual adjustment for inflation in terms of the region, not just the
nation. There will be a single wage category that will cover everybody.
Pick the typical family and use as the benchmark. Everybody will be
benefited somehow.
Q: Who pays to do the research each year? A: It is an automatic adjustment
with no expenditure of research time.
Q: Will it take into account the rent in Manhattan? A: We ought to revisit
it periodically which won't take much local ability. The state figures will
be used which will be updated every three years.
Q: Eighth paragraph of Living Wage Policy Resolution - Whereas, the Kansas
Department of Social and Rehabilitation Services has commissioned Kansas
State University researchers to undertake a new study, during the summer of
1999, which will determine a basic needs budget for each county in Kansas,
including Riley County. Was that independent research from some source or
was it the Living Wage Coalition that did the research? A:      We did the
research, but it is based on a study by Kansas State University in
1995-1996 which was commissioned by the Kansas SRS. We have tailored the
information which is based on independent data. This is competent research
that needs to be reviewed and audited.
Q: Are you proposing a living wage to companies who receive economic
development by the City only? A: Yes.
Q: Are there any thoughts into expanding that to companies who have
contracts with the City or provide services to the City? A: It will
eventually go outside to other businesses. Applies to only large and major
Q: In the census nine years ago were college students included? A: No.
Q: The federal census puts them where they are at the time of the census
and that the state census reports back to their county of residence. Are
these federal or state census numbers? A: These are from the state census
which does not include college students. Q: If the college students are
excluded, why are we that low?  If the college students were included we
would be even lower. A: We will check on that.
Q: In the cover letter, the figure is only for Manhattan residents, not
Riley County residents. How does this make more money available to spend?
A: Circulate more money in Manhattan. The money is going to go back into
circulation. They will be spending the extra money that is received.
Q: Do you have any experience of a negative affect on people in a town with
new companies coming in? A: We wouldn't attempt to find any negative
Q: Will all forms of economic development assistance be covered? A: Bonds
that would benefit the community are not covered. Tax abatements, as
opposed to grants and loans, should also be covered.
This Resolution is not the Living Wage Policy. Once the Resolution is
passed, the Living Wage Policy could be developed that we could live by and
stick with. The Resolution offers framework to develop the Policy.
Q: Is this an appropriate philosophical way to get at the solution to the
problems that have been identified.? A: Yes, that is a good way to put it.
We are asking for your support for the idea in its general form and now
with that support and the approval of the City Commission, we can work on
the actual policy details.
Q: What kind of criteria or indicators are used when talking about a
positive impact? A: In Baltimore and Los Angeles it was found that
employees affected by the policy are making better wages.
Q: What is the starting wage for members of the union? A: Starting wage for
a 60% apprentice, journeyman carpenter is $13.28/hour with training
included. The first year starting out apprentice is making $7.96, which is
60% of the journeyman wage, plus a benefit package of $3.39/hour. The total
wage is approximately $11.00/hour. A journeyman is making $17.02/hour.
ACORN listing of cities who have enforced a living wage, when they did it,
and the parameters placed on the living wage ordinance.
Q: Each time that the living wage is changed, will companies have to pay
their bottom employees that wage? Would there be a cost of living
adjustment to the living wage? A:       The employee is already hired. We would
like to see it in the ordinance.
Q: If entry salary is raised, will higher positions also get that increase?
A: Would probably see that or companies would have to have lower wages in
Q: Is it better to not have the company or to have a company that will be
receiving the help? A:  We can't know if that will occur. We can only make
assumptions. If we lose the company, we will still have the funds
available. We shouldn't assume that having the living wage we would be
scaring off opportunities.  If do scare off the company, we may get a
better deal down the road.
10:00 Board took a break.
Emily Bode, 1906 Bluestem Terrace - League of Women Voters observer.
Clarification of League position on the issue. Presented to the State Board
a study item on the living wage issue in which Mary Jo Murphy was a part
of. It was adopted by the League of Women Voters in Kansas that they will
study this issue which will not be restricted to economic development
funds. Local Manhattan/Riley County Chapter will be studying this issue.
