Stories of the Sharing Economy: Denver

This is a guest post by Denver councilmember Mary Beth Susman. This post is the first installment of a new blog series that examines how the sharing economy is developing in different cities.

Statistics show about 2000 dwellings in Denver listed on various short-term rental websites – a sign that the sharing economy in Denver is booming. (Juli Scalzi/Getty Images)

Exciting things are happening in Denver these days! Our city is growing. Our economy is humming. Millennials are flocking to the region in overwhelming numbers. Denver is constantly appearing on or near the top of some great lists that extol the quality of life in the Mile High City. And have you heard about our little experiment with recreational marijuana?

Denver is also at the forefront of the on-demand economy, commonly known as the sharing economy. Colorado was the first state to legislatively re-regulate ridesharing, thus making their operations legal. Now we are immersed in considering whether to re-regulate homesharing and the short-term rental (STR) market. I say “re-regulate,” because it is currently illegal in Denver to rent a home or apartment in a residential zone for less than 30 days. But the business is booming. Our best statistics show about 2000 dwellings in the city listed on various STR websites.

Early last year, I formed a Sharing Economy Task Force of the Denver City Council charged with studying these innovations and what they might mean to our city. “Sharing” economy can be considered a misnomer, as the industry entrepreneurs rarely “share” in the strictest sense of the word. They charge for the goods or services. It’s also been referred to as Peer to Peer, On-Demand, Collaborative Consumption, The Mesh Economy and other terms, but “sharing economy” has stuck as the most widely understood term.

We started out with many questions. How would ride-sharing and car-sharing affect our established taxi industry? (Dramatically, it turns out.) Should municipal governments step in to place regulations on meal-sharing? (Probably not. How would we enforce?) With much of Denver’s general fund revenues coming from sales tax, how do these untaxed on-demand models that prize access over ownership affect our sales tax revenues? (The jury is still out on this one.) There is a lot to tackle.

The task force has spent the bulk of its time discussing STR’s. Each meeting features presentations from citizens, hosts, guests, city agencies and representatives of the industry (i.e. Airbnb, VRBO, corporate rental companies), in addition to a review of the literature and other cities’ ordinances. Generally, it leads us to more questions. How can Denver promote innovation and creativity without sacrificing the quality of life of our neighborhoods? How can we preserve affordable housing and prevent the gobbling up of diverse housing stock? Are short term rentals helpful to home affordability by giving homeowners extra income to meet a mortgage, or do they diminish the supply when multi-units are converted to short-term rentals instead of long term? What safety measures do we need and how do we verify that hosts are complying? If we regulate STR’s with lessened requirements for inspections, etc. does it have implications for modernizing regulations on the existing hotel and lodging establishment? We’ve even seen the emergence of cannabis-friendly home-sharing. That discussion was a trip!

As we’ve watched other cities pass laws on home-sharing, we’re cognizant of going too far: creating regulations so onerous that home-share hosts simply don’t register, something Portland and San Francisco are experiencing. Meanwhile, it is difficult to enforce our present ordinances against STR’s. A city inspector has to receive a complaint, visit the site, find the renter, ascertain that he/she is a renter and not a nephew or cousin, and then prove they are renting for less than 30 days. It takes weeks/months to do this. How could we ever have a workforce to handle 2000 dwellings? Anyway, we have no way of locating them without specific complaints. To put more perspective on this, we’ve only had nine complaints of an STR ever as of this writing.

We considered adding STR’s to the list of allowable home occupations, but with a requirement to get a permit. We discarded that tack because a) it would be the only home occupation requiring such; and b) since we intended to license for taxing purposes, it would mean several extra steps for the host. We are now proposing to add it as a use-by-right for all residential zones, but still require a business license, thus one step instead of two or three. We also are suggesting that it be limited to hosts’ primary residences to thwart the conversion of affordable units. This last component stymies some providers’ business models, i.e. VRBO (HomeAway) and corporate rental companies, who have objected.

We have taken the proposed regulations to neighborhood groups at each iteration to get their feedback. Their input has provided valuable suggestions which continue to inform our work. The discussions have led to our preliminary framework for regulating short-term rentals in Denver. We hope we have elegant solutions that will preserve our residential neighborhoods; promote innovation; ensure the safety of hosts, guests and neighbors alike; prevent the loss of affordable housing, and encourage registration and compliance by hosts.

We are next exploring the licensing process that would apply lodger’s tax to the home-share enterprise. This is a significant step to level the playing field somewhat for our traditional hotel and lodging industry. The task force heard from our Hotel and Lodging Association who opined that they don’t think the home-share enterprises are a serious threat to their business because it appears to draw a different customer, but their biggest request was that we at least apply the same taxes.

Ironically, traditional hotels themselves are now listing unsold rooms on Airbnb and the like.

We will be going back to the community with the licensing and taxation pieces of the regulations for their consideration. I have particularly liked this back and forth process that gives us both time and multiple viewpoints to consider carefully what we are doing.

About the Author: Mary Beth Susman is a Denver City councilmember who chairs the council committee charged with investigating the sharing economy. She also sits on the sharing economy advisory panel of the National League of Cities.

Supreme Court Highlights, Part 2: What You Need to Know, and How Your City Will Be Affected

You can view the first installment of this post here.

The Supreme Court recently ruled on a number of cases that directly affect cities nationwide. (Getty Images)

Same-Sex Couples Now Have A Constitutional Right to Marry

Obergefell v. Hodges will be celebrated and condemned internationally.

In a 5-4 decision written by Justice Kennedy, the Supreme Court held that same-sex couples have a constitutional right to marry. All state laws and court decisions banning same-sex marriage are now invalid. The National League of Cities signed onto an amicus brief in this case supporting the couples.

Justice Kennedy’s opinion can be described as a celebration of marriage itself.  “No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice and family.”

More specifically, the majority opinion offers four principles that demonstrate why the fundamental right to marry applies with equal force to same-sex couples. First, the right to choose who you marry is “inherent in the concept of individual autonomy.” Second, because the right to marry is “unlike any other in its importance,” it should not be denied to any two-person union. Third, marriage between same-sex couples safeguards children and families just as it does for opposite-sex couples. Finally, marriage is a keystone of American social order from which no one should be excluded.

