The Employer of Choice

The St. Paul City Council wants to keep Dayton's downtown. But at what price?

At 10:30 on a Thursday morning, the fourth-floor furniture department of Dayton's in downtown St. Paul is empty of customers. Two employees pass the time chatting near the escalators. The background elevator music is conspicuously loud amid the silence. The acres of purple leather sofas and Lester Loden loveseats might as well be tucked away in a dim warehouse. You get the impression that you could crawl under the covers of a sleigh bed and lie undisturbed for days.

The scene on other floors is not much more robust. A trio of Dayton's employees gossip at the Elizabeth Arden skin-care products counter; a young leather-clad woman browses the lingerie section; a pair of elderly ladies haunts the shoe department. The busiest action is at the foyer pay phones and the coffee and pastry stand.

The sleepy scene highlights what Brian Sweeney, St. Paul's planning director, noted the night before at a city-council meeting: The downtown Dayton's store "frankly is not competitive."

Bernie Hesse, of the United Food and Commercial Workers Union, calls the Dayton's deal "economic blackmail"
David Kern
Bernie Hesse, of the United Food and Commercial Workers Union, calls the Dayton's deal "economic blackmail"

The impetus for Sweeney's comment was a public hearing on a proposal for a $20 million renovation of the last vestige of retail shopping in downtown St. Paul, soon to be known as Marshall Field's. Under the renovation plan, the number of floors would be dropped from five to three, aisles would be widened, floors and ceilings redone, exterior bricks scrubbed, and new facades added to the primary entrances on Cedar Avenue and Wabasha Street. To pay for the overhaul, Target Corporation, parent company of Marshall Field's, is banking on $7.8 million in public funds. The city would contribute $6.3 million in the form of a forgivable loan for renovations. St. Paul also promises to secure a $1.5 million grant for the company to cover the costs of asbestos removal. (The latter funds would likely come through the Metropolitan Council.) If Target failed to keep a store open downtown for 10 years it would have to pay back the $6.3 million.

When the deal, negotiated by Sweeney's office and the St. Paul Port Authority over six years, was made public last month, members of the St. Paul City Council were falling over themselves to embrace it. "They were jubilant; they were giddy," recalls Bernie Hesse, an organizer for United Food and Commercial Workers Union, Local 789. Council member Jay Benanav went so far as to suggest that perhaps the city's contribution was too stingy. "Why not put in a little more to make that look like a first-class building?" Benanav wondered to the Star Tribune. "I'd like to see a little more pizzazz."

But what council members weren't aware of when they made their initial rose-hued assessments of the plan was that, along with pocketing almost $8 million in public funds, Target Corp. would be receiving an exemption from the city's living-wage ordinance. Under this regulation, adopted in 1997, companies that receive more than $100,000 in public financing must pay all employees a living wage. Calculated at 110 percent of the poverty level for a family of four, this amount is $9.02 an hour at present.

Living-wage ordinances have long been a burden that Twin Cities politicians would rather artfully dodge than embrace. Until last month Minneapolis's policy contained a loophole that allowed the city to grant exemptions without going before the public to explain why a publicly supported corporation could not pay its employees $9.02 an hour. Under pressure from city-council member Jim Niland and living-wage advocates, this policy was eventually amended. But not before, among other examples, Target was granted a waiver for its proposed downtown Minneapolis store.

As the fine print of the proposed Dayton's deal became public, other nagging questions presented themselves as well. Will the subsidy ultimately lead to a loss of jobs at the Marshall Field's store? Is the deal simply a means for Target to make a less economically painful farewell to downtown St. Paul down the road? Why hasn't the company made its financial records available to the city?

These were the issues that Brian Sweeney was attempting to defuse as he took the podium at the city council meeting last week. Sweeney noted that the subsidy was "very much on the low end" of what municipalities have ponied up to large retailers nationwide. Citing a report by a retail consultant, Sweeney pointed out that Norfolk, Virginia, recently offered $30 million to Nordstrom for a new location, while Rochester has put together a subsidy of $20 million for the same retailer. (Sweeney has also pointed to Minneapolis's courting of the downtown Target store, which at last count amounted to a benefit package of more than $50 million. "We love being compared to downtown Minneapolis," he quips.)

But Sweeney had a more difficult job in laying out a justification for the waiver of the living-wage ordinance. According to the proposed contract, the only reason given for the waiver is Target's "long-standing participation" in St. Paul. To sweeten this pot, Sweeney made the case that the company is the "employer of choice, when you look at the combination of wages, benefits, and the flexible working schedule." He even went so far as to cite the Dayton's employee discount as proof that the corporation is a benevolent employer.

But Sweeney's best argument lay in pointing out the alternative to giving Target $7.8 million and a living-wage exemption. "Bottom line, the Dayton's store as it existed previously was not a competitive enterprise," Sweeney summarized. "This agreement makes it a competitive enterprise."

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