Many local League members are in support of adopting a living wage
resolution. League does not have a position on this issue.
Dan Colantone, President, Manhattan Chamber of Commerce - Stated the
position of the Chamber of Commerce in regard to living wage issue. This is
a community issue. The Chamber does not support a mandate. We need to
provide people with better skills and training and help with child care
issues. The Chamber maintains a proactive position in maintaining those
issues. There should be no conditions. The Board has set parameters with
conditions. Competitive wages and higher wages are part of the competitive
nature. The Chamber is interested in increased parameters with packages to
receive economic development funds. Work force development is the biggest
issue in small, medium, and large businesses. More and more challenges will
be faced in bringing jobs into Manhattan. The Chamber has been doing a
study with a coalition of other organizations who have been speaking with
their boards. They have concerns. The final survey results are not in. Mr.
Colantone gave statistics of those who have responded to the questions of
the survey to date. What is the right thing to do? Do we really need a
living wage? Private sector jobs have increased by 3.9% over the last 2
Dick Hayter, 1920 Grandview Drive - Is a minimum wage needed at all? We
have been able to attract positive industries that have a positive effect
on the wage industry. This would be an unfriendly business label that would
be placed on Manhattan. Is negotiation on a salary, rather than a
requirement, better? Need to give the City the flexibility to handle these
Ann Harts, Director of Economic Development, Manhattan Chamber of Commerce
- Gave family background since she is a native of Manhattan. Every day her
father would go to work, he would be asking himself: How am I going to make
overhead today? How am I going to provide for my employees and family? A
living wage policy would put small businesses out of business. They would
like to be able to keep their doors open. Employment numbers went up while
population went down from 1996-1998. Ms. Harts has concerns with Baltimore
study. Gave statistics on wages from meeting with Human Resources Board.
Q: Federal minimum wage and State minimum wage are set. Is there any
particular reason why counties or cities should establish any type of
minimum wage? A: No.
Kevin Fateley, KanGolf,Inc. - The wages are going up on their own now.
Competition to get quality employees is causing the wage to go up.
Companies that come to Manhattan are looking for the Quality of Life which
is high in Manhattan without the pay like Overland Park. Overland Park
doesn't have the Quality of Life as it is in Manhattan. There is no way to
define what certain people are paid.
Mr. Exdell doesn't think it is fair that it is conveyed that they are
requesting a proposed minimum wage set aside from the federal minimum wage.
We recognize that the Board has adjusted its standards for different
companies. This is not sufficient. This Board will not be the same board in
the future and decisions are only advisory to the City Commission.
Voluntary parameters are not enough.
A. Brightman - Appreciates the social call to action brought about by the
report. There is no evidence that what the City Commission or MEDOFAB are
doing is creating poverty. Economic development has had a positive effect
on the wage structure in Manhattan. Concern with proposal is that if you
tie in the Board with this proposal with the exemptions and rules and
regulations, adding more complexity is something the Board has tried moved
away from. Not in favor of enacting an ordinance of this type. Work ethic
is not addressed by this.
B. Muir - Commended the group on its work. These groups sensitize us and
continue to influence us. Wants to see the ordinance, not a resolution that
states that an ordinance will be developed.
L. Stutzman - Technically, the living wage is not a minimum wage, but it
is. Companies are not going to look at us if there is a living wage in
effect. Big companies will be affected more by a living wage than a small
business would. Not in favor of a living wage.
D. Rathbone - If you start adding exceptions to the process, a salary
spectrum trying to accomplish this will not be very different than what it
is today in Manhattan. Solving the poverty issue is something that should
be done in a different way. Concern with Mary Jo Murphy's statistics. Would
like to see an analysis of the spectrum of salaries in Manhattan to see if
there really is a problem. A living wage is not the correct solution.
B. Riley - We don't disagree with the issue at hand, but disagree on how to
solve the problem. Work ethics and responsibility will make a difference in
where we go. On the right track in this community with regard to economic
development. Supports competitive wages and a competitive work environment.
G. Klingler - The Coalition has made a difference in making companies a
little more aggressive in their wage scale. Has a concern with "all forms
of economic development." Can legislate realism, but cannot legislate
idealism. Degrading in saying this is a living wage and this is what we are
going to give. How can we pay the different living constellations the same?