The Court relied on the Constitution’s Fourteenth Amendment Due Process Clause and the Equal Protection Clause in its opinion. In previous marriage cases like Loving v. Virginia, invalidating bans on interracial marriage, the Court relied on both Clauses. The Court did not state what standard of review it applied to decide this case.

The Court rejected the argument that sufficient debate had not occurred over this issue, noting that “individuals need not await legislative action before asserting a fundamental right.”

After acknowledging that many may take the view that same-sex marriage should not be condoned on religious grounds, the Court stated that the First Amendment protects this view and the views of religious organizations.

Justice Kennedy’s final words in his majority opinion effectively summarize his opinion:

“[The] hope [of the same-sex couples in this case] is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions. They ask for equal dignity in the eyes of the law. The Constitution grants them that right.”

Chief Justice Roberts and Justices Scalia, Thomas, and Alito dissented.

Federal Government Wins Health Care Case:  ACA Subsidies Continue

The third time’s a charm for the Affordable Care Act (ACA). King v. Burwell is the first complete victory for the law.

In 6-3 decision, the Supreme Court ruled today that health insurance tax credits are available on the 34 Federal Exchanges. The Court’s opinion focused largely on the consequences of ruling to the contrary: the destruction of health insurance markets.

Chief Justice Roberts, writing for the majority, began his opinion by pointing out that the Affordable Care Act relies on three reforms: making sure health insurance is available to everyone regardless of their heath and not charging higher premiums depending on health; requiring everyone to be insured; and offering tax credits to those with low incomes so they can afford insurance. If only the first reforms were to be implemented, a well-documented economic “death spiral” would occur, wherein health insurance premiums skyrocket because only the sick buy insurance.

The ACA allows the states and the federal government to sell insurance on health care exchanges. The ACA states that tax credits are available when insurance is purchased through “an exchange established by the state.”

So the technical legal question in this case was whether a Federal Exchange is “an exchange established by the state” that may offer tax credits.

The Supreme Court said yes. The Court first concluded that the above language is ambiguous. But by looking at it in the context of the entire statute, the meaning of the language became clearer. Specifically, if tax credits weren’t available on Federal Exchanges “it would destabilize the individual insurance market in any state with a Federal Exchange, and likely create the very ‘death spirals’ that Congress designed the Act to avoid.”

The Chief Justice’s analysis is simple and pragmatic:

“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is consistent with the former, and avoids the latter. [The statutory language at issue] can fairly be read consistent with what we see as Congress’s plan, and that is the reading we adopt.”

As a result of this decision, the status quo remains: if an individual otherwise eligible for a tax credit buys health insurance on a State Exchange or a Federal Exchange, the tax credit will be available.

Justices Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan joined the majority opinion. Justices Scalia, Thomas, and Alito dissented.

SCOTUS Rules Disparate-Impact Fair Housing Claims are Possible But Limited

If you were surprised by the Supreme Court’s ruling in the Affordable Care Act Case, you may have even been more surprised by the Court’s ruling in the Fair Housing Act case.

In Texas Department of Housing and Community Affairs v. Inclusive Communities Project the Supreme Court held 5-4 that disparate-impact claims may be brought under the Fair Housing Act (FHA). All Federal Circuit Courts of Appeals had decided this issue, ruling that such claims were possible. The Supreme Court was expected to come to the opposite conclusion (or else why would they have taken this case?). Having taken up this question twice before, only to have the cases settle, the Court has finally resolved it.

While state and local governments are more likely to be sued under the FHA, they do occasionally sue others for violating it. Justice Kennedy pointed out at the end of his majority opinion that the City of San Francisco filed an amicus brief supporting disparate-impact liability under the FHA, despite being a “potential defendant.”

In a disparate-impact case, a plaintiff is claiming that a particular practice isn’t intentionally discriminatory but instead has a disproportionately adverse impact on a particular group.

The Inclusive Communities Project (ICP) sued the Texas Department of Housing and Community Affairs, claiming that its selection criteria for federal low-income tax credits in Dallas had a disparate impact on minorities, in violation of the FHA. Specifically, ICP claimed the Department was giving too many tax credits to low-income housing in predominately black inner-city areas compared to predominately white suburban neighborhoods. While 92% of low-income housing tax credits in Dallas were located in census tracts with less than 50% white residents, federal law favors distribution of such tax credits in low-income areas.

The Court held that disparate impact claims are cognizable under the FHA. In prior cases, the Court held that disparate impacts claims are possible under Title VII (prohibiting race, etc. discrimination in employment) and the Age Discrimination in Employment Act relying on the statutes’ “otherwise adversely affect” language. The FHA uses similar language — “otherwise make unavailable” — in prohibiting race, etc. discrimination in housing. And Congress seems to have acknowledged that disparate impact claims are possible under the FHA. Congress amended the FHA in 1988 to include “three exemptions from liability that assume the existence of disparate-impact claims.” (By 1988, nine Courts of Appeals had held ruled in favor of such claims.) Finally, the Court reasoned that recognizing disparate-impact claims is “consistent with the FHA’s central purpose” — to eradicate housing discrimination.

Justice Kennedy opined that when the lower court takes this case up again it “may be seen simply as an attempt to second-guess which of two reasonable approaches a housing authority should follow in the sound exercise of its discretion in allocating tax credits for low income housing.” To make sure disparate-impact lawsuits aren’t successful in this instance, he suggests the following: first, governments and developers should be able to maintain a housing policy that they can prove is necessary to achieve a valid interest; second, disparate-impact claims that, like this one, rely on a statistical disparity will fail if the plaintiff can’t prove that the defendant’s policy caused the disparity; and third, remedies must be consistent with the constitution and not include quotas.

Why You Should Care About SCOTUS’s Recent Case Involving Raisins

In Horne v. Department of Agriculture the Supreme Court held 8-1 that the federal government violated the Fifth Amendment Takings Clause by physically setting aside a percentage of a grower’s raisin crop each year without pay. At least six other agriculture set aside programs are in trouble as a result of this case. But what about its impact on state and local government?

Horne is a complicated case with four issues. The holding most relevant to state and local government is that taking an interest in personal property (here, raisins) rather than land is a per se taking rather than a “more flexible and forgiving” regulatory taking. As the International Municipal Lawyers Association amicus brief points out, an argument can now be made that towing illegal parked cars, removing abused and neglected pets, confiscating drugs or pirated copyrighted materials, and confiscating guns from felons might amount to takings requiring just compensation.

