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2017-4143 Ordinance ORDINANCE NO. 2017-4143 AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AMENDING CHAPTER 2 OF THE CITY OF MIAMI BEACH CODE, ENTITLED "ADMINISTRATION," BY AMENDING ARTICLE VI, ENTITLED "PROCUREMENT," BY AMENDING DIVISION 6, ENTITLED "LIVING WAGE REQUIREMENTS FOR SERVICE CONTRACTS AND CITY EMPLOYEES," BY AMENDING SECTION 2-408, ENTITLED "LIVING WAGE," BY INCREASING THE CURRENT LIVING WAGE RATE OF $11.62 PER HOUR WITH HEALTH CARE BENEFITS OF AT LEAST $1.69 PER HOUR, OR NO LESS THAN $13.31 PER HOUR WITHOUT HEALTH CARE BENEFITS, IN A "PHASE-IN" APPROACH COMMENCING ON JANUARY 1, 2018 AND ENDING ON DECEMBER 31, 2020 AS FOLLOWS: 1) A LIVING WAGE OF NO LESS THAN $11.62 PER HOUR WITH HEALTH CARE BENEFITS OF AT LEAST $2.26 PER HOUR, OR A LIVING WAGE RATE OF NO LESS THAN $13.88 PER HOUR WITHOUT HEALTH CARE BENEFITS, COMMENCING JANUARY 1, 2018, 2) A LIVING WAGE RATE OF NO LESS THAN $11.70 PER HOUR WITH HEALTH CARE BENEFITS OF AT LEAST $2.74 PER HOUR, OR A LIVING WAGE RATE OF NO LESS THAN $14.44 PER HOUR WITHOUT HEALTH CARE BENEFITS, COMMENCING ON JANUARY 1, 2019, AND 3) A LIVING WAGE RATE OF NO LESS THAN $11.78 PER HOUR WITH HEALTH CARE BENEFITS OF AT LEAST $3.22 PER HOUR, OR A LIVING WAGE RATE OF $15.00 PER HOUR WITHOUT HEALTH CARE BENEFITS, COMMENCING ON JANUARY 1, 2020 AND ENDING ON DECEMBER 31, 2020; BY REQUIRING THAT COMMENCING ON JANUARY 1, 2021, AND EACH YEAR THEREAFTER, ANY INCREASE TO THE SUPPLEMENTAL HEALTH CARE BENEFITS RATE, AS APPROVED BY COMMISSION, BE CALCULATED USING THE MIAMI CONSUMER PRICE INDEX EXCLUSIVELY FOR "MEDICAL CARE" FOR ALL URBAN CONSUMERS (CPI-U) IN THE MIAMI/FT. LAUDERDALE AREA; AND, PROVIDING FOR REPEALER, SEVERABILITY, CODIFICATION, AND AN EFFECTIVE DATE. WHEREAS, pursuant to Section 2-408(a) of the Code of the City of Miami Beach, any service contractor entering into a covered services contract with the City, as defined in Section 2-407, must pay to all its employees, who provide services under the covered contract, the stipulated living wage rates, as approved by the City Commission; and WHEREAS, pursuant to Section 2-408(d) of the City of Miami Beach Code, the living wage rate may, by resolution of the City Commission, be indexed annually for inflation using the Consumer Price Index for all Urban Consumers (CPI-U) Miami/Ft. Lauderdale area, issued by the U.S. Department of Labor, Bureau of Labor Statistics; and WHEREAS, at its April 26, 2017 meeting, the City Commission, pursuant to Agenda Item C4-G, approved a referral to the Finance and Citywide Projects Committee (the "Committee") for a discussion on whether or not to change the current Living Wage hourly rate; and WHEREAS, at its July 10, 2017 meeting, after several discussions, and after considering all available options, the Committee recommended indexing the living wage rate cumulatively by 5.62% in a "Phase-In" approach to catch up with inflation from previous years (from January 1, 2016 through December 31, 2016, and from January 1, 2017 through December 31, 2017) when no living wage increases took place; and further to require that commencing on January 1, 2021 and thereafter, any annual adjustment for inflation to the supplemental health care benefit hourly rate, as approved by the City Commission, be calculated using the Miami Consumer Price Index exclusively for "medical care" for all Urban consumers (CPI-U), Miami/Ft. Lauderdale area; and WHEREAS, after considering the Committee's recommendation during First Reading of this Ordinance on September 25, 2017, the Mayor and City Commission directed the City's Administration to increase the health care benefit, by at least 50 cents per hour the first year, with a pathway to make the living wage rate without health care benefits at least $15.00 per hour using a "phase-in" approach; and WHEREAS, using a "phase-in" approach, the new hourly living wage rates, as approved by the City Commission, will be as follows: • Effective January 1, 2018, covered employees must be paid a living wage rate of no less than $11.62 per hour with health care benefits of at least $2.26 per hour, or a living wage rate of no