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White Lodging says city broke promises on Marriott prevailing wage issue

Tuesday, June 18, 2013 by Michael Kanin

After the city cancelled fee waivers associated with an economic incentives package Friday, the development company behind the construction of a new Marriott Hotel at Third Street and Congress Avenue fired back Monday. In a statement from Deno Yiankes, White Lodging’s President and CEO for Investments and Development, the company questioned the City of Austin’s ability to follow through on its promises.


“On August 16, 2011, White Lodging received written confirmation from the City Manager’s office that it will meet the City’s prevailing wage requirement by adhering to specific wage rates identified in the written confirmation. White Lodging has and will continue to meet those requirements,” Yiankes said.


“The written confirmation from the City was the basis for White Lodging beginning construction on the hotel. Now, after construction has begun, the City has changed its mind on the written confirmation White Lodging received. We look forward to continuing the discussion and remain confident the City will honor its word and not engage in bait and switch tactics when it comes to economic development incentives.”


Mayor Lee Leffingwell also expressed concerns about the action, which came, without either public debate or an official Council vote, in the form of a letter from Assistant City Manager Anthony Snipes. “I’m very uncomfortable because it seems like the city has not kept its word on this,” Leffingwell told In Fact Daily.


Leffingwell later noted that the situation “is very troubling to me,” adding that, if the general public can’t depend on the city to be consistent, it could cause “chaotic situations.”


Council Member Kathie Tovo told In Fact Daily that “a deal is a deal.”


“I voted against awarding financial incentives for this project, but at the time I was glad to see that the deal would at least include prevailing wages for the workers,” she said via email. “My position on the current situation is that a deal is a deal. White Lodging committed to pay prevailing wage to workers on the project, and the City of Austin must hold them accountable for that commitment.”


Other Council offices remained silent or unavailable Monday when asked for comment. White Lodging has requested that Council members put the item on an agenda as soon as possible. It remained unclear as of Monday evening whether this would happen. There is nothing on this Thursday’s agenda addressing the matter. The June 27 meeting is the final one before Council takes its annual summer break. The next official regular meeting is August 8.


At the center of debate is what exactly White Lodging agreed to as part of the incentives package. Council approved the deal after the firm signed-off on a promise to pay construction workers on the project prevailing wages – a hard-fought victory for local labor advocates.


However, shortly after Council approved the deal, White Lodging says that a July 2011 “analysis showed that the additional cost of strictly applying the public sector prevailing wage to a private project would exceed the incentive passed by council.”


The White Lodging release continues on to say that the company sought to clarify the situation in light of that revelation. That’s when former Assistant City Manager Rudy Garza affirmed in an email to White Lodging that prevailing wages could be calculated via average.


The Workers Defense Project began issuing complaints earlier this year over individual worker salaries. City staff eventually concluded that at least 13 workers were underpaid. Staff also sought more information from White Lodging about their construction payroll in an apparent effort to determine if more laborers were due back wages.


According to letters from the head of the city’s contract management division Rosie Truelove, White Lodging offered only partial responses to city queries. On May 31, Truelove issued a final ultimatum for the firm to comply with its informational requests and to pay workers back wages. She gave White Lodging until June 4 to respond.


On June 6, Snipes informed Council members of the situation, and indicated that city management was considering its next steps.


Then, on June 14, Workers Defense and the local chapter of the International Brotherhood of Electrical Workers let out a raft of complaints over wages and job safety on the Marriott project. That afternoon, In Fact Daily obtained a copy of a letter from Snipes to White Lodging informing the company that the city would cease granting fee waivers for the project and bill it for waivers it had already received – at least $360,000 in right-of-way fees waived in January and February of this year.


That action prompted the response from Yiankes. In the Monday statement, White Lodging paints a picture of confusing communications from city staff. “Well after the hotel was under construction, the City of Austin informed White Lodging that they would no longer abide by the confirmation of compliance on the prevailing wage issue given to White Lodging in August 2011,” it reads.


The company insists that it asked “the city to honor its August 2011 agreement” over the same period of time that staff issued its queries. Then, in response to the June 4 deadline, White Lodging writes that it asked “the City Manager to place this issue on the next available council meeting for clarification and ratification by council for the August 2011 agreement.”

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