Per the Agricultural Marketing Act, raisin growers are required in certain years to give a percentage of their crops to the federal government free of charge to maintain a stable market for raisins. Raisin growers sometimes receive proceeds from the sale of set-aside raisins. The Hornes refused to set aside raisins for the federal government and were fined the fair market value of the raisins for failing to comply with the order. The Hornes sued, claiming the set-aside requirement was an unconstitutional taking.

The Court first held that the appropriation of personal property is a per se taking just like the appropriation of land, stating that the text, history and precedents interpreting the Takings Clause don’t suggest a different rule. The Court next concluded the government could not avoid paying just compensation because the growers in this case had a contingent interest in the value of the set aside raisins. “The fact that the growers retain a contingent interest of indeterminate value does not mean there has been no physical taking, particularly since the value of the interest depends on the discretion of the taker, and may be worthless, as it was for one of the two years at issue here.” To the question of whether the government’s mandate to turn over raisins as a condition of participating in commerce is a per se taking, the Court said yes in this case. It is not enough that the growers voluntarily chose to sell raisins rather than wine.

Only five Justices agreed that the Hornes’ just compensation should be the fair market value of the set aside raisins (and that the fine for disobeying the order should be dropped). Three Justices would have sent the case back to the lower court to determine whether, through the price supports for the raisins the Hornes did not have to set aside, they received just compensation.

Only time will tell whether people will try to bring takings claims against state and local governments, citing Horne for government seizures of personal property more common than raisins — and whether those claims will be successful.

Lisa Soronen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

Why City Governments Should Adopt the 2015 Enterprise Green Communities Criteria

This is a guest post by Katie Swenson and Tom Osdoba.

Photovoltaic cells cover the facade of a green apartment building in Berlin, Germany. The photovoltaic cells replace the conventional facade slabs and produce around 25,000 kWh of solar-generated electricity a year, which is then fed into the public grid and offsets the energy consumption of the building. This also helps to reduce the operating costs charged to residents. (Photo: Andreas Rentz/Getty Images)

Cities are centers of opportunity — thriving cities promote economic mobility, improve access to important services, and attract businesses and jobs. Housing is the first rung on the ladder of opportunity. Without a home, it’s hard for adults to get or keep a job, and it’s hard for kids to find a safe, quiet place to do homework and stay healthy. The best housing focuses on meeting the needs of residents and the surrounding community, and can make a profound difference in the lives of residents. Green affordable housing also improves resident and community health without increasing costs.

With that in mind, Enterprise Community Partners and a coalition of leading affordable housing and sustainable development organizations created the 2015 Enterprise Green Communities Criteria — and we’re calling on every city government in the United States to adopt this critical standard for greening all affordable housing.

Originally introduced in 2004, the Criteria are the first national standard for creating and preserving green affordable housing. They help cities and housing developers deliver the economic, health and environmental benefits of green building to the most vulnerable residents, and do so in a cost-effective way. Criteria-certified housing helps build long-term solutions to systemic housing issues that affect communities of every size across the country. Our goal is to ensure every affordable home in America is built to this level of quality.

Criteria-certified homes are 15% more efficient than those built to local code. They reduce energy use by almost 2,000 kilowatt hours and greenhouse gas emissions by 1.4 metric tons per home per year. That means that in 2014 alone, homes built to meet the Criteria saved the energy equivalent of removing 2,300 vehicles from the road or adding 9,077 acres of forest land.

Since the Criteria were introduced, Enterprise has invested nearly $3 billion and created more than 38,000 healthy, green homes. We’ve worked with more than 550 organizations to build capacity and encouraged the adoption of policies that support green affordable housing development at the local, state and federal levels. The 2015 Criteria will expand on that work: for the first time, we’ve included resilient design features that take things like climate change, natural disaster, power loss and other interruptions in available services into account. They also include “active design” criteria that encourage using the architecture of the building to help combat major health issues that disproportionately affect low-income communities like obesity, heart disease, diabetes and mental health issues. For example, something as simple as placing a stairwell in a prominent location can encourage their use over elevators, enabling residents to burn enough calories each day to prevent average annual weight gain.

The benefits of green building extend beyond residents to the neighboring communities as well: the Criteria encourage the use of local services and the creation of walkable neighborhoods with good lighting. They also improve water quality and reduce the impact of storm water runoff on community sewer systems.

Seventy percent of design decisions are made during the first ten percent of the design process. By considering the health and environmental factors that affect communities at the very beginning of that process, housing developers can build better homes; by encouraging use of the Criteria, city governments can build better communities. Enterprise has found that healthy, green housing doesn’t cost more, especially with good design processes that prioritize these considerations early. In those cases where building to our standard can bring slightly higher initial costs, the operating savings quickly pay back those costs and deliver long-term economic benefits throughout the life of the property.

Enterprise’s goal is to end housing insecurity in the United States within a generation. That means no more homelessness and no more families paying more than half their income on housing. As a down payment toward that goal, Enterprise will help provide opportunity to 1 million low-income families through quality affordable housing in thriving neighborhoods by 2020. The Green Communities Criteria help us get there by building long-term solutions to some of our most pressing issues.

More than 20 cities and states referenced the last version of the Criteria in their low-income housing programs. Enterprise and our partners developed the 2015 Criteria based on years of experience and research, and we aim to build on the work we’ve done so far to make all affordable housing in the country green. Together, we will end housing insecurity, and we ask every city in America to join us.

About the authors:

Tom Osdoba is Vice President of Enterprise Green Communities at Enterprise Community Partners.

 

Katie Swenson is Vice President of design initiatives at Enterprise Community Partners.

How the New Public Sector Pension Accounting Rules Will Affect Your City

This is a guest post by Les Richmond.

Understanding the new rules will enable your community to improve its long-term financial strength, and will also put you ahead of the curve in preparing for additional accounting changes for retiree health benefit plans that are coming in a few years. (Getty Images)

New public sector pension accounting rules that take effect for fiscal years ending June 30, 2015 and later are likely to have a significant impact on your city’s financial statements. Because pensions can often be a controversial issue for employees and taxpayers, now is a good time for city leaders to prepare all stakeholders for the change — including elected officials, union leaders, and even the local media – so any resulting policy decisions are not made in a “crisis atmosphere.”