less than $13.88 per hour without health care benefits; and • Effective January 1, 2019, covered employees must be paid a living wage rate of no less than $11.70 per hour with health care benefits of at least $2.74 per hour, or a living wage rate of no less than $14.44 per hour without health care benefits; and • Effective January 1, 2020, covered employees must be paid a living wage rate of no less than $11.78 per hour with health care benefits of at least $3.22 per hour, or a living wage rate of no less than $15.00 without health care benefits; and WHEREAS, all existing covered service contracts and future solicitations for covered services shall reflect and comply with all provisions herein, and as may be amended from time to time. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AS FOLLOWS: SECTION 1: That Chapter 2, Article VI, Division 6, Section 2-408 of the Code of the City of Miami Beach is hereby amended as follows: CHAPTER 2 ADMINISTRATION * * * ARTICLE VI. PROCUREMENT * * * DIVISION 6. LIVING WAGE REQUIREMENTS FOR SERVICE CONTRACTS AND CITY EMPLOYEES * * * Sec. 2-408. Living wage. (a) Living wage paid. Effective January 1, 2015, covered employees shall be paid a living Using a thfee=R4=yeaf "phase-in" approach - - -- •• - ^ • - -.e °: •• - -- - - hourly living wage rates are adopted as follows: (1) Effective January 1, 2018, covered employees must be paid a living wage rate of no less than $11.84 11.62_per hour with health care benefits of at least 1.72 2.26 ser hour or a livin s wase rate of no less than ',13.56 13.88 per hour without health care benefits; (2) Effective January 1, 2019, covered employees must be paid a living wage rate of no less than $12.06 11.70_per hour with health benefits of at least '4.75 2.74 ser hour or a livins wase rate of no less than ',13.81 14.44 ser hour without health care benefits; - - - ^• •• - - - '• • - - - - - • -- --- - - -- - --- - --- ---- - --= ------_- - - ---- -- eeffimissiew (3) Effective January 1, 2020, covered employees must be paid a living wage rate of no less than $12.27 11.78_per hour with health care benefits of at least '.474:43.22 ser hour or a livins wase rate of no less than '.44606 15.00 per hour without health care benefits_; pl � incroas& in thr, ( DI for all - - • - • •' - -- - _ •• • - - - S A _ •"• -e_• -_•• - I LV') J (b) Health benefits; eligibility period. For a covered employer or the city to comply with the living wage requirements of this division by choosing to pay the lower wage scale available when a covered employer also provides health care benefits, such health care benefits shall consist of payment of at least $4,69 $1.72 2.26 per hour toward the provision of a health care benefits plan for covered employees and their dependents effective January 1, 2018, and thereafter, as provided in subsections 2-408(a)(1)-(3). If the health care benefits plan of a covered employer requires an initial period of employment for a new employee to be eligible for health care benefits (eligibility period) the living wage requirements of this division shall be deemed to have been complied with during the eligibility period, provided the covered employer commences to pay the applicable living wage rate without health care benefits, effective as of the date of hire of the covered employee. Upon completion of the eligibility period, and provided the new employee will be provided health care benefits, a covered employer may commence to pay the applicable living wage rate with health care benefits. Proof of the provision of health care benefits must be submitted to the city's procurement director to qualify for the wage rate for employees with health care benefits. (c) Annual open enrollment/election of benefits. If a covered employee is being paid the hourly living wage rate with health care benefits and elects, during such period of time (but no less than once during the covered employer's fiscal year) on which the covered employer permits its employees an opportunity to change their health benefits plan coverage (hereinafter such election period shall be referred to as the "annual open enrollment period") to no longer continue receiving coverage