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Communication from Jim Giese_Admin Policy 3.10 C7 ~ June 11, 2008 C7 ~~ =-= iii ) :.7 Mayor Roy Buol and Members of the Dubuque City Council . _~ ; = ~' T1 Cittfiy Hall _ ~; :r." v 13 & Central Ave. - ~~' ~ m Dubuque, Iowa 52001 }' %;~ ~ ~ iP ~ Re: State of Iowa statute (23A.3) and the City of Dubuque Administrative Policy #3. 10 Dear Mayor Buol and members of the council: This letter is being written to share with you my recent experience with the above referenced statue and policy. Last week one of my estimators informed me he was advised that a project my company had submitted agood-faith bid on (Roof Replacement for Fire Station #2 on JFK Road) may be awarded to another contractor because of the referenced policy. On Monday, June 2°d, I was informed that this policy does not apply to formally bid (construction) projects and that the Code of Iowa requires the acceptance of the low bid in these cases. However, the experience of possibly having my successful (low) bid rejected for the sole reason that my business address is not "local" (within the city limits of Dubuque) has led me to think seriously about the ramifications of this policy and the attitudes it may engender among affected local businesspersons. I respectfully offer the following for your consideration. Many thoughts crossed my mind when thinking about how this policy might affect my business and those who work for me and live in the city. Anger was my initial reaction. Despite the fact this policy apparently will not apply to my business now or in the future, it still angers me to think of local businesses who have served this community, some since the 19th Century, who are negatively impacted by this arbitrary policy. Like some others, I was born in the city, went to school here, worked here, started and built a business here, own and pay city taxes on both residential and commercial property within the city limits, and have participated in community service and served on charitable boards. My extended family has been in business here since 1923. The direct implication of the policy (and by extension, policymakers) that my business (or any other similarly situated business) is not local due to the simple and completely arbitrary notion of physical location is simply unreasonable. As a city taxpayer it is upsetting that the city is paying more for some services that necessary due to the application of this policy. Of course I first contacted the City Manager, Mike Van Milligan, regarding my "encounter" with the policy and he explained that offhand he wasn't sure if the policy applied in my case and he would check with the city attorney and get me an answer. In our conversation Mike mentioned he had discussed this policy at length with Jim Mulgrew, whose company, Mulgrew Oil, is now located next to mine in Tamarack Business Park. This is an example where an "inside the city limit" business is now outside the city because of the city's plans for the harbor-area development. How fair is that? Mulgrew was inside the city where he would receive the preference and because of actions of the city and city council is now outside the limit where he is discriminated against. (This is not a criticism of the actions of the city with regard to the harbor area, only the consequence of those actions due to this arbitrary policy). Is this the message the council wishes to send to local businesses? It occurred to me that my anger with the arbitrariness of such a policy is not unlike the anger felt by a minority upon being rejected for employment simply on racial or other irrelevant grounds. Understanding that there is little comparison between the injustice of this city policy and the long-term historical injustices perpetrated toward members of minorities, I suggest there is no difference in the arbitrariness of the single criterion used to accept or reject a "proposal" or "application" in either case. As I am sure you are aware, I rarely hesitate to express my views, to the consternation of many. On the other hand, I receive many private affirmations from those who are in businesses that would suffer if they made their opinions known. As a member of the business community, and having some knowledge ofbehind-the-scenes opinions, I suggest that many local businesspersons perceive that if they are not adding significant employment or are not a new business coming to town, they are at best taken for granted. Whether this perception is true or not, this policy does nothing to encourage a different view; on the contrary, it says, "You're not welcome." I understood Mike Van Milligan's opinion to be that neither he nor the council had any discretion regarding the application of the state statute or the city's policy. While that's possible, in reading these documents, I believe the language in the documents suggest otherwise. The state statute clearly states the city (and other public jurisdictions) "shall adopt" a policy which requires consideration [emphasis mine] of purchasing ...goods and services from a locally owned business ..." located within a relevant jurisdiction. The city's Administrative policy 3.10, which I understand was approved by a previous council, states "... it shall be City policy to consider [emphasis mine] purchasing ..." and "Vendors