The new accounting rules, known as “GASB 68,” are designed to provide public-sector leaders with more useful information for calculating the cost of their community’s pension promises, and provide insights into whether they have set aside adequate assets to pay them. Understanding the rules and the new financial information they provide will enable your community to improve its long-term financial strength, and will also put you ahead of the curve in preparing for additional accounting changes for retiree health benefit plans that are coming in a few years. Here are a few of the key concepts to understand about the new rules:

Pension Accounting Will Be More Volatile: The balance sheet liability for pensions will be the difference between pension fund assets and liabilities (the unfunded liability) based on the market value of assets. Annual returns on pension fund investments like stocks can fluctuate dramatically. That volatility on the asset side of the balance sheet can spill over to the calculation of pension costs: When below-average asset returns lead to an unfunded liability in the pension fund, that gap will have to be amortized over a much shorter time period than allowed under prior rules. In addition, for reasons described in the next section, the discount rate for determining pension liabilities can change from one year to the next, which can have a huge impact on plan liabilities and accounting expense. Though public-sector political leaders who appreciate stability in their financial statements are likely to be uncomfortable with the new rules, the new accounting does provide a clearer, real-time picture of the plan’s status to all stakeholders.

Underfunding Pensions Will Have Bigger Consequences for Your Financial Statements: Under GASB 68 rules, the discount rate used in the accounting measurements is no longer simply the expected long-term rate of return of pension fund assets. Instead, to determine the discount rate each year, the fund’s actuary will have to project assets and liabilities into the future to determine whether the fund’s assets will be exhausted. The date this fund exhaustion is projected to occur is called the “depletion date.”

It will be more likely that a depletion date will occur if the employer has been contributing less than the full actuarial amount. The consequence of this underfunding can be a lower discount rate, because the expected return on pension assets after the depletion date will be based on a 20-year AA bond rate, which is much lower than most funds’ current expected returns. So underfunding the contribution not only directly reduces the assets in the fund, it also can lead to higher plan liabilities.

This Is a Good Time to Adopt a Pension Funding Policy: If your pension contribution has been based on the Annual Required Contribution (ARC), then you have a decision to make about your pension funding policy, because under GASB 68 the ARC will no longer be calculated. Consult with your municipal advisors and actuaries about a new funding policy — preferably one that avoids pushing unfunded liabilities to future generations, which will, in turn, avoid a depletion date.

Adopting a clear and credible pension funding policy can help manage the impact of the new information on the value of your community’s municipal bonds, by sending a strong message that you understand the pension funding situation and are dealing with it. (It may also make sense to build an investor-relations outreach program or purchase bond insurance to market your bonds to investors more effectively.) At Build America Mutual, our analysis of public sector pension liabilities is already in line with most of the new rules, so we’re comfortable taking a “long view” of a community’s pension funding status, rather than having an extreme reaction to the GASB 68 numbers.

— Finally … Don’t Panic: While it is possible that cities’ pension liabilities will climb under the new rules — some sharply — the pension commitments the city has made aren’t changing, and neither is the amount of assets available to repay them.  In most cases, pension underfunding accumulated over multiple years, and the problems can be fixed with discipline applied over multiple years.

Good luck for a smooth implementation!

About the Author: Les Richmond is the in-house pension actuary for Build America Mutual, which NLC’s preferred provider of municipal bond insurance and the leading insurer of municipal bonds sold by small- and mid-sized governments in the U.S. He reviews the pension risks for every issuer BAM considers for insurance, and is an expert on the impact of the new accounting rules on municipal financial statements.

NLC to Hold Leadership Academy on Juvenile Justice Reform

Our RFP to participate in the upcoming Municipal Leadership for Juvenile Justice Reform Leadership Academy is out now.

Minneapolis skylineMinneapolis will host NLC’s Municipal Leadership for Juvenile Justice Reform Leadership Academy this fall. Photo credit: AMB-MD

Despite substantial decreases in juvenile crime rates during the past decade, state and local juvenile justice systems remain in need of fundamental reforms. High-quality, community-based alternatives to incarceration for youth — and support systems for re-entry — are not available in every city, and racial and ethnic disparities continue to be a persistent problem in juvenile justice systems across the country.

As part of a strategic partnership with the John D. and Catherine T. MacArthur Foundation’s Models for Change initiative, the NLC Institute for Youth, Education, and Families will host its second Municipal Leadership for Juvenile Justice Reform Leadership Academy from September 23-25, 2015 in Minneapolis.

Mayors and other city leaders have unique opportunities to drive improvements in their local juvenile justice systems. Local leaders, city law enforcement agencies and their community- and faith-based partners can explore new roles and resources in collaboration with courts and juvenile probation departments.

The Municipal Leadership for Juvenile Justice Reform Leadership Academy will provide local officials and their teams with the skills and knowledge they need to build on existing city-led efforts and take up leadership roles in juvenile justice reform. Participants will have access to national experts, promising practice examples, and peer learning opportunities, as well as the opportunity to begin the process of developing local action plans. See the RFP for more information. Responses are due by Wednesday, July 15, 2015.

The Models for Change initiative supports reforms to the treatment of young people who come in contact with police or get charged with crimes, and it is playing a key role in reshaping the juvenile justice system. The initiative is grounded in the core principles of fundamental fairness, developmental differences between youth and adults, individual strengths and needs, youth potential, responsibility and safety.

Local officials report that Models for Change and NLC have helped them improve public safety and support youth in their communities, even as they grapple with tight budgets and tough fiscal decisions. NLC is working with Models for Change on juvenile justice reform and concentrating on the issues of status offenders, mental health services, juvenile indigent defense, and racial and ethnic disparities.

Laura Furr
About the Author: 
Laura E. Furr is the program manager for justice reform and youth engagement in the NLC Institute for Youth, Education, and Families. Follow Laura on Twitter at @laura_furr.

Supreme Court Highlights: What You Need to Know, and How Your City Will Be Affected

Supreme Court facadeThis summer, the Supreme Court has already ruled on a number of cases that directly affect cities nationwide. (Getty Images)

Reed v. Town of Gilbert May Require Altering Sign Codes Nationwide

In Reed v. Town of Gilbert the Supreme Court held unanimously that Gilbert’s Sign Code, which treats various categories of signs differently based on the information they convey, violates the First Amendment. The State and Local Legal Center (SLLC) filed an amicus brief in this case arguing that Reed’s argument, if adopted by the Court, will render sign codes unconstitutional nationwide.