under the employer's health benefits plan, then notwithstanding the covered employer's continuing to offer a health benefits plan to employees - the covered employee (electing out of coverage during the annual enrollment period) shall, by the next pay period, be paid the applicable hourly living wage rate without health care benefits. The covered employer may, in its reasonable judgment and discretion, determine the length of time for the annual open enrollment period; may require employees to complete and return a benefits election form; and, in the event that a covered employee does not complete and return such election form to the covered employee during the prescribed time of the annual open enrollment period, then the covered employer may treat the covered employee as having elected to continue with the health plan benefits coverage (then in effect) and, accordingly, may continue to pay the covered employee the applicable hourly living wage rate with health benefits. (d) Indexing. The living wage rate - -= --- - -- - =--- • - - may, by resolution of the city commission, be indexed annually for inflation using the Miami PMSA Consumer Price Index for all Urban Consumers (CPI-U) Miami/Ft. Lauderdale, issued by the U.S. Department of Labor's Bureau of Labor Statistics. Commencing in Fiscal Year 2019 on January 1, 2021, the supplemental health care benefits rate (the per hour rate towards health benefits) may, by resolution of the city commission, be separately indexed annually for inflation using the Miami PMSA Consumer Price Index for all Urban Consumers (CPI-U) for the Miami/Ft. Lauderdale area, for medical care only, as issued by the U.S. Department of Labor's Bureau of Labor Statistics. Notwithstanding the preceding, no annual index shall exceed three percent; nor shall an annual increase exceed the corresponding annual compensation increase (if any) provided to unrepresented (i.e., unclassified) city employees. The city commission may also, by resolution, elect not to index the living wage rate in any particular year, if it determines it would not be fiscally sound to implement same (in a particular year). The determination to index (or not index) the living wage rate shall be considered annually during the city commission's review and approval of the city's annual operating budget. In the event that the city commission has determined, in any particular fiscal year (or years), to not index the living wage rate, and thereafter determines that making up all or any part of the prior year's (or years') unindexed percentage would not have an adverse fiscal impact upon the city, then the city commission shall also have the right, but not the obligation, to cumulatively index the living wage rate to "make-up" for any deficiencies in the prior year (or years) where there was (were) no increase(s) (the "catch up" election). The "catch-up" election must be approved by resolution, and may only be considered during the city commission's review and approval of the city's annual operating budget. * * * SECTION 2. REPEALER. All ordinances or parts of ordinances in conflict herewith be and the same are hereby repealed. SECTION 3. SEVERABILITY. If any section, subsection, clause or provision of this Ordinance is held invalid, the remainder shall not be affected by such invalidity. SECTION 4. CODIFICATION. It is the intention of the Mayor and City Commission of the City of Miami Beach, and it is hereby ordained that the provisions of this Ordinance shall become and be made part of the Code of the City of Miami Beach, Florida. The sections of this Ordinance may be renumbered or re- lettered to accomplish such intention, and the word "ordinance" may be changed to "section," "article," or other appropriate word. SECTION 5. EFFECTIVE DATE. This Ordinance shall take effect on the 1st day of January, 2018. ���' PASSED AND ADOPTED this �'� day of C , 2017. ATTEST: / B 1141 . //\4\....