Throw "living wage" out, it raises the expectations of the employee.
The Board supports a competitive wage. What is the Board"s recommendation?
Need to include some reference to the Resolution and where the Board stands
in the recommendation to the City Commission.
Motion was made by B. Muir that MEDOFAB reinforces its commitment to create
competitive jobs and wages, but do not recommend approval of the proposed
Living Wage Policy Resolution. Seconded by D. Rathbone. Motion approved by
consensus (6-0).
A. Brightman left the meeting at this time.
ACCOUNTABILITY REVIEWS Kansas Entrepreneurial Center (KEC) and Manhattan
Holdings, LLC B. Riley was the Board member assigned. Curt Wood and Gary
Fees, along with R. Fehr participated from City staff. R. Fehr gave an
overview of the Accountability Checklists for KEC and Manhattan Holdings,
LLC, which are both under the management of MACC (Mid-America
Commercialization Corporation). Together they created 21 jobs as of the end
of 1998. KEC has moved to full occupancy a year ahead of time. $265,000 in
lease hold improvements have been made. Incubator companies have brought in
$6 million from outside the community.
Ron Sampson, President, MACC, stated this is an illustration of economic
development at work without mandates. Steris Corporation acquired Food Labs
and will be based in Manhattan. Food Labs and Nantek will be recognized in
Kansas City as some of the fastest growing companies in Kansas.
D. Rathbone commended Ron Sampson on the work that he has done in the
B. Riley added that it gives us a better look at vertical job levels. This
is a company that allows graduates of KSU to be able to stay in Manhattan.
B. Riley moved to enter into the record that MEDOFAB has heard the Annual
Accountability Review of the Kansas Entrepreneurial Center (KEC) and
Manhattan Holdings, LLC.  L. Stutzman seconded.  On vote, the motion passed
KanGolf, Inc. G. Klingler was the Board member assigned. Gary Fees, and R.
Fehr attended for the City.  R. Fehr gave an overview of the Accountability
Checklists for KanGolf, Inc. They are working with a program through KSU to
employ students on a part-time basis. Paid $5,593.00 to the City as a fee
in lieu of taxes in 1998. This compares to $4,149.00 for 1997.
G. Klingler commented on the increase in sales tax and what it says for the
R. Fehr mentioned several high interest SBA loans KanGolf has that they
were able to refinance.
Kevin Fateley stated that 16 students aren't just those in the turf grass
program, they are students from many different programs. KanGolf's goal was
to provide a Quality of Life issue.
Q: Where is the potential for growth? A: The golf site which has not maxed.
More promotion has been placed on miniature golf. Second miniature golf
course expected in 2002. They are slow getting the larger parties out to
the site, but there is growth.
Q: Is the area going to be annexed some time soon? A: FEMA flood plain map
issues need to be resolved before annexation can occur. This is the reason
a fee in lieu of taxes was instated in the agreement. Have already filed
for annexation and it will go through as soon as new flood plain maps are
released. The money now received would still be received, but in a
different way. The money would go to the City, not to MEDOFAB.
B. Riley moved to enter into the record that MEDOFAB has heard the Annual
Accountability Review of KanGolf, Inc.  D. Rathbone seconded.  On vote, the
motion passed (5-0).
Second City Commission Policy Session in September has been canceled.
MEDOFAB will go before the City Commission at its Policy Session on
Tuesday, September 14, 1999. The regular reports will be finished at the
regular MEDOFAB meeting on September 1, 1999. There was a discussion on the
date for the evening public meeting which is a combination of a report that
summarizes each company's report and gives the public the chance to ask
questions. It was discussed that Board members would bring their calendars
to the September 1 meeting to set a date.
As there was no further discussion, the meeting was adjourned at 11:40 a.m.
Next meeting will be at 8:30 a.m. on Wednesday, September 1, 1999.  This
meeting will be in the City Commission Room at City Hall.
Respectfully submitted,
Wendy Schomaker Administrative Secretary
Minutes were approved, with changes, on September 1, 1999.