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Workers group: Marriott in breach of development pact with city

Wednesday, February 6, 2013 by Michael Kanin

Officials with the Workers Defense Project this morning unveiled affidavits from construction workers and other evidence they say illustrates a breach by White Lodging of a fee waiver agreement between the hotel company and the City of Austin for the construction of what will be a JW Marriott hotel at 2nd Street and Congress Avenue.


The deal between the city and White Lodging was consummated in June 2011. In it, White Lodging agreed to break ground by a specific date, agree to City of Austin minority- and women-owned contractor goals, and – in a first – pay construction workers on the project a prevailing wage. In exchange, the city agreed to waive $3.8 million in fees associated with construction.


Workers Defense along with several other organizations revealed the evidence to the public today. White Lodging has denied the allegations.


In Fact Daily and three other local news outlets were granted access to the documents in exchange for a promise to not publish it until the news conference began.


Though the allegations are not new, the evidence is. It features affidavits from two construction workers who claim that they were not paid a prevailing wage. Workers Defense also said that it has an email from a JW Marriott representative to a project subcontractor stating that “there is no prevailing wage scale for this project.”


The two affidavits offered by the Workers Defense Project were heavily redacted. No names or identifying information was included in emails sent to media outlets.


The first is from a worker who was paid $12 an hour for a form-building carpenter’s position. According to Workers Defense, the Department of Labor puts prevailing wage for that position at $13.20.


The second is from a heavy equipment operator who was classified as a laborer. Workers Defense business liaison Gregorio Casar told In Fact Daily that laborer positions could be paid as little as $8 an hour, though this individual was paid $12 an hour. Someone who operates heavy machinery, adds Casar, should not be classified as a laborer. Theoretically, he should be paid $13.03 without fringe benefits.      


Word of the potential breach first surfaced in a report published in the American Statesman on Jan. 13. In their story, reporters Shonda Novak and Marty Toohey referenced a memo from Interim Assistant City Manager Anthony Snipes, where Snipes suggests that a “high-level city staffer” offered White Lodging “approvals that turned out to be ‘contrary to the (agreement) passed by the (City) Council.’”


In Fact Daily obtained a copy of the memo last week. “This direction may have caused confusion with White Lodging and lead them to believe that they could pay less than the City’s published prevailing wage scale for certain trades/job classifications,” Snipes wrote.


The Statesman reported that, in response to their story, the city began an audit of the project’s construction wages. City spokesperson Kyle Carvell told In Fact Daily that the city’s contract management department is still looking into the issue. It was fair to characterize their efforts, he confirmed, as in the early stages.

Council Member Mike Martinez told In Fact Daily that the issue was related to pay for electrical and sheet metal workers. Martinez added that he spoke with a White Lodging representative.


“It is their belief that they have not broken any provision in the ordinance. But there could be some issues down the line as it relates to rates of pay for certain electricians and sheet metal workers who haven’t started on the job site yet,” Martinez said. “Their position is that they have 100 percent complied with prevailing wage up to this point. They do realize that there could be a problem once electricians get on site and once sheet metal workers get on site with their prevailing wage category.”


Martinez added that White Lodging “does not want to violate the ordinance.” The hotel is a $300 million project designed to help pull more convention traffic to the City of Austin. Indeed, hotel operators have already sold what they term as 100,000 room nights beginning in 2015.


As part of the Council action that cemented the deal, White Lodging officials told Council Member Bill Spelman that they were familiar with prevailing wage practices and, indeed, had implemented them on other projects. They also offered a very rough estimate of five percent as the number for the extra costs they might incur with prevailing wages.


Rumors swirled Tuesday that costs associated with prevailing wage pay could run into the millions. If the company does not comply with prevailing wage rules, they would have to cough up the fees.


“We don’t have to take any action,” said Martinez. “It’s in the ordinance that they would have to return those incentives if they have been paid to them.”


White Lodging released the following statement this morning: “White Lodging is working on the City of Austin’s goal to bring a $300 million JW Marriott Conference hotel to fruition. White Lodging remains committed to our agreement, and is working with the city to comply with the conditions of the few waivers. We are also committed to achieving the goals related to the prevailing wage issue. Not only are we adhering to the agreement, we are exceeding the prevailing wage targets by at least 15%. We are confident the City will honor our agreement reached in August 2011. We look forward to opening this game-changing hotel in 2015.”

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