***1‘11."1...cci r e Mayor k,(7, •. jY P Rafael E. Granado, City Clerk Underline denotes additions `' •' w, �- APPROVED AS TO denotes deletions '� -� "R, `` FORM & LANGUAGE I underline denotes additions after Fiat'Rn &FOR E UTION Double � � denotes deletions after First Reading 4 -- 1 ) City Attorney iorDote (Sponsored by: Commissioner Ricky Arriola) Ordinances - R5 H MIAMI BEACH COMMISSION MEMORANDUM TO: Honorable Mayor and Members of the City Commission FROM: Jimmy L. Morales, City Manager DATE: October 18, 2017 10:35 a.m. Second Reading Public Hearing SUBJECT: AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AMENDING CHAPTER 2 OF THE CITY OF MIAMI BEACH CODE, ENTITLED "ADMINISTRATION," BY AMENDING ARTICLE VI, ENTITLED "PROCUREMENT," BY AMENDING DIVISION 6, ENTITLED "LIVING WAGE REQUIREMENTS FOR SERVICE CONTRACTS AND CITY EMPLOYEES," BY AMENDING SECTION 2-408, ENTITLED "LIVING WAGE," BY INCREASING THE CURRENT LIVING WAGE RATE OF $11.62 PER HOUR WITH HEALTH CARE BENEFITS OF AT LEAST $1.69 PER HOUR, OR NO LESS THAN $13.31 PER HOUR WITHOUT HEALTH CARE BENEFITS, IN A "PHASE-IN" APPROACH COMMENCING ON JANUARY 1, 2018 AND ENDING ON DECEMBER 31, 2020 AS FOLLOWS: 1) A LIVING WAGE OF NO LESS THAN $11.62 PER HOUR WITH HEALTH CARE BENEFITS OF AT LEAST $2.26 PER HOUR, OR A LIVING WAGE RATE OF NO LESS THAN $13.88 PER HOUR WITHOUT HEALTH CARE BENEFITS, COMMENCING JANUARY 1, 2018, 2) A LIVING WAGE RATE OF NO LESS THAN $11.70 PER HOUR WITH HEALTH CARE BENEFITS OF AT LEAST $2.74 PER HOUR, OR A LIVING WAGE RATE OF NO LESS THAN $14.44 PER HOUR WITHOUT HEALTH CARE BENEFITS, COMMENCING ON JANUARY 1, 2019, AND 3)ALIVING WAGE RATE OF NO LESS THAN $11.78 PER HOUR WITH HEALTH CARE BENEFITS OF AT LEAST $3.22 PER HOUR, OR A LIVING WAGE RATE OF $15.00 PER HOUR WITHOUT HEALTH CARE BENEFITS, COMMENCING ON JANUARY 1, 2020 AND ENDING ON DECEMBER 31, 2020; BY REQUIRING THAT COMMENCING ON JANUARY 1, 2021, AND EACH YEAR THEREAFTER, ANY INCREASE TO THE SUPPLEMENTAL HEALTH CARE BENEFITS RATE, AS APPROVED BY COMMISSION, BE CALCULATED USING THE MIAMI CONSUMER PRICE INDEX EXCLUSIVELY FOR "MEDICAL CARE" FOR ALL URBAN CONSUMERS (CP1-U) IN THE MIAMI/FT. LAUDERDALE AREA; AND, PROVIDING FOR REPEALER, SEVERABILITY, CODIFICATION, AND AN EFFECTIVE DATE. RECOMMENDATION Adopt the Ordinance. ANALYSIS In the current fiscal year, the minimum hourly ("Living Wage") rate paid to covered employees of applicable City service contractors is $11.62 per hour, with health benefits of at least $1.69 per hour, or $13.31 per hour without health benefits. These rates were last indexed by the City Commission on September 30, 2014 with an effective date of January 1, 2015. No increases were approved for Page 500 of 1633 the following periods between January 1, 2016 — December 31, 2016 and January 1, 2017 — December 31, 2017. Pursuant to Section 2-408(d) of the City of Miami Beach Code, the living wage rate may, by resolution of the City Commission, be indexed annually for inflation using the Consumer Price Index for all Urban Consumers (CPI-U) Miami/Ft. Lauderdale area, issued by the U.S. Department of Labor, Bureau of Labor Statistics. According to the City Code, the City Commission may: 1) index the Living Wage rate annually; 2) index the Living Wage rate cumulatively to "catch up" for any prior year(s) where there was/were no increase(s); or 3) may elect to forego any increases if it determines it would not be fiscally sound to do so. At its April 26, 2017 meeting, the City Commission, pursuant to Agenda Item C4-G, approved a referral to the Finance and City-Wide Projects Committee (the "Committee") for a discussion on whether or not to change the current Living Wage hourly rate. The discussion item was originally presented to the Committee at its May 19, 2017, meeting for indexing the living wage rate. At that time, representatives of the Service Employees International Union (SEIU) also presented recommendations to the Committee that it proposes for both the living wage rates and amendments to the language and requirements of the Living Wage Ordinance (the "Ordinance"). Following the discussion of the information presented by both the Administration and SEIU, the Committee deferred the discussion to its June 30, 2017, meeting and requested staff to meet with the representatives of SEIU to determine the fiscal impacts of the different rates proposed and to provide an analysis of the amendments to the City's