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City formally demands White Lodging return $688,000 in fee waivers

Thursday, August 22, 2013 by Michael Kanin

The City of Austin is formally asking for the return of $688,000 in fee waivers awarded to the developers building a new Marriott Hotel at Third Street and Congress Avenue.


Assistant City Manager Anthony Snipes made the request of Indiana-based White Lodging Services Corp. in a letter dated August 20. It comes in the wake of Council action that reaffirmed Council members’ interpretation of the definition of prevailing wages that are connected to the fee waivers by way of a development incentives agreement.


White Lodging has argued that a ruling from former Assistant City Manager Rudy Garza allowed the firm to proceed by averaging wages for project construction workers. Though Garza’s ruling is not in question, Council members and staff have argued that he did not have the authority to interpret Council action – confused as it may have been.


Deno Yiankes, President and CEO of White Lodging Investments and Development, issues a statement on Wednesday.


“We are disappointed that the City Council did not take the opportunity to clarify the original agreement and add an amendment that would have raised the minimum wage on the project to $11/hour,” he said. “This would have resulted in a raise for hundreds of the lowest paid workers. White Lodging is continuing to explore all of its options.”  


Also on Wednesday, White Lodging attorney Richard Suttle pointed to a flurry of city letters – and positions. “We’ve gotten many letters from Assistant City Managers, from everybody from Rudy Garza to Anthony Snipes,” he told In Fact Daily. “We don’t know what to do. We’re going to ask them (how) it all breaks down.”


But if White Lodging does nothing, the ball is still in the city’s court, with litigation a serious possibility.


Snipes’ letter is direct. He reminds White Lodging of Council’s action – ultimately a quiet refusal to redefine Council members’ interpretations of the term prevailing wage that came without a formal vote – and  told the company to return just over $688,000 in fee waivers within 30 days of White Lodging’s receipt of the letter. This is the amount of fees already waived.


“White Lodging has failed to prove compliance with the terms of the fee waiver ordinance and has not completed the Voluntary Corrective Action plan as initiated by the city,” Snipes wrote.


Snipes further notes that the city will not issue any more fee waivers and that it could take legal action if necessary. The original total of fees waived by the city to draw the project is $3.8 million.


White Lodging argues that by paying all construction workers a prevailing wage, its costs would exceed the $3.8 million figure. The company could still back out of the development agreement.


Workers Defense Project – the group that originally pushed for the prevailing wage language in the incentives deal – has served as a watchdog and subsequent vocal critic of the project. The organization’s business liaison, Gregorio Casar, issued a statement via email Wednesday afternoon about Snipes’ letter.


“The City of Austin has successfully created thousands of good construction jobs for low-wage and mid-wage workers by requiring common-sense protections on projects receiving tax breaks or assistance,” Casar wrote. “When everyone plays by the rules, we can raise workers’ quality of life while businesses also prosper.  However, when the rules are knowingly broken, as in this case, it’s important that the rule of law be enforced. Mr. Snipes’ follow-up on the ordinance is appropriate.”

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