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Council denies White Lodging’s request for prevailing wage rule changes

Friday, August 9, 2013 by Michael Kanin

Early Friday at the end of a lengthy hearing, the Austin City Council decided unanimously to enforce the prevailing wage agreement originally made with White Lodging two years ago without either a motion or a vote.


Council Member Mike Martinez first made a motion to enforce the original agreement but Mayor Lee Leffingwell pointed out that there was no need for a motion to do that.


Assistant City Attorney Cindy Crosby then explained that if Council took no action, staff would enforce the ordinance as it was originally written. Martinez then withdrew his motion and Leffingwell pronounced the day’s agenda to be complete and the meeting adjourned.


The Council’s action – or lack thereof – reinforced what they said was the original interpretation related to $3.8 million in fee waivers set aside to lure the development firm White Lodging to build a new downtown convention center hotel. By taking no action, Council empowered city management to seek repayment of development fees waived so far for construction of the JW Marriott Hotel on Congress Avenue.


On Thursday, the Workers Defense Project marshaled a large coalition to speak in favor of revoking the incentives granted to White Lodging. With the item beginning just shy of 11pm, Mayor Leffingwell limited public comment to 30 minutes per side.


The action came after months of pressure from Workers Defense. Indeed, though it appeared that White Lodging might have had Council votes to retain its incentives as late as Monday, Workers Defense partisans apparently made a very strong case in the days before Council action.


Workers Defense Business Liaison Gregorio Casar laid out his case again for Council members. As part of the incentives deal, Casar said that White Lodging agreed to pay construction workers on the project a prevailing wage. In subsequent communications, however, he said city staff – in the person of former Assistant City Manager Rudy Garza – signed off on an interpretation of prevailing wage that allowed White Lodging to average wages to get to that figure.


That, argued Casar, was an incorrect interpretation of what a prevailing wage is. Casar told Council members that he’s since spoken to Garza and that “it still appears that he does not understand what happened.”


White Lodging presented its own union representatives. Jeremy Hendricks of the Laborers’ International Union cast the firm’s interpretation of prevailing wage in an alternate light. Hendricks argued, as White Lodging has previously, that the company’s read lifted the lowest paying up by as much as $4 an hour (from $7).


Veteran Minority and Women Business incentives consultant Cloteal Haynes stressed the commitment that White Lodging made to those goals. “This company is supporting locally-owned minority and women businesses,” she said.


White Lodging Investments President and CEO Deno Yiankes did his best to stress that the deal and the company’s subsequent execution of it was not pursued in bad faith. He echoed Hendricks’ notes about lower-paid workers.


As for the prevailing wage definition, Yiankes pointed to what he called “a very confusing” city policy on the issue. Yiankes said that Martinez sent him to confer with Garza about it, when he says he presented White Lodging’s interpretation of the prevailing wage policy as a clear win for lower-wage workers. Garza, Yiankes says, told him that that was the intent of Council.


White Lodging then proceeded with the project, Yiankes said.


Yiankes said, given all of that, he found himself wondering “why isn’t City Council doing what they said they would do?”


Martinez – who moved for the prevailing wage – offered this statement about his intent. “My intent was clear that night: If we’re going to move forward prevailing wage should apply,” he said.


Martinez added that he may not have understood the fuller implications of his vote – that, argues White Lodging, wages would escalate above the actual amount of the fee waivers – but that White Lodging also noted that their costs would escalate by only five to 10 percent.


Later he drove the point home: “It’s been a two-year mess, but that doesn’t change the intent one ounce,” he said.


Martinez moved to get back to that original intent. Attorney Cindy Crosby said that the existing ordinance would allow for enforcement.


Construction of the new hotel, a JW Marriott located at Third Street and Congress Avenue, is already 27 percent complete. It appears as though it will continue. White Lodging may not be able to pursue a breach of contract lawsuit thanks to Austin‘s sovereign immunity. The firm will no doubt explore its other options.


White Lodging representative Richard Suttle told In Fact Daily that he and his clients “were going to be looking at all of our options.”


“We’re disappointed,” Suttle added.


Martinez used the experience to call for immediate work on the city’s pending comprehensive economic incentive agreements. “We need to make those crystal clear,” he said.

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