living wage ordinance proposed by SEIU. At its June 30, 2017, meeting, the Committee considered the information requested, which included the proposed living wage rates, each rate's potential fiscal impact as noted in the table below. Option Agency LW Health LW Potential Rate Benefit Rate Fiscal with Minimum without Impact Health Amount Health Benefits Benefits Miami 1 Beach 1.73 $13.64(single year $11.91 $ $ 351,622 option) Miami 2 Beach $12.27 $1.79 $14.06 799,140 (catch up option) 3 SEIU $13.00 $3.16 $16.16 $3,036,732 On June 30, 2017, the Committee directed staff to consider any circumstances that may reduce the fiscal impact of the living wage rate options noted above. In carrying out the direction of the Committee, staff considered two scenarios that may reduce the fiscal impact of any increase: 1. Are any contractor employees at or above any proposed rate and, therefore, not eligible for an increase? In this scenario, only the fiscal impact from reimbursing contractors for those employees that would actually receive the increase is considered in the Revised Potential Fiscal Impact. 2. Is the City considering reductions in the current level of service for any of the contracts to which the living wage rate currently applies? Since the City is, in fact, considering reductions in the Page 501 of 1633 current level of service for the contracts noted below in 2a-2c, the fiscal impact of the living wage rate increase may be reduced by the corresponding reduction in the level of service. The portion of Revised Potential Fiscal Impact indicated in the table below has been adjusted for the estimated reduction in the level of service in the following contracts: a . Security Guards. The Emergency Management Department is currently working on a plan to reduce a percentage of security guards deployed city wide. b . Temporary Labor Services. The Sanitation Division of the Public Works Department has been and is planning to continue to reduce the number of temporary workers it utilizes because it plans to continue filling the full-time positions already allocated in its budget. c . Tennis Management. Pursuant to Resolution 2017-29897 approved by the City Commission on June 7, 2017, the Parks and Recreation Department is implementing a reduction in the level of service for the tennis management contract. d. Other areas. The impact of any increase can be further mitigated by the reduction of service in other contracts that may be currently being considered. For example, the deployment of the gated revenue control system in the City parking garages may result in a reduction in the number of parking garage attendants required. The same is the case for the number of temporary office personnel contracted through one of the City's temporary services (clerical and para-professional) contracts. However, the potential reduction in these areas is not yet known and the Revised Potential Fiscal Impact indicated in the table below has not been adjusted for any potential future reduction. Based on the foregoing, the table below provides Revised Potential Fiscal Impacts for the options being considered by the Committee on July 10, 2017. Option Agency LW Health LW Potential Revised Rate Benefit Rate Fiscal Potential with Minimum without Impact Fiscal Health Amount Health (Maximum) Impact Benefits Benefits (Based on Current Employee Rates and Service Reductions) 1 Miami Beach (single $11.91 $1.73 $13.64 $ 351,622 $ 234,985 year option) 2 Miami Beach 4 (catch up $12.27 $1.79 $14.06 $ 799,140 $ 586,364 option) 3 S E I U $13.00 $3.16 $16.16 $3,036,732 1$2,395,681 1There are no City employees whose hourly rates are below Options 1 and 2. A number of City employee hourly rates are below the rate in Option 3. These figures do not include any adjustments that may be required in the hourly rates of employees currently below the rate stipulated in Option 3. Page 502 of 1633 That figure is estimated at approximately$150,000. On June 30, 2017, the Committee also requested options for staggering the implementation of rate increases to mitigate the impact on any given year. One approach for doing so is a phased-in option over three (3) years. The