While the SLLC argued in its amicus brief that the sign categories in this case are based on function, the Court concluded they are based on content. Content-based laws are only constitutional if they pass strict scrutiny — that is, if they are narrowly tailored to serve a compelling government interest. The various categories draw distinctions based on the message a speaker conveys. So under Gilbert’s sign code: “[i]f a sign informs its reader of the time and place a book club will discuss John Locke’s Two Treatises of Government, that sign will be treated differently from a sign expressing the view that one should vote for one of Locke’s followers in an upcoming election, and both signs will be treated differently from a sign expressing an ideological view rooted in Locke’s theory of government.”

Gilbert’s Sign Code failed strict scrutiny because its two asserted compelling interests — preserving aesthetic and traffic safety — were “hopelessly underinclusive.” Temporary directional signs are “no greater an eyesore” and pose no greater threat to public safety than ideological or political signs.

Many, if not most communities, like Gilbert, regulate some categories of signs in a way the Supreme Court has defined as content-based in this opinion. Communities will need to change these ordinances. Justice Alito, in a concurring opinion, offers a list of rules that he and two other Justices believes would not be content-based. Justice Kagan, in a separate concurring opinion joined by two other Justices, is less optimist about the impact of this ruling on local government:

As the years go by, courts will discover that thousands of towns have ordinances [that contain subject matter exemptions like historical markers] many of them “entirely reasonable.” And as the challenges to them mount, courts will have to invalidate one after the other. (This Court may soon find itself a veritable Supreme Board of Sign Review.) And courts will strike down those democratically enacted local laws even though no one — certainly not the majority — has ever explained why the vindication of First Amendment values requires that result.

Bill Brinton, Rogers Towers wrote the SLLC’s brief which was joined by the National League of Cities, the National Association of Counties, the International City/County Management Association, the United States Conference of Mayors, the International Municipal Lawyers Association, the American Planning Association, and Scenic America.

Walker v. Sons of Confederate Veterans Decides Significant Government Speech Case

In Walker v. Sons of Confederate Veterans the Supreme Court held 5-4 that Texas may deny a proposed specialty license plate design featuring the Confederate flag because specialty license plate designs are government speech. Walker is of particular significance to state and local government because the Court did not narrow the 2009 landmark government speech case Pleasant Grove City, Utah v. Summum.

The Sons of Confederate Veterans (SCV) proposed a specialty license plate which featured a faint Confederate flag in the background and the organization’s logo, a square Confederate flag. After receiving public comment on the proposed plate the Texas Department of Motor Vehicles Board unanimously voted against issuing it noting that many members of the general public found the design offensive. SCV sued Texas claiming that specialty plates are private speech and that the Board engaged in unconstitutional viewpoint discrimination by refusing to approve its design.

The Court disagreed concluding that specialty license plates are government speech. It relied heavily on Summum, where the Court held that monuments in a public park are government speech and that a city may accept some privately donated monuments and reject others. First, just as governments have a long history of using monuments to speak to the public, states have a long history of using license plates to communicate messages. Second, just as observers of monuments associate the monument’s message with the land owner, observers identify license plate designs with the state because the name of the state appears on the plate, the state requires license plates, etc. Third, per state law, Texas maintains control over messages conveyed on specialty plates and has rejected at least a dozen designs, just as the city in Summum maintained control monument selection.

The result in Walker wasn’t a foregone conclusion. In a vigorous dissent, Justice Alito questions much of the majority’s analysis. He points out that only within the last 20 years has Texas allowed private groups to put messages on license plates and argues that Texas allows messages on license plates in order to make money, not to convey messages it supports.

But Justice Breyer, ever the pragmatist, insists that “government would not work” unless the government may determine “the content of what is says.”

“How could a city government create a successful recycling program if officials, when writing householders asking them to recycle cans and bottles, had to include in the letter a long plea from the local trash disposal enterprise demanding the contrary? How could a state government effectively develop programs designed to encourage and provide vaccinations, if officials also had to voice the perspective of those who oppose this type of immunization?”

EEOC v. Abercrombie & Fitch Stores: Court Rules Against Employer in Religious Accommodation Case

In EEOC v. Abercrombie & Fitch Stores the Supreme Court held 8-1 that to bring a religious accommodation claim an applicant or employee need only show that his or her need for a religious accommodation was a motivating factor in an employment decision. The State and Local Legal Center (SLLC) filed an amicus brief, which NLC joined, arguing that to bring a failure to accommodate claim the applicant/employee should have to notify the employer of the need for a religious accommodation.

Abercrombie & Fitch’s “Look Policy,” prohibits employees from wearing “caps” because they are too informal for the store’s desired image. Samantha Elauf wore a head scarf to an interview at Abercrombie but didn’t ask for a religious accommodation. The assistant store manager who interviewed Elauf told the district manager she believed Elauf wore the headscarf for religious reasons. The district manager decided Elauf should not be hired as headwear worn for any reason violates Abercrombie’s “Look Policy.”

The Equal Employment Opportunity Commission (EEOC) sued Abercrombie alleging it violated Title VII by failing to accommodate Elauf’s religious beliefs. The Tenth Circuit held in favor of Abercrombie, finding that an applicant/employee must inform the employer about the need for a religious accommodation.

The Court concluded that to bring a religious accommodation claim an applicant/employee need not show that the employer had “actual knowledge” of the need for an accommodation. Instead the employee/applicant only must show that his or her need for an accommodation was a motivating factor in the employer’s decision. Title VII prohibits employers from taking an adverse employment action “because of” religion. While “because of” usually means but-for causation, Title VII has a more relaxed standard that prohibits even making religion a motivating factor in an employment decision. Simply put, the Court would not add an “actual knowledge” requirement to Title VII.

According to the Court, while a knowledge requirement could not be added to the motive requirement, arguably the motive requirement cannot be met unless the employer at least suspects the practice in question is religious. Here Abercrombie at least suspected Elauf wore a head scarf for religious reasons so the Court did not decide whether the motive requirement could be met without knowledge. Justice Alito, in a concurring opinion, stated that the Court should have decided this question–in the negative.

