By Don Walker of the Journal Sentinel 11/5/13
In an affidavit filed as part of a lawsuit over the city’s residency rule, Mayor Tom Barrett says a new study indicates 60% of the city’s more than 7,000 employees would move outside the city over an 11-year period if the law is repealed.
Barrett cited a recently completed study by SB Friedman Development Advisors of Chicago, which concludes that if the city lost its right to enforce a residency rule, an estimated 375 employees a year will move from city to suburb.
Barrett asked the city’s budget office to commission the study, which cost $68,900. Friedman is a Chicago-based real estate and development advisory firm.
“The Friedman report projects a total of 3,940 employee households to the suburbs over an 11-year period resulting in a reduction in the tax base of $622 million and reduced consumer expenditure within the city of $57 million,” Barrett said.
Barrett’s statement was filed Monday in Milwaukee County Circuit Court as part of a motion by city lawyers seeking summary judgment in the case. The lawyers want Circuit Judge Paul Van Grunsven to leave intact the city’s 75-year-old residency rule because it is a lawful exercise of the city’s home-rule authority. Van Grunsven has scheduled a hearing for Jan. 27.
In June, Gov. Scott Walker signed into a law a measure, sought for years by the city’s police and fire unions, that ended residency rules for all local units of government.
In July, the Milwaukee Police Association filed suit, saying the city’s failure to comply with the new law had deprived officers of “exercising their liberty interest in being free from residency restrictions as a condition of employment.”
The Milwaukee Professional Fire Fighters Association Local 215 also has joined the suit.
In a separate filing, Jon Cermele, an MPA attorney, said the city’s failure to abide by the new state law had deprived MPA members of their freedom to move out of the city. And he argued that city has no authority to thumb its nose at state law.
Citing the Friedman study, Barrett said city workers have higher incomes, higher housing values and higher homeownership rates than other city residents. As a result, they are a stabilizing force in city neighborhoods, he said.
“The lower incomes, housing values and homeownership rates of all city residents suggest to me that the city employees who migrate out of the city will not be replaced with residents who have the same or better economic advantages,” Barrett said.
Barrett also noted that, between July and Oct. 30, 53 city employees had already filed change-of-address forms stating they had moved beyond the city limits. In addition, he said, 25 newly hired employees do not live in the city, and 15 new employees who were hired before July 2 had applied for and received six-month exemptions from the residency requirement.
“If none of these employees moves into the city, the city will have lost a total of 93 employees who otherwise would be required to move into the city,” Barrett said.
The city has agreed not to enforce the residency rule while the lawsuit is contested.
The Friedman study looked at other cities in which residency rules were repealed. In Baltimore, 60% of city employees live outside the city limits. In Minneapolis, 70% of that city’s employees live outside the city limits.
The study also notes that “few barriers exist that would prevent city employees from moving beyond city limits as housing in the majority of communities in the metropolitan area is both affordable, readily available and within a 15-mile radius of city limits.”
The study adds: “This outflow of city employees who have significantly higher incomes, higher home-ownership rates and higher-value homes than the average city resident is likely to result in negative impacts on the city’s housing and retail markets and the overall property tax base of the city. The housing market impact will likely be manifested primarily through a decrease in new housing construction. The retail market impact will likely be experienced through reduced retail sales within the city, which in turn will influence the amount of rent that retail businesses are able to pay.”
That, in turn, will affect the assessments of residential and retail property, reducing the property tax base and increasing the burden on the remaining taxpayers in the city, according to the Friedman study.