tables below shows some potential options for phasing in the rate increases for Options 2 and 3. A longer phase-in period (e.g., five years) is also an option at the Committee's discretion, especially for Option 3. Phase-in for Option 2 Current Option 2 Difference 2018 2019 2020 Rate Rate $13.31 $14.06 $.75 $13.56 $13.81 $14.06 (.25/yearfor3 (13.31+ 25) (13.56+.25) (13.81+.25) years) plus any plus any increase in increase in CPI for CPI for 2019 2020 Fiscal Impact $586,364 $195,455 $195,455 $195,455 plus the plus the ($195,455/year impact of impact of for 3 years) any rate any rate increase in increase in in 2019 in 2020 Phase-in for Option 3 Current Option 3 Difference 2018 2019 2020 Rate Rate _ $13.31 $16.16 $.2.85 $14.26 $16.16 (.95/yearfor3 (13.31+.95) $15.21 (15.21+.95) years) plus any (14.26+.95) increase in plus any CPI for increase in 2020 CPI for 2019 Fiscal Impact $798,560 $798,560 $798,560 $2,395,681 plus the plus the impact of impact of ($798,560.33/year any rate any rate for 3 years) increase in increase in in 2019 in 2020 After considering all options, the Committee recommended approval of the Option 2 Phase-in. This option consists of indexing current living wage rates by a 5.62% cumulatively increase in a "Phase- In" approach to catch up with inflation from previous years when no living wage increases took place; and further to require that commencing on fiscal year 2019 and thereafter, any annual adjustment for inflation to the supplemental health care benefits hourly rate, as approved by the City Commission, be calculated using the Miami Consumer Price Index exclusively for "medical care" for all Urban consumers (CPI-U) in the Miami/Ft. Lauderdale area. On September 25, 2017, after considering the Committee's recommendation during First Reading of this Ordinance, the Mayor and City Commission directed the City's Administration to increase the Page 503 of 1633 health care benefit, by at least 50 cents per hour the first year, with a pathway to make the living wage rate without health care benefits at least $15.00 per hour using a "phase-in" approach. The new pathway or "Phase-in" approach will take effect as reflected in the revised Ordinance (attached). CONCLUSION The Mayor and City Commission directed the City Administration to increase the current health care benefit, by at least 50 cents per hour the first year, with a pathway to make the living wage rate without health care benefits at least$15.00 per hour using a "phase-in" approach. Using a "phase-in" approach commencing on January 1, 2018 and ending on December 31, 2020, the new living wage rates, as approved by the Mayor and City Commission, will be as follows: 1. Effective January 1, 2018, covered employees must be paid a living wage rate of no less than $11.62 per hour with health care benefits of at least $2.26 per hour, or a living wage rate of no less than $13.88 per hour without health care benefits. 2. Effective January 1, 2019, covered employees must be paid a living wage rate of no less than $11.70 per hour with health care benefits of at least $2.74 per hour, or a living wage rate of no less than $14.44 per hour without health care benefits. 3. Effective January 1, 2020, covered employees must be paid a living wage rate of no less than $11.78 per hour with health care benefits of at least $3.22 per hour, or a living wage rate of no less than $15.00 without health care benefits. Furthermore, commencing on January 1, 2021, and each year thereafter, any increase to the supplemental health care benefits rate, as approved by Commission, be calculated using the Miami Consumer Price Index exclusively for "Medical Care" for all Urban Consumers (CPI-U) in the Miami/Ft. Lauderdale area. KEY INTENDED OUTCOMES SUPPORTED Improve City's Managerial Leadership To Reward Innovation And Performance FINANCIAL INFORMATION The Phase-in approach will help mitigating the total estimated budget impact of $1,339,129, which will have an annual estimated impact of $446,376 commencing on January 1, 2018 and ending on December 31, 2020. Legislative Tracking Procurement Sponsor Vice-Mayor Ricky Arriola ATTACHMENTS: Description o Ordinance Page 504 of 1633