Amanda Kellar and Chuck Thompson, International Municipal Lawyers Association, wrote the SLLC’s brief which was joined by the National Conference of State Legislatures, the National League of Cities, the United States Conference of Mayors, the National Association of Counties, the International City/County Management Association, the International Municipal Lawyers Association, the International Public Management Association for Human Resources, the National Public Employer Labor Relations Association, and the National School Boards Association.

A Look Ahead: Luis v. United States Will Decide How Far Asset Forfeitures May Go

Even though her crimes aren’t violent and horrific like many criminal defendants who end up in the Supreme Court, it is hard to feel sorry for Sila Luis. But her point is that she has rights, regardless.

She was indicted on charges related to $45 million in Medicare fraud. Unsurprisingly, her personal assets amounted to much less than $45 million. The federal government sought to freeze the use of her assets not traceable to the fraud. She wanted to use them to hire an attorney.

The question in Luis v. United States is whether not allowing a criminal defendant to use assets not traceable to a criminal offense to hire counsel of choice violates the Sixth Amendment’s right to counsel.

This case is relevant to state and local government for a few reasons. First, while the asset forfeiture in this case likely went to reimburse the federal government for the Medicaid fraud, generally, state and local law enforcement receive asset forfeitures. Second, some state asset forfeiture laws, like the federal statute in this case, allow untainted assets to be substituted. Third, in some instances state and local governments, like the federal government in this case, are the victim of a fraud and seek to recoup as much of their losses as possible.

This case comes on the heels of last year’s Kaley v. United States, where the Supreme Court held 6-3 that defendants may not use frozen assets which are the fruits of criminal activities to pay for an attorney. Luis argues that it is “inconceivable” that she may not use “her own legitimately-earned assets to retain counsel.” The federal government responded that per her reasoning criminal defendants “could effectively deprive her victims of any opportunity for compensation simply by dissipating her ill-gotten gains.”

The district court, affirmed by the Eleventh Circuit, agreed with the United States using this example:

“[S]uppose . . . a bank robber [steals $100,000 and has] spent the $100,000 that he stole. It just so happens, however, that he has another $100,000 that he obtained legitimately. Should his decision to spend the $100,000 he stole mean that he is free to hire counsel with the other $100,000 when Congress has authorized restraint of those substitute assets? The reasonable answer is no. The bank has the right to have those substitute, untainted assets kept available for return as well.”

Lisa Soronen bio photoAbout the Author: Lisa Soronen is the Executive Director of the State and Local Legal Center and a regular contributor to CitiesSpeak.

How the National Park Service Can Support Outdoor Recreation Projects in Your City

This is a guest post by Jonathan B. Jarvis, Director of the U.S. National Park Service.

Cyclists enjoy the South Platte Greenway, a river trail that travels through the Denver metropolitan area. NPS, Groundwork Denver and the City of Denver are working with adjacent low-income neighborhoods to help identify and address barriers to connecting to, and using, the Greenway. (Photo: National Park Service)

In April, I traveled to San Francisco to announce the National Park Service Urban Agenda during the Greater Greener Conference presented by the City Park Alliance. Our Urban Agenda establishes a framework for strategic alignment of parks, programs and partnerships that will better serve communities.

As the National Park Service moves into our second century, we recognize that our first century was about bringing people to the parks, but the next century will be about bringing parks to the people. In order to do this, we need a strong network of federal, state and city parks and conservation lands – woven together to maximize their recreational, ecological, economic and social values – so that each person can find a park and benefit from the enjoyment, education and inspiration offered by public lands.

On July 22, I am back in San Francisco for the U.S. Conference of Mayors Annual Meeting, where I’ll have another opportunity to invite mayors to connect and collaborate with the National Park Service. The launch of the NPS Urban Fellows program in 10 cities is a new approach to our work in cities, but we have not abandoned our effective programs that have long helped local municipalities and partners in urban areas.

National Park Service staff from the Rivers, Trails and Conservation Assistance (RTCA) program continues to help create close-to-home recreation opportunities and conserve natural and cultural resources. The RTCA program works with local partners to achieve many goals – engaging youth, enhancing recreation opportunities, supporting livability, improving health, and enhancing property values and quality of life.

Through the RTCA, the National Park Service has provided assistance to more than 8,000 community-led projects throughout the country.

Our nationwide staff of planners, landscape architects and collaboration experts helps to catalyze support for community projects that connect parks with the people and communities around them.

The RTCA program is accepting applications through August 1, 2015, for help planning and facilitating a wide range of projects, such as:

  • Developing close-to-home parks and greenways
  • Managing community-led visioning, planning and design
  • Facilitating public involvement
  • Building sustainable partnerships
  • Engaging youth through outdoor recreation skill-building and conservation stewardship
  • Planning for trails, landscape conservation, water trails, river restoration, green transportation and tourism

RTCA projects are always in motion, and you can view a list of current projects in your state on the National Park Service website.

The Urban Agenda, Urban Fellows program, and RTCA are all integral pieces of the effort to improve and expand infrastructure for the next generation. Unfortunately, a significant part of our work to protect green space in urban areas through the Land and Water Conservation Fund (LWCF) is in jeopardy.

LWCF Program legislation expires September 30, and Congress must act now to extend its future. The LWCF Program provides matching grants to states and local governments for the acquisition and development of public outdoor recreation areas and facilities. The program is intended to create and maintain a nationwide legacy of high quality recreation areas and facilities and to stimulate non-federal investments in the protection and maintenance of recreation resources across the United States.

Land and Water Conservation Fund grants boost local economies and support jobs in the outdoor recreation and tourism industries. Every $1 invested in land acquisition through the Land and Water Conservation Fund generates a $4 return on the investment for communities.

Since the inception of the Fund, over $4 billion has been made available to state and local governments and over 40,000 projects have been funded in every state throughout the nation.

On all fronts, the myriad of programs that improve quality of life for Americans must be protected and supported by mayors, local elected officials, and all engaged citizens who wish to leave a rich inheritance of public lands to those who will come after us.

