As the Santa Monica City Council prepares to finalize the city’s living wage ordinance next week, most of the scores of impacted businesses in the coastal zone are girding for a two-front battle to overturn it, at the ballot box and in the courts.

But some businesses that would be affected by the change are looking for another way out of the controversy, quietly exploring whether they can be exempted from the law set to take effect next July 1.

Since employers with collective bargaining agreements are exempt from the ordinance, even if those agreements stipulate lower wage levels than the $10.50 minimum wage specified in the law, many business owners are contemplating what was previously anathema: allowing their workplaces to become unionized.

The Santa Monica living wage ordinance is believed to be the first in the nation to include not only those businesses that have contracts with, or receive funds from, the city but also businesses within a certain geographic zone with no financial ties to the city in this case, the four block strip parallel to the ocean.

Just last week, owners of the Pacific Shore Hotel in south Santa Monica signed a collective bargaining agreement with the Hotel Employees and Restaurant Employees (HERE) Union, Local 814. Under the 30-month agreement, the salaries of minimum wage workers will climb from the current state mandated minimum of $6.25 an hour to $10.15 an hour, just shy of the $10.50 living wage threshold.

Pacific Shore became only the second hotel in Santa Monica to unionize in the last 40 years, following the Fairmont Miramar Hotel in 1999.

HERE is now attempting to unionize the Loews Santa Monica Beach Hotel.

Community activists say other businesses are considering whether to use this exemption.

“We have had some feelers from a handful of businesses who are interested in exploring all their options to the living wage law, including allowing unions to organize and then signing collective bargaining agreements,” said Vivian Rothstein, an organizer with Santa Monicans Allied for Responsible Tourism. SMART drafted the living wage ordinance and first put it before the City Council two years ago.

Rothstein and other union activists note that over the next year employers can lock in wages lower than those mandated in the living wage ordinance provided those salary levels are agreed to by both labor and management in collective bargaining agreements. After the ordinance takes effect, it’s unlikely that collective bargaining agreements would include a wage rollback.

“It’s a little bit of a carrot for employers to help organizing (workplaces) move along,” said Erica Zucker, an organizer with the Los Angeles Alliance for a New Economy, which has helped with the Santa Monica living wage effort.

Employer representatives said they, too, expect the collective bargaining exemption to be explored.

“I would expect that, as the July 1 2002 deadline approaches, you will see the unions out there trying to convince employers to unionize and sign collective bargaining agreements,” said Tom Larmore, partner in the Santa Monica law firm of Harding, Larmore, Kutcher & Kozal and the chamber’s point person on the living wage issue.

But union leaders said resistance among the large coastal hotels to unionizing efforts is as strong as ever.

“I just don’t buy this talk that the hotels would rather have union collective bargaining agreements rather than the living wage,” said Kurt Petersen, organizing director for HERE Local 814. “And even if we were to push for this, organizing a hotel takes longer than a year. If we do get more hotels signing up within the next year, it will be due to a culmination of years-long efforts.”

Most businesses are putting their energy into overturning the ordinance altogether.

The Santa Monica Chamber of Commerce and other business organizations are preparing to launch a signature-gathering campaign the day after the council approves the second reading of the ordinance. They must collect 6,000 signatures in 30 days to put a referendum on the November 2002 ballot. The referendum would put the living wage ordinance approved by the council to a straight majority up-or-down vote of the people.

Living wage measure opponents also are preparing to sue the city on fairness grounds, arguing that an identical business outside the coastal zone doesn’t have to pay a living wage; and jurisdictional grounds, arguing that local governments don’t have the authority to impose such an ordinance on businesses that do not do business directly with the city.