located within the corporate limits of the city of Dubuque may [emphasis mine] be given ... preference ...". I think the language used and the words I emphasized clearly imply discretion on the part of city officials and/or the city council with regard to the application of this policy in specific cases. I believe the intent of the city's policy is first to meet the requirements of the state statute and then to give reasonable preference to local businesses for local public work. Presumably, this is because the owners and employees of these businesses live and work within the specific jurisdiction and pay taxes to the government entity in that area. The purpose of this communication is to suggest the policy needs to be changed or at least exercised with consideration and discretion. Mike correctly said the City is mandated to have such a policy but I believe he said the amount of the preference is left to the city council's discretion, which is currently 10% on items less than $500.00 and 5% on items above. I believe the state law should be repealed or at least changed (if necessary) to make clear there is, in fact, local discretion. In the meantime, I suggest the council consider a "preference" amount so low as to make the state mandate virtually ineffective. The state mandate is that such a "policy" must be adopted and "consideration" is required. The statute does not appear to dictate the outcome or amount of that "consideration." Most local businesses do not need, nor have they asked for, these kinds of preferences. The market automatically favors local business in all locations simply due to the added logistical costs of time and travel. Efficient and competitive businesses do not need and should not want special favors from government, nor should they be the victims of governmental "preference." There are certainly numerous criteria that could be looked at to make a decision as to what is best, not for "preferred" local business, but for the citizens who pay the bills. If you choose to keep the current policy and percentages, then I urge you to exercise what I believe to be your option and consider more factors than simple physical location. While I understand the use of address is objective (but not fair) and that introducing other more subjective criteria might add difficulty to the process, I suggest some things you may wish to consider are: 1. Is the company submitting the low bid from another community, or essentially a "local" business? 2. How many employees of the company live in the city? 3. What is the company's safety record? 4. Does the businessperson or business have property in the city upon which they pay city taxes? 5. How involved is the business, its owners and employees, in community service? 6. How charitable is the business, its owners and employees? Also, while I don't believe it's any of the public business, it seems many local residents and former and (perhaps) current city councilpersons are concerned with the wages being paid to employees of the firms they contract with. If you are going to scrutinize businesses for "preference," then this might also be a criterion for consideration. In short, if you are going to prefer, then at least let the preference be earned. Other considerations and questions apart from specific business issues are as follows: 1. In reading the local paper it appears the city has some revenue shortfalls. Does it make sense to pay more for something? 2. Are your actions for the entire community or for special interests? 3. Are your actions in line with your fiduciary responsibility to the taxpayers of the city? 4. Does the city and the Dubuque Development Corporation inform potential new businesses of the city's "preference" policy, letting them know they will be at a disadvantage in sales to the city if they locate outside city limits? 5. What would happen in a case where the owner of the business was, say, from Rockford, Illinois, but also a female minority? Would the city's 5% "preference" be added to her bid, then the State's mandated 5% preference be subtracted? How would you "prefer" a local vendor in this case? 6. In addition to costing more in real terms, this policy also has the effect of limiting competition, as fewer bidders will be willing to expend the time and expense to quote on work for which they are at an immediate disadvantage. 7. What would happen should the "preferred" vendor decline to take the advantage offered by the city's administrative policy? Are we forced to accept it? When discussing this last item with Mike Van Milligan, he mentioned the city was going to move to annex Tamarack Business Park in the near future in which case this would never be an issue to me. On the contrary, I have a philosophical disagreement with arbitrariness of this law and its consequent city policy, believing it to be anti- competitive and unfair to both the bidding vendors and the taxpayers of the city. I will state here that should I ever be put in the position to benefit from such a preference I will certainly decline the advantage. I would conclude by again asking if it is really the intent of city leaders to treat demonstrably "local" businesses in this fashion? Thank you for your attention and appreciate your consideration. Sincerely, ,, f Jim Giese, President Jim Giese Commercial Roofing Co., Inc.