Jonathan_Jarvis_150x183About the Author: Jonathan B. Jarvis began his career with the National Park Service in 1976 as a seasonal interpreter in Washington, D.C. Today, he manages that agency whose mission is to preserve America’s most treasured landscapes and cultural icons. Managing the National Park Service on the eve of its centennial in 2016, Jarvis has focused on several key areas that are critical for the future: enhancing stewardship of the places entrusted to the Service’s care; maximizing the educational potential of parks and programs; engaging new generations and audiences, and ensuring the welfare and fulfillment of National Park Service employees. His blueprint for the agency’s second century, A Call to Action, calls for innovative, ambitious, yet practical ways to fulfill the National Park Service’s promise to America in the 21st century.

A Young African-American Male Joins the Memphis Police Force

This is a guest post by Jack Calhoun. The post originally appeared here.

National Forum on Youth Violence PreventionYouth delegates at the National Forum on Youth Violence Prevention in Washington, D.C., May 13, 2015. Jhukuruin Cole is pictured fourth from the left in the back row. (Photo: Alex Coccia)

A few weeks ago I had the opportunity to hear Jhukuruin Cole speak. He shared his thoughts as a member of the youth panel at the National Forum on Youth Violence Prevention’s annual Summit held in Washington, D.C. Jhukuruin had recently joined the police force in Memphis.

But why did this impressive, self-possessed young man join the police? Why now? Why, in the face of citizen protests – even riots – against the police in Baltimore and Ferguson, and atop controversies in North Charleston, Cleveland and ferment in other cities across the nation? I had to speak with him. His young, ingenuous answers to my questions seemed uncannily to reflect the future of policing, the very heart of police reforms beginning to sprout across the country.

Coming from a somewhat “spotty background,” Jhukuruin found mentors: “people who lifted my eyes past my zip code. Drug dealers, rappers and professional athletes were the only role models I knew about.” One mentor took him to Habitat for Humanity and to homeless shelters. “This opened my eyes, and I realized I could do something. Dereck, one of my mentors, paid for my first suit. I went to his wedding. Ryan, my other mentor, paid for my application to the University of Memphis. They cared. I think I felt I had to give something back.”

As part of Memphis’ youth delegation to the Summit two years before, Jhukuruin met Police Chief Toney Armstrong and Major Newell. They saw potential in him. “They decided to take a chance on me. They looked past my past mistakes, and saw something in me. Kinda took me under their wings. I applied to be a police officer. They encouraged me. I passed the tests. I got in.”

Jhukuruin spoke of the rigorous training, how hard it is physically — “the shooting, driving.” And he spoke about how tough the studies were, the technical and legal issues. “People don’t realize how hard it is to be a police officer. I almost dropped out. But I made it,” he told me proudly.

He started out on patrol for three months. I asked, “You were in uniform, wearing a gun? What did your old buddies think guys you used to hang with?” He replied, “Well, I don’t work in my old neighborhood, but I think they respect me.”

“So what keeps you going? What keeps your legs under you?”

“The work is really hard. But at the end of day I know I’ve helped someone each day.”

“But now you’re in enforcement! Isn’t that strange for you?”

“Well I really don’t call it enforcement.” And here Jhukuruin paused. He paused for a long time. Although not framed in policy or program terms, his thoughtful, highly personal answer to me touched the very heart of police reform. He said slowly, “Yes, sometimes you have to do what you have to do. Sometimes it’s enforcement. But to me the work is more like protection. You see, I know what it’s like to go to school scared. Kids getting bullied. Kids joining gangs so they won’t get hurt. Makes me feel real good to know that the kids feel safe going to school when I’m there. Same with parks. They should be able to play. It’s hard to play when you’re scared. It’s really hard to be a kid. I don’t want it to be hard.”

He continued, touching the central nerve – trust. “I talk to the kids. If I get their trust, then they can tell me what’s going down, at school or in the park. I’ve had kids tell me that it would help if I showed up at such and such a place after school. And I do.”

This from a young African American police officer: knowledge of the community, trust building, and protection first. Enforcement the last resort. Here in this young man, the future of policing.

His cell phone rings. He looks up apologetically. He has to go. He stands. Departing, he says, “I really feel proud of what I’m doing. I have a career. And I’m helping kids have better lives.”

Jack CalhounAbout the Author: John A. “Jack” Calhoun is an internationally-renowned public speaker and frequent media guest and editorial contributor. He currently serves as Senior Consultant to the National League of Cities and Founder and CEO of Hope Matters. For more than 20 years, Mr. Calhoun was the founding president of the National Crime Prevention Council, prior to which he served under President Carter as the Commissioner of the Administration for Children, Youth and Families.

Startup in a Day, Minimum Wage, and 1 Million Cups: This Month in Economic Development

Our monthly roundup of the latest news in economic development filtered through a city-focused lens. Reading something interesting? Share it with @robbins617.

Startup in a Day is a new initiative that calls on cities to reduce the time it takes to start a business by streamlining the permitting process.

Take the Startup in a Day Pledge. This week, the White House, Small Business Administration (SBA), and NLC announced the Startup in a Day initiative. This national call to action challenges cities to cut regulatory red tape and support the growth of local entrepreneurship by developing an online tool that lets business owners discover and apply — in less than a day — for permits and licenses needed to start or expand a business. Learn more here about the pledge and funding opportunities from SBA. This announcement is a timely one, with the Kauffman Foundation recently releasing news that the number of new entrepreneurs is on the rise for the first time in five years. The US Chamber of Commerce Foundation and 1776 also just launched the Innovation that Matters report highlighting strategies for strengthening local entrepreneurial ecosystems. (Spoiler alert: one way is to provide a supportive regulatory environment.)

Fueling entrepreneurship with 1 Million Cups (of Coffee). “Let’s meet for coffee,” is a common invitation that often leads to the exchange of ideas, mentorship, and career advice. The 1 Million Cups program, launched in 2012 by the Kauffman Foundation, brings that concept to an even larger scale by providing entrepreneurs with a weekly platform to present their business plans and receive immediate feedback and advice from industry experts, venture capitalists and fellow business owners. NLC’s Big Ideas for Small Business peer network recently caught up with the Kauffman Foundation and community organizers from the 1 Million Cups programs in Fort Worth, St. Petersburg, and San Antonio. Their advice on how to launch 1 Million Cups in your own city is captured here.

Another city takes action on minimum wage increase for local workforce. It’s looking like Los Angeles will be the latest city, and also the largest, to pass a law that will raise the minimum wage from $9 per hour to $15 per hour by 2020.

Smaller cities are big contenders for job seekers. Glassdoor released a list of the best cities for jobs in 2015. Andrew Chamberlain, chief economist at Glassdoor, said of the survey results: “A key takeaway for job seekers is that a bigger city doesn’t always mean better when it comes to finding a job, being satisfied in that job, and affording a mortgage.” The key metrics used to rank these cities were availability of job opportunities, cost of living, and job satisfaction. Leading the pack of top cities are Raleigh, Kansas City (Mo.), Oklahoma City, Austin, and Seattle.

Local Jobs Report: City government workforce sees longest stretch of growth since the recession. Local governments nationwide added 15,000 jobs during the month of May, which also marked six consecutive months of job growth for the first time since the start of the recession. If this rate of job growth persists, city workforces will be back to pre-recession levels by 2019, which is two years sooner than the Bureau of Labor Statistics predicted in 2013. Local government workforce recovery is contingent on fiscal recovery, as this Governing piece describes, and several revenue-strapped cities may not be able to fully rebuild their local government workforce in the near future.

Should downtown development projects still be subsidized by cities? This insightful piece from Next City explores the history of downtown development in Kansas City over the past decade, and poses an important question. If building downtowns is a profitable investment, should cities still be providing subsidies?

Local businesses in Baltimore receive federal loans to fix damage. Last month we shared that local businesses in Baltimore suffered serious riot-related damage. The Small Business Administration announced these business can now apply for low-interest loans to helpcover the cost of needed repairs.

Idea of the Month: Accepting food stamps at farmers’ markets. Michigan’s Double Up Food Bucks program maximizes the value of food stamps and supports local farms at the same time.

What We’re Reading: This Brookings piece on the maker movement.

For a laugh. Every business has a different way of celebrating hitting their crowdfunding goals. For the owners of Scotland’s Brewdog brewery, this includes dropping taxidermy “fat cats” over London as a show of support for alternative business financing.

Robbins_small (2)About the author: Emily Robbins is the Senior Associate of Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.

(Read our previous monthly roundups: January, February, March, and April.)

Opening the Door for Data Sharing in the Juvenile Justice System

As part of NLC’s Municipal Leadership for Juvenile Justice Reform initiative, we are working with cities across the country to improve information and data sharing between city governments and agencies within the juvenile justice system.

San Francisco mapThis map of crime incidences in San Francisco was created using data shared by various city and county agencies. (https://data.sfgov.org/)

Recently, I had the pleasure of interviewing Andrew Wong, President of AJW Inc., a national expert on data sharing and data management across local government agencies and service providers. In our conversation, he shared lessons learned from recent data and information sharing efforts and explained how city leaders can improve policy and outcomes for residents through successful data and information sharing by taking three key steps:

  • Engage legal counsel early in the process,
  • Build community buy-in for data sharing, and
  • Embrace the role of champion.

Our recent guide, Sharing Data for Better Results, includes legal counsel as key stakeholders at the beginning of an information and data sharing initiative. How have agencies successfully worked with legal counsel?

AW: In Albany, N.Y., agency leaders from the local school district, city police, county mental health, county child welfare services and county probation were all interested in creating an information sharing agreement to prevent youth violence. As soon as this level of departmental interest was clear, we engaged with their legal counsel. We presented why we wanted to share data, how data would flow and how client-informed consent forms would explain to families that all private information would be protected. The clarity and specificity of purpose and protocol allowed us to speed up the development of documentation, both with project leadership and legal counsel.

A common concern about information and data sharing is community buy-in, especially when the records of children and youth are concerned. How can leaders successfully build buy-in and address community concerns about potential privacy violations?

In two projects, in Richmond and Antioch, Calif., we are working to build community buy-in for a shared data system to benefit families and the community. This system would allow schools, police and child welfare agencies to share data on incidences involving youth, but information on services the youth’s family receives would also be shared. The intent is for these agencies to use this information to identify how services provided to the young person and his or her family could be improved.

Data sharing quote1A community engagement specialist began engaging the community early on in the process to facilitate a process to address conflicts and share the purpose of the work. In particular, the consultant highlighted the intersection of community interests and the benefits of the shared data system to young people and their families. The decision to engage the community at the beginning of the process – even before agreements between the city and county departments were signed – made the difference.

We’ve discussed the role of legal counsel and the community. What is the role of local agency leaders in creating a successful data sharing agreement to benefit communities?

Government and agency leaders can best support data sharing by taking ownership of a project and acting as its champion. In San Francisco, we are working with mental health, child welfare, probation and school districts to develop an early intervention system for children who have poor school, safety and mental health indicators. Data sharing quote2The project has been developing for over a decade and we have seen leadership changes during that period. When mental health or human services leaders took ownership and drove the project, the initiative moved forward successfully. In between these periods, the project faltered. There were also times where the legal conversation got bogged down. A second lesson came about when the purpose and flow of information was made clear to the district attorney and the head of probation, who were then able to help break the logjam. They even played a role in convincing other departments of the potential benefits of identifying potential at-risk youth at an early age. The need for buy-in from agency leads is a key lesson that has resonated in all of my work since then.

In your experience, what type of policy decisions are improved through shared data?

In Antioch, Calif., education and law enforcement agencies were able to use a shared data system paired with a protocol on collaboration to divert youth from more severe disciplinary or incarceration options toward family support services. In California, county probation agencies are gearing up to work with state legislators to create better informed policies on when and how data should be shared. Most interestingly, we are now seeing agencies reviewing how policies focused on collaboration between partners that share data can also focus on shared outcomes.

Beyond the ability to make policy decisions based on shared data, what results can cities expect from a well-crafted data sharing structure?

Over the course of a five-year initiative in San Francisco, new thinking and new ways of collaboration between departments are emerging. These include focusing multiple departments on shared outcomes, such as increasing school attendance, engagement and performance. We have also seen cities achieve cost savings by identifying high-cost clients who receive services from multiple departments and taking steps to serve them more efficiently or effectively.

For a primer on first steps in creating an information or data sharing structure, check out NLC’s City Practice Brief on Information Sharing. This project is supported by the John D. and Catherine T. MacArthur Foundation’s Models for Change initiative. 

Laura Furr
About the Author:
Laura E. Furr is the program manager for justice reform and youth engagement in the NLC Institute for Youth, Education, and Families. Follow Laura on Twitter at @laura_furr.